Designing Profitable Products Using

QFD and Kano Model

When competition for new markets and customers increases, the level of customer satisfaction becomes a key
factor for long-term business success. Satisfied customers often become loyal customers and help to ensure
future cash flow. In their article Zero Defections: Quality Comes to Services (Harvard Business Review, 1990)
F.F. Reichfeld and W.E. Sasser report that a 5 percent increase in customer loyalty can increase profit by 100
percent due to the fact that satisfied customers purchase the companys products more often and in greater
quantities. In general, satisfied customers are less price-sensitive and more inclined to spend more on proven
products.
Considering customer satisfaction levels when creating a product is not an easy process. Many Six Sigma
practitioners use the quality function deployment (QFD) tool to translate the voice of the customer (VOC) into
product specifications. QFD offers a customer-oriented approach, supporting design teams in developing new
products based on an assessment of customer needs. Customer needs are translated into design attributes,
which are then deployed in process and quality requirements.

Benefits derived from using the QFD tool include:

The creation of work teams that include multiple skills and experiences
The determination of specific work aims
A display of a wide variety of important design information in one place in a compact form
Reduced overall costs from realizing a reduction in design changes
Reduced production costs by eliminating redundant features and over-design

What Is QFD?
QFD is composed of four stages:

1. Complete the house of quality (HOQ).

2. Design the product Determine tolerance of each part of the product so that it satisfies the target value
identified from the HOQ.
3. Design the process Determine the necessary production process that will satisfy tolerances established
during product design.
4. Control the process Determine quality standards for the new product design.

Many companies think QFD is composed of simply the first stage; however, all stages are important to the
successful development of the product. This article focuses heavily on the first stage because of its importance,
but practitioners should remember that this is not the only part of the approach.

Completing the House of Quality

The house of quality is a diagram used to capture, summarize and display detailed information (Figure 1).
 Figure 1: Areas of House of Quality

Step 1: Customer Requirements and Needs

This section, Room 2 of the HOQ shown in Figure 1, is sometimes completed by the marketing department
because of its relationship with customers, although other areas of the company with customer touch points also
may contribute. The information contained in this section represents the VOC and is obtained from various
sources such as:

Searching the market for industry standards

Surveying customers
Analyzing customer complaints

The Kano model of customer satisfaction is a useful tool to help determine attractive or must-be customer
requirements. Results from the Kano survey feed the customer requirements and needs section of the HOQ
matrix.

Kano Model of Customer Satisfaction

The Kano model (Kano, 1984) distinguishes between three types of product or service requirements that
influence customer satisfaction (Figure 2):

Must-be requirements These represent the basic criteria for a product as determined by customers. If
these requirements are not present or are insufficient, customers are extremely dissatisfied. On the other
hand, if these requirements are present or sufficient, they do not bring satisfaction. In fact, customers see
these requirements as prerequisites. For example, if a restaurant is very clean, it will not bring additional
satisfaction to the customer because cleanliness is regarded as a must-be requirement. If a restaurant does
not meet the minimum requirement for cleanliness, customers will not go to that restaurant at all. Customers
usually do not explicitly demand must-be requirements.
One-dimensional requirements Customer satisfaction is proportional to the level of requirements
fulfilled. The higher the level of fulfillment, the higher the customer satisfaction. For example, for a given
model of car, the higher the mileage per gallon, the higher the customer satisfaction. If the mileage per
gallon is under a certain level, customers will be dissatisfied. We can say that the lower the mileage per
gallon, the higher the dissatisfaction regarding this requirement. In this example, the level of neutral
satisfaction is the industry average for that class of car. Usually, customers explicitly demand one-
dimensional requirements.
Attractive requirements These requirements are key to customer satisfaction and are considered
delighters. The fulfillment of these requirements brings more than proportional satisfaction, but they do not
bring dissatisfaction if they are not met. For example, if at the end of a dinner a restaurant gives a
 complimentary gift to its customers, it will bring satisfaction. If the gift is not offered, it will not bring
dissatisfaction to customers. Attractive requirements are neither explicitly expressed nor expected by the
customer.

