5 Core Customer and Marketplace Concepts

5 Core Customer and Marketplace ConceptsThe 5 core concepts of customer and marketplace allow you to understand and examine the customer, marketplace, and why it behaves in various situations. 5 core customer and marketplace concepts are; (1) needs, wants, and demands, (2) market offerings such as products, services, and experiences, (3) value, satisfaction, and quality (4) exchange, transactions, and relationships, and (5) markets.

To understand the customer, marketplace, and behavior; 5 core concepts customer and marketplace that needed to be mastered.

All marketing efforts are made to attract customers, serve superior value, and capture return value for the customer in a superior routine than the competitors in the marketplace who compete with the same motive.

So, understanding the customer, the marketplace, and their behavior is essential for any marketing decision and action.

Marketing pundits and gurus have examined the customer, the marketplace, and the way it behaves are situations.

They have identified and acknowledged that 5 core concepts of customer and marketplace;

  1. Needs wants, and demands,
  2. Market offerings such as products, services, and experiences,
  3. Value, satisfaction, and quality
  4. Exchange, transactions, and relationships, and
  5. Markets.

Needs, Wants, and DemandsNeeds and wants drive people to demand products and services.

The most basic concept of fundamental marketing is that of human needs, wants, and demands.

Human needs are states of felt deprivation. Marketers did not create these needs; they are a primary part of the human makeup.

Basic physical needs for food, clothing, warmth, and safety; social needs for belonging and affection; and individual needs for knowledge and self-expression; are needs of humans.

Wants are needs shaped by culture and individual personality.

Every human being requires food but what form they take food is different due to an individual’s cultural and social attributes.

One person may like a burger or hot-dog; another might like french fries or rich. Individuals’ cultural and social features shape the wants. With buying power, wants become demands.

Needs and wants to drive people to demand products and services.

Human wants are unlimited, but resources are limited. People choose goods & services their money. Human wants to become demands when backed by buying power.

Consumers perceive products as bundles of benefits and choose products that give them the best bundle for their money.

For example, Toyota means basic transportation, low price, and fuel economy. BMW means comfort, luxury, and status.

People demand products with the benefits that maximize satisfaction based on wants and resources.

Best marketing companies go to great lengths to learn about and understand their customers’ needs, wants, and demands.

  • They conduct consumer research, focus groups, and customer clinics.
  • They analyze customer complaints, inquiries, warranty, and service data.
  • They train salespeople to be on the lookout for unfulfilled customer needs.
  • They observe customers using their own and competing products and interview them in-depth about their likes and dislikes.

A clear and detailed understanding of the needs, wants, and demands provide useful information for designing marketing strategies.

Market Offerings – Products, Services, and Experiences

Market Offerings Consumers’ needs and wants are satisfied through market offerings.

Market offerings are some combination, mixture, or blend of physical products, services, information, ideas, or experiences offered to a market to satisfy a need or a want.

Examples of market offerings are everywhere. From coke’s “open happiness” adverts’ to a simple banner on a webpage, market offerings are finding you no matter where you go online or offline.

For any sellers putting the best blend of offers in a market, the offering is the challenge.

Many of them make a mistake named “marketing myopia” – paying more attention to the specific products they offer than the benefits and experiences produced by these products.

Here they are so hooked with their products that they focus only on existing wants and lose sight of customer needs.

They forget that a product is only a tool to solve a consumer problem. “market offerings”- that gets results for the sellers puts the customers’ needs, wants, and demands first.

Need

What is the need?

If an individual feels that he is deprived of something, we may say that he has a need.

An individual may have different types of needs. There are three basic categories of needs viz. physical, social, and individual. Physical needs arise out of biological tension, such as the need for food and shelter.

On the contrary, social needs are created out of social interaction, such as affection.

Again, individual needs arise out of the person’s personal characteristics, such as the need for self-expression and knowledge. You should know that these needs vary from person to person, country to country, region to region, and so on.

An individual looks for an object when he has a need unmet, and because of this, marketing is concerned more about human needs. Marketers try to identify varied human needs and attempt to meet these needs better than their competitors.

Wants

Human wants – the other marketing concept means the conversion of needs to some tangible product or service. This conversion depends on the personality of the individual or his culture.

For example, if an Asian person is having a need for food, he will look for the rice to satisfy his need, while an Italian will look for spaghetti to meet the same need.

With the elapse of time and the development of science and technology, wants are becoming diverse. Keeping this in mind, marketers are continuously coming up with new products to meet people’s new and changing expectations.

