Principles of Marketing. Unit 1 Setting the Stage. Chapter 1 Marketing and Customer Value. 1.5 Determining Consumer Needs and Wants

 

By the end of this section, you will be able to:

• 1 Explain how an organization identifies consumer needs and wants.
• 2 Describe the process through which an organization satisfies consumer needs and wants.

Identifying Consumer Needs and Wants

We’ve repeatedly mentioned satisfying customer needs. But understanding those needs and/or wants isn’t always as simple as it sounds. For example, some customers have needs of which they’re not fully aware; others can’t articulate their needs, or the words require some degree of interpretation. Consider this: what does it mean when a customer asks for a “restful” hotel, an “attractive” bathing suit, or a “powerful” lawn mower?

Let’s consider an example to illustrate this concept. A customer comes into your car dealership and indicates that she wants to purchase an inexpensive hybrid vehicle. That description is broad and subject to interpretation, so it’s essential that the marketer probe further, because there are really five types of customers needs38

• Stated Needs. Stated needs are those that are clearly specified by the customer. It’s what the customer requests. For example, you go into a big box store such as Best Buy and tell the sales associate that you “need a new phone.”
• Real Needs. Real needs are one level above stated needs; they are more specific and define the parameters that are immediate to defining and fulfilling the need. In other words, real needs are what the stated needs actually mean. What are our phone buyer’s real needs? Are they looking for a phone with long battery life, a high-resolution camera, or a lot of internal memory?
• Unstated Needs. Unstated needs are what the customer also expects but doesn’t ask for. Once again, using our phone example, the consumer may expect but not express the desire for good service from the carrier and/or the big box store.
• Delight Needs. Delight needs are those that provide the “wow” factor. These needs, like unstated needs, can make some products more desirable than others if they meet those needs. Going back to our phone example, delight needs can be something like a phone case or other promotional gift.
• Secret Needs. Secret needs are those that a customer may not state or realize but can be one of the main reasons for choosing a particular product to fulfill the basic stated need. Do customers want a new cell phone as a status symbol but won’t admit that status is important to them?

The bottom line is that responding only to a customer’s stated need may not satisfy the customer. The marketer needs to understand what the customer really wants.

Satisfying Consumer Needs and Wants

You may be asking yourself at this point, “Does marketing satisfy needs, or does it create needs?” Some people feel that marketing creates needs and pressures consumers into buying unneeded products or services. However, marketing does not create needs; rather, it opens consumers’ eyes to their wants, and it’s up to marketers to understand those wants in order to guide consumers on the path to purchasing their products or services.39 Marketing creates value, and value speaks to the satisfaction of customer needs and the benefits customers receive from the product. It’s the customer, however, who ultimately determines how well the product fulfills their needs and how much value the product creates.

The challenge for the marketing team is to succinctly and compellingly articulate a value proposition that speaks directly to the benefits your product or service delivers.

The Value Proposition

A value proposition identifies the quantifiable benefits that customers can expect when they choose to purchase your company’s product or service. A value proposition is, in effect, a promise from the company to the customer, and it can serve as a competitive differentiator to motivate customers to purchase your company’s products or services. In other words, your value proposition should bring together in a brief, concise statement what your customer wants and/or needs and how your product or service will meet those wants and needs better than your competitors.40

That’s a bit abstract, so we thought we’d include a few examples of some good value propositions:

• Bill Ragan Roofing: “Let us take the stress of roof repairs or a roof replacement off your shoulders.”41
• Applied Educational Systems (AES): “Spend your time connecting with students, not planning and grading”42
• DuckDuckGo: “Tired of being tracked online? We can help.”43
• HelloFresh: “Take the stress out of mealtime.”44

The Exchange Process

Marketing facilitates what is known as the exchange process—the act of obtaining a desired product or service from an individual or business by providing in return something of value, as illustrated in Figure 1.10.

