What is House Of Quality? Concept & Advantages Explained With Example

House of Quality can be defined as the most convenient, easy, and simple tool used to convert the customer needs into technical descriptors for the firm. House of Quality is actually a matrix and is also termed as Quality Matrix.

The matrix gives us details such as customer requirements, technical descriptors, priority levels of the various descriptors, the relationship between the descriptors and target values for each descriptor amongst others. house of quality also shows competitive evaluation between various other products with the current product in the market. and we also learn

Competitor analysis is absolutely essential if you have to grow in a competitive market. It is becoming increasingly important because of the rise in competition in each and every sector. Whether electronics, automobiles, or FMCG, each sector today is facing immense competition affecting margins and sales.

Thus there are some critical steps of competitor analysis to be followed by these organizations to outperform their competition. However, they will be able to stand out only when they KNOW their competition. This is where the step by step competition analysis comes in the picture.Here is quick overview of topics that we are going to discuss in the class..are

1.Understand the priorities of the Customer.

2.Identify current and future competitors in the market.

3.Translate Customer Desires into Goals & technicalities.

We will discuss all things in class. Hope you learn a lot.Let’s get in to it.

Anatomy of House of Qualities

House of Quality Main Image house of quality

Image Courtesy – whatissixsigma.net

The ceiling of the house gives the various technical descriptors to the management of the company. The technical descriptors of the product are provided through the various engineering design constraints, requirements, and various other parameters. The roof of the house explains the inter-relationship between the various technical descriptors available.

On the left side wall we have the list of customer requirements and on the right side wall, we have the prioritized customer requirement that reflects the importance of the various needs of the customer. house of quality shows competitive benchmarking and the importance of customer rating. The interior of the house gives inter-relationship between the voice of the customer and the technical descriptors of the product and business operations.

The base or foundation of the house gives the list of the prioritized technical descriptors. house of quality also showcases factors such as technical benchmarking, target values, and the importance of technical descriptors.

The focus in House of Quality is the correlation between the identified customer needs, termed as the Whats, and the engineering characteristics are termed as the House. House of Quality is a kind of conceptual map that provides all details required for inter-functional planning and communication in the organization.

The various departments in an organization must work closely together to form efficient HOQ. Hence the QFD team includes the marketing, design, and manufacturing staff all working together towards the common goal.

Advantages of House of Qualities

  • Reduces the time required for the planning process
  • Focuses completely on customer needs and requirements
  • Reduces design changes and alterations
  • Improved house of quality of the products
  • High customer satisfaction
  • Decreased design and manufacture costs and overheads
  • Reduces time to market the product
  • Helps in prioritizing various design parameters
  • Aids in benchmarking the processes

Steps in House of Qualities

  1. Identify what are the exact needs and demands of the customer in the target market.
  2. Identify how the product will satisfy the targeted customer. house of quality refers to identifying specific product characteristics, features or attributes that the customer is looking for and showing how to satisfy customer’s needs and wants
  3. Identify relationships between How’s and What. A couple of questions, those are to be answered here: How do our how’s tie together? What is the relationship between our two or more how’s in the entire process?
  4. Develop the importance of ratings as house of quality refers to using the customer’s importance ratings and weights from the relationships in the matrix to compute the important ratings.
  5. Evaluate competing products or services as the main question to be answered here is: How well do the competing products in the market meet customer wants? This activity is completely based on thorough market research.
  6. Determine the desirable technical attributes as in this step, our performance and the competitor’s performance are determined and compared in an effective manner to arrive at a conclusion.

Primary Purposes of QFD & House of Quality

Understand Customer needs and desires

Many times, customers need outside perspective to discover what they really require to build their product or process. The goal is to understand customers perhaps in a better manner so that they understand themselves so as to open their eyes to ideal and best solutions available to them.

Understand the priorities of the Customer:

During the interview stage, get to know the exact customer needs, but then break those needs down into prioritized parts in an effective manner. For instance, if a customer is building drones for media production, how important is the battery life as compared to camera quality? How important is an aesthetic appearance as compared to the house of quality of the drone body?

Then the weights are assigned to each house of quality based on what is most important to the customer’s needs and requirements. How well each need is carefully met is ultimately how the customer will judge your solution’s value in the market.

