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Customer needs

The success of a business relies heavily on how it assesses and meets customer needs. Without happy customers, businesses are likely to fail. The main reason why many top retailers experience such high levels of success is because they offer customers what they want at a fair price and make sure it is easy for their clients to purchase goods or services. Customers’ needs can be split down into a number of sections:

  • Convenience – customers need to be able to access goods and services easily. This requires a business to have a good presence in the area that a customer expects. These places do not necessarily have to be physical places such as a shop but also include online shopping facilities, trade shows and anywhere else that is convenient for a client to purchase from a business.
  • Fair prices – businesses will not have much success if they offer products that are overpriced. If a customer cannot get a product or service at a fair price then they are much more likely to spend their money elsewhere.
  • Good range – rather than having only a few products, customers will want a business to offer a good range that leads to their needs being met. Goods and services should be adaptable, where possible, and a good range will enable a business to offer items to a wider range of people in order to make more money.
  • Good quality – price is not everything when shopping. The quality of goods and services will need to be high so that a customer is left happy with their purchase. There is a clear link between price and quality, but as long as the price reflects the quality, a customer will be happy to pay for what a business has to offer
  • Friendly customer service – customers are continuing to become savvier shoppers and, because of this, customer service is key. Having staff that are on hand to help customers with any questions or issues they have is an important area for any company to offer customers what they need.

Understanding customers

Now that we have looked at what aspects must be met in order to deliver on customers’ needs, we will look at how to understand customers. Different companies work with people who each have specific needs. It is therefore important for a business to be able to assess these and truly understand what its customers want in order to have high levels of satisfied clients.

All businesses must have enough customers that are paying enough money for what they offer in order to cover their costs and earn money. If a product or service is offered to customers at a price that is too high, they will not wish to spend their money as they will be able to get a better deal somewhere else. As we have already learnt, customers’ needs can be split into several sections:

  • Convenience
  • Fair prices
  • Good range
  • Good quality
  • Friendly customer service

All businesses need to understand what a customer wants in each of the above areas. These areas are all linked to each other, so a good balance is needed. For example, high levels of quality and customer service are very likely to be reflected in the price of products. Top brands with great reputations charge their customers more because of their high levels of quality. After all, you would not expect to buy a Ferrari for the same price as a Fiat as there is a vast difference between the quality of the two cars. Businesses will meet the needs of their customers by giving different levels of each of the areas. People who are looking to only spend a small amount of money will have to accept that this will be reflected in the quality and service that is found.

The benefits of meeting customer needs

A business that meets the needs of its customers perfectly will have high chances of being successful. This is due to having happy customers that will likely return in the future to make further purchases. People will also tell their friends and family about their experiences which will lead to a strong reputation. There are a number of different benefits to meeting the needs of customers such as:

  • Improving the reputation of the company – by continuously meeting the needs of customers, businesses will generate a loyal following. This helps in selling more products and goods without advertising costs which will save the company a lot of money.
  • Improved sales – simply being able to meet the needs of customers will help to boost sales. By showing that what you offer is going to meet the needs of customers, it is much easier to sell products and services
  • Less stress – employees of a business will be much less stressed when customers’ needs are met. This is due to the fact that clients will be happy and more willing to work with the company should anything go wrong unexpectedly.
  • Business survival – all of these aspects will ensure the survival of a business. By giving customers what they want at a fair price, a business will be able to make enough money to cover its costs and make a profit.

The purpose of market research to understand customer needs

Now that we have a good understanding of what customers’ needs are and how to meet them, we will look at how to really understand these needs and plan a business strategy that ensures happy customers. Market research is used for a number of different reasons including to understand the needs of customers, identifying gaps in the market, reduce risks and inform decisions made by the business.

Identifying the needs of customers

Prior to opening or changing the way that it operates, a business must do some market research to fully understand customer needs. Without having a deep understanding of what customers want, it is simply impossible to ensure that goods or services are to the required level.

Identifying the needs of customers

Analysing the needs of customers can be quite difficult but can be done with a number of different techniques. We will look at these techniques a little later in this section of the course. When conducting market research, the needs of customers can be split down into the same sections that we have already looked into:

  • Convenience – this will include where the customer wants to deal with the business, how goods should be accessed and what customers have to do in order to purchase products or services.
  • Fair prices – research should be undertaken to find out how much people are prepared to pay for the goods and services on offer. Competitors that offer the same or similar items should be analysed and prices decided that offer good value for money
  • Good range – customers will need to be able to access a number of products and services. This means that research should be conducted into the different things that customers want and what features products should have.
  • Good quality – customers will have an idea of how long a product should last and the quality of materials used. This should be fully understood so that clients are not disappointed once they have purchased goods or services.
  • Friendly customer service – the level of service that is provided will vary depending on the industry, price and product on offer. A business will need to identify the level of service that customers expect for a certain product or service it offers and ensure that it meets this level to make the purchasing process as easy as possible.

Identifying gaps in the market

A large part of market research is identifying gaps in the market. A gap in the market is an area that has a demand for a product that is not met. This makes it much easier for a business as there are no competitors that it has to beat – it can take advantage and be the only available business offering goods and services to a group of customers.

Gaps in a market can take the form of a physical location that is not covered by companies. This will include areas of towns and cities that do not have supermarkets, cafés or other shops that are able to offer products to the public. Other market gaps will include a lack of products or services that customers wish to purchase that are simply not in existence. Companies in this case can develop new goods and services in order to capitalise on the fact that they will be the only business to offer these.

Reducing risks and informing decisions

Developing a new business idea costs time and money. For this reason, making the wrong business decision can be catastrophic as a company can lose a huge amount of money for new products and services that are then not received well by customers. In order to avoid this, market research can be used to ensure that the desires of customers are fully understood before investing in new products and services. Information should be gathered in a number of areas to ensure that a new business venture is prepared appropriately such as:

  • Customer needs
  • Competition in the market
  • The size of the market
  • Average prices
  • Expectations of customer
  • Legal obligations
  • Running costs
  • Expected returns and profit margins

Having a deep understanding of all the above areas will allow a company to plan its approach. Doing this when developing new goods and services will help the company to reduce the risk of money being lost and increase the likelihood of customers’ needs being met.

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