By: Billy Liang Wu
Have you noticed a product and thought: “Who is this meant for?” Indeed, while some companies may produce great products, it doesn’t necessarily guarantee the desire to purchase. Customer knowledge and analysis are one of the most crucial aspects of operating a
successful business. Knowing customers implies understanding their needs, values, problems and influences, which helps businesses make the right decisions instead of guessing what people want. Understanding the customers goes beyond increasing sales, as it affects almost any decision a company makes.
Who Is the Product for?
Companies usually don’t try to market the same product to everyone. In order to successfully sell a product, a company identifies its target market, or the specific group of people to whom the product is marketed to. For instance, when marketing a product like backpacks for schools, a company focuses on students, and has to understand what students actually value, including price, comfort, durability, space and other aspects. A product made for a college student with a laptop is much different from that made for a younger student. The knowledge of the target market allows a business to understand which type of products needs to be developed and presented to customers. Without such information, a business might be wasting time and money on developing and promoting products that do not really solve any problems of the target market.
Customer Information Helps Businesses Make the Right Decisions
Another source of customer information is listening. By listening to customers, businesses can gather valuable information through surveys, reviews, interviews, sales data, social media feedback, and market research. For example, a small business dealing with drinks might notice that its customers constantly request drinks without much sugar. Then the owner can develop a new drink with less sugar, and if the response will be positive, the business will learn something important. The fact is that businesses have certain resources that they cannot utilize in many ways. They cannot develop all types of products, make changes everywhere, and promote products everywhere.
Knowing Your Customers May Impact More Than What You Sell
Customer understanding does not just help determine the products a business sells. It can also have an impact on price-setting, marketing, customer service, and the overall experience. For instance, if a business realizes that its customers value cost-effective pricing very highly, then it will likely consider pricing its products affordably or provide different pricing options. Should the customers value convenience highly, the business will ensure it invests in things such as online ordering, fast delivery, and convenient return procedures.
It is also important for a business to understand its customers when marketing its products. Something that resonates well with teenagers may be totally irrelevant when addressing parents. Also, products designed for professionals may require a totally different strategy from
what is used for students.
What Happens When Businesses Do Not Listen?
A business ignoring the needs of the customers can face challenges. The business may expect customers to desire something on the basis of their own preferences. However, there is a difference between the preferences of the business owner and those of the customers.
That is one of the reasons why the customer feedback can help businesses to know more about their products. In some cases, a business finds out that the product customers expect to like has certain disadvantages: an unwanted feature, a very expensive price, or a disadvantage the business was unaware of. Nonetheless, listening to the needs of customers does not mean that a business should do
everything its clients ask for. There are still expenses, business goals, competition, and feasibility that businesses have to take into consideration.
What Young Entrepreneurs Can Learn
It is especially helpful to keep this in mind for young entrepreneurs. When launching your own small business or a project, it can be easy to get lost in the things you want to produce. However, it is necessary to ask the following questions: who would need this and why? Just a brief talk with future clients may give some surprising results to an entrepreneur. The person selling custom products or offering tutoring services, or even creating a mobile application can ask potential clients what they need, how they would improve the product, and
why they would need it at all. It is not necessary to have a big firm with a large research department to understand customers.
It is important just to be ready to listen.
The Customer Is Part of the Business Decision
Ultimately, companies find themselves operating in a market environment where consumers make decisions about their purchase behavior. Information about consumer behavior provides useful knowledge for companies to base their decisions on. A good product is essential but a good product solving the wrong problems does not have much sense at all. Companies that know more about their consumers can react to changing needs and provide appropriate response. It should be clear for the young entrepreneurs that apart from the question of “What do I want to sell?” there is another, equally important question that is worth asking, namely, “What do consumers really need?” Sometimes, the best ideas come from listening, not doing.
Sources
https://www.investopedia.com/terms/t/target-market.asp
https://www.sba.gov/business-guide/manage-your-business/market-research-competitive-analys