Effective Design of Products/Services: An Approach Based on Integration of Marketing and Operations Management Decisions

This paper presents an integrated framework for designing profit-maximizing products/services, which can also be produced at reasonable operating difficulty levels. Operating difficulty is represented as a function of product and process attributes, and measures a firm’s relative ease or difficulty in meeting customer demand patterns under specified operating conditions. Earlier optimum product design procedures have not considered operational difficulty. We show that optimum profit, market share, cost, and product profiles are dependent on operating difficulty level. Empirical results from the pizza delivery industry demonstrate the value of the proposed Effective Product/Service Design approach.