Background and Fundamental Concepts


When Shimano, one of the leading manufacturers of racing bicycle components, considers an extension of one of its product lines or even attempts to launch a completely new product, it must cater to a wide range of customer expectations. Cycling professionals all the way to occasional cyclists purchase their racing bicycles equipped with cranksets, brakes, hubs, derailleurs, chains, and cassette sprockets manufactured by Shimano. It is clear that a professional user, who sits on his / her bicycle for several hours per day, has very different requirements considering quality and functionality as compared to the occasional user, who is much more price sensitive.


Product Variety Fundamental Concept Customer Requirement Conjoint Analysis Product Architecture 
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  1. 1.
    Lancaster (1990, p. 189)Google Scholar
  2. 3.
    The order penetration point describes the location within the value chain where the production is no longer standardized but determined by a specific customer order. The terms customer order decoupling point (CODP) and point of variegation (Ramdas, 2003, p. 83) are used as synonyms.Google Scholar
  3. 5.
    Fabrication system complexity and production complexity are somewhat similar. Bliss (2000, pp. 7–8) argues that differentiating between the two complexity drivers is necessary because, for instance, a firm with a short value chain can avoid production complexity while still suffering from high fabrication system complexity.Google Scholar
  4. 6.
    Following Ulrich and Eppinger (1995, p. 35), I choose to use the terms customer requirements, customer needs, and customer attributes as synonyms. They all label any attribute of a potential product that is desired by the customer.Google Scholar
  5. 7.
    A market segment is defined here as “a group of customers who share a similar set of needs and wants ” (Kotier & Keller, 2006, p. 240). Market segmentation can be performed in many different ways: geographical segments, preference segments, demographic segments, etc.Google Scholar
  6. 9.
    According to Green and Srinivasan (1978, p. 103), it is generally agreed that the start of conjoint measurement is marked by the work of Luce and Tukey (1964).Google Scholar
  7. 14.
    Rathnow (1993, pp. 20–23) differentiates between complexity costs that are incurred once (when the new product variant is introduced) and that occur continuously (during the entire life cycle of the variant).Google Scholar
  8. 16.
    See Miller and Vollmann (1985, pp. 143–144) for a study on the development of overhead costs in several segments of American industry.Google Scholar
  9. 18.
    Simon (1973), p. 23Google Scholar
  10. 19.
    Open systems as presented here are similar to the concept of complex products and systems (CoPS) as introduced by Hobday, Rush, and Tidd (2000). They define CoPS as “high cost, technologyintensive, customised, capital goods, systems, networks, control units, software packages, constructs and services” (pp. 793–794). As an analytical category, they are a subset of capital goods.Google Scholar
  11. 21.
    I use the term structure of functionality because a product’s functionality is displayed in a structured way. Furthermore, by referring to the term “functionality,” the link to external complexity (see Section 0) and to the research question (see Section 1.2) becomes evident. The structure of functionality has been variously called a function structure, a function diagram, a functional description, and a schematic description (Ulrich, 1995, p. 420). In design theory, the term “function structure” is favored by both Pahl and Beitz (2003, p. 31) and Hubka and Eder (1988, pp. 72–77, and p. 257). Functional elements are sometimes referred to as functional requirements or functives (Ulrich, 1995, p. 420). The term elemental function is sometimes also used in literature.Google Scholar
  12. 22.
    I define a component similarly to Ulrich (1995, p. 421) as a separable physical unit or, more generally, any distinct region of the product. The definition of a component strongly depends on the problem at hand. In a simple product, components might be individual piece parts, while in a complex context a component might be composed of a large number of individual piece parts (e.g. defining the jet engine as one component of an aircraft). In any case, I consider a component as the physical unit designating the lowest hierarchic level of a product’s structure of physical components.Google Scholar
  13. 23.
    The subassemblies resulting from the grouping of components into major building blocks are often referred to as chunks. See Ulrich and Eppinger (1995, pp. 131–132).Google Scholar
  14. 24.
    The figure is based on Göpfert and Steinbrecher (2000, p. 25) and was supplemented with additional aspects.Google Scholar
  15. 26.
    A coupled interface between two components results in the need to change both components if a change is made to only one component. A decoupled interface eliminates this need, and both components can be changed without affecting the other. See Ulrich (1995, pp. 423–424) for more details and an illustrative example.Google Scholar

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