MUY691

New Product Development

Identifying Customer
Needs

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 Product Development Process
Concept System-Level Detail Testing and Production
Planning
Development Design Design Refinement Ramp-Up

Mission Concept System Spec Critical Design Production

Approval Review Review Review Approval

Mission Development
Statement Identify Establish Generate Select Test Set Plan Plan
Customer Target Product Product Product Final Downstream
Needs Specifications Concepts Concept(s) Concept(s) Specifications Development

Analysis of customer needs begins the development process.

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 User Innovation Example:
Auvi-Q Epinephrine Injector

EpiPen Auvi-Q
Includes Evan and Eric Edwards
Voice
Instructions
GoodGrips Angled
Measuring Cup
 The goals

§ Ensure that the product is focused on customer needs

§ Identify latent or hidden needs as well as explicit needs
§ Provide a fact base for justifying the product specifications
§ Create an archival record of the needs activity of the
development process
§ Ensure that no critical customer need is missed or forgotten
§ Develop a common understanding of customer needs
among members of the development team

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 Needs vs. Specifications

§ Needs (attributes, requirement) - largely independent of

any particular product we might develop; solution neutral
and not specific to the concept we eventually choose to
follow. A team should be able to identify customer needs
without knowing if or how it will finally address those
needs
§ Specifications - depend on the concept we select. The
specifications for the product depending on what is
technically and economically feasible and on what our
competitors offer in the marketplace, as well as on
customer needs.
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A Classification of Customer Needs
• Easy for customers to express
• Widely known and
Explicit understood
• Likely to be already fulfilled

• Easy for customers to express

Unfulfilled • Known to be difficult to
address
• Generally, not fulfilled

• Hard for customers to

Latent express
• Not yet widely understood
• Currently unaddressed

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 Latent Needs

Latent needs are those not yet widely recognized by

most customers and not yet addressed by existing
products. The needs exist, and if fulfilled, would
result in greater customer satisfaction, yet they
remain largely unknown

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Steve Jobs was interviewed by Inc. editors George Gendron and Bo Burlingham.

INC.: Where do great products come from?

JOBS: I think really great products come from melding two points of view—the technology point of view and the
customer point of view. You need both. You can't just ask customers what they want and then try to give that to them.
By the time you get it built, they'll want something new. It took us three years to build the NeXT computer. If we'd
given customers what they said they wanted, we'd have built a computer they'd have been happy with a year after we
spoke to them—not something they'd want now.

INC.: You mean the technology is changing too fast.

JOBS: Yeah, and customers can't anticipate what the technology can do. They won't ask for things that they think are
impossible. But the technology may be ahead of them. If you happen to mention something, they'll say, "Of course, I'll
take that. Do you mean I can have that, too?" It sounds logical to ask customers what they want and then give it to
them. But they rarely wind up getting what they really want that way.

INC.: It's got to be equally dangerous to focus too much on the technology.
JOBS: Oh, sure. You can get into just as much trouble by going into the technology lab and asking your engineers,
"OK, what can you do for me today?" That rarely leads to a product that customers want or to one that you're very
proud of building when you get done. You have to merge these points of view, and you have to do it in an interactive
way over a period of time—which doesn't mean a week. It takes a long time to pull out of customers what they really
want, and it takes a long time to pull out of technology what it can really give.

“Customers don’t know

what they want.”
Reference: Inc. Magazine 1989 interview: http://www.inc.com/magazine/19890401/5602.html

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Customer Needs Analysis: Process Steps
1. Define the Scope
– Mission statement
– Stakeholders
2. Gather Information
– Interviews
– Focus groups
– Observation
3. Interpret Customer Data
– Write need statements
– Organize in a hierarchy
– Identify latent needs
4. Quantify Relative Importance
– Focus on the trade-offs
5. Reflect on the Process
– Continuous improvement
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Customer Needs Example:
Nest Learning Thermostat

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 Mission Statement
Product Description
•A programmable thermostat for residential use
Benefit Proposition
•Simple to use, attractive, and saves energy
Key Business Goals
•Product introduced in Q4
•50% gross margin
•10% share of replacement thermostat market in 4 years
Primary Market
•Residential consumer
Secondary Markets
•Residential heating, ventilation, and air conditioning contractors
Assumptions
•Replacement for an existing thermostat
•Compatible with most existing systems and wiring
Stakeholders
•User, Retailer, Sales force, Service center, Production, Legal
department
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2. Gather Information

§ Interview

§ Focus groups

§ Observing the product in use

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 How Many Customers?
100

Percent of Needs Identified 80

60
One-on-One Interviews (1 hour)
Focus Groups (2 hours)
40

20

0
0 1 2 3 4 5 6 7 8 9 10
Number of Respondents or Groups
From: Griffin, Abbie and John R. Hauser. “The Voice of the Customer”,
Marketing Science. vol. 12, no. 1, Winter 1993.

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 Customer Needs and Markets

Mainstream Customers

Market Size

Lead/Extreme Users

Common Special
Specificity of Needs
• Lead or extreme users may experience needs more strongly than others.
• Customers with specific needs may be in small market segments, but their needs
may indicate important directions for larger markets.

