Target Markets and Customer Satisfaction - Term Paper Example

Marketing Running head: Managerial Marketing TARGET MARKETS AND SATISFACTION: A MARKETING MANAGER'S GOAL Marketing 2 TABLE OF CONTENTS Abstract 3 Introduction 3 Definition and Importance of Target Markets 3 Definition and Importance of Consumer Satisfaction 5 Description of the Problem 8 Related Work and Experimental Results in Customer Satisfaction 9 Related Work and Experimental Results in Target Markets 10 Marketing 3 Abstract A marketing manager is faced with the heavy problem of making the business profitable and successful despite the competition. If he doesn't have the mastery of two key marketing concepts, target markets and customer satisfaction, chances are the business will be swept away by the wayside. Thus, he must first identify his target market. From there, he must engage himself in advertising and other marketing strategies to gain the upper hand in the capture of a big slice of the market share. But this cannot be maintained if he doesn't master the art of customer satisfaction, which had been researched and continued to be researched. Retention of the customers is a system which must be mastered because it is the key to success and profitability. Introduction Businesses start with dreams of financial independence and financial security. No business can ever start to germinate and soar to success without a good idea, a business plan, sufficient capitalization and mastery of at least two aspects of business, human resource management and marketing management. This paper zeroes in on marketing management where two facets of it stand out as among the most important i.e. target markets and customer satisfaction. Definition and Importance of Target Markets Target market is defined as the specific groups of customers that a business entity aims to capture (www.entrepreneur.com/encyclopedia/term/82498.html). Today, there is stiff competition in practically all kinds of business so it is imperative that to capture these target markets, there be target market strategies. It is also important that these target markets be identified, a process called market segmentation and a market niche be established (Daly,2001,p.50). To do this, an earnest research should be conducted to identify who these people are who have needs and wants that can be met by the services or the products of the Marketing 4 business entity. If the business has already been started, then research begins with one's own existing customers. The questions to be answered are: who are these people; what sort of lives do they lead; who influence their buying decisions; what purchasing power do they have; what is it in your products or services that magnetized them to you; what kind of media are they exposed to and if it is a newspaper, what exact newspaper do they read; what are their ages, education, income; what is their family sizes; what are their personalities; what are their needs, motivations and interests today and in the near future (Brassington,2006,p.277). When this is done, you are ready for your marketing strategy which starts by seeking out the target group or niche that has the same needs and wants as your existing customers and whom you want to do business with and zero in to one group of people you are either most comfortable catering to or one that you feel have the most purchasing power. This target market though, must be one wherein powerful competitors have not yet succeeded to infiltrate and one which doesn't possess too nuch bargaining power. One note of caution though, is that you cannot be everything to everybody. That is one Waterloo you have to evade falling into. One must focus and more important, one should not be complacent into hoping that the right people would somehow manage to seek you out. One really has to go into target marketing or in plain parlance, breaking the market into segments and focusing all the entire efforts into one or two of these segments. When one decides which group is the target market, the marketing strategy shall be concentrated into this group and in finding the advantages you may have over the competitors. This offers so many economical advantages like in advertising, where instead of putting up costly advertisements in media, one can instead concentrate on sending direct mail or web ad campaigns on specific consumers who may be grouped into 3 categories : geographic i.e. Marketing 5 according to location; demographic i.e. according to age or income and psychographic i.e. according to lifestyles (White,2003,p.71). Target marketing is extremely important because once one has identified his or her target market, one can easily and cost-effectively plan market strategies for pricing, promotion, design, positioning, distribution and improvement of one's service, product or idea. When done in the right manner, several companies have attested that it brings incredible sales growth. Definition and Importance of Customer Satisfaction Customer Satisfaction is defined as "the degree of satisfaction provided by the goods or services of a firm as measured by the number of repeat customers" (BusinessDictionary.com). It is also a measure of how services or products provided by a business entity meet or exceed customer expectation. It is an efficient indicator of the extent of success the firm has achieved in providing services or products to the marketplace. It is also an indicator of how the firm has performed , excelled or deteriorated as the case may be. It thus becomes an important element of business strategy (Gitman & McDaniel 2005,p.3). It is also a short-term predictor of consumer spending. To achieve maximum customer satisfaction, company's employees and management must fortify and intensify customer-firm relationship and try with all its might to deliver high-levels of customer satisfaction. They must always hear the voice and listen intently to the customers' needs and complaints and rectify things to conform to customers' constructive complaints. Companies cannot claim to be