Customer needs and survival

Customer needs are the things a customer requires from a good or service before they are willing to buy it. Different customers want different things: someone buying a birthday cake wants it to taste good and be ready on time, while a café buying cakes to resell wants a low price so it can sell them on at a profit. Because needs differ, a business must identify its target customer — the group it aims to sell to — and then work out what that group actually wants.

The right combination

Customer needs are usually summed up as price, quality, choice and convenience. A business has to get the right combination of these four for its target customer, rather than being best at just one.

• Price — a fair amount for what the customer gets. Most customers want good value, not simply the lowest price.
• Quality — the item works properly, is well made and lasts as long as the customer expects.
• Choice — a suitable range of sizes, colours or flavours. Too much choice can confuse customers and tie up money in stock.
• Convenience — buying is quick and easy, for example the product is easy to reach or in stock when the customer wants it.

Why it matters

If a business provides what its target customers want, they are more likely to buy from it rather than a rival. That generates sales, and sales are what allow a business to cover its costs and survive. Getting needs right makes sales more likely, but it does not guarantee survival on its own — poor cash flow or strong competition can still cause problems.

For example, a bakery next to a secondary school targets students with little time and only a few pounds at break. A wide range of £6 cakes would not suit them, however good the quality. Instead it sells a few fresh pastries at £1.50 and opens before school starts, so students get value, freshness, simple choice and speed.