*Corresponding author. Tel.: #358-5-6212627; fax: #358-5-6212667.

E-mail address: hkn@lut." (H. KaK rkkaK inen).

Int. J. Production Economics 69 (2001) 161}176

Ten tools for customer-driven product development inindustrial companies

Hannu KaK rkkaK inen!,*, Petteri Piippo", Markku Tuominen!

!Department of Industrial Engineering and Management, Lappeenranta University of Technology, Box 20, 53851 Lappeenranta, Finland"R&D Center, Valtra Inc., Jyva( skyla( , Finland

Received 31 March 1998; accepted 29 February 2000

Abstract

Need assessment is a critical success factor of product and business development in all companies. In this paper wepresent 10 tools for customer-driven product and business development for companies producing industrial products.The tools help to clarify the needs and objectives of customers and to ensure that customer needs are considered whenmaking development decisions in the di!erent phases of product development. These tools were developed in a two-yearproject with small and medium-sized companies. In our paper we describe important requirements for the developmentof the tool set, give a short description of the tools and their usability, and introduce di!erent practical ways to supportthe selection of tools. ( 2001 Elsevier Science B.V. All rights reserved.

Keywords: Product development; Innovation management; Need assessment tools; Customer orientation; Industrial products

1. Introduction

Successful product development demandsprofound knowledge of customers and their needs.In this paper we present a set of 10 tools for cus-tomer-driven product and business developmentfor companies producing industrial products. Thedeveloped tools help to assess customer's needs andcompetitive situation, to determine targets forproduct concepts, and to manage the di!erentphases of product development ensuring the com-petitiveness of planned product concepts. Byproduct development we mean here all theconcrete development and management activities

to accomplish new or improved products. The em-phasis of our paper is in the management of theearly phases of product development.

Many companies wish or claim to be customeroriented. Customer-driven product development is,however, a demanding and di$cult task. The voiceof the customer should be taken into account in allthe phases of product development, both in de"ni-tion and design phases [1]. Therefore, customer-driven product development requires propercustomer need assessment, which has been tailoredfor this purpose.

Need assessment for product development isa systematic activity of gathering and clarifyingcustomer needs, determining product character-istics based on the clari"ed needs and ensuringthat all the important needs will be ful"lled.The links between need assessment and product

0925-5273/01/$ - see front matter ( 2001 Elsevier Science B.V. All rights reserved.PII: S 0 9 2 5 - 5 2 7 3 ( 0 0 ) 0 0 0 3 0 - X

development are analyzed in more detail inSection 2.

Need assessment is a critical success factor ofproduct and business development [2}6]. In indus-trial markets suppliers can have a signi"cant im-pact on their customers' performance. Customersrequire increasingly more bene"ts and an activerole from their suppliers. For these reasons, sup-pliers cannot be content to do no more than whatcustomers demand in their orders, but they mustalso carefully assess their customers' present andfuture needs. Increasingly, intensive internationalcompetition emphasizes the importance of carefulcustomer need assessment.

Especially in manufacturing industries com-panies can form long business chains. A businesschain consists of all the companies from whichparts, machines and services needed for the "nalproducts are delivered, including also customer'sand company's important stakeholders, the opin-ions and requirements of which may a!ect thedevelopment of a product. In this paper, we gener-ally use the word &company' to refer to an industrialorganization that develops and supplies productsfor its customers.

Customers' needs as well as the competitive situ-ation and the company's goals must be clari"ed inthe very early phases of product development. Inthis way, the product development can be produc-tive and make the greatest possible contribution forthe whole company. Careful, systematic need as-sessment helps to focus development e!orts andreduce the need for future design changes. Based onthe results of careful need assessment, product de-velopment can produce more competitive productsthat ful"ll important customer needs better thancompetitors or provide totally new bene"ts forcustomers.

In spite of the importance of need assessment forproduct development, need assessment is often im-plemented in an unsystematic and unorganizedway in companies producing industrial products.This is partly a consequence of a lack of propertools and lack of information about using them.According to Holt et al. [4] methods for needassessment are poorly developed compared tomore technical tools for product design. Needassessment in industrial markets is carried out util-

izing mainly existing relations with customers dur-ing every day contacts [4]. Free-form discussionsare one of the most common ways to assess cus-tomer needs in industrial companies. Some com-panies, however, use guidelines and outlines tomake such discussion more e!ective. Pilot projectswith customers are also an important way to ana-lyze customers' needs for industrial products. Still,there is a strong need for systematic need assess-ment methods in the product development of in-dustrial companies.

Many commonly used need assessment methodshave originated from statistics and market re-search. Urban and Hauser [7] describe how di!er-ent market research methods can be utilized inproduct development. In many cases, traditionalmarket research does not provide su$cient under-standing of user needs for industrial product devel-opment [4]. Many traditional market researchmethods are more aimed for marketing and con-sumer products than product development of in-dustrial products and they are not so suitable, assuch, for industrial product need assessment.

