In this article we will discuss about the core concepts of marketing. The concepts are:- 1. Needs 2. Wants 3. Demand 4. Customer Value 5. Exchange 6. Customer and Consumer 7. Customer Satisfaction 8. Customer Delight 9. Customer Loyalty 10. Marketing V/s Market.
The core concept of marketing is a social and managerial process by which individuals or firms obtain what they need or want through creating, offering, exchanging products of value with each other.
Needs are the basic requirements which human beings require for existence. These mainly consist of air, water, food, clothing and shelter. Along with these needs, some other needs which are required to be satisfied are education, medical care, entertainment, and recreation. It is a difficult task for a marketer to identify the needs of the customers since costumers may not be conscious of their needs, and even if they are, then they might be unable to put forth their needs clearly.
The notion that marketer creates needs is wrong. The need actually pre-exists in the market; the marketer just has to identify these needs, make the customers aware of these needs, and make the customers believe that only their company can satisfy these needs.
The needs can be further classified into 5 types as:
(i) Stated Needs:
These are the clearly defined needs of the customer; i.e. the customer clearly tells his needs to the company. These are the parameters that the customer defines to the marketer of the product. They are the easiest to deal with since through the stated needs the marketer actually knows what the customer wants from them. For example, a customer may ask for an inexpensive fridge.
(ii) Real Needs:
These are the actual needs of the customers which he may not be able to pinpoint to the salesperson. In this case, salesperson has to ask questions to the customers to find out the exact nature of the stated need by the customer. From the above example – if a customer says that he wants an inexpensive fridge, he might be saying that he needs to buy a fridge which consumes less electricity and thus save the electricity cost. In this case the word “inexpensive” means that the initial cost might not be less but the operating cost should be less; and for this the seller needs to ask specific questions to understand the actual requirement of the customer.
(iii) Unstated Needs:
These are the benefits which are not asked by the consumers but they expect them naturally with the products/services offered. E.g. Customer expects good service from the showroom dealer from where he is going to purchase the fridge.
(iv) Delight Needs:
When a customer gets more than what he needs and if that makes him happy, then it is called as delight needs. These needs help the marketer to cross the expectation level of the customer. E.g. If the dealer provides the customer with free movable fridge trolley and free fridge cover on purchase of fridge then the customer will be delighted.
(v) Secret Needs:
These are the needs which customer does not want to disclose but still gives indication to have it from the seller. E.g. The customer wants his friends to see him as a savvy customer and gain a social status for himself after buying the fridge.
The wants are a step ahead of needs and are largely dependent on the human needs. A need becomes a want when a need is directed to a specified object. Wants are designed according to the taste and preferences of the society.
Needs already exists in the market; however, wants may be created by the marketers. It can also be said that Need and Want are relative terms because a product may be considered to be a need by someone but it may also be perceived as a want by others. E.g. To have a food is a basic need of human beings but to have biscuits for food is a want created by the marketers.
A demand is generated when a customer is willing to buy a particular product and has an ability to pay for it. A company should study not only how many people want their product but also how many would actually afford to buy the product. E.g. Many people would be desirous to buy Ferrari car; however, there is only a small segment which can afford to buy it which reflects the demand for Ferrari car in the market.
Demand = Willingness to pay + Ability to pay
4. Customer Value:
Value reflects the sum of the perceived tangible and intangible benefits and costs to customers. Here the costs include both economic and non-economic costs whereas benefits include both tangible as well as intangible ones. A product or services is successful when it delivers value and satisfaction to the buyers. Value is usually a combination of quality, service, and price.
Value increases with quality and service and decreased with price. A value is a relative term as perceived benefit for one person may not be a benefit for others. Value changes based on time, place, and people in relation to changing environmental factors. It is a creative energy exchange between people and organizations in our marketplace.
Companies try to figure out the list of add-on benefits that they can provide based on the taste and preferences of the customers. A high value product not only helps the company to generate new customers but also helps to retain the older ones. Eg. Online parcel tracking facility provided by the courier companies without any additional cost can be one of the best examples of customer value. The same goes for free delivery of products purchased through online shopping portals.
It is act of obtaining an object which one needs from another by offering some other thing in return. Marketing occurs when individuals decide to satisfy needs and wants through exchange. Marketing helps to create a business environment where exchange of value can take place.
For an exchange to happen:
(i) There should be at least two parties involved for any kind of exchange.
(ii) Each party must have something or other that interests the other party.
(iii) Each party must be willing to have an exchange with other party and must have a desirable or atleast acceptable opinion about the other party.
(iv) Each party must be totally free from any obligation regarding accepting or denying the offer.
(v) Each party must be able to communicate and deliver the product as per the requirement of the other.