Figure 1.10 The Exchange Process (attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license)

The buyer (or customer) initiates the exchange process. The buyer (who has a want or need) is the individual or business who is willing to pay money or provide other personal resources to satisfy this need or want. Let’s simplify that definition with an example. When lunchtime rolls around and you’re on campus or at your job, you’re hungry; you have a need for food and drink. You go to the dining hall or a nearby restaurant to order lunch, and you’re willing to pay money in exchange for your meal. Simple, right?

Keep in mind here, however, that there is a difference between a customer and a consumer. The customer is the individual or business that purchases the product or service. The consumer is the user of the product or service. To put this concept in simple terms, if a grandmother buys a toy for her grandson, she is the customer; her grandson (who will use the product) is the consumer. In the case of going out for lunch, you’re both the customer and the consumer.

The desired object is the product or service itself. It may be a physical good, service, or experience that consumers expect will satisfy their wants and/or needs. Let’s go back to our lunch example. The desired object is the meal. The seller is the individual or organization that supplies the need-satisfying product, service, or experience. Once again, in the lunch example, the seller would be the dining hall or the restaurant.

Inherent in the exchange process is what’s known as value—the benefit to the customer or consumer relative to the cost in the exchange. In other words, value is the monetary worth of the benefits the customer receives in exchange for the product or service. Let’s go back to our backpack example a few sections ago. You may really want that backpack because it keeps your “stuff” organized and it’s lightweight (the benefits), but if the cost is too high, either in terms of the monetary cost or the time you’d have to spend going to the store to buy it, that backpack won’t have value for you. No sale!

Knowledge Check

It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.

1.

________ needs are those that provide the “wow” factor in a customer’s purchase.

1. Stated
2. Real
3. Unstated
4. Delight

2.

In the exchange process, the ________ is the individual who purchases the product or service, and the ________ is the individual who actually uses the product or service.

1. buyer; seller
2. buyer; customer
3. customer; consumer
4. consumer, customer

3.

Which of the following terms refers to the promised value of a product or service?

1. Valuation
2. Value proposal
3. Value assessment
4. Value proposition

4.

________ is/are the benefit(s) to the customer or consumer relative to the cost of the product or service.

1. Value
2. The exchange process
3. Stated needs
4. Expectations

5.

Which of the following best describes a satisfactory exchange process?

1. One that allows the seller to incur the highest profit possible
2. One that allows the buyer to pay the lowest price possible
3. One that fairly addresses the needs of both the seller and buyer
4. One that is most convenient without regard for either the seller or buyer

https://xy2.eu/3ipzq

Measuring and maximizing customer value

 

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Carol Dweck's new theory on the foundations of personality

Carol Dweck, founder of mindset theory, has written an ambitious new paper in Psychological Review. In this paper, she presents a new theory about how personality is formed and how both nature and nurture play a role in this. The interesting thing about this theory is that it both establishes connections between old and new theories within psychology and that is brings together separate psychological disciplines. Social psychologists have often been criticized for paying too little attention to theory building and for merely developing fragmentary knowledge. Dweck now comes up with a strong answer to these criticisms in the form of a broad theory which may turn out to explain a broad range of psychological phenomena. This type of theorizing is not only important for social scientists but also for practitioners for whom psychological knowledge is relevant (and who is really excluded from this group?). Good theory can help practitioners deal with problems in more informed, systematic and integrated ways. Below, I will explain what the theory is. Then, I will say a bit more about some of the main parts of the theory.

Dweck's theory of personality development 

As briefly explained as possible, the theory comes down to the following. We all have a set of psychological needs which we try to satisfy through the goals we set. While we try to achieve those goals we develop mental representations in the form of beliefs, emotions and action tendencies. These mental representations then direct the further goals we set. As this happens we gradually form certain styles in the way we set goals and related patterns of behavioral tendencies which can be viewed as personality traits. According to Dweck these mental representations become the basis of how personality develops. The figure below summarizes this.