The purpose of this paper is to introduce needassessment tools developed particularly for com-panies producing industrial products. Our set oftools was developed with small and medium-sizedcompanies producing industrial products in a two-year Technology Development Center Finland(TEKES) funded project between 1993 and 1995.

The goal was to develop a set of easy-to-usetools, considering the characteristics of industrialproduct development and important need assess-ment-related problems of industrial companies, tohelp companies to clarify customers' needs forproduct development and to manage product de-velopment ensuring that development e!orts aim atful"lling these needs. The set of tools was aimed toincrease the e!ectiveness of product developmentand promote the co-operation between companiesand their customers.

Useful methods for need assessment and productplanning were screened from the literature andboth Finnish and foreign companies as well asuniversities. Potential methods were tested andevaluated. The selected methods were further de-veloped to better support customer-driven productdevelopment in industrial companies. The result

162 H. Ka( rkka( inen et al. / Int. J. Production Economics 69 (2001) 161}176

Fig. 1. The links between customer need assessment, productdevelopment processes and strategic planning processes [8].

was a set of practical tools. The set of tools wasdescribed in a Finnish language manual [8].

In this paper we present the developed set oftools, give a short description of the tools and theirusability, and introduce di!erent practical ways tosupport the selection of right tools. In Section 2 wereview earlier need assessment and customer-driven product development research and describea developed need assessment process. In Sections3 and 4 we analyze the characteristics of needassessment for developing industrial products anddetermine requirements for need assessment tools.Section 5 describes the developed set of tools andindividual tools. Section 6 gives advice for the selec-tion of tools and Section 7 describes our "ndings onthe bene"ts and limitations of the tools.

2. Customer-driven product development and needassessment

There are many links between need assessmentand product development. According to Holt et al.[4] (some of the need assessment pioneers in Euro-pe), the starting point for product development, aninnovative idea, originates from the fusion betweencustomers' needs and technological possibilities.Muramatsu et al. [9] have analyzed need assess-ment and information behavior in product devel-opment based on the Holt's fusion model andfurther developed it. People in di!erent depart-ments of a company emphasize di!erent factors inproduct development. The R&D department em-phasizes design reviews and quality assurance andthey tend to give priority to technological problemsolving [9]. People in marketing and sales are quiteoften very interested in short-term customer satis-faction and do not give adequate attention to tech-nical product characteristics. Tuominen et al. [10]have used the fusion model to study innovationmanagement systems in Finnish and Japanese com-panies. According to this study there should bea clearly stated customer need assessment phase ortask as well as a fusion task in the innovationmanagement process to accomplish good fusionbetween customers' needs and technology.

According to Muramatsu et al. [9] customerneed assessment is a series of procedures and

methods to perceive, estimate and adopt the cus-tomers' needs to determine product characteristics.They propose a model with four fusion processesbetween marketing, merchandising, technical andmanufacturing characteristics.

Links between product development and needassessment can be studied analytically when weexamine both as a process. Customer need assess-ment is a systematic process, which gives the meansto clarify customers' needs and to ensure that thewhole company works for satisfying the identi"edneeds. The purpose of the customer need assess-ment process is to ensure that customer needs di-rect all the stages of product development. Forexample, Holt et al. [4] have developed a model forneed assessment process including "ve phases. Theirprocess covers phases from need identi"cation up toupdating and revising the determined needs.

We have divided need assessment into sixphases shown on the left side of Fig. 1. Our need

H. Ka( rkka( inen et al. / Int. J. Production Economics 69 (2001) 161}176 163

assessment process was developed on the basis ofour companies' practical requirements of clearnessand easiness. The process starts by de"ning thestarting situation of a company and the goals of theneed assessment. This is essential in order to be ableto choose the right tools and the right extent for theneed assessment activities. Then the customerneeds data is gathered from di!erent sources. Sincethis data is seldom very precise and in a clear form,it must be structured illustratively and analyzed.Besides mere customer data, also data concerningthe competitive situation must be gathered. All thisinformation enables the company to de"ne devel-opment targets for product concepts and attributes.The targets must be coherent with the company'sown objectives and strategies. Finally, productdevelopment must be managed to achieve the de-"ned targets.

Many researchers [7,11}14] have proposedmodels with 5}10 phases for product development.To illustrate the links between product develop-ment and need assessment we have utilized a simpleproduct development model based on Jaakkola'sand Tunkelo's model with "ve actual developmentphases. This process is described on the right side inFig. 1. Also the planning phase of product develop-ment strategies (in the strategic planning box) canbe seen as a part of the product development pro-cess. In a broad sense, both the product develop-ment and need assessment processes can be seen asa part of product development.

