The Case of the Wary Product Developer and the Headstrong President

The Case of the Wary Product Developer and the Headstrong President

Matt’s Problem

Marc is headstrong. His command to Matt: “Alter our equipment so it can apply selective coatings. I need it yesterday!”

Marc is President of the Printed Circuit Assembly Division (PCA-D). Three weeks ago he promoted Matt from Sr. Sales Engineer, to Mgr., Product Development.

PCA-D makes equipment to apply conformal coatings to printed circuit boards. Conformal coatings’ thin films protect circuits from environmental damage. PCA-D’s present equipment can only apply the coatings in a non-selective manner.

Before beginning alterations, Matt wants to understand the selective coating market.

Matt’s Solution

Matt spoke with Angus, VP R&D of PDA-D’s parent firm. Angus suggested Matt engage me to provide the market research. Matt followed his advice.

Market research tasks

  • My first task is to build a list of 120 well-informed people in the selective, conformal coating market.
  • Second task is to chose, at random, people on the list and cold-call them.
    All respondents will hear the following phrase. “My client is working on an innovative conformal coating system. They have been able to apply selective, conformal coatings with excellent thickness control.”
  • Third task is to analyze data collected during the calls. For statistical significance, I used the Central Limit Theorem1 in the analysis. 

Executive Summary: Customers’ Feedback and Market Dynamics in the Selective Conformal Coating Market

Thirty-one respondents entered into deep interviews with me

None saw value in the client’s product concept

Why?

Most manufacturers in the printed circuit assembly industry are small < $10M/yr.

In US alone, >700 PCA firms. Majority are privately held firms.

They compete on price, and proximity to their customers.

“George, our life cycle cost per board is now in the range of 15 cents to 20 cents per board. We have a target to bring that down to a dime. Less expensive machines — lower present value of capital — could move the meter down there.
There are two manufacturers of selective, conformal coating machines out there, PVA and Nordson. They own the market. There is no way we would switch from them for better thickness control.
     Electronics Reliability Engineer … DaimierChrylser

Printed circuit assembly industry divides into 3 classes

  • Class I and Class II PCAs are not conformally-coated
    Class I: Ordinary products — Toys, TV remotes
    Class II: High tech, low reliability — Most consumer electronics

“Engineers hate putting on conformal coating. My job is to end coating.”
     Materials Technology Mgr., … Visteon

“Conformal coating is an afterthought in board design. You can avoid using it. Don’t put certain components too close to each other.”
     Head, Equipment Partnership … Dow Corning

Class III PCAs may use selective, conformal coating
     Endusers value high reliability and durability

Endusers mentioned by respondents
     Car owners, aerospace, military, medical, owners of long warranty consumer products –
        e.g., smoke detectors, air conditioners.

“(In manufacturing) we are only responsible for the manufacturing costs. It’s the people who make the risk assessment (of external costs) on whether to coat a specific board. If the board fails because it wasn’t coated — it wasn’t our decision.”
     Conformal coating expert — Delphi Delco Electronics

Some competitors do selective, conformal coating without a machine.

Small firms use traditional dip coating and masking. They depend on the skills of experienced workers for manufacture of Class I and II.

Even for Class III

“We mask and hand spray urethane coatings. Boeing and Hughes are customers.”
     Technical Mgr., … Procoat

Outcomes

Marc shut down work on developing a selective conformal coating machine.

Six months later, Matt left PCA-D to join a major firm.

One year later, Marc’s parent firm sold PCA-D to a competitor

Lesson Learned

Your product concept has no competitive advantage? Don’t be headstrong and bring a knife to a gun fight.

Footnote

Central Limit Theorem