Marketing Orientation - Introduction to Customer Led Businesses

The purpose of a business is to satisfy the needs of its customers. A business that fails to do this in a competitive market will not survive because customers have alternatives - and they will probably go elsewhere. By contrast, businesses that successfully satisfy customer needs create the best opportunities to prosper and grow. Therefore, marketing - the task of designing and delivering products and services that customers value - is perhaps the most important task of management.

Marketing Theory - the Need for Customer Orientation

It is a fundamental idea of marketing that organisations survive and prosper through meeting the needs and wants of customers. This perspective is commonly known as the "marketing concept".

The "marketing concept" is about matching a company's capabilities with customer wants. This matching process takes place in what is called the "marketing environment". Businesses do not undertake marketing activities alone. They face threats from competitors, and changes in the political, economics, social and technological environment. All these factors have to be taken into account as a business tries to match its capabilities with the needs and wants of its target customers.

The nature of "Customer Needs" and "Customer Wants"

A "need" is a basic requirement that an individual wishes to satisfy. People have basic "needs" for food, shelter, affection, esteem and self-development. Many of these needs are created from human biology and the nature of social relationships. Customer needs are, therefore, very broad.

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The nature of "Customer Needs" and "Customer Wants"

Whilst customer needs are broad, customer "wants" are usually quite narrow. A "want" is a desire for a specific product or service to satisfy the underlying need. For example, consumers need to eat. What they want to eat and in what kind of environment varies enormously. For some, MacDonalds is satisfies the need; for others a microwave ready-meal meets the need. Other consumers are never satisfied unless the food comes served with a bottle of fine Chardonnay.

Consumer wants are shaped by social and cultural forces, the media and marketing activities of businesses.

Consumer demand is a "want" for a specific product supported by an ability and willingness to pay for it. For example, many consumers around the globe want a Mercedes. But relatively few are able and willing to buy one. Companies therefore have not only to make products that consumers want, but they also have to make them affordable to a sufficient number to create profitable demand.

Businesses do not create customer needs or the social status in which customer needs are influenced. It is not MacDonalds that makes people hungry. However, businesses do try to influence demand by designing products and services that are attractive, work well, are affordable and available. They also try to communicate the relevant features of their products through advertising and other marketing promotion.

Marketing Management in the Customer-Led Business

The process of marketing management is about attracting and retaining customers by offering them desirable products that satisfy needs and meet wants. Marketing management in a customer-led business consists of five key tasks:

(1) Identifying Target Markets

Management have to identifyu those customers with whom they want to trade. Choice of target markets will be influenced by the wealth consumers hold and the business' ability to serve them.

(2) Marketing Research

A key activity. Management have to collect information on the current and potential needs of customers in the markets they have chosen to supply. Areas to research include how customers buy (which marketing channels are used) and what competitors are offering.

(3) Product development

Businesses must develop products and services that meet needs and wants sufficiently to attract target customers to wish and buy.

(4) Marketing Mix

Having identified the target markets and developed relevant products, management must then determine the price, promotion and distribution for the product. The marketing mix is tailored to offer value to customers, to communicate the offer and to make it accessible and convenient.

(5) Market monitoring

The objective in marketing is to first attract customers - and then (most importantly) retain them by building a relationship. In order to do this effectively, they need feedback on customer satisfaction, they need to feed this back into product design and marketing mix as customer needs and the competitive environment changes.

The Need for Competitive Advantage

The customer-led business needs to do more than just meet customer needs. To succeed and prosper, a marketing-orientated business needs to meet customer needs and wants better than the competition. In other words - the business needs to seek competitive advantage.

An important role of marketing in a business is, therefore, competitor benchmarking. This compares customer satisfaction with the products, services and relationships of the business with those of key competitors. Competitor benchmarking involves five steps:

(1) Determine the critical success factors: market research shouild identify the elements of quality and service that are most valued by customers:

(2) Measure how customers perceive the business against critical success factors:

(3) Measure how customers perceive the competition:

(4) Measure the "performance gap" - how does the business perform against the competition? What are the strengths and weaknesses?

(5) Take action - identify the most important performance gaps and how they can be closed