Departmental Buy-In

Quite often, disagreement or misunderstanding between various departments of a customer’s organization can occur in relation to what is actually needed and required. As per the above-mentioned examples, the marketing department may think that a drone with trending features is the top priority, but the engineering department may think that renovation of the problematic part is the top priority. The process helps to create a plan that addresses all the true priorities and to which all departments can agree upon.

Translate Customer Desires into Goals & technicalities

This is at the heart of the QFD process where the recorded desires of the customer are ranked on the basis of the priority and specific process and where resource planning takes place. They are laid out onto a useful diagram labeled as the House of Quality.

Specify traceable requirements

Specific requirements for the execution of the customer’s product or process should be laid out in an effective and efficient manner. The how and why questions should be answered in the plan such as how are we meeting the client’s requirements and why are we doing it this way? The written requirements should be specific enough in nature that their completion and success ratios are traceable.

One should be able to work forward and backward in the plan to determine easily whether or not the overall plan is being executed successfully or not. For instance, if there is a question on why something is done a specific way, one should be able to trace back to the beginning of the process to the initial requirement that the determined process is needed to meet that specific requirement.

Provide structure

It is quite easy for customers to jump all over the place stating what they desire and are tossing out the ideas. But, at the end of the day, your role is to hone in on what they actually want and provide a logical, executable, and the traceable structure to organize their ideas.

Allocate resources

Whether developing a physical product or creating the process for a customer, effective resources are required to do the same. Human resources, machinery, computer systems, construction materials, along with the disposable materials and more must be accounted for.

1) Identify current and future competitors in the market

The best way to identify current and future competitors is to analyze your target products. Supposing you are currently selling hair oil. You need to know how many branded and unbranded players are there in the market. You need to know if any new company is starting to sell Hair oil or if any current company might stop selling the same.

Furthermore, you also need to know how many of your customers prefer some other product over Hair oil. Thus by doing this you know your direct and indirect competition. This is the first step in competition analysis.

7 steps of competitor analysis, competitor analysis importance and competitor analysis needs

2) Finding and Analysis of market share

Naturally, once you have identified the competition, the second step is to know their market share. You cannot know the strengths and weaknesses of your competition unless and until you know their presence. Thus if your product is selling in a wide region, you need to break down the region into territories and find out the share of wallets in each territory.

While doing this, you can also do a mini-market research to find the reason for the sale of your competition. Is it selling because it is easily available, quality is high or the price is low. This step will help you perform a SWOT.

3) Performing SWOT for a competitor analysis

Once you know the share of the market and you have done your secondary and primary analysis, you need to actually work out the strengths, weaknesses, opportunities and threats for each of your competitors in turn.

This is important as this shows where you currently stand in your industry, who do you need to benchmark to move forward, and what strategies can be most effective to stay on top or to avoid a drop in rank. The SWOT is indirectly responsible for showing you the steps where you can capitalize and move ahead of your competition.

4) Build competition portfolio for competitive analysis

Once you know the SWOT of your competitors, you can build a competitive portfolio. A competition portfolio will have each and every product of your competitors, their features, logistics, tangible features (product qualities), intangible features (product service), etc.

This portfolio needs to be treated like MIS and needs to be updated from time to time. The best source for building a competition portfolio is your sales force itself. They are continuously in touch with the market and therefore can immediately notify you of any changes happening in the market.

5) Plan strategies

Now you have your complete competition portfolio in front of you. Thus you clearly know your line of action. If the competition is far superior, you have two ways to move forward. You can either try the same strategies as a top competitor and slowly move on top OR you can go creative/innovative and try to directly take on the market leader. Read more on Market challenger strategies.

At the same time, if the competition is average and you can reach the top through some effort, then do not procrastinate and put the best strategies forward to reach the top at the earliest. Remember –  If reaching the top takes much effort, then staying on top will take double the effort from the complete organization. You can also read, Market follower strategies.

6) Execute strategies

Quite simple. Execute the strategies which you think are the best and make sure of executing them effectively. There is no meaning of going to such an effort to analyze competition and then fail at the implementation part. At the same time, it is very important to have a contingency plan and to anticipate your competitor’s reaction.

If your competitor reacts too strongly, but the contingency plan in place to avoid any long term affects to the brand / product. This might cause you to lose the advantage of surprise, but it definitely gives you more chances to form even better strategies (To be truthful, very few companies have actually gotten their strategies “spot on” the first time itself). Thus contingency plans while executing strategies are very important.

