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Successful innovations must solve market problems and to do that you must understand your customer need.
The drinking fountain is a fixture in most public buildings. Chances are, the one in your office hallway is indistinguishable from the one you encountered on your first day of kindergarten. You probably haven’t thought much about drinking fountains since then, unless you are a plumber or work at Elkay Manufacturing.
In 2010, Elkay, a Chicago-based maker of sinks, faucets and other fixtures, launched its EZH20 drinking fountain and bottle-filler, revolutionizing what had been a mature, stable market. By studying drinking fountains—the people who use them, where people use them, and most important, what people use them for—the company found a huge opportunity to solve a market problem by developing a breakthrough new fountain.
The new fountain provides not only a refreshing sip of water, but also an easy way to fill the reusable water bottles many consumers carry. As a private company, Elkay does not disclose sales, but its new fixtures can be found nearly everywhere: college dormitories, airports, hospitals, office buildings and shopping malls. In short, it’s a winner.
Elkay’s case demonstrates what product developers and marketers know to be fundamental: Successful innovations must solve market problems. Yet before you can create a great solution to solve that market problem, you must first understand the customer need, and define them in clear, unambiguous language. After all, how can you understand something you cannot define?
To start, what is a customer need (or what Pragmatic Marketing calls a market problem)? If your response is somewhere between a blank stare and a headache, you are not alone. Many hands-on innovators—product professionals, market researchers, engineers, marketing managers—still cannot agree on what defines a need. It is not for lack of discussion. Articles, conference presentations and blog posts have tried to define or differentiate flavors of customer needs, using terms like: wants, benefits, preferences, motivations, requirements, attitudes, functional goals, desired outcomes, product attributes, critical-to-quality characteristics, jobs-to-be-done, problems and use cases. This proliferation in terminology can leave innovators confused, wondering where to start.
Rather than arguing over the right term, I prefer to stick with the most familiar one—customer needs—and define it well. Some use this definition: A need is a desire that causes a customer to buy a product. If customers buy products to satisfy needs, then needs provoke customers to buy products. But this definition is vague; it doesn’t give any direction to product teams or market researchers on how to understand what customers want.
Instead, let us consider a more useful definition: A need is an opportunity to deliver a benefit to a customer. This definition contains three components:
1. A benefit that has value (the what)
2. A customer who values the benefit (the who)
3. A context that creates the opportunity to deliver the benefit (the when or where)
The first component is the what, a benefit that has value. A benefit could be tangible or functional. Perhaps it helps a person do something faster, easier or more accurately. It could be intangible or emotional, helping a person feel better or avoid feeling worse.
Successful products deliver some combination of functional and emotional benefits. The mix varies by category. Some industrial products deliver almost entirely functional benefits, while some consumer products deliver entirely emotional benefits. We must assess the opportunity to deliver both functional and emotional benefits, no matter which market we are in.
For example, the programmable thermostat is a common product. Its main product features are clear: It automatically controls your home’s heating and cooling system throughout the day, using a built-in clock and microprocessor. Some models offer variable programs for weekends and weekdays or for each day of the week. Others have lighted displays and touchscreen controls. The newest models use the internet to remotely connect to smartphone apps.
These features are merely components of a solution, and a solution without a problem has no value. The features in your programmable thermostat deliver functional benefits like ensuring your home is a comfortable temperature when you arrive from work, preventing frozen pipes during cold days, regulating how much energy you consume and reducing system wear from excessive cycling on and off. They deliver emotional benefits such as helping you feel like a smart homeowner, perceiving yourself as environmentally responsible and signaling your environmental commitment to guests. You did not buy a programmable thermostat because it had a lighted screen; you bought it so that you could turn up the heat on a dark, cold night without turning on the lights and waking the infant you just spent an hour putting to bed.
The second lens is the who, the customer who desires the benefit and is willing to exchange something valuable like money or information. A good understanding of needs means identifying and understanding the right customers.
Sometimes, the customer is simple to spot. If you sell a consumer product, your customer is the end consumer, the primary shopper who purchases the product. However, if you sell to a business, your customer is often a combination of several individuals who may seek one or more different benefits from your product, or your competitors’ products, and they must reach a consensus on what to buy.
Not all customers perceive equal value in a benefit. A hospital purchasing manager may not see much benefit in a premium lightbulb with a lifespan 20 times longer than a traditional bulb. However, a maintenance manager, whose budget pays union wages to the workers changing lightbulbs every day, may value the same benefit much more. Similarly, demographics, firmographics, behaviors and attitudes also vary by customer. Male consumers may differ from female consumers. Managers at small businesses differ from those at large businesses. And while one investor may be comfortable with a large amount of risk and volatility, another may prefer security and stability. Even two otherwise similar individuals may hold different opinions.
John C. Mitchell is president and managing principal and a leader in the insights for innovation practice at Applied Marketing Science (AMS), a marketing research and consulting firm that helps clients find insights to develop new products and design distinctive customer experiences. Contact John at email@example.com.