Small to Medium Enterprises (SMEs) face enormous financial risk when embarking on a
new product launch. SMEs are less likely to implement more formal risk minimization
strategies for new product development (NPD) such as StageGate, often citing reasons of
resource constraints or the more prevalent notion that “this stuff doesn’t apply to us”.
Two key elements of any such risk minimization strategies are an early emphasis on
benchmarking competitors and a thorough study of the attitudes and behaviours of potential
customers. The SME’s investment of time and resource in early acquisition of this
knowledge is a critical factor for success (Cooper 2001). Armed with this information, the
SME is able to adopt a Customer Focused Design (CFD) strategy, whereby the product
development effort is remains focused on the external customers wants and needs through
all phases. SMEs that are able to satisfy these needs more effectively enjoy an obvious
competitive advantage (Matzler and Hinterhuber 1998; Lüthje 2004).
SMEs are often challenged by these tasks (Freel 2000; Larsen and Lewis 2007; Owens
2007). They may be overwhelmed by the prospect of expected costs, lack of expertise, and
financial pressures to rush to market. Too often the more conventional path is chosen,
whereby a solution is proposed, developed and tested in the market to “see if it sticks”.
Such methodologies are less effective and subject the SME to increased financial risk.
International studies of SMEs attitudes and behaviour towards NPD reveal common
challenges of resource limitations, skills deficiencies and organizational issues (Xueli,
Soutar et al. 2002; de Jong and Vermeulen 2006; Siu, Lin et al. 2006; Murphy and Ledwith
2007; Owens 2007). New Zealand firms are no exception, and are burdened with similar
challenges as their international counterparts.
This study aims to propose a simple framework for small firms who wish to acquire
knowledge about their target markets and potential customers with limited time and
resources. The framework enables SMEs to incorporate customer focused design principles
into their product definition phase, and better orient themselves to the consumer
The study makes use of a New Zealand based case study to evaluate how the framework
may be employed to identify quick and inexpensive efforts that can reproduce some
elements of more sophisticated CFD and benchmarking methods. The obtained results are
incorporated into a product design specification and embodied into a physical prototype to
further illuminate the process. In addition to the primary area of study, prospects for new
adjacent product lines and new potential markets for future development are also gained
from the research.