Customer Value Appraisal and Consumer Trends

Consumer Attitudes and Trends

Consumer needs substantially differ from consumer wants during the process of becoming our customers. Marketing managers try to understand consumer needs (and unmet needs) while attempting to influence consumer wants. The hope is that consumer wants will be indistinguishable from needs in the mind of the consumer (or corporate purchasing agent). For example, consumers need toothpaste and businesses need spare parts for machinery, but we try to influence them to demand our taste, color, packaging, pricing, distribution, service, etc., and associate those characteristics with our brand.

Consumer attitudes are very different from consumer behavior and attitudes often are not good predictors of behavior. Marketing managers must understand that consumer attitudes as reported in surveys can vary widely from behavioral data, what they actually buy, and how they use the product. For example, a consumer, who is registered to vote, may tell you that they will vote for Republican candidate or that they did vote for the Republican party candidates in the last election; however, there are whole host of social context issues that influence what they will actually do at the time the decision is made or what they will actually say when asked to report what they did.

Marketing managers must develop intuition about customers’ needs, wants, and behaviors that allow them to recognize trends. Of course, competitors are also trying to do so as well, so there is a need to be timely in gathering and acting upon intelligence. It is the marketing department’s job to be evangelists within the organization. Consider also that such intuition must be grounded in current knowledge about the customer; intuition alone is no substitute for solid research.

Industry and Competitive Trends

Oftentimes, marketing managers must integrate data collected for their current research needs (i.e., primary) with data collected by the company or an outside party (i.e., secondary). Knowing when to collect data directly as opposed to repurposing existing data is a critical decision making skill. It is important for marketing managers to have knowledge of the industry and competitor actions to formulate and test hypotheses about trends. For example, it is pedestrian that security is required today in the provision of customer service and safeguarding of information technology networks, but what is the next trend? Business empires are built on such knowledge.

Customer Feedback

Sources of Customer Feedback – in any organization, the marketing manager must be capable of identifying the voice of the customer and representing that voice to the entire organization. Moreover, marketing managers cannot respond to every customer issues nor direct organizational resources toward every issue, instead there is a balance to be struck between statistical significance and business risk. For example, if we ignore all little issues and never follow up with customers, we run the risk of having customers view our customer feedback process as hogwash. Still, organizations have neither the time nor resources to address every issue. It is up to the marketing function to be arbiter of depth and magnitude of the customer’s voice.

Drivers of Customer Value

Customer value is in the eyes of the beholder. The depth and magnitude of the 4P’s (Product, Price, Place, and Promotion) should be defined by the marketing manager but the customer will interpret the value of the marketing mix on their own. Never forget this reality and in doing so delude your organization into thinking that customers “will eat whatever we set out for them.” The marketing manager is always challenged to take this understanding of what customer’s perceive as valuable and let it be embodied in all marketing strategies and operational tactics. Normally, consistent delivery of real customer value drives meaningful and profitable customer relationships.

Customer Acquisition and Retention Objectives

Marketing activities can be subdivided into those that are focused on acquisition, retaining and nurturing customers. Alternatively, one could think of these activities as getting, keeping, and growing customers. Important: it is often extremely expensive to acquire customers, moderately expensive to keep customers, and extremely profitable to grow existing customer relationships. Always establish clear objectives for getting, keeping, and growing customers relative to the marketing budget. Marketing managers will be evaluated by the accounting and finance function when the marketing budget is renewed. Pardon the analogy, but just like an army, how much food, bullets, and fuel you are given is a function of killing, capturing and taking territory away from the enemy. Moreover, you need long term objectives for each of the three activities but you are often judged on short term results; don’t be discouraged by this myopia.

Segmentation Analysis and Segment Profitability

Segmenting markets can be a difficult process but it is critical; it narrowly defines how you will profitably attack the marketplace in the minds of your customers relative to the competition. You will need access to customer data to make decisions on what variables to define your customers and purchase media to reach them. Demographics (i.e., age, gender, education, and income), Psychographics (i.e., personality, preferences, social group membership, etc.) and behaviors (i.e., hunter, smoker, shopper, student, etc.) are used to segment the market. Business markets are often carved up using industry classification, company size in annual sales volume, geographic region, and markets served, etc. Sometimes customer needs overlap the above segmentation variables and can be segmented based on needs. Marketing managers are ultimately faced with choosing the most actionable segments in terms of what is doable (i.e., operationally possible) and profitable (i.e., financially sound). There will be tradeoffs between segments and the investment in time and resources required to pursue the segments. Establishing informed segmentation priorities is critical.

Reference

Kerin, R.A., Hartley, S.W., Berkowitz, E.N., & Rudelius, W. (2006). Marketing. (8th ed.). New York: McGraw-Hill.