Eg. A man visiting a fast food chain might have enough money to buy a burger while the fast food chain should have a burger. If the customer in the fast food chain shop cannot make himself understood, or if he decides he does not want a burger, or if he does not have quite enough money to buy the burger, then there will be no exchange. If all of the needed conditions are met then there will be an exchange of money for burger.
6. Customer and Consumer:
Customers and consumers are used interchangeably to define the same individual but there is a difference. The path of the product, after it is purchased, differentiates the customer from a consumer.
If an individual purchases an item for his own use, then that individual is a consumer; however, if the individual buys the product as a gift or purchases it for someone else for any reason then the person purchasing that product is the customer and the person who will use the product or benefit from its purchase is the actual consumer. The customer can be a consumer but a consumer may or may not be a customer.
Eg. If a person buys a bike for himself then he is the customer as well as consumer of that bike but if a father purchases a bike for his son then the father will be customer and the son the consumer.
7. Customer Satisfaction:
Satisfaction reflects a person’s judgment of product’s perceived performance in relationship to expectations. Customer satisfaction with a purchase depends on how well the product’s performance lives up to the customer’s expectations.
(i) If the performance falls short of expectations, the customer is dissatisfied.
(ii) If it matches expectations, then the customer is satisfied.
(iii) If it exceeds the expectations, then the customer is delighted.
Performance < Expectation → Dissatisfied Customer
Performance = Expectations → Satisfied Customer
Performance > Expectations → Delighted Customer
Satisfied customers will buy the product repeatedly and recommend the same to others; however, dissatisfied customers may switch to the competitors and discourage others to buy the product. Marketers should be careful while setting the expectations. If they set expectations too low, they may satisfy those who buy but fail to attract enough customers. If they raise expectations too high, customer might be disappointed.
8. Customer Delight:
Customer delight can be defined as the effect of delivering a product or service that surpasses customer expectations in a favorable experience.
Performance > Expectations → Delighted Customer
In most cases delighted customers tend to come back again because of the great services they have received from the company. Customer Delight directly affects sales and profitability of a company as it distinguishes the company and its products and services from the competition.
Customer delight can be created by the product itself, by accompanied standard services and/or by interaction with people at the front line. The customer’s interaction with the staff is the greatest source of opportunities to create delight as it can be personalized and tailored to the specific needs and wishes of the customer. During contacts with touch points in the company, more than just customer service can be delivered.
The person at the front line can surprise the customer by showing a sincere personal interest in him, offer small attentions that might please the customer, or find a solution specific to customer’s particular needs.
These front line employees are able to develop a relationship between the customer and the brand. Eg. A restaurant presenting a free cake to the customer during a birthday party bash thrown in that restaurant will keep the people delighted and astonished and might make the consumer loyal to them.
9. Customer Loyalty:
Loyalty can be defined as a customer’s strong continuing belief that a particular organization’s products/services offer remains their best option. Customers are said to be loyal when they consistently purchase a certain product or brand over an extended period of time.
Loyalty also means customers hanging in there, even when there may be a problem with the company’s products or services, just because the organization was good to them in the past and had addressed their issues whenever they arise. It means that customers do not seek out competitors and, even when approached by competitors do not show any interest in them.
It also means customer being willing to spend the time and effort to communicate with the organization so as to build on past successes and overcome any weaknesses. The loyalty can be measured by measuring the strength of the relationship between buyer and seller or between the organization and its customer.
True loyalty requires both share-of-wallet and share-of-heart so that loyal customers continue to buy even when situational factors may make a repeat purchase difficult, such as stock outage, or alternative providers try to persuade customers to switch to them by using promotional offers. Eg. A customer loyal to use a particular brand such as Nokia mobiles will always go for repurchase of Nokia mobiles irrespective of many other competitors offering the same features at relatively low price.
10. Marketing V/s Market:
Marketing is the process of trying to get group of people interested in buying company’s products or services. It is an organizational function and a set of processes that work in tandem to serve the market effectively, efficiently and profitably. It is a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.
Marketing is all those activities that facilitate trade. These include activities that identify consumers’ needs such as market research and those activities that satisfy consumers’ needs e.g., packaging and distribution. Marketing activities therefore support the marketing of goods and services.
Market is a collection of buyers and sellers. A market, colloquially, is a group of people who are willing to buy something. It is a public gathering held for buying and selling merchandise. It is a place where goods are offered for sale. It is a set of individuals or institutions that have similar needs and that can be met by a particular product.
Therefore, a market is the set of all actual and potential buyers of a market offer. A market is any space within which trade takes place between buyers and sellers for a well-defined product. This space can be a produce market, a shop, internationally between countries, or over the internet. Eg. There is a “market” for detergent soap.