Friday 11 January 2013

Know your customer


Know your customer

The customer should be at the centre of your marketing efforts. An organisation must know what the customer wants, how to deliver what they want and how to communicate with them. There is no point in producing a fantastic product if no-one is interested in buying it.
 
Overview

  • who are your customers?
  • developing a customer profile
  • understanding purchasing behaviours
  • positioning your product
  • sources of customer information

Who Are Your Customers?
 
Your customers are the target group that was selected during your analysis and segmentation of the industry. For the purpose of this guide, the customer is the person or organisation that will ultimately be consuming the product (the end-user). It is important to always begin a customer analysis with the consumer in mind.
 
When there is an extended value chain (a number of different players involved in the development, production, distribution and marketing of a product), a direct customer of an organisation may not actually be the end-user (i.e. the customer of a small biotechnology company may be a large pharmaceutical company). As a developer of a product however, your aim is to fulfil a need of an end-user, which means that all other players in the value chain should essentially be considered partners. An analysis of all potential partners should also be conducted using the guide to Selecting the Right Partner.
 
Developing a Customer Profile
 
Knowledge of the customer enables you to determine the market size. It provides information that will assist in choosing a location, determining products to be offered, establishing pricing and planning a promotional strategy.
 
Key issues to consider when developing a customer profile include:
 
Individual consumers:

  • demographics – age, gender. marital status, race/ethnic group, family size, religion, home ownership
  • socioeconomics – occupation, income level, disposable income, social class, education
  • psychographic/lifestyle – personality, self-image, cultural influences, interests
  • geographics – region, urban/suburban/rural, population density, city size, climate
  • purchasing behaviours - what, when why and how purchases are made

Business customers:

  • industry
  • location
  • size of firm – by employee and by turnover
  • quality/technology/price preferences
  • product use
  • purchasing behaviours

This information is usually gathered during the industry analysis and segmentation process. It provides a basis for selecting your target market.
 
Understanding Purchasing Behaviours
 
Research should be conducted into how customers make purchasing decisions. The sought of information that needs to be collected includes: 

  • What are they currently purchasing, where from and why - what needs are they trying to fulfil with these products?
  • How do they pay for their purchases?
  • What are their usage patterns or frequency of purchase?
  • Are they loyal? Can long term relationships be built?
  • When making a purchasing decision does it generally involve routine behaviour, extensive problem solving or limited problem solving?
  • Are there deviations in regional and seasonal purchase patterns and why?
  • What criteria do they use to evaluate alternative products e.g. related services, prices, reliable delivery, and beneficial collaboration?
  • What is their ability to buy?
  • What timeframes do they have for making decisions?
  • What affects the decision making process – social values, norms, roles, culture, social classes, the family etc.?

It is important to find out what role is played by different participants in the decision making process and the benefits that each seek. In this way, the organisation may be able to tailor the product to better benefit the users. The various roles that people can play include:
 
Individual consumers:

  1. Initiator – the person who first thinks of the idea of purchasing the product
  2. Influencer – the person who implicitly or explicitly carries some influence in the purchase decision
  3. Decider – the final decision maker
  4. Buyer – the person who makes the actual purchase
  5. User – the person who consumes or uses the product

Business customers: 

  1. specifier – technical people who develop specifications and standards
  2. user – those who use the product
  3. influencer – those who influence the purchase decision in some way without being responsible for the final decision e.g. finance officer
  4. buyer – those who are responsible for the day to day purchase decisions
  5. decision-maker – those who make the final decision
  6. gatekeepers – those who control the flow of information

Positioning Your Product
An organisation needs to know how its customers perceive its product (through market and product trials), and/or competitor products. Based on this research the organisation will develop its positioning strategy (brand). 

A typical positioning strategy is based on the product’s competitive advantages i.e. the characteristics or consumer benefits that differentiate the product from those of competitors. A positioning strategy may be different for each market segment that you target.
 
Steps involved in developing a positioning strategy:
 

  1. Find out what criteria your customers use to make purchasing decisions and rank by importance.
  2. Determine how customers perceive competing products in relation to the key purchasing criteria.
  3. Create a positioning map using key purchasing criteria as segmentation axes. This will illustrate how each product is perceived by the market and will show any areas of high and low competition. E.g.



  4. Determine where you wish to position your product in relation to existing products (look for areas where there are obvious gap in the market and where needs are not currently being met).
  5. Develop a unique value proposition and develop your product (or make any necessary modifications to your product) so that it can ‘best fit’ the customers’ requirements.
  6. Develop a brand to reflect how you wish the product to be perceived and a promotion strategy to communicate the brand.

Sources of Customer Information  

  • Speak with salespeople – encourage sales people to input all behavioural information about perceptions dealing with your product, delivery, company image, complaint handling, and any other factors that influence a sale. 
  • Internet – conduct searches for research that has already been conducted by others. Click here for related links
  • Ad Hoc contacts – use existing encounters to do informal intelligence gathering.
  • Customer visits – conduct information interviews with decision makers. Find out – How are we doing? What could we do better? Is there anything that we are not doing that we should be doing?
  • Focus groups – structured group interview used in the exploratory stage of information gathering, to scan the environment (What’s going on here? What are the trends? What are the problems?) and to generate options (What are the possibilities? What are the alternatives?)
  • Surveys - used to gather information (“Which of these brands does your family regularly use?”), check on communication within an organization (“People in this company feel free to say what they think”), monitor change (“I find it easier to do my job now that the company has standardised on computer software”), among others. Surveys can be conducted via mail back questionnaires, telephone, face-to-face.
  • Observations – observe customers in their natural environment to gather information about their behaviours without interference from a researcher.
  • Experiments – subject customers to varying situations, observe their behaviours and gather information about how they may use your product, how they use competitors’ products, and how they choose which product to buy etc.
Written sources -
  • published report
  • complaint files
  • local newspapers and business journals
  • marketing and advertising publications
  • industry and trade association publications
  • industry research and surveys
  • computer databases (available at many public libraries)
  • White Pages
  • census data
  • government departments

Important - Keep in contact with customers. Don’t just conduct the research on a once-off basis. It should be an on-going process in order to keep abreast of trends and to predict the likely needs and requirements of your customers in the future.


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