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Understanding customer need

There are three key elements to understanding a customers need when developing new products
or services.
Desirability: the new product or service must be desirable, i.e. a person wants to use it
Purpose: the new product or service must have a useful purpose, i.e. a person will use it
User Experience: the new product or service must provide customer satisfaction, i.e. a person
is happy using it.

You need to identify your customers needs and expectations to develop a competitive edge,
build business relations, drive sales and become profitable. Customer needs can include:

A request for advice or general information about your business or your products and services.
Specific requirements such as product features, quality and durability.
Special requests regarding delivery methods.
Inquiries about price and value.
Scheduling an appointment.
Purchasing products and services.
Lodging a complaint.
Returning products and services.

Common Expectations to Consider
Some of the most common and basic expectations customers have for most businesses include:
Fast, efficient and accurate service
High quality products at a competitive price
Friendly, helpful service staff to provide information and answer questions
Prompt responses to their inquiries, whether online, by phone or in person
Sufficient stock to meet their needs without long waits
A trained staff that can handle their questions without referring them on
A clean facility or easy to navigate website
All of these expectations comprise the minimum of what your top-notch service should look like.
Additional expectations may arise from your customer research, which you can address on an
individual basis.
To help you identify a customers needs and expectations, you should:

Give customers your full attention.
Actively listen to what the customer is trying to communicate.
Speak clearly and concisely.
Use appropriate language and tone of voice.
Provide clear written information/ communication.
Provide opportunities for customers to confirm their request.
Ask questions to clarify and confirm customer requirements.
Seek feedback from the customer.
These tips will help to reduce the chance of a misunderstanding between you and the customer.
They will also allow you to find a solution that will meet the customers needs and increase
customer satisfaction.

The Importance of Meeting Customer Expectations
Customers expect certain things when they walk into a business, and those with the highest level
of service will know how to identify those expectations and meet them to the customer's
However, this process is not as easy as it sounds customer expectations are a dynamic feature
that ebbs and flows regularly in accordance with a wide range of factors. However, when
expectations are not met by the performance of your customer service representatives, customer
dissatisfaction is the result.
Customer Expectations + Service Performance = Customer Satisfaction
The quality of your customer service is almost wholly determined by your ability to meet your
customer expectations. You can have the greatest service team, but if your customers perceive
their needs are not being met, your service reputation suffers.
By the same token, companies that dont spend much time worrying about customer service
but manage to meet customer expectations consistently are perceived as offering good
customer service.
Service quality is largely determined by customer's perception, which is why meeting customer
expectations is an essential part of the process.
Benefits of Meeting Expectations
When you are able to accurately identify and adequately meet your customers' expectations, your
customer service reputation will automatically be enhanced.
Some of the benefits of meeting your customers' expectations include:
Customers that transform from first-time visitors to loyal clients
Increased sales as customers feel more comfortable doing business with you
More referrals from satisfied customers who bring in additional business by word of mouth
There is no doubt that adequately meeting customer expectations is an essential part of a robust
customer service department. By accurately identifying those expectations, and meeting or
exceeding them consistently, your company is likely to enjoy happier customers and a healthier
bottom line.
Market Segmentation, Target Marketing, and Positioning
Segmenting is the process of dividing the market into segments based on customer
characteristics and needs.
The main activity segmenting consists of four sub activities. These are:
1. determining who the actual and potential customers are
2. identifying segments
3. analyzing the intensity of competitors in the market
4. selecting the attractive customer segments.
The first, second and fourth steps are described as market segmentation. The third step of
analyzing the intensity of the competitors is added to the process of segmenting in this process
description. When different segments are identified, it is not necessary that these segments are
attractive to target. A company is almost never alone in a market -- competitors have a great
influence on the attractiveness of entering a certain market. When there is a high intensity of
competitors, it is hard to obtain a profitable market share and a company may decide not to enter
a certain market. The third step of segmenting is the first part of the topic of competitor analysis.
The need for segmenting a market is based on the fact that no market is homogeneous. For one
product the market can be divided in different customer groups. The variables used for this
segmenting in these groups are usually geographical, psychographical, behavioral and
demographic variables. This results in segments which are homogeneous within and
heterogeneous between each other. When these segments are known, it is important to decide on
which market to target. Not every market is an attractive market to enter. A little filtering has
been done in this activity, but there are more factors to take in account before targeting a certain
market segment. This process is called targeting.
After the most attractive segments are selected, a company should not directly start targeting all
these segments -- other important factors come into play in defining a target market. Four sub
activities form the basis for deciding on which segments will actually be targeted.
The four sub activities within targeting are:
1. defining the abilities of the company and resources needed to enter a market
2. analyzing competitors on their resources and skills
3. considering the companys abilities compared to the competitors' abilities
4. deciding on the actual target markets.
The first three sub activities are described as the topic competitor analysis. The last sub activity
of deciding on the actual target market is an analysis of the company's abilities to those of its
competitors. The results of this analysis leads to a list of segments which are most attractive to
target and have a good chance of leading to a profitable market share.
Obviously, targeting can only be done when segments have been defined, as these segments
allow firms to analyze the competitors in this market. When the process of targeting is ended, the
markets to target are selected, but the way to use marketing in these markets is not yet defined.
To decide on the actual marketing strategy, knowledge of the differential advantages of each
segment is needed.
When the list of target markets is made, a company might want to start on deciding on a good
marketing mix directly. But an important step before developing the marketing mix is deciding
on how to create an identity or image of the product in the mind of the customer. Every segment
is different from the others, so different customers with different ideas of what they expect from
the product. In the process of positioning the company:
1. identifies the differential advantages in each segment
2. decides on a different positioning concept for each of these segments. This process is
described at the topic positioning, here different concepts of positioning are given.
The process-data model shows the concepts resulting from the different activities before and
within positioning. The model shows how the predefined concepts are the basis for the
positioning statement. The analyses done of the market, competitors and abilities of the company
are necessary to create a good positioning statement. When the positioning statement is created,
one can start on creating the marketing mix.