For need assessment to be successful one musttake into consideration its links to product devel-opment and strategic planning. Only then can needassessment be useful to the whole company.Fig. 1 describes these important links. The strategicplanning process and its results should direct theimplementation of both product development andcustomer need assessment. On the other hand, thepossibilities and challenges observed during prod-uct development and customer need assessmenthave to be taken into consideration also in strategicplanning.

The speci"c goals for product development pro-jects are set on the basis of the strategies. Importantmatters in the goal setting of the product develop-ment projects to be taken into account are timeschedule, available resources and extent of develop-

mental activities. The goals of product develop-ment also de"ne the starting situation of thecustomer need assessment and form a basis for theproject. Strategic planning is thus very important,but it is not automatically paid attention to. If cleargoals are not known before starting the customerneed assessment and product development, there isa danger of performing wrong activities. All thepeople involved in the development activities haveto understand the goals clearly and similarly and tokeep them in mind during the whole developmentprocess.

Customer need assessment and product develop-ment are tightly connected. There has to be con-tinuous and direct interaction between theactivities of both areas and between the people whoimplement the activities. Need assessmentprovides information about the customer needs,which is used in implementing the product develop-ment.

The emphasis of the customer need assessmentactivities should be in the beginning of the productdevelopment process in order to be able to concen-trate on the essential matters in the actual productdevelopment from the very beginning. The resultsachieved in the need assessment may resultin launching totally new product developmentprojects.

Important goals for development projects can bechosen and the concrete development targets canbe de"ned based on the information gained in needassessment. The targets set by the customers andthe competitive situation should direct the conceptplanning and evaluation, and the selection of theconcepts should be carried out systematically basedon the information produced in the customer needassessment. With the help of customer need assess-ment, the results of product development can bethoroughly evaluated in the di!erent stages of theprocess and also the success of the developed prod-uct can be predicted. After the product has beenlaunched into the market, customer need assess-ment is also needed to get out information aboutcustomer satisfaction and further developmentneeds. Continuous follow-up of achieving thetargets has to be performed when the product isalready in the market in order to able to improveand develop the product immediately.

164 H. Ka( rkka( inen et al. / Int. J. Production Economics 69 (2001) 161}176

For product development to get right and un-biased information about customer needs as fast aspossible, the customer need assessment and theproduct development have to be parallel processes.If the processes are carried out at the same time andin connection to each other, there is less danger forthe information concerning customer needs to getlost and data acquisition can be directed to servethe product development activities better.

The best way of ensuring a fast connection be-tween the customer need assessment and productdevelopment and the usefulness of the resultsachieved in the need assessment is to carry out thecustomer need assessment in a group. Thegroups should consist of the representatives fromdi!erent functions of the company and the cus-tomer that participate in the de"nition of newproducts, develop the products, or are a!ected bythem.

3. Customer-driven development of industrialproducts

Need assessment is a vital activity for both indus-trial and consumer product development. In both,customer needs, requirements, attitudes, values andexpectations must be clari"ed profoundly andproperly. The success of a company that producesindustrial products is a!ected by the well-being ofthe whole business chain that the company is partof. For this reason, one of the most important goalsof the company and its product development is tohelp its customers to increase their performance.For this task, the company needs profound know-ledge of its customers' needs and business environ-ment and tools to get this information.

In industrial markets there are often businesschains consisting of complex chains or networks ofsubsequent customers, customers' customers, sup-pliers and other stakeholders. The opinions andneeds of these should be carefully analyzed whencarrying out customer need assessment and makingproduct development decisions. This can o!era competitive edge when o!ering need-based solu-tions to customers. Companies are frequentlyexpected to customize their products to an indi-vidual customer's needs. They should not remain

passive but try to study possibilities to suggest newsolutions based on customer needs.

In order to be able to help their customers andget profound knowledge of customer needs indus-trial companies need to be in close co-operationwith their customers. Need information should beacquired from several persons and functions of thecustomer. In industrial markets many di!erent per-sons, often from di!erent functions of the purchas-ing company participate in the buying process andde"ne the requirements for the product to be pur-chased [15]. Because of the complexity of theindustrial products (see e.g. [16]), product develop-ment should have direct connections with cus-tomers and participate closely in need assessment.

Because of the di!erent characteristics of indus-trial and consumer markets, the means for needassessment di!er and there are di!erent require-ments for need assessment tools in the two markets.Many traditional market research methods havebeen originally developed for consumer marketsand they are not, as such, very useful in industrialmarkets. Below, we will describe why there is a needto further develop need assessment tools for indus-trial markets.

Industrial customers produce their own productswith the help of purchased products or use theseproducts as parts of their own products, which areo!ered forward. According to Kotler [15] the in-dustrial markets consist of all the individuals andorganizations that acquire goods and services to beused in the production of other products or servicesthat are sold, rented or supplied to others. Indus-trial customers have several characteristics that dif-fer signi"cantly from consumer customers'characteristics. Kotler [15] presents the followingtypical characteristics of industrial markets:

f fewer buyers,f larger buyers,f several buying in#uences,f professional purchasing,f close supplier}customer relationship.

