Kano Needs and Value
Dr. Noriaki Kano, Dean of Engineering of Tokyo University, wrote a book describing a method to gather and analyze customer needs. Its basis was from work with Konica Camera during the 1970s. Konica wanted to differentiate its cameras from competitors. Initially, it sought advice from its product designers. However, the information gathered by the design engineers was not useful for creating cost-effective features and functions customer would purchase. Dr. Kano took a different approach. He asked customers and laboratories that developed pictures what they would like to see for camera improvements. Based on customer interviews and on-site visits, Dr. Kano found unspoken customer needs. Konica developed several design improvements based on Kano’s analysis. Three customer-need categories were identified (Figure 3.8): basic, performance, and excitement.
Basic needs are unspoken by the customer. The expectation is that a product or service will satisfy these needs at a basic level. It takes methodical research to extract information from customers because they rarely describe the basic needs in ways that are actionable. In fact, customers do not notice when their basic needs are being met because they are expected. Another characteristic of a basic need is that, when it is absent, the customer will immediately notice and complain about its absence. An example is going to a restaurant and receiving the food cooked properly.
Kano needs and value elements.
If the restaurant meets this basic need, i.e., cooks the food properly, the customer does not really notice because this is an expectation; if the food is not cooked properly, however, the customer will complain.
Customers differentiate one product or service from another based on performance needs. These are associated with differentiated value elements including cycle time, price, utility, and functions of products or services. Customers will usually be able to state the levels at which performance needs must be met to ensure satisfaction. There are usually competitive alternatives available to customers. This enables comparisons of on-time delivery, product pricing, and other performance characteristics between competitors. Customers will usually pay more for performance features and functions if they are important. Excitement needs delight customers. An example is when a customer says, “Wow! I didn’t know I needed this!” These features and functions are unique. Early adopters will pay higher prices than later adopters. Over extended periods of time, excitement needs become performance needs and performance needs become basic needs. Personal computers are an example. Examples of basic needs are the ability to run common operating systems and connect to the Internet. Performance needs might be micro-processor speed or other functions that improve speed or make a computer easier to use. Excitement needs might be completely new microprocessors, software performance, advanced video imaging, and other unique features and functions.
Value is divided into the elements of convenience and price. In certain situations, customers may be willing to pay a higher price for the convenience of obtaining a product or service. As an example, a retail store may have higher prices than competitors because it is open twenty-four hours a day and is conveniently located. Convenience can be further broken down into sub-elements of time and perceived benefits. Some customers may prefer faster service than others and either expect this performance or will pay a higher price to have it. Perceived benefits can be further divided into sub-elements of utility, function, and relative importance to the customer. The relative prioritization of these five value elements varies by market segment. These value elements are used in combination with the three Kano needs to obtain useful information to design products and services or to improve their performance.
Customers with similar needs and value expectations are gathered into a market segment for several reasons, including building analytical models and providing scale for the development of products and services. There are many ways to create market segments, and they vary by industry. Examples include age, income level, location, job function, interests, purchasing habits, direct or indirect sales, and other factors. One segmentation strategy considers direct customers (e.g., a retail store like Lowes) as one segment and indirect customers (e.g., contractors who in turn sell to homeowners, who are the final customers) as another segment. Segmentation helps create focused products and services that have real value to the people using them. Market segmentation proceeds from the general to the specific to create broad market segments that can be successively divided into narrower ones. Asking questions related to who uses the product or service as well as where, when, why, and how they use it helps understand needs and how features and functions are valued by the segment.
Figure 3.8 describes the fifteen combinations of three Kano needs and five value elements. This and additional demographic information can be translated into specially designed products and services. Organizations that understand market segmentation in the context of VOC will be competitive and will be able to focus resources on narrow market segments in ways to compete with other organizations, even if they are larger and more established. Bringing together the information from Tables 3.1 and 3.2 and Figure 3.1 with Figure 3.8 helps initiate the VOC translation process. Translation enables organizations to align the gathering, analysis, and translation of the VOC into meaningful internal metrics and targets to identify performance gaps. New or modified products and services are created to close gaps and thus increase productivity and global competitiveness. This is done in a systematic way using standardized tools and methods.
Figure 3.9 shows that VOC information is organized into major themes after it is collected from listening posts. These correlate to quantitative measures of price, time, and quality (i.e., utility and function). This starts the metric definition phase of translation. The themes are refined into “critical-to” (CT) characteristics. The CT characteristics are
Organizing “voice-of” information.
evaluated, organized, and prioritized for solution. In Figure 3.9, one CT characteristic is time, and three examples are shown: on-time delivery < 3 days, time to resolve complaints < 1 hour, and turnaround time for sales quotes < 24 hours. Now we have a metric and target. The next steps, which will be discussed in later chapters, are defining the metric, so it is unambiguous, and creating historical baseline from which to start improvement work.