Understanding your customers
Understanding your customers

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Understanding your customers

1.2 What is Marketing?

According to the UK’s Chartered Institute of Marketing, ‘Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably’ (CIM, 2015, p. 2).

The words highlighted in the definition provide a good starting point for thinking about marketing and the importance of customers:

  • Management process – marketing is a way to manage an organisation’s activities. Marketing sees the customer as the only reason any organisation can afford to exist. Without customers, you only have costs. So, marketing prioritises customers in all aspects of an organisation’s activity. This is known as ‘customer orientation’. It entails understanding what your customers want, and how to provide it so they choose you over the alternatives. As competition increases, understanding customers becomes ever more important.
  • Identifying – means using research and observation to find out people’s current needs, this is also called ‘actual demand’.
  • Anticipating – means spotting gaps emerging in the market and predicting what people might need in the future, this is also called ‘latent demand’. Marketing organisations often describe themselves as customer-led, but it can be just as important to be customer-leading. This entails seeing an opportunity for a product or service, even before customers realise they need it. Before the launch of the iPhone on 29 June 2007, who in the world realised they ‘needed’ such a device? As technological change accelerates, marketers must make increasingly risky bets on the future in order to have a chance of success. Such marketers must understand customers better than customers understand themselves.
  • Satisfying – means providing products and services that meet needs effectively. Marketing has been criticised for creating artificial needs (O’Shaughnessy and O’Shaughnessy, 2002) but, to support a sustainable business, a product or service must serve a genuine purpose. The fads and fashions engineered by some marketing activity are by their nature short-lived. Successful organisations, whether commercial or not-for-profit, understand customer needs sufficiently well to be able to satisfy them better than competitors can over the long term.
  • Profitably – profit is the prime objective of commercial organisations, to keep shareholders happy and to fund growth. Thinking of marketing as an exchange (Bagozzi, 1974), we can see that ‘profit’ is what the supplier is getting from the customer in exchange for the benefits provided by the product or service supplied. However, marketing can support non-profit objectives as well – such as those of charities – so a better way of phrasing this part of the definition might be to substitute the last word ‘profitably’ with a new phrase such as ‘to achieve organisational and personal objectives’, which has wider relevance. Furthermore, many commercial organisations look for success beyond profitability alone. They include social and environmental objectives in their business planning. Marketing can help by revealing how such objectives relate to customer requirements, such as the satisfaction that comes from dealing with an ethical supplier.

Each aspect of our chosen definition of marketing has close relevance to understanding customers. As a management process, marketing must focus everyone in the organisation on a common understanding of the customer. Identifying, anticipating and satisfying needs effectively depends on understanding those needs as felt and expressed by customers. Finally, profitability depends on supplying relevant and valued goods and services that customers are willing to exchange money, time and energy to acquire. In short, marketing is really all about understanding customers.

Activity 1 Marketing definition and development

Timing: Allow 60 minutes for this activity

Here’s a short document from the Chartered Institute of Marketing [Tip: hold Ctrl and click a link to open it in a new tab. (Hide tip)] , a UK-based organisation with international influence on the way marketing is practiced and taught. Read it to understand more about marketing and customers, and then try the questions below.

  1. Why is getting close to customers more important than ever?

a. 

Digital and mobile technology is making inroads into all areas of our lives


b. 

Customers are looking for low prices


c. 

Customers are increasingly difficult to please


The correct answer is a.

  1. How is marketing now regarded?

a. 

A departmental activity


b. 

A frontline business attitude for all employees


c. 

Something to be delegated to an external agency


The correct answer is b.

  1. Which fifth P was added to the four Ps of Product, Price, Place and Promotion as marketing became more sophisticated?

a. 

Pace


b. 

Power


c. 

People


The correct answer is c.

  1. What is the product quality trap?

a. 

Selling products that are cheap but don’t last long


b. 

Selling products that are better quality (and more expensive) than the customer wants


c. 

Trapping inferior products in the quality testing process


The correct answer is b.

  1. What is the only element of the marketing mix that generates profit?

a. 

Promotion


b. 

Place


c. 

Price


The correct answer is c.

  1. What is the process of considering the seven Ps together to form a cohesive strategy called?

a. 

Marketing research


b. 

Marketing planning


c. 

Marketing practice


The correct answer is b.

  1. Which three distinct future trends in marketing does the article identify?

a. 

Lower prices, more use of marketing information, and monitoring performance


b. 

Staff development, monitoring performance, and digital printing


c. 

More use of marketing information, monitoring performance, and staff development


The correct answer is c.

B206_1

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