A taxonomy of needs 

As part of her macro theory Dweck presents a micro theory of needs which is interesting. In her theory of needs she integrates parts of many other needs theories, such as self-determination theory (Ryan & Deci, 2016). Her model fits with these earlier theories and builds on them by adding a meaningful stratification. The first layer consists of three basic needs: acceptance, predictability and competence. The second layer consists of three emergent or compound needs: trust, control, and self-esteem/status. The third layer consists of one developed need: self-coherence, which itself consists of two components: identity and meaning.

The figure on the right shows the entire needs model. The first layer of needs are basic needs. These are needs which are present from birth of shortly thereafter.

The second layer contains needs which have developed later on and follow from combinations of the previously mentioned basis needs. Trust emerges from the combination of predictability and acceptance, self-esteem from the combination of acceptance and competence, and control from the combination of competence and predictability. These compound needs develop later on in the development of the individual because the require a greater self-awareness and a greater ability to compare oneself to a certain norm. By the way, that these compound needs develop later does not mean they are less important. The need for self-coherence is the "hub" of all needs and refers to the feeling of being psychologically intact and integrated. The component of identity revolves around the question of "who am I?" while the component of meaning revolves around the question of "How does the world work?".

The formation of mental representations (BEATs) 

Dweck argues that when we set goals to satisfy our needs experiences are created which we start to represent in our brains. The representations can be thought of as cognitive schemas based on our experiences. What these mental representations refer to Dweck explains by the acronym BEATs which stands for Beliefs, Emotion, and Action Tendencies. BEATs are thus the way the brain encodes the experiences we have as we try to achieve the goals we set in order to fulfill our needs. That BEATs emerge from experiences does not mean that genes play no role in their formation. Genetic factors can surely play a role in how experiences are mentally represented. A an aside I would like to mention that a powerful example of how beliefs (the B from BEATs) play a role in the development of behavior and personality is Dweck's own mindset theory. Mindset theory is also a good example of how influencing people's beliefs can have a great impact on their behaviors and consequences of their behaviors. If the influence is structural, Dweck's new theory suggests, personality formation can be influenced.

Implications of this theory

This theory may have important implications for how we think about individual development and for effective ways of intervening in the case of problems. The theory could, for example, be very useful in explaining personality disorders. One way in which this might be done is by understanding how an excessive focus on fulfilling one particular need could suppress the fulfillment of other needs. Obsessive-compulsive disorders might be understood as an excessive focus on goals which are aimed at satisfying the need for control which may be at the expense of the satisfaction of other needs. A BEAT which might play a role in this process is a low expectation of control.

Another way in which personality disorders might be understood is through the formation of ineffective BEATs. People with a borderline personality disorder might, for example, have developed ineffective and unrealistic beliefs about the meaning of rejection bu others due to which they might react in and extreme manner to rejection. Further, disorders could be understood as a inability to keep updating BEATs throughout life.

Another type of implication of this theory concerns the identification of entry points to stimulate or guide healthy personality development and to intervene in case of problems. An healthy personality development can take place in a context which recognizes and supports the seven needs which Dweck describes. The basic needs can be recognized, acknowledged, and supported from very early on. The compound needs emerge later and can be supported later on. Also, a healthy personality development requires the formation of effective and realistic mental representations (BEATs). Realistic beliefs and effective action tendencies are important prerequisites for healthy personality development. Beliefs and action tendencies also appear to be very suitable as entry points for the treatment of problems and disorders. Unrealistic (and/or ineffective) beliefs may lead to ineffective behavioral tendencies and eventually even to personality disorders.

Reflection

I have tried to briefly summarize Carol Dweck's new theory. Of course, her paper provides a much more in depth treatment of everything I have mentioned. I think this paper is one of the most ambitious and interesting psychology papers I have read in a long time. The framework which Dweck presents builds on a great deal of previous theory building. At the same time it may guide a lot of new research which may test the specific parts of this theory and their connections.  Future research could, for example, test the structure of the taxonomy of needs, the relations between personality disorders and needs satisfaction, and BEATs, and the degree to which personality development can be influenced through BEATs.