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Customer selection matrix for a
thermostat project

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The Art of Eliciting Customer Needs Data

§ When and why do you use this type of product?

§ Walk us through a typical session using the
product.
§ What do you like about the existing products?
§ What do you dislike about the existing products?
§ What issues do you consider when purchasing the
product?
§ What improvements would you make to the
product?

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The Art of Eliciting Customer Needs Data

Some general hints for effective interaction with the

customers

§ Go with the flow

§ Use visual stimuli
§ Suppress preconceived hypotheses about the product
technology
§ Have the customer demonstrate the product and/or typical
tasks related to the product
§ Be alert for surprises and the expression of latent needs
§ Watch for nonverbal information
§ Data privacy
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Documenting Interactions with Customers

§ Audio recording
§ Notes
§ Video recording
§ Still photography

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2. Interpret Raw Data in Terms of
Customer Needs
Needs Statement - Needs Statement -
Guideline Customer Statement
Right Wrong
“What” not I would like my iPhone to The thermostat can be The thermostat is
“How” adjust my thermostat. controlled remotely accompanied by a
without requiring a special downloadable iPhone app.
device.

Specificity I have different heating and The thermostat can control The thermostat is versatile.
cooling systems. separate heating and
cooling systems.

Positive not I get tired of standing in front The thermostat can be The thermostat does not
Negative of my thermostat to program programmed from a require me to stand in front
it. comfortable position. of it for programming.

An Attribute of I have to manually override The thermostat An occupant’s presence

the Product the program if I’m home when automatically responds to triggers the thermostat to
I shouldn’t be. an occupant’s presence. automatically change
modes.

Avoid “Must” and I’m worried about how secure The thermostat controls are The thermostat must be
“Should” my thermostat would be if it secure from unauthorized secure from unauthorized
were accessible online. access. access.

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Five Guidelines for Writing Needs Statements
 3. Organize the Needs into a Hierarchy
** The thermostat is easy to install. ** The thermostat controls are precise.
*** The thermostat works with my existing heating and/or cooling system. ** The thermostat maintains temperature accurately.
** The thermostat installation is an easy do-it-yourself project for a novice. The thermostat minimizes unintended variability in temperature.
** The thermostat can control separate heating and cooling systems. The thermostat allows temperatures to be specified precisely.
* The thermostat can be installed without special tools.
The thermostat is easily purchased. *** The thermostat is smart.
Secondary Needs *** The thermostat can adjust temperature during the day according to
* The thermostat lasts a long time.
Latent Needs user preferences.
The thermostat is safe to bump into. ** The thermostat can be programmed to a precise schedule.
The thermostat resists dirt and dust. ! The thermostat automatically responds to occupancy.
! The thermostat exterior surfaces do not fade or discolor over time. ! The thermostat prevents pipes from freezing in cold months.
The thermostat is recyclable at end of life. The thermostat alerts the user when a problem arises.
Primary Needs The thermostat does not require users to set time or date.
*** The thermostat is easy to use. The thermostat adjusts automatically to the seasons.
** The thermostat user interaction is easy to understand. Importance
* The thermostat is easy to learn to use. Ratings * The thermostat is personal.
* The thermostat does not place significant demands on user memory. * The thermostat accommodates different user preferences for comfort.
! The thermostat can be programmed from a comfortable position. The thermostat accommodates different user preferences for energy
The thermostat can be controlled remotely without requiring a special efficiency.
device. The thermostat controls are secure from unauthorized access.
! The thermostat works pretty well right out of the box with no set up. The thermostat provides useful information.
The thermostat’s behavior is easy to change.
The thermostat is easy to control manually. *** The thermostat is a good investment.
The thermostat display is easy to read from a distance. ** The thermostat is affordable to purchase.
The thermostat display can be read clearly in all conditions. *** The thermostat saves energy.
The thermostat’s controls accommodate users with limited dexterity. * The thermostat tracks cost savings.
The thermostat accommodates different conventions for temperature
scales. ** The thermostat is reliable.
The thermostat accommodates different preferences for representing time The thermostat does not require replacing batteries.
and date. The thermostat works normally when electric power is suspended.

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Complete List of Customer Needs
 3. Organize the Needs into a Hierarchy

§ Print or write each needs statement on a separate

card or self-stick note
§ Eliminate redundant statements
§ Group the cards according to the similarity of the
needs they express
§ For each group, choose a label
§ Consider creating supergroups consisting of two to
five groups
§ Review and edit the organized needs statements
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4. Establish the Relative Importance
of the Needs

Example importance survey (partial).

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 5. Reflect on the Results and the Process
§ Have we interacted with all of the important types of customers in our
target market?
§ Are we able to see beyond needs related only to existing products to
capture the latent needs of our target customers?
§ Are there areas of investigation we should pursue in follow-up
interviews or surveys?
§ Which of the customers we spoke to would be good participants in our
ongoing development efforts?
§ What do we know now that we didn’t know when we started? Are we
surprised by any of the needs?
§ Did we involve everyone within our own organization who needs to
deeply understand customer needs?
§ How might we improve the process in future efforts?
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