In industrial markets there are normally fewer cus-tomers compared to consumer markets. Also theindustrial products and product development di!erfrom consumer products. According to a recent

H. Ka( rkka( inen et al. / Int. J. Production Economics 69 (2001) 161}176 165

study by Gri$n [16], industrial products are gener-ally more complex than consumer products andtheir development time is signi"cantly longer.

Because the markets, the products and productdevelopment have signi"cant di!erences in indus-trial and consumer sectors, it seems fair to thinkthat also customer need assessment activitiesshould take these di!erences into account. Still, it isby no means rare that industrial companies usecustomer need assessment methods which havebeen designed especially for consumer market needassessment and are not very well-suited for indus-trial need assessment. For instance, because thenumber of customers is small and the products andproduct requirements are complex, statisticalmethods are not always very suitable for the clari"-cation and thorough understanding of customerneeds in industrial markets.

Harari [17] has analyzed the problems of tradi-tional market research and its methods. Many ofthese problems are related to producing useful in-formation for product development. Traditionalmarket research mainly produces information ofpresent situation and it does not promote co-opera-tion with a company and its customers e!ectively.To be useful for need assessment in industrial busi-ness chains the tools should especially be able topromote co-operation between a company and itscustomers, systematically utilize the expertise of therepresentatives of the customers and the company,as well as clarify future needs.

According to research conducted by Gri$n [16]the best succeeding companies use signi"cantlymore qualitative market research tools than therest for product development. Business-to-businesscompanies use more tools (customer visits, beta sitetests), that produce qualitative data than consumercompanies. Also Mahajan and Wind [18] havestudied the use of new product development, espe-cially need assessment methods in the biggest USFortune 500 "rms. Twenty-four di!erent modelsand methods were cited by respondents froma sample of 338 respondents from 200 Fortune 500"rms [18]. According to their survey, Focus groupswas by far the most often used method in productdevelopment (68%), Limited rollout the second(42%) and Concept test the third (26%). Conjointanalysis was the sixth (15%) most cited method and

Quality Function Deployment eight (9%) mostcited method [18]. The major shortcomings of thetools mentioned by respondents were the long im-plementation time (for example QFD and Limitedrollouts) and the incapability of tools to capture thecomplexity of markets (for example conjoint analy-sis and focus groups). About 36% of the respon-dents suggested that new product developmentprocess could further bene"t from more formalapproaches.

Prior to the development of our need assessmenttool set, we interviewed more than 10 successfulFinnish companies producing industrial products(see [8,19]) screening common need assessmentproblems, which included for instance too few con-tacts between the company and the customer, anddizculties in communicating customer informationwithin the company (see Table 3). According to ourinterviews, many industrial companies in Finlandhave tried some traditional market research andneed assessment methods in product development.Many of these methods have not remained in con-tinuous use, because these methods have not beenuseful enough, they have been too di$cult, or theexpectations have been unrealistic.

Product development often has to exploit cus-tomer need information gathered for other thanproduct development purposes, e.g. marketing pur-poses. Product development should get as usefulinformation as possible for its own purposes inorder to be able to develop competitive productsfor industrial markets. For this reason, the above-mentioned characteristics and typical di!erenceshave to be considered carefully when planning cus-tomer need assessment activities for industrialproduct development.

Industrial products are usually purchased byprofessional buying people who consider a numberof di!erent criteria when making the buying deci-sions. They often have to acquire plenty of informa-tion from the industrial products and evaluate thedi!erent alternatives objectively. This is one reasonwhy the competitive situation has to be taken care-fully into account in customer-driven development.There are not many competitive assessment toolsespecially designed for product development pur-poses. To e!ectively focus development e!orts,product development needs information about

166 H. Ka( rkka( inen et al. / Int. J. Production Economics 69 (2001) 161}176

their and their competitors' relative competitivesituation on an interval scale in order to determineconcrete development targets.

4. Requirements for customer-driven productdevelopment tools in industrial business chains

In this section we present essential requirementsfor the development of a need assessment tool setfor companies in industrial business chains. Thesehave been derived from the need assessment pro-cess and its links to product development processand strategic management (Section 2) and the char-acteristics of industrial business chains, productsand product development. We also utilized theclari"ed common need assessment problems ofcompanies (see Section 6) when deriving the re-quirements. Even though not fully separable fromeach other, the requirements have been divided intogeneral requirements for the tool set, customer-re-lated requirements and company-related require-ments.

4.1. General requirements for the tool set

A starting point for developing the tools was to"nd ways to produce essential and useful informa-tion for product development of industrial com-panies. This should be done continuously andsystematically, not only as a single activity in thebeginning of the product development process. Theneed information should accumulate gradually inthe process. The tools should make this kind ofoperation possible.

