Customer Needs Assessment MassMEDIC IGNITE

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Customer Needs AssessmentMassMEDIC IGNITE

• Maria Shepherd
• Data Decision Group, April 2008

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Data Decision Group

• Formed in 2006
• Quantitatively/qualitatively size market
  opportunities
• Judge/develop new technologies
• Assess prospective acquisitions
• We have expertise in
• Pricing studies
• Voice of the Customer
• Web surveys
• Focus groups
• In-depth interviews
• Primary and secondary market research
• Instructor WPI/MassMedic Medical Device
  Certificate Program
• Objective Foster productivity and profitability
  for Medical Device Industry Leaders
• http//cpe.wpi.edu/Industry/advanc505.html)
• Marketing, Customer Needs Assessment, Product
  Planning Forecasting, Clinical Studies, Product
  Design

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Presentation Objectives

• Identify and measure a sustainable market
  opportunity
• Apply different tools of customer needs
  assessment (data collection, interviews,
  competitive analysis)
• Develop an effective business case
• Create value for the enterprise

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Presentation Take Aways

• Be familiar with a customer needs assessment
  (CNA) matrix
• Understand the difference between an outcome and
  a solution
• Know the difference between qualitative and
  quantitative analytical techniques
• Understand the relationship between a CNA matrix
  and a marketing specification

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Key Points

• All products require a clinical/business/competiti
  ve assessment of customer use/need
• The medical device industry is data rich!
• Data can be generated to support decision-making
  and assessment
• Voice of the Customer guides product design to
  identify/rank requirements, identify unmet needs
• Two types of Market Research
• Qualitative
• Quantitative
• When product design is the desired outcome, CNA
  should result in a Marketing Specification

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Basic Tool to Size Market Opportunities

• Step 1. All US procedure rate data begins with
  the US government
• Most recent data is 2005
• Measured in procedure rates

• Until recently, US percentages were calculated as
  50 of the WW market, but this is expected to
  change
• http//www.cdc.gov/nchs/about/major/hdasd/listpubs
  .htm
• Step 2. Trends must be applied to get accurate
  procedure rates
• To current year
• 5-10 year projection

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Customer Needs Assessment Matrix
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What is Customer Needs Assessment?

• Whether you are designing a product, licensing a
  technology, or buying a company, it is important
  to know how to
• Assess, compare, or develop a product concept to
  the needs/desired outcomes of the customer
• Define the desires of the customer are they
  clinical, economic, other?
• Have you/your team have an in-depth understanding
  of all of the customers DESIRED OUTCOMES
• Understand the customers environment, agendas,
  anything/ everything that affects the use of this
  medical device in the marketplace

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Why do it? What is the impact of CNA on the
enterprise?

• Productivity, performance, profit
• Team knowledge about the customer
• reduces team dissension
• facilitates communication
• No need for 1 - 2 members to constantly sell
  their vision to team members
• Reduces potential for error
• Informed team members understand how to perform
  their functions
• What does this do for the company?
• Faster time to market
• Better products, fewer post-market disasters
• Higher morale
• Lower costs
• Higher profitability

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What happens to kick-off the CNA process?

• DRAFT marketing spec created
• A full CNA can be Voice of the Customer, or any
  other method that gets the entire team to common
  ground in
• A detailed understanding of the customers
  needs/desired outcomes
• Generally qualitative, in-depth interviews
• The ability to articulate customer needs to
  integrate them into all respective functions
• Regulatory, reimbursement, etc.

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CNA Matrix
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Voice of the Customer Objectives Issues

• Objectives
• A detailed understanding of the customers
  requirements
• A common language going forward for the team
• Key input for development of well-selected design
  specifications for the new product or service
• A springboard for product innovation
• Issues
• Gathering unbiased data.
• Customers often do not know, or cannot
  effectively communicate their actual needs and
  requirements

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Qualitative Market Research

• Qualitative research gets in-depth information
  that is
• Rich in detail
• Explains the environment of the customer
• Describes subtleties that affect buying decisions
• Helps define vague terms like ease-of use
• Helps the entire team understand the language of
  the customer
• Identifies the desired outcomes of the customer
• Identifies unmet needs that may leapfrog the
  competition

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Quantitative Market Research

• Quantitative surveys get information that
• Validates results from qualitative research to
  ensure they are aligned with customers true
  needs/ desired outcomes
• Is statistically significant and reduces decision
  making risk

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CNA Matrix
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Determining Importance

• How does all this utility get reduced down to two
  buttons?

• Prioritization
• A clear understanding of the importance of the
  customers expected outcomes

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Life is about trade offs

• Buyers want all of the most desirable outcomes at
  the lowest possible price
• High burst pressure with low withdrawal force
• Sellers want to maximize profits
• Low COGS and development expenses

• If ignored, trade offs manifest themselves
• in development
• on prototypes
• at product launch
• Basically, when its too late

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Trade Offs

• We need to make trade-offs,

• But who should make them?
• The customer, of course.
• But they dont want to.
• It is important to push the trade-off decision to
  the customer..
• ..or else youll end up making them.

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How do push the trade-off of outcomes decision to
the customer?

• Preference queries dont always work well
• On a scale from 1 to 10 how important is
• The brand you prefer?
• The balloon's deflation rate?
• The withdrawal force?
• The burst pressure?

Not very actionable!
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Conjoint Analysis

• A more effective question is Which
  balloon would you prefer . . .

Choose left, you prefer lower withdrawal
force Choose right, you prefer higher burst
pressure

• When respondents are forced to make difficult
  tradeoffs, we learn what they truly value
• Conjoint is a way to learn how people make
  trade-offs when confronted with different
  outcomes or features
• Mimics the real world
• Helps identify market segments
• Maybe 50 want each type of balloon

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Conjoint Analysis

• Conjoint assumes the value (utility) of a product
  is equal to the sum of its parts (features)
• Angioplasty balloon burst pressure withdrawal
  force sales rep clinical outcomes company
  reputation
• The trade-off comes from the fact that burst
  pressure and withdrawal force are both functions
  of balloon material strength.
• Conjoint can be expensive
• Difficult on a project with low revenue
  expectations and a small budget, Such as
  commodity items or line extensions
• However, commodity items often have a greater
  need for conjoint analysis
• Difficult product differentiation
• Low margins

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CNA Matrix
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Completing the Opportunity Algorithm

• OpportunityImportance (Importance-Satisfaction)
  
• Where
• (Importance-Satisfaction) cannot be less than
  zero
• Double weights Importance
• Ensures that a high satisfaction doesnt detract
  from Importance

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Final Questions to Ask

• Have we interacted with all of the important
  types of customers in our target market?
• Are we able to see beyond outcomes related only
  to existing products in order to capture the
  latent needs of our customers?
• Do these results lead to other product
  development opportunities?
• Have we considered other competitive modalities
  to treat the disease state such as
  pharmaceutical, biologic, or new forms of therapy?

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Final Questions to Ask

• Which of the customers we contacted would be good
  participants in our ongoing development efforts?
• What do we know now that we didnt know when we
  started? Are we surprised by any of the
  outcomes?
• Did we involve everyone within our own
  organization who needs to deeply understand
  customer needs?
• How might we improve the process in the future?

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CNA Matrix