Marketingby Jeff Bartlett
Understanding customers and consumers
Customers are those organisations or people who buy directly from you, and may or may not be consumers. Consumers are the final ‘users’ of your product. For example, if you sell cakes to Tesco, Tesco is your customer but Mrs Smith, who shops at Tesco, is your consumer. In this example, it is self-evident that Tesco’s requirements of you as a supplier will be very different to those of Mrs Smith.
Understanding and satisfying their (very) different needs – plus monitoring them as they change over time and adjusting your product and service offer accordingly – is essential for your long-term commercial success.
How do we get to understand them?
The tools of market research are used to gain the necessary understanding of customers and consumers.
There are two basic types of market research: quantitative research (where you need to generate numbers, such as likely sales volume, market share and percentage of consumers preferring model A to model B), and qualitative research (where you need to understand what people do, why they do it, how they do it and their reactions to different ideas and concepts).
Traditional market research techniques are very good at identifying customer and consumer needs, but anticipating needs – a critical part of the marketing process – is more difficult, as the conclusions to be drawn from the research results rely much more on inference and judgement.
Typical quantitative research techniques include surveys and questionnaires – in the street, by phone, post or internet. To help guarantee robust numerical answers, careful statistical planning is needed to ensure the correct sample of respondents, by number and by type.
Two popular and relatively low-cost quantitative techniques are hall tests (often used when large numbers of people are needed to comment on something new), and omnibus surveys, where more than one client targets the same types of consumer. Here, companies jointly share the survey costs, although each asks their own questions in the survey.
Qualitative research usually takes the form of focus groups (also known as group discussions), and personal in-depth interviews.
Focus groups of up to nine respondents are guided through their discussion by an experienced moderator. In-depth interviews follow a more structured format, but with space and time for spontaneous comments.
A major benefit of qualitative research is that it often stimulates the unearthing of unexpected findings, which in turn warrant further investigation and research. A downside is that if your product or concept is not yet understood by your respondents, they may well not give useful responses, as the following quote shows.
If I had asked my customers what they wanted, they would have said a faster horse.
Some other things market research is used for
One key aim of market research is to identify market segments, or sub-groups, within the broad mass of customers or consumers, who exhibit related needs and who will respond in a similar fashion to specific marketing inputs, such as advertising.
For example, it is easy to see that the car market is broken up into different segments, variously described by price, vehicle size, specification, luxury or utilitarian, on- or off-road and so on.
The size of a segment is important when it comes to determining whether it is financially viable to operate within it, and also to help set budgetary limits around the investments to be made in that particular segment.
Another important element within the marketing process is the ‘satisfying of customer and consumer requirements’. How do you know if these have been satisfied?
Again, market research techniques can be used. Regular customer perception and satisfaction tracking research can show whether or not the results of your marketing activity are on track.
How to go about it
There is a well-developed market research industry in the UK, with many professional agencies and consultancies offering research services.
The Market Research Society publishes various guides to market research, agency selection, and so on, and the society is a valuable starting point for all matters relating to market research.