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customer analysisA customer analysis is also known as a customer profile or target market analysis; and, it is an essential element of your company business plan.  This analysis will determine your marketing strategy by identifying your customer base and ascertaining their needs, something which helps you develop your product or service in a way that specifically meets or exceeds those needs.  You can use a customer analysis not only to better understand your current customer base, but also to draw in new customers.  You do this by studying why people buy certain products, the method by which they make their purchase, how often they buy those products, and under what conditions they make their purchasing decisions.

All of this information helps you increase your sales, develop your customer loyalty, and expand your business.  After you have read the article, you can check out this video to learn how to add the customer analysis to your business plan.

A customer analysis profile helps you not only to develop your product, but also tells you how to best position and sell yourself in the market. In order to properly position yourself, you have to know both your customer demographics, such as age, geographic location, gender, and income, and their purchasing patterns.  Your customer analysis will be informed by the stages in the buyer decision-making process.  Buyer decision-making can be seen as an underlying psychological process, meaning that the stages a customer goes through when making a decision to purchase are not necessarily consciously undertaken in the mind of the buyer.

The Buyer Decision Process

This process reflects the stages that a buyer goes through before making a purchase.  The general stages assume that the purchase is already of a general value to the buyer and that the buyer has time to make an informed decision before he or she actually makes the purchase.  Economic decisions are not always rationally motivated. For example, you may have two products on the market with exactly the same ingredients, but with drastically different prices, such as the brand name headache medicine, Excedrin and the no-name brand, Headache Relief typically offered at a discount store.  For some customers, the name brand is more important than the specific ingredients – so much so that they will pay more than double the price just to have it.  Why is this so?  What are the prime motivators for that customer?  In a competitive market, knowing the answers to these kinds of questions is what makes an in-depth customer analysis so valuable to a business.

The Stages in the Buyer Decision-Making Process

Recognition of the Problem

This is often considered the most important step in the buying process:  a potential buyer recognizes either a desire that needs fulfilling or a problem that needs solving. That need or problem can be internally motivated, such as a need to eat or to remedy a headache, or, it can be externally motivated through strategic advertising, that is, advertising which constellates a need that a customer was previously unaware of.

The Search for Information

After a buyer has recognized the problem, he or she will begin to search for a solution.  This is the stage at which the buyer starts to look for information to find out more about what products and services are currently in the market. Having your information strategically placed can make the difference in whether or not a potential buyer sees your product or service.

An Evaluation of Alternatives

This is the stage at which the buyer measures his or her needs and desires against what is available and how much it costs. At this stage, a buyer will determine a set of criteria by which to assess the alternatives. You need to know this criteria in order to position yourself against your competition.

Making the Choice

This is obviously the point at which the buyer makes the purchase. An individual buyer’s choice is often based on a balance between price and perceived quality. For an industrial purchase, other factors are considered, such as payment terms, delivery schedules, and reliability.

Post-Purchase Evaluation

This is the stage at which the customer assesses the product or service in terms of its value.  Did the product meet his or her needs?  Did it exceed expectations?  Was the benefit worth the cost? Would they buy the product again?  This information is crucial in establishing customer loyalty and getting word-of-mouth advertising.

Your Customer Analysis

Determining Your Customers Needs and Desires

In order to establish your customer base, you need to determine your customer’s needs and desires.  In other words, you have to know what the prime motivators for making the purchase are. What exactly are they looking for in the product or service?  Are they making a purchase that solves a problem or are they making a purchase that fulfills a desire. The answer to these questions will lend insight into the underlying psychological motivations for the intended purchase. This information helps you determine a plan of action to encourage the customer to come to you instead of your competitors.

You must also determine if your customers are willing to wait for delivery of your product or if they need it on demand. This helps you determine not only your production strategy, but also your market placement strategy.  Other factors to consider are whether your customer has a preference for quality versus quantity; what their general price-point is; and whether or not they demand a warranty.

Attracting Your Customer

What is the best way to attract new customers and keep them coming back to you?  To answer this question, you first need to know who wants to buy the product or service. In marketing terms, this person is called the initiator of the purchase. The initiator is not always the decision-maker in the process, for example a teenager may want an IPod, but may not be able to make the purchase for himself. You have to attract both the attention of the teen who desires the product and the attention of the person who ultimately makes the decision to buy it. How can you attract both at the same time? Your customer analysis will help you determine the marketing strategy to do it.

Another consideration for attracting customers is answering the question, “What is your message and how does it solve your potential customer’s problem, need, or desire?”  To answer this, you need to have training in effective customer service.  You have to be able to really listen to your customers.  How does your product satisfy their core values?  To determine this, you must know what will make your customer’s life easier. If there is a way to make an emotional connection to your customer, then make it. Think about how Apple customers feel about their product. Their brand loyalty goes far beyond a rational satisfying of a desire.

You should also determine how your customers measure satisfaction and success. If you have a product that fits the bill, then the product will sell itself.

How to Gain the Trust and Loyalty of Your Customers

In order to gain the trust of your customers, you have to back up what you say about your product. This means giving them real data about your product or service, something which makes them stop and take notice.  If you have a special ingredient, then offer the research on why it is better than what is already on the market.  If you have test data that proves your product does what it says, then show that in your marketing material.  And if your product can stand behind what it says it can do, then offer a money-back guarantee.  You also have to give people an incentive to try your product over what they may already buy. Be prepared to offer initial deep discounts with the inner assurance that your product will stand on its own and keep your customers coming back.

Customer Demographics

Are you positioning yourself in the right retail or market outlets?  Your customer demographic describes the specific segment of the market to which your product or service appeals. This information is based on factors such as age, social class, geography, and gender.  This helps determine both your market advertising and placement.  For example, you probably do not want to place an advertisement for denture cream or bladder control products on MTV.  The same would be true for advertising a high grade power saw during daytime television.

The Current Market

How are customers responding to current marketing programs?  To answer this question you have to know where your potential customer buys the product or service you offer. For example, if your product is a high-end product, you don’t want to position it in a deep discount store.

What are your current or potential customers’ purchasing patterns?  You can focus your research on the types of items that were purchased, the amount of the average transaction, where the item was purchased, or items that are purchased in conjunction with other items.  This kind of customer analysis helps you determine how often and under what conditions a customer makes a purchase. It also helps you define price points and the amount of a product a customer will buy. If you understand the current state of the market, then you can speak with confidence about your product or service and inspire people to find out more about what you have to offer.


Page Last Updated: February 2020

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