1. Entrepreneurial Marketing: An Effectual Approach
Prof. Dr. E.J. Nijssen,
Eindhoven University of Technology
Available from Routledge at:
Session 6: The customer development process

2. Objectives
Discuss customer involvement in new product development; lead users’ role
Explore customer development as a seperate process
Review management issues involved
Discover link with business model and business model optimization

3. Involving customers
Customer involvement helps when developing better new products
However, some customers may be better than others
Bonner and Walker’s (2004) research suggests
Using current customers will help incrementally new products
New customers facilitate developing radical new products, bring new heterogeneous knowledge
Startups should look for and involve venturous customers of the identified target segment
Use experimentation to validate assumptions
Develop prototype
Act as ambassador to prospects

4. Lead Users Lead users are venturesome customers who
Anticipate obtaining relatively high benefits from obtaining a solution to their needs, and
Are at the leading edge of important trends in a marketplace.
Willing to engage in cocreation effort with entrepreurial mind to develop prototype
Their leading edge position regarding market trends and needs, make their experiences highly relevant to broader parts of the market tomorrow
Rogers (1995) and Von Hippel (1986) 4

5. Lead user concept
Entrepreneurs should identify and leverage these kinds of customers (see, e.g., Popovic and Fahrni, 2004)

6. Lead user involvement process
Step II
Identification of needs and trends
Interviews with market and technology experts
Scanning of literature, Internet, databases
Selection of most attractive trends
Step III
Identification of lead users
Networking based search for lead users
Investigation of analogous markets
Screening of first ideas and solutions generated by lead users
Step IV
Developing concepts;
engage in experi-
mentation
Involvement of lead users in start-up’s NPD process; e.g., workshop to improve or generate product concept
Evaluation and documentation of the concepts
Create prototype
Step I:
Start of the customer development process (CDP)
Building CDP team
Defining the target market using effectual segmenting and targeting
Defining the goals of the lead user involvement
Drawing on Herstatt and von Hippel (1992); von Hippel et al. (2000); Lüthje and Herstatt (2004)

7. Move towards formal customer development rocess
Customer discovery
Customer validation
Customer creation
Company building
Adapted from Blank (2006)

8. Dynamics of the customer-NPD development process
New product development process
Customer development process
Information exchange
Lead customer feedback
Product concept
Prototype
Additional
(technical) customer feedback
customer feedback
Wider commercial-lization
Improvements
Opportunity recognition
Development Testing Commercialization
Customer discovery
Customer validation
Customer creation
Company building

9. Customer roles in customer development stages
Customer development process stages
Customer roles per NPD stage
Customer discovery
Customer validation
Customer creation
Company building
Opportunity review
Source of initial feedback ✔
Source of latent needs
Customer-based funding
Development buyer
Early buyer
Development and testing
Technical advisor
Co-developer
Commercialization
Reference
Promoter
Feedback
Sounding board
User and critic
Adapted from Coviello and Joseph (2011)

10. Relationship between concepts
CUSTOMER DEVELOPMENT PROCESS
Customer discovery
Customer validation
Customer creation
Company building
Fine tune sales roadmap; address early adopters
Develop hypotheses about market using Abell
Co-develop with lead customer to test; experiment as necessary
Scale up activities, with extended sales force

11. Marketing activities per stage
Develop customer value and positioning
Develop initial marketing mix
Perform creative marketing
Experiment and get customer feedback
Support sales
Build on the initial sales to create additional end-user demand and build a distribution channel
Consider how to address pragmatists
Step-up awareness-building
Initial market description
Initial buying behaviour analysis
Initial target segmenting
Define initial customer value
Move toward traditional or “planned” marketing
Begin differentiating between marketing and sales
Continue asking for feedback
Address the majority more and more
Customer discovery
Company building
Customer creation
Customer validation

12. Sales activities per stage
Identify prospects
Obtain feedback from customers of identified and other segments
Establish problem recognition
Expand sales hunting and begin maintaining and building accounts
Expand sales force rapidly and systemise/routinise operations
SALES ACTIVITIES
Look for leading customers
Explore preparedness to co-finance
Begin developing sales roadmap including prospect list and sales approach
Experiment
Visit more customers and detail and fine tune sales message, etc.
Begin up-scaling the sales effort finalising roadmap
Educate customers, organize road shows/ demonstrations
Customer discovery
Company building
Customer creation
Customer validation

13. Team for customer developement
Important and sensitive task
So, involve the entrepreneur him/herself
Add marketing experience to the team
Ensure links to NPD team

14. Relationship of customer and product development with business model
New product development process
Customer development process
Information exchange
Business model development process
Model identification
Model optimisation

15. Lessons
A start-up benefits from separate customer development process to complement new product development process
Need to indentify and involve lead customers
Be aware of different roles these customers play in subsequent stages of the development of your firm
Co-finance, co-develop, help develop marketing roadmap and ramp up
Begin shaping your marketing and sales activities in line with stages of the process