Linking Marketing and Engineering Product Design Decisions via Analytical Target Cascading

Authors

  • Jeremy J. Michalek,

  • Fred M. Feinberg,

  • Panos Y. Papalambros


  • *The authors wish to thank Feray Adigüzel, Peter Ebbes, Laura Stojan, Michel Wedel, and Carolyn Yoon for their help and comments and to acknowledge the sponsorship of the Rackham Antilium interdisciplinary project, the Reconfigurable Manufacturing Systems Engineering Research Center, and the Business School, all at the University of Michigan.

Address correspondence to: Fred M. Feinberg, University of Michigan Business School, 701 Tappan St., Ann Arbor, MI 48109. Email: feinf@umich.edu.

Abstract

Firms design products that appeal to consumers and are feasible to produce. The resulting marketing and engineering design goals are driven by consumer preferences and engineering capabilities, two issues that conveniently are addressed in isolation from one another. This convenient isolation, however, typically will not result in optimal product decisions when the two problems are interrelated. A method new to the marketing community, analytical target cascading (ATC), is adopted here to explore such interrelationships and to formalize the process of coordinating marketing and engineering design problems in a way that is proven to yield the joint optimal solution. The ATC model is built atop well-established marketing methodologies, such as conjoint, discrete choice modeling and demand forecasting. The method is demonstrated in the design of dial-readout household scales, using real conjoint choice data and a parametric engineering product design model. Results indicate that the most profitable achievable product can fall short of predictions based on marketing alone but well ahead of what engineering may produce based on original marketing target specifications. A number of extensions can be accomplished readily using techniques from the extant marketing and design optimization literature.

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