Needs analysis is defined as a formal process focus on how a product addresses the needs of a human. It is not an official business development tool, but is considered a valuable analytical technique to better gauge the marketability of a product or a service to a human consumer. It is often used across many industries, such as software development, automobiles, consumer products and banking services. Needs analysis was originally used for software developers, who used the system in tandem with requirements analysis - a study of the elements represented within a system. In short, if these two systems were applied to Apple Inc., requirements analysis would be involved with all the internal guts of the computers, the ugly complicated bits of hardware and firmware that are hidden from the end user; while needs analysis would be focused on the slick software operating system interface as well as its peripherals - such as the keyboard and mouse - that are directly used by the end user - and as such, affect the end user's final perception of the product.

6 Principles of Needs Analysis

  • The opinion of end users is essential to unify a diverse, opinionated design team, and their opinion should transcend the desires of your design team.
  • Market research is essential to unify end user opinions, and to use quantitative and qualitative research to find the best direction for product or service designs.
  • Appeal to the lowest common denominator in end user needs. Marketing to the lowest skill levels results in the largest potential market. In other words, follow the KISS principle - "keep it simple, stupid".
  • Do comprehensive beta tests of your products over a long period of time to allow adequate adjustments before "freezing" your product for the final manufacturing stage.
  • Continue to monitor user feedback after the product launch, and address defects quickly and keep an accurate record to apply to future releases, if they cannot be addressed immediately in the current product.
  • Elegant designs are the end product of successful needs analysis, and will put your product head and shoulders above industry peers.
Gap analysis, which is used to compare actual business performance with ideal performance, is often used in conjunction with needs analysis to maximize a business' growth potential. Gap analysis insures that a company is allocating its resources for maximum production. Gap analysis is considered a benchmarking tool for efficiency and is used for outlining a clearer road map for future growth, and can be used at both the strategic and operational levels of an organization. In short, it tries to fill the "gap" between where a company is, and where it aims to be. In addition, some organizations referred to "gap" as an acronym - separating the "good", "average" and "poor" aspects of a business.

5 Areas to Apply Gap Analysis

Workforce organization

The overall efficiency of your company must be examined, from top to bottom. Redundant positions should be cut or combined, and poorly performing business segments should be eliminated or merged into existing ones. If you company has shifted in direction from one industry to another - for example, from personal computers to cloud computing - then your workforce must be restructured to reflect this, and to shed the extra weight.

Business direction

Everyone must be on the same page in the pursuit of your company's goals. A poorly timed chang in business direction can alienate your existing customers and make it difficult to gain new ones. If your company's industry is becoming crowded, then a change in direction may be inevitable - but you have to make sure that your employees, shareholders, stakeholders and debtholders are all in agreement.

Production capabilities

If your company is still relying on domestic production plants, then you may have to consider outsourcing your labor to close the gap with larger competitors. Keeping all your production plants within the United States could cripple your margins and affect your ability to price products competitively.

Customer base

Has your company reached the full breadth of its potential customer base, or is it dwindling in a corner, marginalized by larger companies? If there are still a large number of unreached potential customers, it may be time to invest in expensive advertising and PR campaigns to thrust your product into the public eye.

Market Potential

Is the current market saturated? If it's too saturated, then you should only produce products that have fewer competitors but broader appeal. A vigorous needs analysis can help you craft better products that appeal to more consumers.

A well crafted combination of thoughtful, repeated needs analysis and expansive gap analysis can transform your company and its products for the better. By using both, you can toss out the old and renew your company, allowing you to see avenues of growth that were previously obscured by daily habits, routines and mediocre expectations.