Lakhasly

Management science in the era of smart consumer
products: challenges and research perspectives
Herbert Dawid1 · Reinhold Decker2 · Thomas Hermann3 ·
Hermann Jahnke4 · Wilhelm Klat5 · Rolf König6 ·
Christian Stummer7
The Author(s) 2016. This article is published with open access at Springerlink.com
Abstract Smart products not only provide novel functionalities, but also may establish new business models, markets, or distribution channels, strengthen relationships
with consumers, and/or add smart remote services. While many technical obstacles
of such products have already been overcome, the broad market dissemination of
smart products still poses some vital managerial challenges for decision makers. In
this paper, we outline the technical potential and future trends of smart consumer
products, discuss economic challenges in four scopes, namely, preference-based new
product development, market analysis, supply chain design, and industry development, and, in particular, we highlight research perspectives for management science
in this promising field.
Keywords Smart products · Management science · Economic challenges · Research
perspectives
B Christian Stummer
[email protected]
1 Chair of Economic Theory and Computational Economics, Bielefeld University,
Universitaetsstr. 25, 33615 Bielefeld, Germany
2 Chair of Marketing, Bielefeld University, Universitaetsstr. 25, 33615 Bielefeld, Germany
3 Ambient Intelligence Group, Cluster of Excellence - Cognitive Interaction Technology (CITEC),
Bielefeld University, Inspiration 1, 33619 Bielefeld, Germany
4 Chair of Management Accounting and Operations Management, Bielefeld University,
Universitaetsstr. 25, 33615 Bielefeld, Germany
5 Institute for Technological Innovation, Market Development, and Entrepreneurship (iTIME),
Bielefeld University, Universitaetsstr. 25, 33615 Bielefeld, Germany
6 Chair of Business Taxation, Bielefeld University, Universitaetsstr. 25, 33615 Bielefeld, Germany
7 Chair of Innovation and Technology Management, Bielefeld University, Universitaetsstr. 25,
33615 Bielefeld, Germany
123
H. Dawid et al.
1 Introduction
Smart homes, smart cars, or smart cities have been part of popular visions of the future
for several decades. None of them have been fully realized yet, but substantial (technological) progress has been achieved and prototypes of smart homes as well as smart
cars have already been implemented. Moreover, we have witnessed successful market
entries of smart products such as Nest’s thermostats, Oral-B’s Bluetooth toothbrush,
Big Ass ceiling fans with SenseME technology, or Philips’ Hue lighting. They show
how traditional and well-established consumer products can be transformed into smart
products by integrating intelligence-generating technologies that equip them with abilities of environment sensing, data processing, information sharing, reasoning, and/or
actuation. While the industry for products which assist and/or act autonomously is
still in its infancy, it has already become rather obvious that smart products have the
potential to revolutionize their respective markets and it is widely expected that their
era is set to start in the near future. A recent discussion on how smart products are
transforming competition is provided by Porter and Heppelmann (2014). Gartner correspondingly expects a market that will be worth $69.5 billion in 2015 and $263 billion
by 2020 (Rivera and van der Meulen 2014).
In the following, smart products are defined as consumer products that are equipped
with intelligence-generating technologies including (i)sensors and/or actuation, either
to gather data from the environment or to use the data to change the environment, (ii)
computing power for data analysis, and (iii) optional interfaces to exchange information with their environment. It is noteworthy that smart products are often referred to
as “intelligent products”, i.e., both terms are used interchangeably (e.g., Meyer et al.
2009).
While companies, in most cases, loose direct access to traditional products after
their adoption by the customers, the data captured and shared by smart products during
product usage stretches the opportunities for companies far beyond the point of sale
(Mayer 2010; Körling 2012). Smart products have capabilities for monitoring, controlling, and/or optimization and, ultimately, may even work with complete autonomy
based on the vast quantities of data now available (Porter and Heppelmann 2015). Thus,
smart products provide opportunities such as creating innovative products (Rijsdijk
et al. 2007), applying new communication and business models (Maass and Varshney 2008), strengthening relationships with consumers (Mayer et al. 2011), reducing
the information asymmetry between consumers and manufacturers (Bohn et al. 2004),
establishing new markets (Rijsdijk and Hultink 2013), or adding smart remote services
to a smart product (Allmendinger and Lombreglia 2005; Yang et al. 2009).
