An integrated decision support system for new product development with customer satisfaction

Abstract

New product development (NPD) is vital to business success. Companies launch profitable and attractive products to satisfy customers as well as gain profits and market share. New products are a crucial driver of customer satisfaction, and that customer satisfaction plays a key role in business growth. It is clear that NPD and customer satisfaction are associated. In the NPD process, decision making at the front end is particularly important as it helps companies concentrate on developing competitive and customer-focused products instead of investing in worthless ones. Such decision making is complex and the existing decision support systems (DSSs) are nevertheless ineffective. A new and innovative approach of DSS is therefore proposed to aid companies in making sophisticated and reliable decisions on NPD. A framework of an integrated decision support system (iDSS), which is novel and significant, is designed to support NPD. A mixed methodology is adopted and several decision-making techniques are employed, including the scorecard technique, Markov analysis, the fuzzy analytic hierarchy process, and system dynamics. The iDSS contains three modules, namely Module I: an idea screening decision model, Module II: a customer perception model, and Module III: a dynamic decision model. Each module serves specific purposes. Module I is designed to predict the success probability of new product ideas and provide the optimal intervals for making the exact go or kill decisions on all ideas. Module II aims to weigh and prioritize product characteristics, which are corresponding to customer requirements. Ideas selected through Module I would be further developed and evaluated in detail in Module III for approval while the results of Module II would be input into Module III. Module III serves to provide a financial estimate, which is the net customer lifetime value (NCLV), taking into account the time value of money and on-going customer relationships. Projects with higher NCLVs satisfy customers and bring profits to the company in the long term, thus worth further investment. Three case studies were conducted to validate the iDSS and to highlight its feasibility. They are based on a world-class company in the power tool industry and supported by extensive data collection, a customer survey, and interviews of this company. The company accounts for over 30 percent of global market share in 2010. It has been listed on the Stock Exchange of Hong Kong since 1990. The case studies are related to the specific needs of the company and are a part of the Teaching Company Scheme. From the case studies, it is found that the company should make go decisions on new product ideas whose success probability lies in the interval [0.53, 1]. These selected ideas will be further investigated and regarded as NPD projects. The company should emphasize the durability (the durability of surviving from drops), efficiency (to complete applications quickly and easily), and robustness (the ability to endure tough applications) of power tools as these are the top three important factors prompting customers to initiate a purchase. Before further development and production, detailed evaluation of the NPD projects is required. It is found that the NCLV calculation is useful to determine the value of NPD projects in the long term. Projects with higher NCLVs are more profitable, and thus worth further investment and launch. The iDSS is proven to be effective and convincing through the case studies. It aids companies in selecting and developing new products that could satisfy customers to build long-term customer relationships and generate greater profits; this improves the quality of the NPD decision making.