Understanding Customers

Not a step you finish

This looks like the easiest topic in the marketing unit and it is the one students most often waste. The temptation is to treat identifying customer needs as a first step: find out what people want, tick it off, move on to pricing. That is not how this specification treats it. Knowing what your customers need is the thing every later decision has to answer to. The price you set, the product you make, how you promote it and where you sell it are all judged against it. So the marks here are not for saying a business should find out what customers want. They are for showing what that knowledge then decides.

Words for the customer

Six terms. The last two belong to later modules and are here only so you know what this topic feeds into.

Reason to what it does

Which reason is this

A business spends heavily developing a product, launches it, and finds almost nobody wants it. Which of the reasons this specification names does that failure illustrate most directly?

• Avoiding costly mistakes, since money was spent on something customers did not want
• Staying competitive, since rivals will now have an advantage over it
• Increasing sales, since the product did not sell as many units as hoped
• Selecting the correct marketing mix, since the promotion clearly did not work

What it gets, what it saves

The specification names five reasons and they are easier to hold as two kinds. Notice that the second column is the one students forget, and it is often where the strongest answers are.

Reasons the spec names

Select the TWO reasons this specification gives for identifying and satisfying customer needs.

• To select the correct marketing mix
• To provide a product or service customers will buy
• To decide how many staff the business should employ
• To work out how much tax the business will owe

Never leave it standing alone

Here is the move that decides the band, and this specification asks for it directly. A mid-band answer says the business should identify what its customers need. A top-band answer says what that identification then decides. Knowing that customers in this market care most about speed tells you what to promise in your promotion, what to charge, and where to sell. So whenever you write about customer needs, finish the sentence: identify the need, then name the decision it shapes. An answer that stops at find out what customers want has described a step without saying what the step is for.

From need to decision

Put the stages by which knowing a customer need turns into a business decision into order.

• Decide which group of customers the business is selling to
• Find out what that group actually needs, rather than assuming
• Design a product or service that meets that need
• Choose a price, a promotion and a place that suit those same customers
• Check whether they are buying, and change the decisions if they are not

Customers in a paragraph

A business that knows what its customers _____ can make something they will actually buy, which is the first reason this specification gives. That knowledge also decides the marketing _____, since the price, the promotion and the place all have to suit the people being sold to. Getting it wrong is expensive, so identifying needs helps a business avoid a _____ mistake. It also helps it stay _____ against rivals selling to the same people. The way to earn marks is never to leave the identification standing _____.

Which decision does this shape

A business finds that its customers value being able to buy late in the evening more than they value a low price. Which decision does that most directly shape?

• Where and when it sells, because convenience is what these customers are choosing on
• What it charges, because price is always the most important decision
• What it makes, because the product has to change to suit them
• None of them, since this is information rather than a decision

An answer that links

Question: explain why identifying customer needs is important for a small bakery. Model answer: identifying what its customers need lets the bakery make things people will actually buy, which is the first reason the specification gives, and a small business cannot afford to produce stock that does not sell. Suppose it finds that most of its customers are buying on the way to work and care more about being served quickly than about choice. That finding then decides several things. It shapes the product, since a smaller range prepared in advance suits a queue better than a large one made to order. It shapes the place and the hours, since being open early matters more than being open late. And it shapes the promotion, since there is no point advertising variety to people choosing on speed. It also protects the bakery from a costly mistake, because expanding the range would have cost money and made the service slower. Notice that every point names a decision. Not one of them stops at saying the bakery should find out what customers want.

Which sentence stops short

Three of these sentences would earn credit. Select the ONE that stops at the finding without saying what it decides.

• Customers here choose on speed, so a shorter menu prepared in advance suits them.
• It is important for a business to find out what its customers want.
• Because these customers buy before work, opening early matters more than opening late.
• Knowing that price matters less than convenience means it need not be the cheapest.

Deciding for a real business

A small gym is deciding how to run itself and has found out what its members value. Work through what each finding decides.

• Most members say the main reason they chose this gym is that it is close to home. What does that decide?
• Members also say they rarely use the classes. What should the gym consider?
• A rival opens nearby offering the same facilities more cheaply. What does knowing the members help with?
• An exam question asks why identifying customer needs matters here. What does a top-band answer do?

Explain what it decides

A new sandwich shop is opening near a college. Explain why identifying its customers needs matters, and what those needs would decide.

• Name the group of customers the shop would be selling to
• Suggest one thing those customers are likely to need most, and say why
• Explain what that need would decide about the product
• Explain what it would decide about the price or the opening hours
• Explain one costly mistake the shop could avoid by finding this out first
• Explain how knowing this would help it against a rival selling to the same people