Customer Requirements

Customers are said to be the lifeblood of the business. These are the people who buy
the
products or avail the services of the entrepreneur. Their thoughts, feelings, and
experiences shape the
decisions of the business. Thus, the phrase “the customer is always right” is a mantra
that most
successful entrepreneurs follow. Customer requirements are specific features and
characteristics that
the customers need from a product or a service. It is in these customer requirements
that business
opportunities originate. Entrepreneurs must be aware of all these requirements for
them to come up
with features that best suit their needs. They must know who buys, and what, when,
where, how, and
most importantly why they buy. These requirements can be used to formulate the
value proposition
and the unique selling proposition, addressing the requirements would increase the
competitive edge
of the business.
Primary and Secondary Target Market.
Most entrepreneurs believe in the misconception that they can serve all types of
customers or,
if not, a wide range of customers. Little do they know that this thinking may lead to
failure?
Entrepreneurs must focus only on customers whom they can serve beneficially
because they will be
wasting resources if they will target all, or worse, target none.
The entrepreneur can tap a primary target market and a secondary target market as
resources
are limited during the startup stage. With this, the probability of success is higher as
the entrepreneur
can focus to sell to the identified customer group.
Market intelligence, which includes customer profiling, drives the entrepreneur on
what
correct strategies and tactics to employ. This can only be obtained through a
meticulous market
segmentation process.
Market segmentation is the process of grouping similar or homogeneous customers
according
to demographic, psychographic, geographic (location), and behavior.
It is best to create a persona(s) of the target customer to represent the general
characteristics
and behavior of target market. A secondary target market is also necessary to spread
out the capital
expenditure and the risks as well. They are the customers who don’t have enough
purchasing power
or have fewer demands. They may not be your primary target market, but they can be
converted once
effective marketing strategies are implemented.
Segmentation
Explanations
a. Demographic
segmentation
Also called socioeconomic segmentation, is the process of grouping
customers according to relevant socioeconomic variables for the business
venture. These socioeconomic variables include income range and social
class, occupation, gender, and age, religion, and ethnicity.
 Income range and the social class of the customer is very important
factors for the entrepreneur to consider because these represent the
purchasing power of the market.
 Occupation – should also be considered not just to determine the
customers’ income but their daily routine where goods and services
can be properly positioned.
 Gender and age group – are data that must be mined because the
life cycle of customers and their gender influence their buying
behavior.
 Religion and ethnicity – also should be taken to account because of
these affect the way they buy products or avail of services.
b. Psychographic
A process of grouping customers according to their perceptions, way of life,
motivations, and inclinations.
 Perceptions – it is a process wherein an individual receives external
stimuli using the five senses of hearing, touching, smelling, seeing,
and tasting. A product or service can be perceived differently by
different people. The customer’s way of life will give an
entrepreneur an overview of what products or services can be best
suit the problems of the customers that happening on a daily basis.
 Physiological motivation – involves the needs of the person (e.g.,
food, clothing, shelter); they seek to avoid pain and give pleasure.28
 Psychological motivations involve customer’s preferences (what
customer likes and dislikes). -Motivations are also affected by their
aspirations and deprivations.
 Aspirations are what the customer wants to achieve, while
deprivation involves the customer’s recognition of certain voids to
fill.
c. Geographic
Simply grouping customers according to their location. This is critical in
the analysis of the target market as this encompasses the cultures, beliefs,
preferences, politics, and lifestyle of a certain geography. Geographic
segmentation can be as small as a street, village, or a barangays.
d. Behavioral
Process of grouping the customers according to their actions. These
behaviors are instigated by occasion, desired benefits, loyalty, and usage of
products or availment of services.
 Occasions drastically affect the customers’ buying behavior.
 Loyalty is the result of maintaining satisfied customers. The goal of
every entrepreneur is to inform, persuade, and remind customers to
buy the product or avail of the service consistently. Loyalty
programs and rewards separate loyal customers from the new ones.
 Usage of products or availment of service is also a behavior
segmentation factor that describe to the entrepreneur how often a
product is being used or the service is being availed. Therefore, he
or she can group customers as light users, medium users, or heavy
users.
Although segmentation is a strategic and an efficient way of classifying and grouping
customers,
there is also a term in marketing called market aggregation. Market aggregation
happens when an
entrepreneur wants to target a broader market as possible because the product or
service that the business
offers is suited for an undifferentiated market such as fruits, vegetables, rice, water,
and bread, as well as
services such as haircut, plumbing, or transportation.
Talking to Your Customer
Marketing research will not be complete without talking to directly to the target
customers. It
is good to estimate numbers such as market size, market share, and other general
market assumptions,
but the best way to fully understand the customers is to ask them about their specific
thoughts and
desires.
• Qualitative research – includes identifying the written or spoken opinions of
customers.
• Quantitative research – involves analyzing the customer’s preferences by using
relevant
statistics (such as those in surveys).
Below are the four most common methods of collecting data from the target
customers: interview,
focus group discussion, observation, and survey.
A. The Interview
When designing an interview schedule, it is imperative to ask questions that are likely
to yield
as much information about the study phenomenon as possible and also be able to
address the aims
and objectives of the research. In a qualitative interview, good questions should be
open-ended (ie,
require more than a yes/no answer), neutral, sensitive and understandable. It is usually
best to start
with questions that participants can answer easily and then proceed to more difficult
or sensitive
topics. This can help put respondents at ease, build up confidence and rapport and
often generates
rich data that subsequently develops the interview further.
As in any research, it is often wise to first pilot the interview schedule on several
respondents
prior to data collection proper. This allows the research team to establish if the
schedule is clear,
understandable and capable of answering the research questions, and if, therefore, any
changes to the
interview schedule are required.
The length of interviews varies depending o