Challenge No. 9: Knowing How to Compete – Part B

Product Benefits and Customer Needs -Keys To The Marketing Paradigm

 (This is a lecture from a University MBA Class I instructed. It more clearly defines a paradigm for competing.)

A major difference between physical and social sciences is that physical sciences tend to have “hard” fact basic fundamentals. Take string theory in physics – once you get to a string, that’s the end of the line. Most social sciences deal with the uncertainty of human interaction. Yet marketing has a basic element that is almost as elemental as the string in physics.

 The “Holy Grail” of marketing is called a need. Needs are internal human drives that force humans to seek specific “things” to reduce the force of the drive. All services and products have elements called benefits that are the key to satisfying needs. Marketing is the science and art of matching benefits to target market needs.

 The matching of benefits to needs is the primary function of any business. Until recently marketing was often thought of as a division or function within a firm. Many firms are now considered marketing driven firms. The recognized leading scholars in the marketing discipline now consider that the sole reason for the existence of a free market firm or organization is deliver goods and services whose benefits match the need of the market place. Understand that this implies that all resources of an organization/firm are committed to this action.          

 What is a need? Perhaps one of the best needs models is that of Abraham Maslow. Maslow developed a model known as the “hierarchy of needs”. There are many other needs models, but Maslow’s model has stood the test of time in social science literature. It has as it’s basis five different level of needs.

 These five levels of needs are: physiological needs, safety needs, social needs, esteem needs, and self-actualization needs. You might find it useful to look up Maslow on the net and become more familiar with this theory if you have not been exposed to it. This is another good model to keep handy and ask yourself “my products most important benefit satisfies what need level”.

 Marketing has developed significant tools to discriminate product benefits. These are used a predictive models for market acceptance. What does it mean to match a benefit to a need? It means that some form of communication from the organization seeking to deliver a good or service convinces the intend target market that the product/service will indeed satisfy the markets need.

 Some benefits of particular products are so strongly related to needs that little “marketing” communication is needed. Gasoline for your car. Milk, bread, and toilet paper at the super market. Insulin for diabetics and antivenin for snake bite victims. Some of these items are commodities – meaning that price is often the key selling point. Some are specialty items that are so import that quality is more important than price, but the price/value ratio can also be important in these products.

 Marketing communications are often highly visible elements in the marketing mix of a firm. Yet there are other marketing elements such as product quality and channels of distribution that can change the markets perception of how well the product’s benefits meets it’s needs.

 The marketing paradigm as presented in the text is a useful pedagogical tool for understanding the different elements of marketing and how they interrelate. As with any tool an understanding of that tool and how best to use it is critical to how valuable a tool is in one’s professional skill set. It is important that in each section of the text you ask yourself – how does this section facilitate the matching of product/service benefits with the target markets needs.

 The following two examples are of how assessments of product benefits allowed for a matching with target market needs that resulted in significant increase in product sales.

             The Camera Retailer Big Print – Consumer Marketing Benefits to Needs

 In the late 1970’s computerization allowed high quality, low cost autofocus cameras to enter the market. More people began to shoot 35mm film which has far superior color rendition and sharpness compared to the 126 and 110 formats. This presented a market opportunity for the specialty camera shops.

 Most of the new cameras were sold (at first) in camera specialty shops. Normally these shops are small shops (some are chain stores others are “Ma & Pa” stores) located both in malls and in smaller standalone buildings. Customers who normally use photo specialty stores have a higher expectation of quality. This expectation is a need and the quality control exercised by the specialty store photo finishing is the product benefit that meets that need.

 The one-hour labs had yet to gain a significant amount of market share. The traditional photo processing labs consisted of three types. High volume, low quality processing plants that serviced the price sensitive markets represented by firms like Fred Myer and the various drug chains. The national (and at that time international) photo processing leader who focused on quality was Kodak.

 Specialty camera shops often bought photo finishing from the high volume labs and had a private brand with somewhat more quality control than offered by the discounters. Most camera specialty stores offered Kodak processing that cost more and took a substantially longer time to be returned than the other two processing options..

 At this time, the standard picture size was 3.5″ x 5″.  Pictures were in fact a commodity with only quality (which is very subjective when it comes to processing) and delivery time, a key product benefits.

 One of the manufacturers developed an automated processing machine that could produce a new size of print – the 4″ x 6″ print. The 5 x 7 was the most popular enlargement at this time. It cost substantially more than the little 3.5 x 5 prints. Bigger pictures display better, older people with less than perfect eyesight find them fitting their needs betters.

