Customer centric product development

Content

1. Introduction

2. Situation analysis in reference to product development

3. Improvement ideas in reference to product development
3.1. Product development committee
3.2. Customer requirements
3.3. Requirement specification
3.4. Competitor analysis
3.5. Kick-off-Meeting – KOM
3.6. Project management
3.7. FMEA

4. Implementation and maintenance of the new process

5. Bibliography
5.1. Books
5.2. Internet

1. Introduction

Each business should have one major focus to be able to develop and satisfy the market needs. Obviously this focus is the customer. It does not matter who the customer is defined as he/she has to be defined for each company in a different way. The main thing is that all efforts are addressed to the customer. Every company sells products or services to customers so from a quality assurance point of view it is crucial to develop products in reference to market needs or customer needs respectively. This is the focus for the assignment. A general guideline for an efficient product development process should be created with the overall objective – customer centric product development combined with an improved internal workflow.

Anderson et al (2006, p. 1) states that customer value proposition is one of the most widely used terms in business in recent years. So it is important that a company is able to help customers understand the superior value of the products or service offered. Under pressure to keep costs down, customers may only look at the price and so it is important to think about the customer value proposition but also the comparison to the competitors of a specific market environment. This should flow into this assignment as well. Another problem of product development is that in many companies it is rather influenced by opinions of different sales people then by facts and figures.

2. Situation analysis in reference to product development

According Annacchino (2007, p. 101) a lot of companies tend to make a mistake at the product definition step, so that the customer is not really involved in the product development process. In reference to the definition of customer-defined needs there are different ways:

- A company can use direct customer surveys to solicit feedback and to obtain information in a direct manner.
- Another way is a focused group discussion which allows multiple-person input and prompted discussion to generate ideas.
- A third possibility is a suggestion system and communication platform for customers and stakeholders.
- Probably the most efficient way of improvements or even new product developments is to analyse customer complaints.

Cooper (2002, pp. 22-3) believes that the typical failures of a product are insufficient market research, technical problems, too less marketing expenses and bad timing. In reference to the timing there is very often a problem that the product launch is too early or too late. This is caused through the change of the buyer behaviour as the development took too long.

Ehrlenspiel (1995, p. 490) states as well that the condition for a successful market launch is the product planning (product development process) and the customer-oriented approach. One basic question has to be which problem does the customer have and how a company can solve that problem.

In many companies the product development process is driven very short-term oriented. Sales people insist on a product and the product development department begins with the development of that specific product. The problem of such a process is that on the one hand there is no project management behind which causes a lot of products which are not developed. There are a lot of products in the pipeline and no finish of the product development is planned which influences the time to market as well. If there is a potential order for a non-developed product the product will be sold which can cause complaints as the product is not developed at that moment. On the other hand there are a lot of development loops which cause a waste of time, resources and therewith money. With this assignment a possible process of customer centricity and efficient internal processes should be created on the basis of customer requirements as well as target prices.

3. Improvement ideas in reference to product development

As mentioned in the introduction this should be a praxis oriented guideline for customer centric product development with an efficient execution internally. From an author’s point of view customer centricity is really important however it is as important to secure the daily practise of the process. Out of the practical experience of the author it does not make any sense to establish a well-prepared process from a theoretical point of view if the people involved in the process are not able to fulfil that process.

3.1. Product development committee

The first stage of the product development should be the definition of the customer requirements. An organisation can arrange two annual product development committee meetings in which certain sales people, marketing department, purchasing dept., technical dept., the product manager and the CEO will attend. At this meeting potential products will be discussed and aligned to the strategy. If the product does not fit to the strategy it will not be developed. The output of the committee should be approximately three products which should be developed in the next six months and the committee defines a priority for each product.

3.2. Customer requirements

One crucial point in reference to a customer centric product development is the collection of customer requirements. This should be done in an extensive way to minimise the amount of development loops. If this point is not done in a deep and thorough way there will be difficulties as there always arise new requirements and therefore the whole process has to be started from the beginning. So in the first step the collection of customer requirements has to be done. This takes place through the product development committee as they have the direct contact to the market. Following points have to be considered:

- Which is the target group of the specific product?
- Which are the MUST-have and which are the NICE-to have requirements?
- Which are the buyer’s decisions in reference to the product?
- What is the target price of the product from a production cost point of view?
- Which amounts of pieces can be sold within the first three years (forecast)?
- What are the USP’s of the product?
- What can be disadvantages of the product?
- Which norms and certifications are relevant and necessary?

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