5.1 Identifying and Understanding Customers
Why Does A Business Need To Do This?
- A business must offer a product / service which people want or need
- It must place itself where these people are likely to be
- Pricing should be good value for the target customer
- By understanding these factors, a business can then identify its potential customers and target them
Wants and Needs
A want is something which a person desires, but is not essential
A need is something which a person requires to survive
There can be overlap – we all need food to survive, but we might want a delicious cake!
Customers and Consumers
A customer purchases a product or service
A consumer uses the product or service
Example:
- A customer buys a cake
- A consumer eats the cake
They are often the same person
Increasing Sales
When a business understands its customer’s wants and needs, it should work to identify how it can meet them
Example: a clothing store opposite a gym could increase its sales by stocking more leggings and running shoes
Product
Price
Promotion
Place
These Four Ps are the Marketing Mix. We'll look at them again in Section 5.4
Avoiding Costly Mistakes
When a business does not understand its customers' needs and wants, it can make costly mistakes:
- Lack of sales
- Amendments to products
- Return and disposal of products
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5.2 Market Segmentation