 This new size represented a significant opportunity to present a new benefit to this particular target market. 4 x 6″ prints are 37% larger that the smaller size. The machines that produced this new size print were comparably priced with the older machines. Fuji was aggressively moving into the photo process supply market as was Agfa. Both produced a 4″ wide roll that was priced to compete with the smaller roll.

 The price of this new benefit was zero to the consumer. Photo processing is one of the most profitable items sold in a camera specialty store. We had over 75 stores at the time that could be service by our own processing plant ( which we opened to take advantage of the new size and it cost advantages).

 We developed a program of consumer advertising in electronic and print media that focused on what we felt were the two key benefits. Benefit one – the customer was now receiving a print that was 37% larger than the industry standard at no extra cost. We had a new state of the art plant that produced Camera Retailer Big Print – with guaranteed color – Love Em or Leave Em! Benefit two – a no risk purchase decision.

 We knew our product well enough to know the key benefits. We recognized a competitive new product that had an added benefit to our target market. We developed a marketing strategy that highlighted how the larger size and guaranteed quality could satisfy the needs of the customer.

 The chain expanded to over 300 stores when I was there. A significant portion of that growth was funded by the explosive growth of the large standard print. When one hour processing machines were developed, we became the distributor for the first 4″ x 6″ machines and had them in over 175 stores in the first year as the distributor.

 The Shuttle Transportation Market – The Industrial Customer Benefits and Needs

 Oregon is a state that is growing rapidly. The high tech industry in the Portland area is stressing the infrastructure. Roads are experiencing capacity problems. The state has had a revolt of the tax payer and new taxes and levies are defeated routinely.

 Public transportation systems are not chartered to help firms solve their transportation problems. The state and federal government regulate the safety issues of people moving transportation systems by inspections whose result can brings fines and/or revoking a firms operating authority if safety standards are not meet.

By a combination of relationship selling and market evaluation, we felt that this was a market that would provide Bus Company, who was at that time a very seasonal firm, with a year round income base.

 Industrial sales involves several sets of customers. Those who ride the shuttle are customers. The purchasing agent is a customer. The firm is a customer. Each of these customers have different needs, but paramount is the need to feel the transportation system is safe. The purchasing agent and the firm need to reduce risk that the system will fail causing the firm not to fulfill it’s mission.

 Can one product have a different set of benefits to different customers? Can one product have a set of benefits that are perceived by different targets markets as solving different needs? Yes, a product or service can be perceived by different customers as meeting vary different needs. Passengers want the system to be safe and run on time. The purchasing agent wants a price/value purchase as well as reliability that reduces the risk to him/her of losing their job if the system does not meet the needs of the firm and riders. The firm may need a system that is never seen as a traffic problem or is seen as an effort by the firm to reduce it’s impact on the community.

 We developed and continuously revise our shuttle proposal program. Our sales staff evaluates the specific needs of all customers sets involved in a shuttle. From that field intelligence we develop a profile of the benefits of our program that address the expressed and implied needs of the customer.

 Knowing one’s product/service benefits is extremely critical in developing the message you send to the customer to provide evidence that your products fulfill their needs. Other key benefits of a shuttle system which are not apparent to most customers include the management of the rules and regulations of the overseeing government agencies, the redundancy of equipment and drivers needed in such a system.

 Many industrial purchasing agents often are required to purchase items that they do not understand. Benefits must be presented in a format that explains how they satisfy the needs of the industrial buyer. Most industrial buyers have a high risk aversion factor. A careful presentation of benefits in a positive manner will often get the same risk reduction message across that a negative reference does. The difference being that in being positive you have helped convince the purchasing agent that you program is designed from the start to reduce risk – one of the key needs of all industrial buyers.

 The model that we have developed now represents more than 50 firms – from large to international giants. We have cataloged how the various buyers present the needs of the firm, themselves and the end users of the products. We utilized this feedback to refine our models for specific industries, although the two key major benefits of risk reduction and safety remain key elements of each sales presentation.

 Product benefits are often very hard to identify. Many firms have made the mistake of promoting product features as benefits. At most, product features lead one to discover the product’s benefits. A digital tuner for a radio is a feature – the ability to program stations which then can be found with the press of a button is a benefit. Specifically, the benefit is the ability to find your favorite station without turning a dial and listening to each station until you find the one you want.

 Product/service benefits are key to fulfilling the needs of target markets. In every case study you read, in every model or theory you study, the student of marketing needs to ask, does it help identify a need (or action that represents a need) or does it help define benefits.

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