Stakeholders in marketing and finance

# 1.1 Customers, consumers and clients

An understanding of marketing requires a clear understanding of the terms customer, consumer and client. The customer is the person buying from an organisation. The customer can also be another organisation, for example, when a bookstore buys from a book publisher. The customer will also be the consumer if the person or organisation uses what has been bought. This is not the case with the bookstore: there the bookstore is the customer of the publishing company and a person buying a book from the bookstore is likely to be the consumer.

Here are two simple examples that highlight the distinction:

- You choose, buy and eat an ice cream. Here you are the customer and consumer.
- Your child chooses and eats an ice cream but you pay for it. Here your child is the consumer and you are the customer.

The second example is of interest because marketing activity is likely to be focused on the consumer rather than the customer. Consumers and customers may not share the same view, and marketers often use the influence that consumers (in this case, children) have over customers (in this case, parents). For example, marketers advertise tempting toys or food items during breaks in children’s television programmes or by placing sweets within reach of small children in supermarkets. They are thus attempting to use children’s ‘pester power’ to persuade parents to buy the goods in question. As a result they are often criticised for addressing the wants of children without much consideration of the expectations of their parents, the customers.

When we look at purchases made by organisations, in most cases, customers and consumers are not the same. Many purchasing decisions in organisations are made by purchasing departments. As a manager you may be allowed to take decisions to buy items costing up to a certain amount of money. An exception might be for products used in many parts of the organisation and which are supplied by another department, for example, ink for printers and printer paper. For these and more expensive items, many managers are required to use the equipment and materials which someone else in the organisation has chosen – and these buyers may or may not respond to managers’ needs or wants. We will look in more detail at the buying behaviour of individuals and organisations later.

## Customers and clients

Now we turn to the difference between customers and clients. The term ‘client’ is generally associated with the provision of professional services (such as accountancy and legal services). In these contexts, the specific service being provided is normally discussed and agreed between client and provider. While the client has more influence over the specification of the product or service being provided, the service provider – the marketer in this context – is often in a position to advise the client as to what his or her needs and wants actually are, and then charge fees for delivering services that meet these needs. You should immediately recognise that the power balance between the marketer and the person being provided with a product or service can be quite different according to whether the person is a customer or a client.

In recent years it has become customary to use the terms customer or client for the recipients of public and not-for-profit services. Before then, these recipients were called passengers, patients, students and so on. These more traditional terms had the advantage of indicating to service providers the needs and expectations of these service recipients. It is argued that calling everybody a customer reduces every service to a commercial transaction – and many people would be unhappy to think that their relationship with their doctor or teacher is nothing more than a commercial transaction. This is partly an issue of terminology and becomes less problematic if we recognise that many aspects of marketing are useful and appropriate in not-for-profit contexts.

In the not-for-profit context we might consider the example of a doctor in the UK National Health Service (NHS) wanting a patient’s blood sample tested. Here, the patient is the doctor’s client and the doctor then becomes the customer of the blood testing laboratory. The laboratory must deliver a prompt service to satisfy the expectations of the doctor as a customer and the patient as a client.

When we look at internal stakeholders, an interesting feature is that ‘consumers’ often have no decision over what they consume. For example, in an organisation’s wage and salary payment system there is usually no choice of products or suppliers if an employee wants to be paid. There are exceptions, however. For example, all IT systems within an organisation may be provided by the IT department but the internal customer or consumer may be able to influence the design.

In addition, while we can see clearly who is paying for a family’s ice creams, holiday or car, in internal marketing contexts it is often not as clear who is paying and how much is being paid for the services or goods supplied. If you are a budget holder, you will know what items are charged to your budget. But if you are not the budget holder you may have little or no idea of what internal services actually cost.

## Activity 1 Know your stakeholders

Allow 45 minutes for this activity.

In this activity you are asked to think further about what marketing means in your work context, focusing particularly on who your customers, consumers and/or clients are. The use of the words ‘customer’, ‘consumer’ and ‘client’ is not restricted to those external stakeholders who buy goods or services from for-profit organisations. Rather, any stakeholders whose needs and expectations you need to satisfy in your work can be regarded as customers, consumers or clients.

First make a copy of Table 1 below, aallowing space for extra rows at the end.

Step 1: Identify all stakeholders whose needs and expectations you and your work team or unit need to anticipate and satisfy, and list them in the first column of your Table 1. Add more rows to Table 1 as necessary.

Step 2: For each of these stakeholders, consider whether you would classify them as customers, consumers and/or clients and briefly say why. Note that in many cases customers and consumers may be the same. Enter this information in the second column of your Table 1.

Step 3: Think about the needs and expectations of each of these customers, consumers or clients and enter this information in the third column of your Table 1.

Step 4: Consider how much influence each of those customers, consumers and clients has over the service or products you deliver to them. Can they normally get what they want from you? Is the extent to which they can influence what they get related to their status as either customer, consumer or client? Enter these considerations in the last column of your Table 1.

## Table 1 Customers, consumers and clients in my work context

Who are the stakeholders? | Are they customers, consumers or clients? Why? | What are their needs and expectations? | How much influence do they have over the service or product they get?
1 |  |  |
2 |  |  |
3 |  |  |
… |  |  |

## Discussion

Depending on your work context, it may seem rather unfamiliar to think of the people who use the outputs of your work as customers, consumers or clients. Thinking of them in this way does not, of course, mean that they cease to be your line manager, colleagues, patients, funders or however you normally think of them. But consideration of them as customers, consumers or clients can give you a new, additional perspective on their needs and expectations and how what you do can fulfil their needs and expectations, and thus improve working relationships with them.

OpenLearn - Stakeholders in marketing and finance
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