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Bus and Motor Coach Library

Professional Management Series #4 - The Basic Tenets of Marketing
                                                                                   

Author – Brian Niddery (2005)

The most basic concept upon which the marketing process is founded is to understand that nobody needs your product or service.  What they really need are the benefits that your product or service will provide them. Many believe that the two are indistinguishable; that they are one and the same.  But you need to understand that there is a fundamental and distinct difference. 

It is so important that we'll repeat it!  Nobody needs or wants your product; rather they need or desire the benefits that will accrue to them if they purchase or use your product.  

Unfortunately many business people see themselves as selling a product, rather than providing a solution to a need. Let's try to think of a scenario that will really drive this point home.  A manufacturer of drill bits may believe that his customers need a drill bit, when in fact what his customers really need is a hole.  Most sellers suffer from marketing myopia.  They concentrate so much on the attributes of their product or service, that they lose sight of the underlying needs of their customers. They forget that a product in most cases is only a tool that can be used to solve a problem or supply a need.

Consequently sellers oftentimes have trouble when another competitor comes along with a product that serves the need better, or less expensively.  They can't figure out why their competitor's products are selling and theirs isn't! They can’t figure it out because they are concentrating too much on comparing the attributes of their own product versus the attributes of their competitor's products; when instead they should be trying to better understand customer needs and desires and determine how these needs can be better served.  

So let's get down to the very basis of marketing; that of dealing with customer needs!

One way to define marketing is, "the delivery of customer satisfaction at a profit". The goal of marketing is to attract new customers with the promise of better value, and keep current customers by delivering satisfaction.  The most successful companies know that if they take care of their customer's needs, market share and profits will follow.

Home Depot is without question one of North America's most successful companies.  In the words of its co-founder, Bernie Marcus, “All of our people understand what the Holy Grail is!  It's not the bottom line; it is an almost blind, passionate commitment to take care of customers.”  Home Depot has calculated the value of a satisfied customer at $35,000.  This is how they break it down - the average customer spends $53 per visit, and makes 30 trips a year, over a 22-year period. 

So let's look at how Home Depot delivers satisfaction.  A customer comes in looking to buy floor tiles.  But floor tile isn't really what he wants!  What he needs is a beautiful new floor at a reasonable cost.  You may have noticed that Home Depot employ a lot of retired skilled people who can show you how to do things like cut and lay tile and show you all the materials and tools that you will need and how to use them to successfully complete the job.  They even host morning workshops on such projects. Compare that to a typical builder supply store that simply tries to sell you floor tiles at the lowest discounted price around. Guess who sells more tiles?

So what is involved in the Marketing Effort? 
Given that so many companies do not understand the difference between selling a product and delivering customer satisfaction, they will naturally think that marketing is simply advertising and selling product. Marketing is far more than just advertising and selling.  In fact advertising and selling activities are just the tip of the iceberg!  "Telling and selling" just doesn't cut it; one needs to have a sense of knowing what the customer really needs, and go about the effort of satisfying those needs.

Every once in a while a "hot" product comes into the market, and the manufacturer is swamped with orders.  This "hot" product is simply the "right" product that significantly better meets a customer need than any of its competitors.  It is the "right" product, rather than just another "me too" copy similar to the competition.  Peter Drucker, a leading marketing professional has offered, "The aim of marketing is to make selling almost superfluous.  The aim is to know and understand the customer so intimately that the product fits the customer's needs so well that it practically sells itself".

Now that we all know that the most vital part of the marketing process is an intimate knowledge and understanding of who your customers are, and what their needs are, let's move one step closer and try to understand how customers are motivated…what makes them tick!

Before we go any further, let's deal with the term "Product".  The definition of a product in marketing terms is much broader than a layman's term.  It is defined as anything that can be offered to a market for attention, acquisition, use, or consumption; that might satisfy a want or need.  It includes physical objects, services, knowledge, persons, places, organizations, and ideas.  Often marketers will differentiate between tangible and intangible products by referring to them sometimes as "goods" and "services".

Needs, Wants, and Demands

As human beings we all possess Needs, Wants, and Demands.  Although these terms seem to be similar in definition, they are in many respects quite different. As a marketer of a product we need to understand these differences.

Needs:  Needs are states of felt deprivation. People can be deprived of something or simply feel that they are being deprived.  Either way, they perceive they are being deprived, and thus go about trying to satisfy the need, or alternately reduce the need.  These can include physical needs (food, clothing, shelter, safety and warmth), social needs (belonging and affection, social status), and individual needs (need for knowledge, self-expression, sense of worth, self-fulfillment, happiness, accomplishment).  Needs cannot be created or modified by marketers; they are a basic part of the human condition.