The tools must support the gathering, organiz-ing, analyzing, and prioritizing of need information.They should also help to set practical targets forproduct concept development based on this ana-lyzed and prioritized need information and supportin achieving these targets. The tools should bedesigned to allow the resulting information fromthe earlier tools to be #exibly utilized in thesubsequent tools.

It should be possible to use the tools e$ciently ingroups because group work is a good way to pro-mote mutual understanding, communication andcommitment. Group work can essentially promote

the communication of need information within thecompany and particularly with the customers.By increasing the participation and interaction ofdi!erent persons it can also improve commitmentto decisions based on the results of using the toolsand guarantee good results.

The tools should also be able to handle system-atically information or expertise that is qualitativeand even intuitive. A signi"cant part of need-re-lated information is not very explicit, especially theinformation concerning trends, future needs andcompetitors. Still, it is very important to exploit thiskind of information.

The tools should be able to provide a commonlanguage. Di!erent persons in di!erent functionsand especially in di!erent companies often usea very di!erent language. This includes also thatdi!erent people may understand the same termsand words very di!erently. Communication insidethe company and with the customers can bepromoted signi"cantly with the right tools.

4.2. Customer-related requirements

Quite often in industrial companies, a rathersmall part of customers can be distinguished as keycustomers. Particularly the expertise of these keycustomers should be exploited carefully and theirneeds understood properly. A customer's real needscan be understood properly only when customer'sbusiness, business environment and objectives arecarefully understood. In order to achieve this,a regular, systematically organized and intensiveinteraction is needed. The achievement of the for-mer kind of intensive interaction should be sup-ported at least when assessing the most importantkey customers' needs.

If the suppliers wish to emphasize their activerole towards customers, supporting the co-opera-tion, trust, mutual understanding and commitmentto mutual goals are important considering thestandpoint of business chains. The customers' im-portant stakeholders, especially their customersand the product's end users, should be assessedcarefully. In this way, trends and future needs canbe predicted more easily and the active role of thesupplier be emphasized in product development.Also managing the large amount of complex and

H. Ka( rkka( inen et al. / Int. J. Production Economics 69 (2001) 161}176 167

controversial requirements from di!erent stake-holders in the business chain should be taken intoconsideration. Requirements that are derived fromremote stakeholders via customers to the companycan be very hard to trace without careful andsystematic analysis.

When the background for the customer's needs isproperly understood and documented, the needscan be better understood and the changes in needsand requirements more easily predicted. In addi-tion, the tools should also capture hidden andfuture needs and try to predict the situation atthe moment of a new product's launch.

There are not only one but several decision-makers whose opinions should be clari"ed whencarrying out need assessment concerning industrialcompanies. For example, buyer's opinions are nat-urally assessed during the every day selling opera-tions. Quite often there is, however, not too muchother customer need information than buyer in-formation for product development. The role ofbuyers and their opinions might be over-empha-sized even in long-term research and development.For this reason, the views of several functions ofindustrial customers like production, product de-velopment, marketing and corporate planningshould be clari"ed as well, when carrying out needassessment. It is important to clarify the preferencesof all the industrial customer's representatives in-#uencing the buying process, especially the prefer-ences of those persons and functions that are themost a!ected by the R&D decisions. The toolsshould be able to handle the possibly controversialopinions and demands of di!erent persons andfunctions, for example by getting a common, sharedview from all the customer's representativesinvolved.

4.3. Company-related requirements

There should be di!erent kinds of tools to beused in di!erent situations, depending e.g. on theobjectives, resources and time available for productdevelopment and need assessment. A too largenumber of available tools can, however, be con-fusing when selecting a suitable tool. The number oftools should be kept to a minimum, still coveringdi!erent kinds of situations and allowing the indus-

trial companies to solve their most essential needassessment related problems.

People carrying out need assessment should beable to step into a customer's role and listen care-fully to the customers. The need assessment toolsshould support this. In careful listening it is impor-tant to take into account and understand cus-tomer's background and values, map customer'sbusiness problems and opportunities, and to noticeunspoken concerns [20].

Customer need analysts often select and interpreta customer's comments, ideas and requirementsaccording to their own way of thinking. This canlead to the selection of less important signals andmisunderstandings. For this reason, it is importantto make the customers themselves to describe, or-ganize and select their most important require-ments. Also the competitors' and company'scompetitive position concerning the most impor-tant customer needs should be tried to be seen fromthe customer's point of view, which helps to setrealistic goals for product development.

Proper communication of customer need in-formation is challenging not only between the cus-tomers and the company, but also between thedi!erent departments of a company. The meaningof need information changes easily and a part of theinformation disappears.