To do this successfully, we mean that marketers should have a clear idea about the distinction between needs and wants to match expectations and offerings.

For example, a passenger transport company should be convinced that passengers do not need transport. Rather, they need a service that minimizes distance, and a sandpaper manufacturer should believe that consumers do not want sandpaper. Rather, they want a smooth surface.

By this, we want to mean that a marketer should not focus only on existing wants and lose sight of underlying customer needs.

Demands

If wants for specific products are backed by purchasing power and willingness to buy, we call them demands. You know that wants are unlimited where resources are limited, and hence people always buy those goods that provide them maximum satisfaction. It implies that people do not buy and cannot afford to buy everything they want.

For example, many persons want the latest model Toyota car, but only a few will be willing and able to buy one of these cars.

As a marketer, you should, therefore, identify basically how many people would actually be willing and able to buy your product, not how many want it, since this is less important to you.

By making your product attractive, affordable, and easily available, you can influence demand greatly, and you should do it since markets nowadays are highly competitive.

Value, Satisfaction, and Quality.
market Value and Satisfaction

Consumers usually face a wide-ranging array of products and services in forms of “market offerings” that might satisfy a certain need.

How do they choose among these many market offerings?

A customer always forms expectations about the value and satisfaction that various market offerings will deliver and buy them for that reason.

Customer value and customer satisfaction are key building blocks for developing and managing customer relationships.

Marketers must be careful to set the right level of expectations. Overcooked it or under-cooked market offerings will not help the marketer’s capture value in return for customer satisfaction.

Satisfied customers will buy again and tell others about their good experiences. On the other hand, dissatisfied customers will eventually switch to competitors and surely disparage the product to others.

The marketer must understand that; consumers have the opportunity of selecting the desired product from a wide range of products. The consumer considers their perceptions of the value that various products and services offer for making such a choice.

Customer value is the difference between the values the customer gains from owning and using a product and the costs of obtaining the product.

However, in many cases, consumers do not assess product values and cost precisely or objectively. They take into account perceived value.

Customer satisfaction is the extent to which a product’s perceived performance matches buyers’ expectations.

If the product’s performance falls short of buyers’ expectations, the buyer is dissatisfied. If performance matches or exceeds expectations, the buyer is satisfied.

The successful marketing process depends on matching customer expectations with company performance.

Customer satisfaction is closely related to quality. Quality has a direct influence on product performance and hence on customer satisfaction.

Total quality management (TQM) programs are designed to improve products, services, and marketing processes constantly.

Exchange, Transactions, and Relationships

Exchanges and Relationships

Marketing occurs when people decide to satisfy their needs and wants through exchange relationships.

The exchange is the act of obtaining the desired object from someone by offering something in return. Marketer tries to bring about a response to some market offering.

By this, marketers try to build and maintain profitable exchange relationships with target audiences interested in an exchange.

Exchange

Marketing takes place when people decide to satisfy needs and wants through exchange. Exchange is the act of obtaining a desired object from someone by offering something in return.

The exchange has many benefits;

  • People don’t have to depend on others, and they must not necessarily possess the skills to produce everything they need.
  • They can decide to produce things which they excel in and trade them for other goods produced by others.
  • So, the exchange makes it possible to produce much more than it would have made with any other alternative system.

Several conditions must exist for an exchange to take place.

There should be at least two parties in exchange, and each must have something of value to the other.

Each party must have the desire to deal with other parties, and each must have the freedom to accept or reject the other’s offer.

Finally, each party must have the ability to communicate and deliver.

In reality, marketing emerges when people decide to satisfy their needs and wants through an exchange, we mean obtaining something (the desired object) by offering something in return from someone. In the contemporary world, the exchange is the only recognized way through which an individual can obtain his desired object, and hence it is considered the core concept of marketing.

Exchange cannot take place in isolation. Several conditions must be met for an exchange to take place. They are;

  1. at least two parties must participate,
  2. each must have something of value to the other,
  3. each must also want to deal with the other party,
  4. each must be free to accept or reject the other’s offer, and,
  5. each of them must be able to communicate and deliver

Unless these conditions are fulfilled, the exchange cannot take place.

Transactions

Whereas exchange is the core concept of marketing, a transaction is marketing’s unit of measurement. The transaction is a trade between two parties that involves at least two things of value, agreed-upon conditions, a time of the agreement, and a place of agreement.

In a transaction, one party gives A to another party and gets B in return.

For example, a buyer pays LG $2,500 for a 4k television. This is a typical momentary transaction. But all transactions do not involve money.

For example, in a barter transaction, one might trade an old sewing machine in return for secondhand furniture.

