Understanding Customer Needs and Market Segmentation Strategies

The Five Types of Customer Needs

We can distinguish five types of needs:

• Stated needs: The customer wants an inexpensive car. Example: "I want to buy a cheap car."
• Real needs: The customer wants a car whose operating cost, not initial price, is low. Example: "I want a car that does not consume a lot of fuel."
• Unstated needs: The customer expects good service from the dealer. Example: The customer has not thought about the specific need they have.
• Delight needs: The customer would like the dealer to include an onboard GPS navigation system. Example: Identifying secondary needs that surprise the customer.
• Secret needs: The customer wants friends to see them as a savvy consumer. Example: Needs that the customer is unlikely to voice explicitly.

Target Markets, Positioning, and Segmentation

Not everyone likes the same cereal, restaurant, college, or movie. Therefore, marketers start by dividing the market into segments. They identify and profile distinct groups of buyers who might prefer or require varying product and service mixes by examining demographic, psychographic, and behavioral differences among buyers.

After identifying market segments, the marketer decides which present the greatest opportunities—these are the target markets. For each, the firm develops a market offering that it positions in the minds of the target buyers as delivering specific central benefits. For example, Volvo develops its cars for buyers to whom safety is a major concern, positioning its vehicles as the safest a customer can buy.

Core Marketing Concepts

• Segmentation: The process of dividing the market based on the products being sold.
• Target Market: Selecting the specific groups that the company intends to serve.
• Positioning: Establishing a specific identity in the mind of the customer (e.g., luxury, friendly, or reliable). Value, customer service, and quality are critical factors when creating a market position.

Offerings and Brands

Companies create a value proposition through their offerings, which can be a combination of products, services, information, and experiences. Three characteristics define an effective offer: the capacity to produce a good, the ability to create value for that good, and a specific plan to sell it.

All companies strive to build a brand image with as many strong, favorable, and unique brand associations as possible. The brand is a constant offering; when a company sells a product, it is simultaneously selling the brand.