How can I identify customer needs?

Identifying customer needs is probably the most important step in the product development process. Only by understating target customers’ needs can the enterprise design a product that fits those needs. Figure 1 illustrates the process to identify customer needs, as suggested by Ulrich and Eppinger [1]. 

FIgure 1. Generic process for identifying customer needs [1]

The first step in identifying customer needs is to define the scope of the project, which includes formulating the mission for the development project. The scope should address the following:

  • A product description.
  • Key business goals.
  • Primary and secondary markets.
  • Assumptions.
  • Stakeholders.

Second, data about the market and customers should be gathered. According to Lehmann and Winer [2],  to fully understand the customer, the following needs addressing:

  • Who buys and uses the product. The roles of different actors in the purchasing process should be understood (initiator, influencer, decider, purchaser, and user). Especially important in industrial products. This also includes market segmentation, where customers are grouped into segments with similar characteristics (demographic, behavioral, etc.).
  • What customers buy and how they use it. Customer purchase benefits, not features; thus it is important to understand what is the value that the customer obtains from a product and its features (“300hp engine” vs. “ability to pull away quickly”). This also includes understanding purchase frequency and customer lifetime value and the “share of wallet” spent on the product.
  • Where and when do customers buy. It is important to learn the preferred channels of distribution of customers, and also how these preferences evolve. As to when customers buy, focus should be on understanding the seasonality of demand, month, day, and whether sales and price breaks are most effective in prompting purchase decisions.
  • How customer choose. There are different models to explain customer purchasing behavior. The multi-attribute model for example has four components: (1) products are seen as collections of attributes, (2) customers have a perception of the “amount” of each attribute is contained in a certain product, (3) customers place some level of importance to the different attributes, which directly influences purchasing decision, and (4) customers combine their perceptions of attributes and importance in a process to develop a preference [2].

Major methods to collect the aforementioned data are focus and interviews. The former allow learning perceptions about a certain topic from a group of 8 to 12 similar and carefully picked participants in a non-threatening environment. Focus group sessions are normally conducted by a trained moderator and last from 60 to 150 minutes, these sessions are recorded and about three iterations are conducted [3]. Interviews are helpful to reveal what customers think and why they act in a certain way [4]. Interviews can sometimes be more cost-effective than focus groups, but about 20 to 30 interviews are necessary to capture most of customer needs. A third method to gather customer information is to observe the product in use. This has been successfully implemented by Honda and Toyota, and Intuit, and has resulted in successful products.

In the data interpretation phase, the need statements by customers are “translated” into a language that can be used by product development teams. Needs should be focus on the benefits and not the features or solutions that customers sometimes suggest; also needs should be stated in a positive rather than negative way; and lastly, words such as “must” and “should” should be avoided [1].

Needs identified to this point need to be organized. Typicall a list of 50 to 300 need statemens are collected, thus there is a need to reduce this to a list of critical ones. The organization process consists of grouping similar needs, eliminating redundant statements, and creating “super groups” of two to five groups [1]. In the last step of the needs identification process, some approach should be adopted to establish the relative importance of the needs identified thus far. This is usually carried out by consensus among product development team members or with a survey of potential customers [1], where they are asked to rank or rate a list of a few need statements. 


  1. Ulrich, K.T. and S.D. Eppinger, Product design and development. 2011, Boston: McGraw-Hill Higher Education. 432
  2. Lehmann, D.R. and R.S. Winer, Product Management. 4th ed. 2006: McGraw-Hill. 512.
  3. Anthony, S., et al., The Innovator’s Guide to Growth: Putting Disruptive Innovation to Work. Business & Economics. 2008: Harvard Business Press. 299.
  4. Griffin, A. and J.R. Hauser, The Voice of the Customer. Marketing Science, 1993. 12(1): p. 1-27