In addition to these types of requirements are neutral and reverse requirements or characteristics. Neutral
characteristics are those whose presence does not bring satisfaction, but whose absence does not bring
dissatisfaction. Examples of neutral characteristics are those product features that are never or rarely used by the
customer. Reverse characteristics are those whose presence brings dissatisfaction.

Figure 2: Kano Model

Kano Results and the HOQ

An example of designing a pencil is used to illustrate the process of completing the HOQ. Step 1 for this example
is shown below, where results from the Kano survey are entered into the customer requirements and needs
section of the HOQ (Figure 3).

Figure 3: Customer Needs and Requirements

Step 2: Ranking the Requirements

This step involves asking customers to rate the importance of each requirement using a numerical ranking (from
1 to 10). The ranking is then entered into the HOQ as shown (Figure 4).
 Figure 4: Ranked Requirements

Step 3: Comparing Competitors

The benefit of this step is viewing situations where a companys product is weaker than its competitors products
as assessed by customers. This step also uncovers which specific requirements to focus on for improvement. To
display this comparison, A represents the company and X, Y and Z the competitors (Figure 5).

Figure 5: Compared Requirements

Step 4: Transforming Customer Requirements into Design

Engineering Characteristics
This section of the HOQ is typically completed by the product design or engineering department. This information
represents the design elements that correspond to customer-stated needs. This process transforms customer
requirements into specific characteristics to be designed into the product (Figure 6).
 Figure 6: Engineering Characteristics

Step 5: Determining the Relationship Between Customer

Requirements and Engineering Characteristics
Different indicators are used to depict the level of relationship between the customer requirements and the design
requirements. In the example below, the following indicators are used (Figure 7):

Strong relationship = 9 points (reflected on HOQ as =)

Moderate relationship = 3 points (reflected on HOQ as O)
Weak relationship = 1 point (reflected on HOQ as X)

Figure 7: Ranking Relationship Levels

Step 6: Comparing Competitor Characteristics with Design

Engineering Characteristics
In this step the engineering design characteristics are compared with those of the competitor products (Figure 8).

Figure 8: Comparing Engineering Characteristics

Step 7: Completing the HOQ Roof

Sometimes two product characteristics have a negative influence on each other. For example, when one is
increased the other is decreased. This is recorded by placing an X in the roof of the HOQ chart where influence is
anticipated (Figure 9).
 Figure 9: Expected Negative Influence Marked in HOQ Roof

Step 8: Weighing the Engineering Characteristics

It is important to weigh the characteristics in order to identify the amount of importance each characteristic has on
the level of customer satisfaction desired. The weight of each characteristic is derived using the following formula
(Figure 10):

Wj = sum(Wi x dij),

where
Wj = weight of characteristic j, Wi = rate of importance of requirement i (determined in Step 2) and dij = point of
relationship between characteristic j and requirement i (determined in Step 5).
 Figure 10: Weight for Each Characteristic

During this step, certain characteristics are revealed as key components for the design. These components
satisfy a majority of the weighted customer satisfaction factors. For example, in this pencil case, the time
between sharpening and the amount of lead dust generated are key components.

Step 9: Determining New Target Values for Characteristics

At this point in the completion of the HOQ, it is possible to set new target values for the product. These values
are determined based on the following items (Figure 11):

Relative importance (Step 2)

Ranking of competitors relative to the satisfaction level of customers (Step 3)
Competitor product value (Step 6)
Component influences at the roof of house (Step 7)
 Figure 11: Completed House of Quality

The new target values in the last row of the chart provide direction to set a strategy that matches the best
competitor on the most important customer requirements. To achieve the goal, the design must consider the
following challenges:

Technical difficulty of designing and deploying the new product

Cost of changing to a new design
Negative relationship shown in the roof of the chart indicating potential difficulty in implementing specific
requirements

Using the HOQ Results to Complete QFD

There are several uses of the HOQ results, including improving the process to gather VOC data, enhancing the
design process and assessing competitor data more thoroughly. However the results are incorporated, they are
not completely successful unless the remaining QFD cycles are also deployed: designing the product, designing
the process and controlling the process.