successful when its customers do not come back even if it is successful in attracting new customers. It is always preferred to keep current customers than lure new ones. It is an admitted fact that markets keep on shrinking as more competitors join the business competition. Chasing new potential customers entail spending more in terms of Marketing 6 money and resources. It has been found out that it costs 5 to 8 times more to net new customers than retain current customers. It is thus an important economic asset of the firm. It has been admitted by many that customer satisfaction is a strategic and critical weapon used by today's companies to generate increased market share and to boost and maximize its profits. Historically, customer satisfaction occupied less importance to managers who preferred to focus their minds on balance sheets and profits. But the onset of cutthroat competition and the crowding of markets which manifested little differentiation have compelled managers to take a serious look on customer satisfaction, which must be measured quantitatively and qualitatively. The outdated means consisted of analysis of accounts receivables, basing it on the belief that unhappy customers pay late; on the movement of sales volume; on stories by sales representatives of the customers' states of mind; on the nature and frequency of customers' complaints. But luckily for the modern entrepreneurs, an effective customer satisfaction surveying program had been devised by marketing analysts. Its objective is to discover the mind-set of customers vis--vis the products or services offered by the company by extracting customer feedback . Through well-designed questionnaires, customers are asked to rate such products or services from 1 to 10. From the answers to the queries can be deduced whether there is rejection i.e. the customer has no intention to go back and repurchase; acceptance i.e. the customer is satisfied but will shop around for a better shopping opportunity or preference i.e. customer is entranced and will purchase again even for a higher price. It must also be emphasized that this program seeks to actively inquire on customer satisfaction not only on the products or services offered to them but also to satisfaction of the ongoing business relationship of the customer and the company; satisfaction with the prices offered to them; satisfaction with Marketing 7 the on-time delivery and the expectation that the product or service will adhere to customer specification and satisfaction because all of the above have exceeded the customers' satisfaction (Vavra,1997,p.4). This program carries additional burden not only on the company but also on the customers who will be queried. Thus the questions should be kept simple, relevant and direct to the point and should not take much of the customers' time. What all of this expects to achieve is to identify product or service weaknesses or strengths and from thereon find ways to innovate or refine them as well as to ameliorate conditions in the workplace. More importantly it can serve as basis for finding out the issues that are important to the customers so that the company can focus on such issues. Moreover, this serves as basis for performance evaluation and reward system of company personnel. Again, such serves also as basis for the fabrication of marketing strategies which aim is to fortify relationships with customers so that loyalty will ensue and they will keep on returning to make more purchases. It also allows the company to benchmark its performance for future comparison (National Research Council,1999,p.2). However, this program should not be done if the firm is not ready to take action on the complaints and opinions of customers because the firm will only lose its reputation with its customers if it bothers its customers and yet don't act on them. Customers want to feel that they have impacted on the company's policies with their participation in the survey. By satisfying customer needs and proffering exceptional customer service and by innovating to conform with the customer needs and wants, it is hoped that their loyalty will forever be bagged and with it the opportunity to steal customers from other businesses and eventually high profitability and a sustainable profit growth. Stealing customers from other establishments is not far-fetched because many well-entrenched businesses who have tasted Marketing 8 profits tend to seek for more and thus lose sight of the customers as what drives them is no longer how to satisfy the customer but more revenues and profits and the finding of ways to cut costs. In a research done by Dun and Bradstreet, it was found out that the reason many businesses folded down and suffered demise in USA was that they lacked sales. This can be extenuated to mean that there is lack of customers. We can therefore conclude that these were not customer-oriented or driven enterprises or run short of being one. To ensure customer satisfaction, the company must be ready to set aside time, money and efforts for customer service training of its employees. What is basic is that all of them must maintain effective customer communication at all times; must carry a perpetual amiable, affable and accommodating attitude; must be ready to proffer answers to all of customers' queries and thus must be 'encyclopedic' as to knowledge pertaining to the business; must be ready to handle any customer conflict or issue with due respect and courtesy; and must go out of his/her way to meet any special problem, request, need or service that the customer has. In other words, the employee is expected to provide exceptional service which is beyond his usual role. These all employees have to do because customer satisfaction is essential to the survival of every business. Description of the Problem The world of business can be a dog-eat-dog business . So many businesses dealing with the same product or service have proliferated. There is a scramble for the market and the contest for a bigger slice of that market termed as market