A large representation from product develop-ment would be desirable in need assessment: inorder to get unbiased information about customerneeds in as useful form as possible, product devel-opment itself should participate in carrying outneed assessment in several stages of product devel-opment. Close interaction between the representa-tives of the customer and product development isfruitful in other ways, too: having the experts ofboth needs and solutions to interact together cane!ectively facilitate the achievement of innovativeresults.

5. Set of 10 tools for product development

In order to develop the tool set, informationabout presently used methods and tools in cus-tomer need assessment and new product develop-ment was collected from companies and

168 H. Ka( rkka( inen et al. / Int. J. Production Economics 69 (2001) 161}176

universities in Finland and several other countries.Also information about more general type of toolslike creative problem solving and group decisionmaking tools was gathered. After testing and evalu-ating their usefulness in solving the most importantproblems in industrial product need assessment weselected a set of promising methods. These methodswere further developed. They were tested "rst inter-nally and then in close co-operation with pilotcompanies and improved to "nally form a set of 10tools. The following table (Table 1) presents verybrie#y the goals of the tools in customer needassessment, the needed input information for theirsuccessful use and the most important outputinformation the users may expect.

The tools have been selected to cover the mostimportant phases in industrial customer need as-sessment process described above in the paper. Thisincludes planning of need assessment (tool 1),gathering (tools 2 and 3), organizing and analyzing(tools 4 and 5) and prioritizing (tools 6 and 7)customer needs and ensuring that customer needsreally direct the product development (tools 8}10).

The Need assessment outline helps industrialcompanies to plan their customer need assessmentaccording to the goals of product development andthe state of the present knowledge. When using theCreative group interview a group of company's andcustomer's representatives from di!erent depart-ments (marketing, production, product develop-ment, purchasing, corporate planning) workstogether to get a common, broad-structured view ofthe needs and demands of the customer (see [19]).The Framework for 1-on-1 interviews helps to makeright, future-oriented questions about the customerand his business environment by providing a broadinterview framework. The Trace matrix for businesschains helps to describe complex business chainsand trace back requirements for the company fromeven remote customer's stakeholders and trends.

The Voice of customer interpretation table helps toanalyze the customer's demands, opinions, atti-tudes, values and strategies in order to "nd the realneeds behind them and consider the criteria bywhich the customer evaluates the di!erent sup-pliers. Industrial customers tend to describe theirrequirements in technical terms. This tool givesa concrete device to discuss and clarify the real

needs behind these requirements together with cus-tomers. The Competitive position assessment helpsto "nd out the customer's opinion about the com-pany's and its competitors' competitive positionconcerning the most important needs and set devel-opment goals for these needs. The House of Qualityprovides a common language for di!erent functionsto prioritizing product attributes based on impor-tant customer needs. The Pugh concept selectiontable gives an illustrative way to combine, developand choose the best product concepts taking thecustomer needs into account. The Problem sourceassessment provides a creative way to extract pos-sible defects, problem sources or other negativeimages in an early stage of product developmentthat can originate for example from unexpectedconditions or ways of using a product. The Assess-ment of future competitiveness helps to estimate thecompetitiveness of the concepts in the planningstages and be better prepared for the futuresituation. This can eliminate the preparation ofunnecessary prototypes.

Many of the tools are widely known, like theHouse of Quality (QFD) [21}23] and Pugh's con-cept selection table [24]. In these cases, however,the tools have been tried to be made as easy to useas possible, with precise guidelines on how to applythe tools e!ectively in industrial companies basedon literature and our company experiences. Insome cases, some general methods have beenapplied and transformed to better suit to customerneed assessment purposes. For example tool 2, theCreative group interview tool is based on OPERA[25], a creative problem solving tool developed inFinland. Tool 9, the Problem source assessment, isbased on negative brainstorming [4] developed inNorway and some other generally known creativeproblem solving tools. Some tools are a collectionof checklists, guidelines and general tools like tools1, 3, 5 and 6, in which cases there are severalinnovative ideas from the authors that have beenintegrated in the tools. The tools have been de-signed to be used integratively and the results ofone tool can be combined with the use of othertools.

Group work aspects have been stressed stronglywhen selecting and designing the tools, even ifmany tools can be applied also individually. Group

H. Ka( rkka( inen et al. / Int. J. Production Economics 69 (2001) 161}176 169

Tab

le1

Des

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tion

ofin

div

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need

asse

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entto

ols

Tool

Goal

ofth

eto

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and

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ent

and

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the

com

pan

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unde

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od

Pre

sent

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170 H. Ka( rkka( inen et al. / Int. J. Production Economics 69 (2001) 161}176

work can essentially promote communication with-in the company and with the customers, improvecommitment to decisions based on the tool resultsand guarantee good results in many other ways.

We have considered the integration of creativefeatures and methods into the developed toolsimportant in order to, for example, "nd new andhidden needs and possible problem sources in theconcepts. In addition, tools that support e!ectivelyboth creativity and group work

f help to raise problems and development needs ina positive manner while not allowing direct criti-cism,

f help to democratically bring out all participants'opinions, committing them better to achievedresults, and

f encourage the generation of also new and wildideas, helping to discover new and hidden needs.

