Marketing Fundamentals: Demand Management, Segmentation, and Value

Core Concepts: Managing Market Demand

Needs, Wants, and Demands

People have needs for specific goods or services. Companies aim to identify and satisfy these needs. A complete demand includes four components:

• The underlying need and the specific want.
• The budget (ability to pay).
• The specific plan to purchase the item.

Types of Consumer Needs

Understanding the different levels of needs is crucial for effective marketing:

• Stated Needs: Explicit requests. Example: “I want to buy a cheap car.”
• Real Needs: The underlying requirement. Example: “I want a car that does not consume a lot of fuel.”
• Unstated Needs: Needs the customer has not yet consciously considered.
• Delight Needs: Identifying secondary needs that exceed basic expectations.
• Secret Needs: Needs the customer is unwilling to articulate or admit.

Note: Marketing does not create needs; marketing transforms existing needs into wants in order to satisfy them.

Target Markets, Positioning, and Segmentation

This process forms the heart of strategic marketing, focusing primarily on the customer.

Segmentation is the process of dividing the total market into distinct groups based on shared characteristics (e.g., gender, age, preferences, or purchasing behavior). The division depends heavily on the product being sold.

The Target Market is the specific group(s) selected to serve after the market has been segmented.

Positioning relates to the brand's identity, aiming to occupy a specific, desirable place in the mind of the customer (e.g., luxury product, friendly service). Key factors considered when establishing market positioning include value, customer service, and quality.

Offerings and Brands

Offerings represent what companies provide to the market. A successful offer (supply) requires three characteristics:

1. The capacity to produce the offering.
2. The ability to create a value offering.
3. A specific plan to sell it.

Example: Coca-Cola has the capacity to produce a mint-flavored soda, but must assess the value and sales plan.

The Brand is the most constant offering. When a company offers a product, it is simultaneously selling the brand identity.

Value and Satisfaction

Value is defined as solving a customer need at a price the customer perceives as fair. When the price is perceived as fair, it consequently leads to satisfaction.

Marketers must distinguish between:

• Real Value: What the company is actually offering.
• Perceived Value: How the consumer evaluates and interprets the real value.

To measure customer satisfaction, organizations typically conduct market research.

The Value Triad outlines the three core areas marketers should focus on to satisfy consumers: Quality, Price, and Service.

Essential Marketing Channels

Marketing channels are the pathways used to reach and serve customers. They are typically categorized into three types:

• Communication Channels: Used to deliver information to target buyers (e.g., advertising, email, social media).
• Distribution Channels: Used for the delivery of physical goods or units.
• Service Channels: Used for delivering intangible services that are neither information nor physical products (e.g., banking, maintenance, repair services).

Key Company Orientations (Philosophies)

Company orientations define the philosophy management adopts toward the marketplace.

• Production Orientation: Rooted in the Industrial Revolution, this philosophy focuses on achieving high production efficiency, mass distribution, and low costs. The assumption is that consumers prefer widely available and inexpensive products.
• Product Orientation: Focuses on offering superior quality, performance, or innovative features. Management believes consumers favor the best products available and often neglects market feedback.
• Selling Orientation: Focuses heavily on aggressive selling and promotion efforts. This approach is often used for unsought goods, aiming to persuade the public to buy the company's product rather than a competitor's.
• Marketing Orientation: This customer-centric approach focuses on identifying and satisfying customer needs better than competitors. It involves innovation, advertising, logistics, and continuous focus on the target customer.