A customer is a company or person who purchases a product or service, whereas a user is a person or company that actually uses the product or service. For a B2B company, the needs of both customers and users must be considered. A B2C company would mostly be concerned with its users, who presumably buy from the company directly or through a distribution channel and retailer. A user will decide whether a product has provided a satisfying experience, whereas a customer, who has made the purchase decision, may be satisfied because he/she, for instance, purchased the product at a good price or bought a product that was environmentally sound. A good example of the difference between a customer and user is provided by comparing a child (user) who is playing a new game bought by the parent (customer). The parent may be considering the factors of safety (no small parts or lead paint), cost (not too expensive), and experience (causes the child to learn or have fun). The child will use the game and decide if the game provides a satisfying experience. Of course, a customer is often a user.
A new venture needs to make the transition from a company that has primarily focused on technology to one that understands customer and user needs and provides (builds, sells, and delivers) products to customers and users. One approach to this transition is to simply “build it and assume customers will come.” Unfortunately, this approach infrequently works. By the time the new venture eventually builds and delivers the right product to the customer and user, too much time and money will have been consumed and the window of opportunity passed.
The better way for a company to succeed is to understand customer and user needs and build the appropriate product or service. Both customer and user needs must be well understood and translated into products and services that the company can consistently sell to a large number of customers (e.g., the target market). The objective of marketing and sales is to understand their customers and build the right product(s) for the right market(s).
If a new venture is providing a technologically improved product to an existing market that is already being served, then understanding customers and users may be accomplished by first studying the existing market and its customers and users. The new venture can then better understand how the customer will make a purchase decision and what users will expect to be satisfied. New products raise new issues for customers, and the only way to determine those new issues is by seeking out customers and asking questions. This aspect of determining customer and user needs is sometimes called customer needs analysis (CNA) or voice of the customer (VOC).
The objectives of both CNA and VOC are to understand customer and user expectations, preferences, likes, and dislikes. This primary research is often conducted with focus groups or interviews of prospective users before design work begins, perhaps using even competitors’ existing products or services as references. Focus groups can also be deployed early in the product-design phase using models, pictures, prototypes, colors, etc., to elicit opinions from customers and users. The immediate need is to identify the wants and needs of the customers and users who constitute members of the target market. These needs and wants can be prioritized by relative importance, with some needs and wants being categorized as priority or essential and other needs taking a lesser ranking. Great value and insight is gained by having customer and user needs and wants expressed in their own words.
The result of CNA or VOC activities is to better define product requirements in terms of the human interface (HI). HI is often a key part of product design and matters most for consumers who must handle a product, but HI pertains, to varying degrees, to all products and services. The HI components of the requirements are coupled with the qualitative and quantitative performance aspects of many products. The end result is product requirements that will be used for product design and engineering efforts.
Understanding customer and user needs naturally leads to a better understanding of markets and the market niches. Target markets and market niches are an outcome of market segmentation, discussed in the next section.
Rocky Richard Arnold provides strategic corporate and capital acquisition advice to early-stage companies founded by entrepreneurs wishing to successfully commercialize high-value-creation opportunities, ideas, and/or technologies. More information about Rocky can be found at www.rockyrichardarnold.com. His book, The Smart Entrepreneur: The book investors don’t want you to read, is available as paperback or Kindle ebook for purchase on Amazon at http://tinyurl.com/pv248qq. Financial software for use by startups can be purchased on Amazon at http://www.amazon.com/gp/product/B00K2KPSI2. He posts articles about entrepreneurship on his blog at http://thesmartentrepreneur.blogspot.com. Connect with Rocky on Twitter @Rocky_R_Arnold; Facebook at www.facebook.com/rocky.r.arnold; Google+ at www.google.com/+RockyArnold01.
 Both focus groups and interviews must start with customers and users who are believed to best represent the target markets of interest to the new venture. Focus groups are often used to assist product development, gauge customer and user needs and wants, design marketing messages, and secure new ideas and insights. Marketing specialist firms can conduct focus groups, and sites exist on the Internet for soliciting people in target markets for purposes of participating in a focus group; for instance, www. focusgroup.com.