A. The Basics of Market Segmentation

An organization can choose to sell to everyone in the market or it can choose to segment a
large market into smaller groups.

1. Mass Marketingappropriate strategy when demand is homogeneous, or every potential
customer has the same basic need that can be satisfied in the same basic way, and with
the same marketing mix.

2. Market Segmentationprocess of dividing a large market into smaller groups or clusters
of customers with similar wants and needs and responses to marketing activities and

3. Why Subdivide Markets?globalization, increased numbers of competitors, more
diversity among customers, technology, and other factors encourage the use of
segmentation strategies to reach more narrowly defined customer segments with highly
targeted marketing mixes.

4. Customer Value and Target Marketingcustomer satisfaction is related closely to
value as perceived by the customers themselves; organizations must not only deliver
value to their customers but also do so better than the competition.

B. The Market-Segmentation Process

Market segmentation starts with a commitment to satisfy one or more groups of customers,
requiring a thorough knowledge of both the targeted customers and the benefits of the goods
and services being offered. Segmentation strategies also must be consistent with the
organizations mission, policies, goals, and ability to provide the desired benefits

1. Steps in the Segmentation Process

Five major steps are involved in dividing markets into meaningful segments, although
these steps and their description may vary from one situation to another.

a. Define and analyze the marketdetermine market parameters (based on
characteristics that may include or exclude customers from a group) within
organizations mission and business definition, as well as its strategic intent.

b. Identify and describe potential segmentsdecide on the most useful dimensions or
variables for selecting members of potential market segments; then aggregate
customers into homogeneous groups, develop a profile of the characteristics of each
group, etc.

c. Select the segment(s) to be servedselect segments by evaluating against
predetermined criteria, then rank according to the organizations ability to serve the
market profitably while providing customer satisfaction.

d. Determine the product positioning strategydetermine the best fit between a
product and a market according to features most desired by customers; consider
competitors positioning strategies, organizational goals, and the market situation.

e. Design and implement the marketing programdevelop a tactical plan (marketing
mix) and determine objectives for the marketing program; all elements of the
marketing mix must be consistent with the selected positioning strategy.

2. Criteria for Effective Segmentation

Because of the costs associated with the development and implementation of a market
segmentation strategy, each segment must meet certain basic criteria.

a. The organization must be able to identify and measure each segment. Some
variables are easier to identify and measure objectively than others (i.e.,
demographics such as age, population statistics, etc.), while others are more
subjective (i.e., lifestyle dimensions such as attitudes, etc.) Both objective
(quantitative) and subjective (qualitative) information about a potential segment
should be considered.

b. The market must be substantial enough. The segment must be sufficiently large,
with substantial potential to generate desired revenue and profit levels. Multiple
criteria are used to measure the size and profitability of an identified segment, and the
organization also must consider its ability to serve this segment profitably.

c. The organization must be able to reach customers. A market must be accessible in
terms of the availability of distribution channels, advertising media, personal selling,
and other aspects of the marketing mix that are used to reach the market. Barriers also
may include unfavorable laws and regulations, etc.

d. Customers in the selected segment must be responsive. Customers must have the
money and willingness to buy the good or service offered.

e. Characteristics of the segment are relatively stable over a long period. Segmentation
is a long-term strategy, consistent with the organizations mission and long-term
corporate objectives. Markets characterized by volatility and uncertainty make it
difficult to forecast demand patterns and plan future actions.