Wants: The form or interpretation taken by humans to satisfy or reduce their needs.  The form or interpretation is shaped by culture and individual personality.  A need translates to a want, which is how a person seeks to satisfy that need - whether it is perceived or real.

Demands:  Wants that quite simply are backed by buying power.
A need might be hunger.  Either a person needs to eat or he or she will starve to death.  This is definitely a strong "need".  How one goes about satisfying that need differs, and this translates to a "want".  In North America one might want a hamburger and fries; in Bali one may prefer mangoes, suckling pig, and beans. In another part of the globe, extreme hunger may be satisfied by eating insects and roots.  

Wants therefore can be described in terms of products that will satisfy needs.  As a society evolves, its members' wants will expand.  As people are exposed to more products that arouse interest and desire, producers will try to provide more want-satisfying products and services.

People have almost unlimited wants but usually limited resources.  Thus they want to choose products that provide the most value and satisfaction for their buying power.  This brings us to the definition of "Buying Power".  Buying power can be any kind of currency - monetary being of course the most prevalent.  However there is also trade, barter, begging or stealing.  These are all forms of exchange. The selling process is really an exchange of product.  People place a personal value on something, and in order to acquire it, are willing to part with something else.  An exchange for food could be monetary, as in purchasing it from a store, or barter through a trade with something else of equal value, or it can mean the investment of one's time in begging or stealing food, fishing, hunting, or gathering food.

Customers view products as bundles of benefits and choose products that give them the best bundle for their money or trade.  Given wants and resources, people demand products with the benefits that add up to the most satisfaction. It is important to understand that these bundles of benefits can and often vary between individuals.  For example Honda knows that a large portion of the car buying public look for basic transportation, low purchase price, good fuel economy.  Mercedes-Benz also knows that a significant portion of this same market wants comfort, luxury, performance and status.  Each seeks to maximize its value and customer satisfaction according to its particular buyer market.  To accomplish this they need to know exactly the array of benefits that will most satisfy their specific customer base.  Outstanding companies go to great extremes to learn more about and understand their customer's needs, wants, and demands. 

How extreme you ask? Here are a few samples.  Coca Cola knows that we each put an average of 3.2 ice cubes in our soda drink glasses. Auto makers know that 38% of us would rather have a tooth pulled than take our automobile to a dealership for repairs.  Procter & Gamble knows exactly how many of us fold our toilet paper versus how many crumple it; and that 68% of us prefer our toilet paper to unwind over the spool rather than under it.  The food industry knows that we eat each year on average 156 hamburgers, 95 hot dogs, 283 eggs, 5-lb of yogurt, 9-lb of cereal, 2-lb of peanut butter, and 46 quarts of popcorn.
There are two additional marketing definitions that we ought to cover to better understand the consumer buying process.

"Customer Value" is referred to in the marketing industry as the "difference between the values a customer gains from owning and using a product, and the costs of obtaining the product".

"Customer Satisfaction" is the extent to which a product's perceived performance matches a buyer's expectations."  If a product falls short of expectations, this equals an unsatisfied customer.  If it matches or exceeds expectations, this equals a satisfied or sometimes a delighted customer.

      "delight customers by promising only what you can deliver; then try to deliver more than you promise"

A key marketing strategy is to try to match customer's expectations with performance.  The aim is to delight customers by promising only what you can deliver; then try to deliver more than you promise.  Many companies who consider marketing as merely consisting of advertising and selling will often promise the "sun and the moon" in their advertising and sales pitch, and then fall short in product performance.  An example might be a charter group sold on "our fleet of new high-deck coaches" at a very "attractive price", and at pick-up time an older, rather well-worn coach pulls up to the curb.  In such a scenario perhaps it would be better to provide the customer with a choice between either a lower price or a new high-decker coach, and upon their choice deliver upon that promise - each and every time!

Customer satisfaction is closely linked to product "quality".  Quality is a measure of product performance; hence it is a parallel to Customer Satisfaction.  One might be inclined to think of quality in the narrowest sense; that is "freedom from defects"; but it should be considered in the broader sense, and thus defined in terms of customer satisfaction. 

If one considers that it's not the product itself that is important, but customer satisfaction, then it follows that any attributes of the product itself are equally not important, but rather those values that will enhance or contribute to a higher degree of customer satisfaction that is important.  So in the charter example above, by giving the customer a choice at the outset, either way you will likely meet that customer's expectations, rather than that sense of disappointment when that elderly coach pulls up to the curb.  To repeat, "Promise only what you can deliver, and (if possible) deliver more than you promise". 
In summary, it's not the product a customer wants, it's the benefits!  It's the sizzle, not the steak"!