Marketing Management: The Need to Understand Customer Preferences Case (Case Study Sample)

Marketing Management
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Institution
Introduction
Understanding customer preferences could be a difficult task, but as Chen, Hoyle, and Wassenaar (2013) argue, it is a difficult and compulsory task. This owes to the fact that consumers may express their preferences but still make purchases that do not complement their preferences. In any case, consumers may not even be aware of the true factors that define their consumer behavior. Considering that understanding consumer behavior is an important element in business operations, many industries strive to understand how their customers behave. The online business is no different because business organizations such as PayPal, Moneybookers, and the Amazon have implemented business strategies based on the consumer preferences of their clients. Evidently, organizations should use their understanding of consumer behavior to design products that meet the tastes of their clients. This paper argues that consumer preferences are important when designing products using PayPal as a case study.
The Need to Understand Customer Preferences
It is important to discuss the why businesses should understand customer preferences because it defines the relationship between customer tastes and designing products based on consumer behavior. To begin with, understanding customer preferences aids an organization to attract more customers. As evidenced, Aravinth (2012) argues that understanding customer preference helps an organization to provide services, prices, and quality that meet consumer demands. As a result, consumer satisfaction increases, which in turn retains and attracts more customers. Critical to the discussion is the fact that understanding customer preference increases the sales of an organization (Rau, 2013). This owes to the fact that understanding customer preference results in increased customer satisfaction, which in turn heightens their need to make more purchases. In short, organizations should understand consumer preference because it results in increased sales and provides clients with products that suit their needs.
According to Sharma, and Lal (2012), understanding customer behavior results in continuous improvement within an organization. As evidenced, the author argues that organizations should hold regular focus group discussions with their consumers with an aim of identifying possible areas of improvement. Further, organizations should keep up with the changing trends in the market in order to compete favorably in the industry. One way to achieve such an objective is through conducting customer surveys frequently. As evidenced, the customer surveys enlighten an organization about changing trends in the market, which in turn enables the organization to isolate areas that need perfection or transformation within the organization (Khondaker, and Mir, 2011). It is also important to note that customer surveys aid an organization not only to identify areas of improvement but could also help the organization identify faults within their business.
Understanding customer preference also plays a crucial part in building relationships with customers, which happens to be a key element for organizational success. According to Hoyer, D. W., Stokburger (2012), the best way to build effective relationships with customers is through understanding their needs. This owes to the fact that understanding consumer tastes results in customer satisfaction, who in turn develop a liking towards the organization. In fact, customers who have developed liking towards an organization are always eager to associate with the organization. It follows that such customers are always more likely than not to refer other customers to the organization because they are contended with services or goods provided by the organization. In short, organizations should understand customer preference because it makes clients satisfied and results in consumer recommendations.
Ultimately, understanding customer’s needs enables an organization to make decisions that result in improvement. Specifically, understanding consumer behavior enables an organization to tailor their products or services in a manner that results in increased consumer satisfaction. For instance, PayPal realizes that security is becoming a major concern for the organization and implements measures to prevent hackers from scaring away their customers. In addition, the organization has put in place measures that ensure fake people do not set up accounts with the organization with an aim of defrauding other PayPal users. Critical to the discussion is the reality that the organization implemented the strategies after learning about such security threats from the market. As a result, the organization improves consumer confidence, which in turn attracts more clients to the organization.
Designing Products and Services Based on Consumer Preferences
As already mentioned, understanding consumer preferences alone is not enough. This owes to the reality that organizations should complement their understanding of consumer preferences with the design of services and products. Simply put, organizations should design their products and services in a manner that increases consumer satisfaction (Voicu, n.d). It is because increasing consumer satisfaction results in the benefits discussed above. It is important to note that organizations could use different strategies to understand and design products based on consumer demands. To begin with, organizations should divide their consumers into groups based on their individual characteristics. In simple terms, organizations should use market segmentation by dividing consumers into groups that share similar characteristics. Consequently, the organizations will be able to design products the suit different types of consumers.
It is also important for organizations to understand different consumers have different tastes. For instance, designing a product involves projecting the price for the product, which determines how consumers react to the product. Critical to the discussion is the fact that consumers may opt to make a purchase or not make a purchase depending on the price of the product. As evidenced, some buyers may decide to make a purchase just because it is affordable. On the contrary, other consumers may opt not to make a purchase because the product is cheaply priced (Ravilochanan, P., and Devi, 2012). It follows that organizations should accompany segmentation with product pricing in order to increase customer satisfaction and promote sales. For example, organizations could implement strategies such as charging clients personalized prices. This owes to the reality that such strategies will eliminate possibilities of losing consumers due to pricing.
Another factor to consider when designing products based on customer preferences is product quality. According to Atulkar (2014), product quality is important, especially when combined with targeting. Critical to the debate is the fact that product quality and pricing complement each other. As evidenced, Regner, T., and Barria (2009) argue that consumers may opt to pay higher prices for quality products and forfeit buying products of poor quality even when they are cheaper. An organization that implements such a business strategy effectively is BMW. This owes to the fact that the organization specializes in manufacturing high-end vehicles meant for wealthy clients. AlGhamdi, Drew, and Alfaraj (2011) who argue that online consumers insist on product quality further stress the same argument. Specifically, the authors argue that online consumers always demand that a lot of information accompanies the products they purchase.
It is notable that AlGhamdi, Drew, and Alfaraj (2011) also argue that trust is an important element for organizations that transact businesses via the internet. As evidenced, the authors argue that online consumers insist on trust because issues with stolen credit card numbers characterize the online market. Further, consumers fear to trust online businesses because of the quality of products received after making the purchase. To support the argument, AlGhamdi, Drew, and Alfaraj (2011) reveal that consumers sometimes receive products of poor quality than the products they ordered. In fact, it is the main reason why, as mentioned earlier, consumers always request for a lot of information before making a purchase via the internet. This implies that online businesses should strive to improve trust from their consumers because trust retains or scares customers away.
PayPal as a Case Study
Peter Thiel and Max Levin established PayPal in 1998. The organization is one of the largest online businesses that could be compared to organizations such as the Amazon, Google, and Yahoo. It is important to note that founders of the organization won an award for innovation, which was awarded by Technology Review Magazine in 2002 (Emmerson, 2006). To date, the organization has received more than six awards PayPal is an online organization that specializing in digital money. Particularly, the organization enables its consumers to pay for goods and accept payments without revealing the financial information of its consumers (PayPal, 2016). Further, the organization permits money transfers in 194 countries and allows its users to pay and receive money in twenty-four currencies. It is crucial to note that the organization allows its users to send and receive money provided they have a valid email address. Vital to the debate is the fact that the upcoming paragraphs discuss how the organization uses consumer tastes to design products that suit their customers.
It is important to note that the organization understands that learning about consumer preference without designing products based on their preferences is not enough. This owes to the reality that the organization continuously con...