share becomes the passion for all those in the business field. Thus, the immediate problem for each is how to survive in that dog-eat-dog business and how to snare the biggest slice of that pie. The two factors that determine these are target market and customer satisfaction. The consequent problem then is how to determine its Marketing 9 target market, how to lure its target market to be attached to it and how to attain customer satisfaction, thereby cementing profitability and a sure survival in that race. Related Work And Experimental Results In Customer Satisfaction Because it is a costly undertaking to ferret out and gain the loyalty of new customers and because it is less expensive to take steps to retain current customers, researches have been made to find ways to maintain the loyalty of current customers and enhance customer satisfaction to the maximum. Historically, customer satisfaction had its roots in the global quality revolution such as the insistence of the Malcolm Baldrige Quality Award that customer satisfaction and focus must comprise more than 25% in the criteria for selecting the best business entities in America (Allen,2004,p.1). Earlier researches had established the fact that companies with high customer satisfaction such as Honda Accord, Dell and Holiday Inn attained high success (Kotler, 2003, p.42) Thus, more researches ensued to find better ways to attain customer satisfaction. In 1980, Oliver pioneered customer satisfaction research by finding ways how to make operational customer satisfaction in the business workplace. He was followed by Churchill, Teel, Bearden and Surprenant. Customer satisfaction research was raised to a higher level in mid-1980's when Parasuraman, Berry and Zeithaml researched on optimization of customer satisfaction and the formulation of the general service quality theory. They finally instituted the landmark SERVQUAL multi-scale with regression analysis which studied the effects of responsiveness, assurance and reliability on service quality (Allen,2004,pp.2,3). Finally in 1987, Buzzell and Gale linked service quality with market share growth and backed this up with evidences. This was however met with some skepticism and thus Rust and Zahorik in 1993, strove and succeeded to link customer retention and satisfaction with market share and corporate Marketing 10 profitability . They then suggested that in order to attain success in this, companies must venture into "training programs to help personnel to be more responsive to customers, upgraded facilities, better data-handling systems, customer surveys and newsletters" (Allen,2004,p.4). Related Work And Experimental Results In Target Markets While customer satisfaction is a universal or general concept and applies to all, the concept of target markets is highly individualized and depends on the kind of business and the unique situations and conditions of each business. It could be demographic, psychographic or geographic and the people that must be captured as one's target market depends on who are the existing consumers of the business. Thus, it is a variable factor. Therefore researches are done by the companies themselves or they hire specialist market analysis firms to do their studies and researches for them. Some of these are CACI, AGB, Nielsen, MPSI, Pinpoint, and Management Horizons (Wrigley,1988,p.30). Most of these firms come up with only two solutions i.e. that companies concentrate selling to only one niche or to two or more niches. Good example to the first is the giant US insurance company, USAA which sells auto insurance, life insurance, mutual funds and other financial products solely to military officers. An example of a company which owns a portfolio of niches is Johnson & Johnson, which is a technical and market leader not only in some mass consumer markets but also in "hundreds of specialized business-to-business markets" (Kotler,2003,p.65). Conclusion It is every entrepreneur's dream to succeed in business and reach his or her dream of financial independence and financial security. But each is realistic enough to know that it cannot be done without personal sacrifices, lots of luck and the business acumen or knowhow. Part of Marketing 11 the latter involves mastering the concepts of target markets and customer satisfaction, both of which are simultaneously arts and sciences. Identifying one's target market is the start of something big. One cannot be everything to everybody. The entrepreneur must know how to specialize and zero in his market to one or two groups, better if the concentration is only in one group. Once he is settled with his target market, he must learn the ropes of customer satisfaction, which is the key to retaining his customers and which in the long run amounts to profitability. Research in this field is a never ending undertaking because consumer tastes and needs change and the world changes. Thus, the marketing manager has to be adept with the latest techniques of customer satisfaction as researched by some of the world's best market researchers and analysts. Bibliography Allen, D. (2004). Customer satisfaction research management. ASQ Quality Press. Brassington, F. & Pettitt, S. (2006). Principles of marketing. Prentice Hall BusinessDictionary.com. Customer satisfaction. http://www.businessdictionary.com/definition/customer-satisfaction.html Daly,J.L. (2001). Pricing for Profitability. John Wiley & Sons. Encyclopedia. Target Markets. www.entrepreneur.com/encyclopedia/term/82498.html Gitman, L. & McDaniel, C. (2005). The Future of business: The essentials. South Western. Kotler, P. (2003). Marketing insights from A to Z. John Wiley & Sons. National Research Council (1999). A handbook for measuring customer satisfaction and service quality. Transportation Research Board. Vavra, T. (1997). Improving your measurement of customer satisfaction. ASQ Quality Press. White, S. (2003). The complete idiot's guide to marketing. Alpha Books Wrigley, N. (1988). Store choice, store location and market analysis. Taylor & Francis Read More