While many technical obstacles

Management science in the era of smart consumer
products: challenges and research perspectives
Herbert Dawid1 · Reinhold Decker2 · Thomas Hermann3 ·
Hermann Jahnke4 · Wilhelm Klat5 · Rolf König6 ·
Christian Stummer7
© The Author(s) 2016. This article is published with open access at Springerlink.com
Abstract Smart products not only provide novel functionalities, but also may establish new business models, markets, or distribution channels, strengthen relationships
with consumers, and/or add smart remote services. While many technical obstacles
of such products have already been overcome, the broad market dissemination of
smart products still poses some vital managerial challenges for decision makers. In
this paper, we outline the technical potential and future trends of smart consumer
products, discuss economic challenges in four scopes, namely, preference-based new
product development, market analysis, supply chain design, and industry development, and, in particular, we highlight research perspectives for management science
in this promising field.
Keywords Smart products · Management science · Economic challenges · Research
perspectives
B Christian Stummer
[email protected]
1 Chair of Economic Theory and Computational Economics, Bielefeld University,
Universitaetsstr. 25, 33615 Bielefeld, Germany
2 Chair of Marketing, Bielefeld University, Universitaetsstr. 25, 33615 Bielefeld, Germany
3 Ambient Intelligence Group, Cluster of Excellence - Cognitive Interaction Technology (CITEC),
Bielefeld University, Inspiration 1, 33619 Bielefeld, Germany
4 Chair of Management Accounting and Operations Management, Bielefeld University,
Universitaetsstr. 25, 33615 Bielefeld, Germany
5 Institute for Technological Innovation, Market Development, and Entrepreneurship (iTIME),
Bielefeld University, Universitaetsstr. 25, 33615 Bielefeld, Germany
6 Chair of Business Taxation, Bielefeld University, Universitaetsstr. 25, 33615 Bielefeld, Germany
7 Chair of Innovation and Technology Management, Bielefeld University, Universitaetsstr. 25,
33615 Bielefeld, Germany
123
H. Dawid et al.
1 Introduction
Smart homes, smart cars, or smart cities have been part of popular visions of the future
for several decades. None of them have been fully realized yet, but substantial (technological) progress has been achieved and prototypes of smart homes as well as smart
cars have already been implemented. Moreover, we have witnessed successful market
entries of smart products such as Nest’s thermostats, Oral-B’s Bluetooth toothbrush,
Big Ass ceiling fans with SenseME technology, or Philips’ Hue lighting. They show
how traditional and well-established consumer products can be transformed into smart
products by integrating intelligence-generating technologies that equip them with abilities of environment sensing, data processing, information sharing, reasoning, and/or
actuation. While the industry for products which assist and/or act autonomously is
still in its infancy, it has already become rather obvious that smart products have the
potential to revolutionize their respective markets and it is widely expected that their
era is set to start in the near future. A recent discussion on how smart products are
transforming competition is provided by Porter and Heppelmann (2014). Gartner correspondingly expects a market that will be worth $69.5 billion in 2015 and $263 billion
by 2020 (Rivera and van der Meulen 2014).
In the following, smart products are defined as consumer products that are equipped
with intelligence-generating technologies including (i)sensors and/or actuation, either
to gather data from the environment or to use the data to change the environment, (ii)
computing power for data analysis, and (iii) optional interfaces to exchange information with their environment. It is noteworthy that smart products are often referred to
as “intelligent products”, i.e., both terms are used interchangeably (e.g., Meyer et al.
2009).
While companies, in most cases, loose direct access to traditional products after
their adoption by the customers, the data captured and shared by smart products during
product usage stretches the opportunities for companies far beyond the point of sale
(Mayer 2010; Körling 2012). Smart products have capabilities for monitoring, controlling, and/or optimization and, ultimately, may even work with complete autonomy
based on the vast quantities of data now available (Porter and Heppelmann 2015). Thus,
smart products provide opportunities such as creating innovative products (Rijsdijk
et al. 2007), applying new communication and business models (Maass and Varshney 2008), strengthening relationships with consumers (Mayer et al. 2011), reducing
the information asymmetry between consumers and manufacturers (Bohn et al. 2004),
establishing new markets (Rijsdijk and Hultink 2013), or adding smart remote services
to a smart product (Allmendinger and Lombreglia 2005; Yang et al. 2009).
While many technical obstacles