Value Re-Engineering

The following are observations of a good friend relating to the all-too-frequent pastime of value engineering.

One of the predictable things about doing product research is that every so often, you may be called upon to slice the old salami. That is, the age-old task of margin-enhancing, cost- saving, value-engineering process in which sequential changes in products are often measured via blind, single product testing versus the preceding change to prove no difference at every step, and "prove" the safety in making the change. [Editor's note: in statistical theory, you can never prove "no difference." Also we know that in the real world everything is different, but is it importantly different?]

The problem with this approach obviously, is that if one were to check the cumulative changes versus the original standard, there's a good possibility that a consumer-detectable change (meaningful or otherwise) would be observable. What makes the salami-slicing approach so palatable to many, is that they rationalize the changes as occurring over a broad enough time horizon, so that the market standard is defined as whatever the most recent changed product is.

Much in the same way that a frog placed in a water bath, where the temperature is incrementally increased, may not realize it's being burned alive until it's too late, a brand may not realize it has violated the trust of its consumer base until defections occur.

Value-engineering needs to be done with a clear eye toward managing consumer expectations and ensuring that performance is maintained on all "critical" attributes, while perhaps conceding cost/quality on ancillary features (where specs may already be over-engineered).

Editor's Contribution: While I agree with Mike, I also believe he has left out one major element of brand maintenance: competition. While many researchers will maintain we should assess changes with historical norms, and companies seldom do. I maintain that most importantly we should be evaluating brand changes in relation to the market competition. We do not operate in a static world. As we value-engineer our brand, the competition may be improving. As a result, we may not be seen as different from our original version, but we could be seen as lower quality relative to the competition as a result of their improvement.

In reviewing this paper, Mike pointed out that competition may also be down-grading their brand(s), causing an additional level of complexity to the decision.