Understanding customer needs. In this video we’re going to investigate the importance of identifying and understanding
customer needs. Including the 4 key needs customers need to take into consideration when buying
a product or a service. Finally
each customer need will be directly linked to the global coffee giant… Starbucks.
Customer needs Customer needs are things that customer want
from a product for the product to be useful or valuable to them and for it to be worth
purchasing.
Customers take into account certain aspects
of a product before making a purchase, this means a business needs to understand these
needs (through market research) and then try to meet these needs with their products.
4 key needs have been identified in terms of what a customer takes into consideration
when buying a product the first is Price (is the product priced correctly to
make it a viable worthwhile purchase Quality (is the quality equal to the price.
Is it the quality the consumer needs or expects from the product)
Choice (Is there a variety of products to suit the needs of different segments)
Convenience (can customers acquire the product with as little barriers in the way as possible)
In the next section I’ll go into detail for each need and link them to Starbucks.
However, one important think to take note of is each need has a different level of importance
for different customers. For example one customer may be prepared to pay more for a convenient
purchase whereas another customer may go out of their way to find the cheapest price possible.
Price The first and perhaps the most obvious customer
need is price. The price of a product can certainly be a key factor that is considered
when making a purchase. For the business it means setting a price
that is affordable for the type of customer the product is aimed at. The business needs
to ensure that whichever segment of the market the business is aiming at that the price makes
that product a reasonable choice for that customer. This doesn't mean it has to be as
cheap as possible. As we know if something is priced too low it can cause suspicion from
customers and could stop them from buying it. The lowest price is not always the best
pricing strategy. Is the product in question value for money
meaning is the price and quality matched correctly. For instance Starbucks has adopted a premium
pricing strategy as their products are around 38% more expensive than competitors. Despite
this they are still dominant in most countries. As they have positioned themselves as being
a little pricey but worth it through clever marketing and a strong brand. Showing that
customers will pay a premium for a better product, good service and a in Starbucks case
a relaxing welcoming environment. Businesses need to bear this in mind when
charging higher prices. Why is your product worth paying more for than competitors? This
brings us onto the second need which is quality.
Quality Quality relates to the standard of the product
or service being offered. Customers always expect some level of good quality, no matter
how much they pay for a product or service. Generally, those paying a low price will expect
a lower level of quality and those paying a higher price will expect a higher level
of quality but also a better all round experience when purchasing. i.e. if you were buying a
rolls roye you would expect a better all round service than buying a used Toyota.
From a businesses perspective they obviously want to make their product as high quality
as possible but this needs to be balanced with price. Again the business needs to ensure
their overall product offering is quality if they are going to charge a premium price
compared to their competition. Which is less important when selling discounted products.
Lets take Starbucks and coffee itself as a product. You can buy a cup of coffee instant
coffee for 50p at a low end café. However in Starbucks one of their top of the range
coffees can cost as much as £4. This is a massive difference for a similar product.
So Starbucks needs to not just offer a better quality product but they also work on added
extras that contribute to the overall quality of their product. A clean relaxing environment,
friendly service, loyalty schemes and their famous name on the cup which psychologically
makes customers feel like they are more than a customer.
Convenience Convenience relates to the purchasing of a
product being easy, quick and generally less hassle for the customers.
Customers want convenience and will often pay more for getting a product in the most
convenient way possible. Convenience can be massively important I couldn’t talk about
convenience without mentioning amazon. Their success is mostly down to convenience. Customers
can sit at home, open an app with all their details stored. Find a product and simply
swipe to buy it. The item is then delivered that day or the next free of charge.
Starbucks convenience comes in the form of… convenient locations in city centres and service
stations. They have also increased the convenience of their offering by recently developing their
app to allow online orders and pickups. Plus Drive thru locations popping up around the
UK. A Drive thru is extremely convenient for customers that want Starbucks on their way
to work without even having to leave the comfort of their car vehicle.
Meeting customer needs is important for two key reasons. The first being survival. This
is especially true for a new venture. If a new business meets the needs of the customer
they are far more likely to survive as customers who purchase the products the new business
creates will be satisfied and therefore purchase the product again or refer the business to
a friend. Which leads to another benefit of meeting
customer needs which is generating sales. If you are meeting customer needs then you
are far more likely to generate sales. You have shown that you have an understanding
the customer and are listening to what they want for your product. You are then providing
them with a product that meets their needs either in terms of price, quality, choice,
convenience or a mixture of the 4. As for Starbucks, they have not only survived
but thrived. With 26.51 billion in revenue, over 31,000 locations, 349,000 employees and
a staggering 4 million cups of coffee sold a
day. It is clear that Starbucks have met the needs
of the customer and in turn this has resulted in huge success for the business.
Thanks for watching the video we really do appreciate you watching to the end and if
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