A transaction takes place if an agreement is reached between two parties involved in the exchange. You should know that unless two parties negotiate and move toward an agreement, they are not engaged in exchange, and hence, an exchange is not an event; rather, it is a process.

The basic unit of exchange is a transaction, and it consists of a trade of values between two parties involved in the exchange. It means that both parties get something out of a transaction.

For example, you have bought a pair of trousers for $1,000. This is a transaction between you and the trouser seller.

Out of this transaction, you have got a trouser, and the other party received $1,000/-. A transaction may also take place without the involvement of money as one of the trades of values as happens in the case of the barter transaction. In the barter transaction, both parties receive goods or services as the trade of value, not money.

Transactions lead marketers gradually to relationship marketing.

Relationship

Relationship marketing is the process of creating, maintaining, and enhancing strong, value-laden relationships with customers and other stakeholders.

Marketing extends beyond creating short-term transactions; they have to build long-term relationships with customers, distributors, dealers, and suppliers.

This is done by promising and consistently delivering high-quality products, good service, and fair prices.

Increasingly, marketing is shifting from trying to maximize the profit on each transaction to maximizing mutually beneficial relationships with consumers and other parties.

The operating assumption is; build a good relationship, and profitable transactions will follow.

Marketsconcepts of exchange and relationships lead to the concept of the market.

The concept of the market basically emerged from the concept of a transaction. We can define the market as a set of actual and potential buyers of a particular product.

You should know that a market can develop around anything of value, whether a good, service, idea or a person.

A voter market of a particular constituency, for example, consists of people 21 years of age or older, both male and female, and the sellers here are the people contesting for the said constituency.

For creating these relationships, marketers must;

  • search for buyers and their needs,
  • design good market offerings,
  • set prices for them, promote them, and
  • store and deliver them.

Activities such as consumer research, product development, communication, distribution, pricing, and service must stay ahead of the competitors in the market.

Traditionally, the term market referred to the place where buyers and sellers gathered to exchange their goods.

A market is a set consisting of actual and potential buyers of a product. The size of a market depends on three things; the number of people who demonstrate the need, have resources to take part in an exchange and are willing to part with these resources in exchange for what they want.

Marketing efforts are undertaken for controlling markets to bring about profitable customer relationships.

To economists, the market is a collection of buyers and sellers who transact in a particular product class as in the rice market. To marketers, sellers constitute an industry, and the buyers constitute a market.

Simple Marketing System

simple marketing system

Four flows connect sellers and buyers. The sellers send products, services and communicate to the market; they receive money and information in return. The inner loop shows an exchange of money for goods; the outer loop shows an exchange of information.

Modern economies are characterized by division of labor where each individual specializes in producing something, gets paid for his work, and buys things with this money.

Thus, modern economies thrive in markets.

Producers buy resources from resource markets such as raw material markets, labor markets, and money markets, transform these resources into goods and services and sell them to intermediaries, who sell them to ultimate consumers.

Consumers sell their labor and earn income. They spend their income to buy goods and services.

The government is another market that buys goods and services from the resource, producer, and intermediaries markets.

It collects taxes from these markets (including consumer markets) and invests in creating needed public services.

Thus, each nation’s economy and the whole world economy are composed of complex interacting sets of markets. These sets of markets are linked through exchange processes.

Businesspeople use the term markets to indicate various customer groups such as need markets (holiday-makers), product markets (garments), demographic markets (young and old), and geographic markets (South Asia).

The concept of markets is extended to cover also noncustomer groups such as financial markets and labor markets.

Conclusion: Concept of Markets Leads to the Concept of Marketing

Marketing is the task of managing markets to create exchanges to satisfy human needs and wants.

Thus, we remember our definition of marketing as a process by which individuals and groups obtain what they need and want by creating and exchanging products and value with others.

Exchange processes consist of activities.

Sellers must locate buyers, assess their needs, design appropriate products and services, set prices of these products and services, promote, store, and deliver them.

Activities such as product development, research, communication, distribution, pricing, and service are regarded as core marketing activities.

Generally, it is thought that sellers perform marketing. But buyers also take part in marketing activities. Consumers engage in marketing when they look for the goods they need at prices they are willing to pay.

A modern marketing system;

modern marketing system

In the usual situation, marketing involves serving a market of end-users in the face of competitors.

The company and the competitors send their respective products and messages directly to consumers or through marketing intermediaries (middlemen) to the end-users. All of the system actors are affected by major environmental forces (demographic, economic, physical, technological, political/legal, social/cultural).

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