7) Follow up and perform competitive analysis

Statistics are always useful for a firm and help the firm in practical decision making. Thus by following up you are making sure of quantitatively and qualitatively measuring the response to the executed strategy. Ideally, the same should be documented so that future generations of marketers may know the earlier strategies implemented and might be able to revive the same through different angles.

At the same time, you might actually execute a strategy that gets excellent response from customers. In these cases too, you need to stick with the same strategy for a longer time and in such cases, it is crucial to have the feedback from your customers so as to know at all times whether the strategies are working effectively. Thus follow up is essential for long term competitor analysis.

In the end, whatever strategies you make, your competitor is going to respond. This needs implementation and updation from time to time. There are very few industries in which there are only 3–4 players. In fact, major industries are characterized by as many as 10–20 different competitors (branded, unbranded, direct, indirect). Thus, it helps you in pinpointing your current standing in the market and the future direction.

What is Diffusion of Innovation? Theory by Everett Rogers

There are many new products being launched in the market every day. To understand how these products are being adopted in the market, marketers must use the Diffusion of Innovation Theory formulated by Mr Everett Rogers back in 1962. One must understand, that this theory is as relevant today as it was back then.

Diffusion of innovation is a theory which explains how innovation is adopted by the population, in how much time does the innovation spread, and finally whether the innovation actually succeeds in bringing a change or it fails in the process.

The Theory of Diffusion of Innovation answers several questions.

  • How do innovations spread in the population?
  • Why do certain innovations fail?
  • What would be the qualities that determine the success of innovation?
  • And how can companies increase the rate of adoption of the latest innovations?

If companies do not act properly, then they are likely to lose the advantage they might have after introducing a new innovation in the market.

Table of Contents

Diffusion of Innovation Theory

Diffusion of innovation

As per this theory, the innovative products when launched in the market can be adopted by 5 different categories of customers. Each of these categories of customers involves people with different personality types. These categories can also be known as Adopter Categories.

If someone is used to buying the latest in technology, they are known as geeks and are therefore early adopters. On the other hand, if someone adopts technology very late, then they are known as laggards. Like these examples, there are 5 total Adopter Categories of who help in the diffusion of innovation by Adopting the products.

) Innovators

These are people who are the first ones to test everything and who like to take risks. For example – Today on YouTube, many people do unboxing videos. These are the people who love playing with technology products and these are the likely people who will be the first in line to adopt a product.

Innovators by personality are passionate people who love to take risks and follow industries they are very fond of. An example of such a behaviour can be gamers who are very passionate and love to fiddle with gaming software and equipment. So if a new product is launched, a passionate gamer might be the first one to adopt.

For a company, these innovators are the audience whom they should keep happy and whose feedback matters. They might or might not consume the products themselves, but they might be the ones who influence future purchases.

Example of Innovators – Influencers, Game testers, Developers etc.

2) Early Adopters

Early adopters are the people who follow the innovators as they are the first ones to accept a change. They are comfortable with changing their traditional thoughts and beliefs but they are not as used to risk as to the innovators.

They have a strong influence on people who follow them and they generally see themselves as opinion leaders. These users do not need much evidence or written materials to convince them for the purchase. They may like the concept and go for it.

A very good example of Early adopters are people who go into new restaurants to test the food. They do not know whether the food is good or bad, but they go into new restaurants for a change from the restaurants they know.

Furthermore, these are people who influence others to join them. Early adopters regularly follow innovators to get information on what is the latest happenings around them.

3) Early Majority

When the innovators and early adopters have already tried, tested and given positive reviews for their experiences, that is when the early majority adopts the product. The diffusion of innovation actually happens very well when the early majority has a majority adoption for the product.

In tech products like smartphones, we see this perfectly. Once some reviews and few positive feedbacks are on board, then a vast majority of people immediately adopt the product. These are the early majority.

They may not take decisions when there is no information available. However, if there is a good marketing pitch and some good reviews are on board, then the early majority adopts the product willingly.

An example of an Early majority is seen in the travel segment. People do not travel to new places unless they have heard good reviews about the same. Once some reviews have come, many people at once might want to experience the new place.

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