(a) Elaborate on the five (5) concepts for:
(i) Core customers
(ii) Marketplace concepts. (20 marks)
(b) Explain the importance of understanding these concepts. (5 marks)
(25 marks, 2015 Q1)
(23.09.2015)
A.
Similar question was asked in:
2013 Q1 - explain five (5) core customers and market place concepts.
The difference in this question is that it is (i) Core Customer and (ii) Marketplace. Hence, the perspectives of the 5 concepts involving customer side and marketplace side are discussed in separate sections.
(a)
(i) 5 concepts on the Core Customer side.
1. Needs, Wants and Demands
Customers have needs, wants and demands for certain product or services. These desires to be fulfilled is what makes the buying and consuming of goods and services. In fact, when a need is backed by buying power it becomes demand. This is the most important concept from the point of view of customers. Without the needs, wants and demands, the activity of production, manufacturing selling and marketing would be meaningless.
Take an example of a nomadic tribe, there is no demand of a permanent house. Hence, from the perspective of the tribe, selling permanent housing to them does not fulfill their needs, wants and thus, they do not have demand for houses.
2. Market Offerings (Choices of Products)
From the customer's perspective, market offering is an array of choices. In the myriad of choices, customers are blurred with what they really need, want or demand.
Hence, the concept of market offerings in the perspective of consumers is about nearest choice. What is the most matching choice would be the right fit for the demand. Without the right marketing offerings, the consumer would likely wait, and consider the next best choice.
For example, when a customer is looking for a sofa and a bed, if a combined Sofa-Bed is attractive and cheaper, the consumer may choose to buy this new product.
Another example is when consumer is flying AirAsia for holidays, they may be attracted to buy the package of Flight with AirAsia and Accommodation at Tune Hotel. This is fueled by the attractive choices in the market offerings.
3. Value and satisfaction
The phrase 'customer first' is really at the core of this concept. Customers make satisfied clients and enable future referrals easier because of the perceived value proposition. A satisfied customer is a customer who will return and consume more. As the value perception is sometimes emotional, and intangible, the correct customer's value perception must be captured. This will then identify the type of product or services that can meet the needs, wants or demand of the customer.
For example, a retailer who seldom go out would not likely buy a car. However, if he perceives the value of a car being his status, and requires it to impress a girl. Then the value perceived of the car is not of transportation. It may be perceived for his emotional need to satisfy a girlfriend.
4. Exchanges and Relationship
This concept is at a higher hierarchy of needs - recognition and emotional satisfaction.
Customers may be seeing the Value and satisfying needs and wants. However, another part of customer's buying satisfaction is the relationship of exchange, trust and confidence.
Take for example, you can buy from a nearby pharmacy some health supplements but you choose to drive 5 kilometers away to get it from the pharmacy that you like. Why? Because of low price? It might not be cheaper but more expensive! Nevertheless, you like to buy from your trusted pharmacist because of the rapport and professionalism in him.
This part of the concept of marketing is about feelings, trust and communication of ancillary needs. Like the above, the need may be health supplements, the value may be professional opinion, the ancillary needs may be trust and long term relationship.
5. Markets
From the customer's perspective, the various relationships of exchanges for the satisfaction of his many needs constitute a place for the congregation of sellers and service providers. This congregation is a market or markets of various goods and services.
For example, a housewife who cooks for the family goes to the wet market to buy necessities like meat, vegetable and rice. In the same market there are also sellers of other groceries like soap, washing powder and even clothing. Hence, the concept of a grouping of sellers of related items come together to satisfy the greater scope of needs of customers. This is the concept of market from the perspective of customer needs.
(ii) 5 concepts on the Marketplace side.
1. Needs, Wants and Demands
Marketplace exists to satisfy the needs, wants and demands of certain product or services by the consumers. The market over time comes to a dynamic of evolution of new products to satisfy the ongoing change of taste and requirement of the consumers. There is then, different substitutes of products for fulfilling the same needs, wants and demands. These are the competitions. The competition are introduced to better satisfy the needs, wants and demands of the consumers.
Take an example of a nomadic tribe, there is no demand of a permanent house but the market may introduce a type of tent. Hence, from the perspective of the market, there is a creation of new product to meet the needs, wants and demands.
2. Market Offerings (Products)
The Marketplace continually evolve to introduce new products and create needs, wants and new demands for consumers.
This can be seen in the ICT industry. The evolving ICT industry always have new products replacing old ones. Take for example, the handphone replacing the old house phone and the mobile computers replacing the desktops. The Marketplace constantly introduce market offerings to entice consumers with ever changing taste and needs.
The concept of market offerings in the perspective of marketplace is about innovation of new products which fulfills better the needs of consumers, giving another (better) choice to the prospective customer.
3. Value and satisfaction
Marketplace concept of marketing is more about identifying the right target audience and fulfilling the target value mix of this group of consumers.
For example, a marketplace for cars would sub-specialize in various types of cars. They can be sport cars, luxury sedan, family van - MPV, or mini compact vehicles. This marketplace sub-categories tends to satisfy the different segments of the market who view value and satisfaction of needs, wants and demand in quite different manners. Varieties and cost-benefits of the marketplace is geared to consumer satisfaction and value propositions.
4. Exchanges and Relationship
Marketing concept on relationship is largely by customer relationship management (CRM). This is a concept in Marketplace where the customer who is satisfied with the experience of good product from the seller would be kept for returning sale or referral to other new customers. Below are links to various postings on CRM.
2012 Q3 - Customer Relationship Management
Capturing value from customers in return
Take for example, a satisfied customer of a chain pharmacy would always return to the same pharmacy. Moreover, he would refer his relatives and friends to buy from the trusted pharmacy as confidence and product assurance is of paramount importance in this business.
5. Markets
Marketplace is the market. The market is a place where goods and services are presented to prospective customers. There are competitors, direct substitutes or quite similar products of nearly similar use competing for the same customer. How well it is able to provide solutions to the consumer is the key success factor of the marketplace. The market has to be dynamic to offer the satisfaction to the customers who are evolving over time.
For example, a housewife who cooks for the family goes to the wet market to buy necessities. The Marketplace is the wet market. They are various sellers in the marketplace, competing among each other for the buyers. The marketplace has to evolve to serve the customers. There may be needs of more comfort while shopping, hence better infrastructure of walkways. Then, the hypermarket concept came into existence. Shoppers can get almost anything and everything at low cost in the hypermarket, from groceries to electronics and furniture, all under the same roof.
(b) Importance of understanding these concept.
Grouping all the 5 marketing concepts into interaction and execute the plans requires much study. Hence, the advent of the profession of 'Marketing'.
Marketing
Marketing involves serving a market of final consumers in the face of competitors. The company and competitors research the market and interact with consumers to understand their needs. Then they create and send their market offerings and messages to consumers, either directly or through marketing intermediaries. Each party in the system is affected by major environmental forces (demographic, economic, natural, technological, political, and social/cultural).Each party in the system adds value. This value satisfies the customers. Satisfied customers built relationships, and repeat sales as well as more referrals.
Ref:
Mubina Kazi. 2012. RelivingMBAdays. Available at,
https://relivingmbadays.wordpress.com/2012/08/12/five-core-customer-and-marketplace-concepts/
1 comment:
Nice article on Core Concepts of Marketing.
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