Knowing Your Customer

By John Ujvari, SBTDC SBIR Specialist

In the early years of SBIR/STTR, a few companies utilized these programs to fund science projects without a credible, intentional plan to develop a commercial product. As time has passed, more companies have continually demonstrated the types of projects that can be brought to commercialization with the federal funding provided by SBIR/STTR award. Today, the agencies and program officers are even more keenly focused on commercialization. To receive an SBIR/STTR award, the company must clearly demonstrate there is a customer base for their novel technology and that they understand the target customers’ needs.

Suppose your company is interested in developing a new hydraulic pump system for the Department of Defense’s (DoD) fleet of aircraft carriers. Who would your customer be in this case? A logical answer might be the Navy, however that is only partially correct. The Navy will be the ultimate buyer and user of the product, but your business will not likely be the one to make the sale. Your business will likely sell your pump to a prime contractor company that will incorporate your pump into a larger system that they will then sell to the Navy. In this example you will need to understand and address the needs of both your customer (large prime contractor) and the ultimate user (Navy). A comprehensive commercialization plan would also consider non-military (civilian) uses and customers for the hydraulic pump system.

Once you have defined the potential users and buyers, it is imperative to carry out market research.  Market research can be divided into two categories.  Secondary market research uses information collected from existing sources including trade associations, published articles, census data and the like.  Since it is relatively simple to track down, most companies are able to invest sufficient time on secondary market research.

Primary market research, on the other hand, is the process of collecting information directly from users and buyers in this case.  “Voice of Customer” is a general term used to describe the process of collecting information directly from users and buyers. But herein lies the weakness of most commercialization plans. Most companies, for a multitude of reasons, do not invest the time necessary to communicate directly with users and buyers of their products.

Because this is such a vital part of the product development and commercialization process, we’ll include articles in upcoming newsletters on simple techniques you can incorporate to capture primary market info. Next issue we will cover methodologies you can use to collect Voice of Customer information.

This entry was posted in Social Entrepreneurship. Bookmark the permalink.

Comments are closed.