The standpoint of business chains has been takeninto consideration. Tools help to clarify customer'sneeds in considering also the standpoint of theirfurther customers and in this way help thecompany to increase its customers' performance.Supporting the co-operation, trust and mutual un-derstanding between a company and its customersare important features of the tools. Also the view-point of managing a large amount of complex re-quirements from di!erent stakeholders of thebusiness chain has been included.

The tools have been selected and designed tobe easy to use and understand. They are largelyqualitative in nature and are more intended topromote understanding than produce statisticaldata, which is not always very helpful in thee!ective understanding of the real customer needsand their background.

6. Selection of tools

In order to get real bene"ts from the developedtools for need assessment in product development,it is necessary to be able to select the right tools fora certain task and use them in a correct way. Thepurpose and goals of need assessment, the presentphase of product development and need assess-

ment, available resources and the schedule for needassessment, present level of knowledge and themost important problems faced in need assessmentshould be considered in the selection. We havedeveloped four selection aids in the form of tablesto help the selection of tools. The tool selection canbe seen from the purpose, process, problem andresource based views. In addition to these, one ofthe goals of the Need assessment outline tool is tohelp to select the right tools for need assessment.It is also vital to check if a group or the wholecompany are mature enough to use certain tools.

Table 1 describes the goals of the tools, requiredinput information and received outputs. To selectwhich tool to use one should "rst "nd a tool thatproduces the desired outputs and best ful"lls thecompany's goals. It should then be checkedwhether there is necessary input information for thetool. If the required inputs are not available, it isnecessary to "nd another tool that produces suchinformation. It is essential to check the requiredinput information for the successful use of thedeveloped tools.

Table 2 describes the process based selection aid.The phases of need assessment process described inchapter two are shown in the top columns and theassessment tools in the left-most rows of the table.From this table, appropriate tools can be chosenfor need assessment according to the process stagethe need assessment is in. For example, if a com-pany wants to collect customer need informationthere are two available tools, the Creative groupinterview tool and Framework for one-on-one in-terviews in the need assessment set to be selectedfrom. In most cases, there are some options tochoose from and the decision should thus be basedon the practical situation the company is in. Wehave developed a minimum number of tools foreach phase that still cover di!erent situations andrequirements of companies executing customerneed assessment.

Table 3 presents some common need assess-ment-related problems in getting the customerneeds to be properly included in the product devel-opment. These examples deal with customer rela-tionships, company's internal communication,competitor analysis and development activities.The problem situations described in Table 3 are

H. Ka( rkka( inen et al. / Int. J. Production Economics 69 (2001) 161}176 171

Table 2Selection table for tools in the di!erent phases of the customer need assessment process [8]

based on company interviews executed in Finland[8]. The given tools in the table are recommenda-tions for solving these problems, based on ourcompany experiences. There may be several suit-able tools in each case. For example, if there are fewcontacts between a company and its customers, theCreative group interview tool and Framework for1-on-1 interviews might improve this situatione!ectively. If a company has di$culties to distin-guish the important needs from the less importantones, the Competitive position analysis tool canhelp to decrease this problem.

The fourth selection aid describes the neededhuman resources and a rough estimated time forusing or implementing a certain need assessmenttool. It has been described in more detail in a Finn-ish-language customer need assessment manual[8].

7. Discussion and further research

Very few tool sets have been developed thatcomprehensively cover the customer need assess-ment process and are useful in the di!erent phasesof product development. Ulrich and Eppinger [26]and a Japanese research group [27] have reportedsomewhat similar types of tool sets, even thoughthe groups have worked independently. However,we have found few individual tools and no othertool sets that were designed especially for the needassessment of industrial companies and industrialbusiness chains. We have developed a comprehens-ive set of customer need assessment tools for indus-trial companies in particular. The tools weregenerally selected and designed to e!ectively sup-port group work and other requirements derivedfrom the characteristics of industrial business

172 H. Ka( rkka( inen et al. / Int. J. Production Economics 69 (2001) 161}176

Table 3Selection table for need assessment tools in common need assessment problems [8]

chains, products and product development, and thecommon problems of customer need assessment inindustrial companies. Some of the individual tools,for instance Creative group interview and Trace

matrix for industrial business chains have beendeveloped for the special problems of industrialcompanies from general decision making methodsand tools. We also developed and reported new

H. Ka( rkka( inen et al. / Int. J. Production Economics 69 (2001) 161}176 173

kinds of practical and useful ways to help the com-panies to select most suitable tools for their needassessment.