C. Selection of Market Segments

Variables used to segment markets should be selected for their usefulness in forecasting sales
and predicting customer response to the companys offer, since a unique target marketing
strategy is designed to appeal to the common characteristics shared by individuals within a
given segment.

1. Bases for Segmenting Consumer Markets

Dimensions used to divide consumer markets into segments include both objective and
subjective dimensions, as noted below.

a. Demographic and socioeconomic descriptorsfrequently used demographics include
age, gender, marital status, household size and lifecycle stage, religion, race/ethnic
group, and nationality; frequently used socioeconomic descriptors include income,
occupation, education, social class, and asset ownership.

b. Geographic descriptorsranging from location of small group of customers to the
entire world, including country, region, state, county, metro area, zip code,
neighborhood, etc.

c. Behavioral and situational descriptorsbased on ways that consumers buy and use
goods and services, including consumers status as present, past, or future user (or
nonuser) of product class, brand, or supplier.

d. Psychological and psychographic descriptorsdifficult to measure, but useful for
product positioning, promotional messages and media, distribution strategies, etc.;
include consumer lifestyles as predictor of buyer behavior.

e. Benefits soughtof particular importance to customers; generally involves quality,
value, and service as wanted benefits; emphasis on convenience and self-
2. Bases for Segmenting Business-to-Business Markets

Many general segmentation variables are used to segment both consumer and business
markets. However, the specific dimensions within each category are selected for their
predictability and marketing applications for business customers.

a. Demographic descriptorsmost widely used dimension is industry classification
(NAICS code); others include the size (sales, number of employees or locations), age,
etc. of an organization, and how the product will be used by customers (OEM, resale,

b. Geographic descriptorsmany industries are concentrated in one or a few geographic
locations; domestic and overseas markets can be segmented on the basis of
geography, economic conditions, population size, etc.

c. Behavioral and situational descriptorsfrequently used dimensions include
technology (high-/low-tech, innovative/conservative, etc.), usage (heavy, medium,
light, nonusers), organization-related variables (e.g., buying policies), and purchase
situation (nature of purchase, degree of customization needed, readiness to buy, etc.).

d. Psychological and psychographic descriptorsapplies to the individual or group that
makes the final buying decision (or may reflect the overall organizational culture);
includes attitudes toward important factors, personal traits, etc.

e. Benefits soughtsome benefits most frequently sought by organizations include
value (low price/high quality), service, delivery based on economic motives and price
sensitivity, and desire for convenience (logistics, service, etc.).

3. Combining Variables to Identify Segments

No one variable is sufficiently comprehensive to use in identifying market segments.
Start with the most important dimension(s), then refine the list of variables until it is no
longer useful; focus on combinations of variables that predict purchase for selected

4. International Implications of Market Segmentation

Rather than treating each country as a single segment with similar needs and wants, in
todays global society it is more meaningful to identify similarities among consumers
across multiple overseas markets (e.g., lifestyles, leisure activities, etc.).

5. Technology and Marketing Intelligence as Segmentation Tools

Segmentation decisions require in-depth knowledge of the market gained from marketing
research and the companys marketing intelligence (MIS) and decision support (MDSS)
systems that make it possible to manage large customer databases.

6. Management Tools

a. VALS2this values and lifestyle measure is used frequently to classify consumers
into eight lifestyle segments, according to lifestyle and psychographics; the focus is
on consumer attitudes and values based on self-orientation and resources.

b. PRIZM and GLOBAL SCANtwo popular systems of geolifestyle and
geodemographic analysis; used to segment markets based on people who share
similar cultural backgrounds, socioeconomic status, and perspectives. PRIZM can
profile U.S. neighborhoods into 62 lifestyle clusters; GLOBAL SCAN identifies five
global segments based on nationality, demographics, and values.

D. Ethical Issues in Market Segmentation

The nature of target marketing is such that some customers are in and some are out of
the group, causing a potential ethical dilemma for some marketers (e.g., markets selected or
rejected on the basis of age, race, national origin, etc.).