Management of Technology and Innovation in Japan

The Customer System and New Product
Development: The Material Supplier's Strategy in
Japan
Junichi Tomita and Takahiro Fujimoto
Introduction
Who is the real customer and what does he need? Recently, as customer needs
have become increasingly sophisticated and diversified, new product development
competition has also intensified in many industries. In order to offer the customer
new value, it is one of the most important tasks for firms to understand their relationships
with their customers.
In general, customer relationships have become more complex for suppliers
than their relationships with final products manufacturers. For instance, for polymer
manufacturers for coatings direct customers are coatings manufacturers,
though it is more important to understand their buyers’ needs. These customers include
wholesalers, general contractors, and owners of buildings. Moreover, design
offices, general contractors, and painters etc. often influence the coatings specifications
that the owners finally decide upon.
In short, for polymer manufacturers for coatings customers form a hierarchical
structure and these broadly defined “customers” are often dependent on each other
and have diverse needs. Therefore, it is not only necessary to consider the intermediate
user (final products manufacturer), but also the end user (consumer) 1 .
This paper defines the downstream of the value chain as a “customer system,” and
argues what an effective development pattern in a “customer system” oriented
manner should be through a case study. It is important to understand the information
flow in the customer system in the product development process.
We seek to answer what impact the product development process in a “customer
system” oriented manner has, and in what conditions the process is most effective.
This paper examines these questions by means of a case study.
1 Our previous research revealed that material suppliers who corresponded to the intermediate
user needs adequately tended to fail in sales, but the suppliers that anticipated
in advance the potential needs of consumers tended to success in sales (in 35 materials
development projects) (Kuwashima and Fujimoto 2001; Tomita 2003a). This result implies
that even material suppliers are required to understand the end user needs.