What is it? Show
No matter how well costs are driven or held down, no product can be profitable unless it sells. Therefore all products must satisfy customer needs and wants. As all customers are different and seek different benefits from products, businesses would ideally tailor their products to satisfy each customer's wants and needs. However, for many businesses this is not achievable, so they need a way of classifying products in a structure aligned to customer segments, as defined by their needs and wants. The more flexibility a business has to configure products to different customer segments at minimal cost, the more segments they can target with the core product. Which is why it is vital to develop new products with flexibility as a key feature. Philip Kotler, an economist, devised a model that recognises customers have five levels of need, ranging from functional or core needs to emotional needs. The model also recognises that products are merely a means to satisfy customers' varying needs or wants. He distinguished three drivers of how customers attach value to a product:
Customers will choose a product based on their perceived value of it. Satisfaction is the degree to which the actual use of a product matches the perceived value at the time of the purchase. A customer is satisfied only if the actual value is the same or exceeds the perceived value. Kotler attributed five levels to products:
The five product levels are:
What benefits does the model provide?Kotler's Five Product Level model provides businesses with a proven method for structuring their product portfolio to target various customer segments. This enables them to analyse product and customer profitability (sales and costs) in a structured way. By organising products according to this model, a business' sales processes can be aligned to its customer needs and help focus other operational processes around its customers – such as design and engineering, procurement, production planning, costing and pricing, logistics, and sales and marketing. Grouping products into product families that align with customer segments helps modelling and planning sales, as well as production and new product planning. Implementing Porter's Five Forces analysis? Questions to consider
How can it be described to satisfy all the customers demands via product which is determined as per the customers need?The Answer is Demand Planning. Effective demand planning can guide users to improve the accuracy of revenue forecasts, align inventory levels with peaks and troughs in demand, and enhance profitability for a given channel or product.
Which supply chain planning function determines how much product is needed to satisfy all customer demand?One of the most important supply chain planning functions is demand planning, which determines how much product a business needs to make to satisfy all of its customers' demands.
Why is it necessary for a supply chain's strategy to reflect customer priorities?Customer-focused supply chain strategy provides an approach to respond to these challenges as it strives to match supply and demand, thereby driving down costs simultaneously improving customer satisfaction. This study underlines the significance of customer-focused supply chain strategy.
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