The tool set was originally developed togetherwith Finnish companies in a plastic injectionmoulding business chain. Tools have been utilizedtogether with and introduced to a large numberof Finnish companies, both SMEs and largercompanies. An example of a business chain that thetools have been rather lately applied to in success-fully attempting to recognize new customer needsis that of a tractor producer (see [28]), wherethe analyzed business chain included for instancetractor producers, farmers, food industry, stores,consumers and government regulations.

Generally, companies have experienced the toolsintroduced in this report to be quite useful and tosolve important problems particularly concernedwith the assessment of customer needs in industrialcompanies and industrial business chains. The pilotcompanies continued to use the tools independent-ly after the tool development project. Clear positivee!ects in the business results were noted in the pilotcompanies. For example, one pilot company madea customer satisfaction survey to their key cus-tomers before and after the project. According tothe survey, whereas the company's total customersatisfaction used to be clearly (ca. 11%) below thecompetitor level, in about 2.5 years after startingthe process of implementing described systematicaltools, the satisfaction had climbed up to be well (ca.6%) above the competitors' level, measured withthe same satisfaction criteria. Also, the use of thetools has spread to a number of other small andlarge companies; approximately 1000 manualsdescribing the developed tools have been sold sofar. Many tools have also been further studied anddeveloped on the basis of practical experiencesreceived from later close co-operation with severalFinnish companies.

Of the tools that we have ourselves developedparticularly for industrial customer need assess-ment for instance from generic decision makingtools and principles, particularly Trace matrix forbusiness chains and Creative group interview havecommonly been very well-received and felt as quiteuseful by a large number of companies. They havebeen experienced to solve important problems in

the customer need assessment of industrial com-panies. Trace matrix for business chains has beenfound to support the clari"cation of customerneeds originating for instance from distant stake-holders by helping to illustrate the complex linksbetween the stakeholders [28]. Creative groupinterview has helped to clarify the way of thinkingand the important objectives of customers, and toform a shared view of the needs and requirementsof the representatives of customer's di!erentdepartments [19]. Companies have generallyexperienced these tools to be quite easy to adoptand use, and they have continued to use them aftertheir introduction.

Need assessment for product developmentshould be understood as a broader task than it isseen at the moment in companies. Need assessmentis not only a single activity in the beginning ofa product development project but should extendto cover all the essential phases of the productdevelopment process. Need assessment should becarried out continuously in order to get need in-formation early enough for product developmentdecisions. In this way, the need information can becumulated and be iteratively made more precise.The need assessing company should carefullyrecognize and consider the di!erent links of needassessment to the strategic management and goalsof product development when planning needassessment activities.

According to our experiences, the developed setof tools can be used to produce useful needinformation for both short-term product develop-ment to increase customer satisfaction and long-term product development to increase the actualcompetitiveness. The use of the developed toolsmakes customer need assessment more systematic,organized and explicit. It helps to focus the com-pany's resources e!ectively and to create higherquality products. The regular use of the developedneed assessment tools presented in this researchpromotes co-operation and commitment bothinside the company between the di!erent functions(for example marketing, product development andproduction) and between the company andthe customer. By using the tools, the customer canbe better integrated in the process of making con-crete product development related decisions, and

174 H. Ka( rkka( inen et al. / Int. J. Production Economics 69 (2001) 161}176

the voice of the customer and the real needs can befound out. The tools help to direct discussions,supporting the more profound understanding ofthe customer and customer's future needs.

The developed tools can be used separately, butthe tool set has been designed in the manner thatthe utilization of di!erent tools can be e!ectivelycombined. The developed tools are rather easy tolearn, use and understand, even though the use ofsome tools is clearly facilitated by an experiencedleader. According to our experience, both the prod-uct development and need assessment processesshould be clearly understood and mature enough inorder for a company to be able to utilize the toolsusefully and e!ectively. Also, successful need assess-ment requires the commitment of top managementand su$cient resources. Systematic need assess-ment can take much time in the implementationphase, but however, the demanded time willdecrease rapidly during the course of practice.

An interesting research topic is the transformingof the tool set into an electronic form. In this way,the tools and the tool set can be made more easy touse and more educative. It can also support thework of geographically distant groups. A furtherimportant topic for future research is the exploita-tion of Group Decision Support Systems (GDSS) inthe need assessment for product development pur-poses. There is a GDSS facility in LappeenrantaUniversity of Technology and it has already beenbroadly utilized in these kinds of applications.

Acknowledgements

This paper is one result of the Strategic Aimingand Assessment of R&D (TOP}abbreviation fromthe Finnish name) research project funded by Tech-nology Development Center Finland (TEKES).The tools were originally developed in previousNASTA (Need assessment systems for technolo-gical applications) project also funded by TEKES.In the TOP project we have utilized the developedtools and further developed them. The authorsthank professors Knut Holt from NorwegianInstitute of Technology and Takaya Ichimura fromNihon University for their signi"cant contri-bution to the development of the tools by sharing

their profound knowledge on need assessmentmethods.

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