Posted: May 25th, 2022

How Marketing Shapes Consumer Needs and Wants

Branding and Lifecycles

How Marketing Shapes Consumer Needs and Wants

The customer has never been more in control of the conversation of what gets produced and sold in both the business-to-business (B2B) and business-to-consumer (B2C) market places. They have greater input yet it is the marketers who are navigating them to the brands and products that align most with their unmet psychographic and functional needs. While the customers have many options for voicing their approval or disapproval of a given product or service through social media, it is the marketer’s accuracy and precision of orchestrating multichannel experiences that gets them to buy (Chatterjee, 2010). And while customers across B2B and B2C have also never been more frustrated with the wide differences in product and service quality, it is up to the marketer to convince them that their given product can bridge or cross this chasm. And to do that, marketers must excel at imparting trust to the potential customer (Suranyi-Unger, 1981). Trust is a foundational element of consumer behavior, and it is the marketer, not the consumer, who will have to earn and keep it to make sales over time. One of the fundamental aspects of customer loyalty is the ability to continually culture expectations and fulfill and exceed them, further earning and keeping trust over time (Morgan, 2000). Add to this the fact that the consumer, both from a B2B and B2C standpoint, has more choices than ever and they really use trust as a currency not just dollars, and it becomes clear that marketing is all about shaping consumer needs and wants over time. Shaping needs and wants by creating an affinity for products is critical (Suranyi-Unger, 1981).

WalMart’s Psychographic Segmentation: How a Retail Giant Serves

An example of how marketing shapes consumer needs and wants can be seen in how retail giant WalMart has architected its entire business model including its value chain to supports its unique value proposition of being a low price leader in mass merchandising. Walmart marketing is focused on shaping consumer needs and wants with its Low Price Everyday (LPED) value proposition, underscoring that they understand many middle and lower-income families are perennially struggling financially and they want to help (WalMart Investor Relations, 2013). Their marketing communicates that they empathize with the challenges of many families from an economic standpoint and their low-price strategy is meant to provide a means to make dollars stretch farther. By marketing to the psychographic needs of consumers to make their incomes go farther during these challenging economic times, they are winning over millions of fans against their competitors. While many critics of Walmart ague that it is their pricing that drives smaller stores out of business, in actuality this isn’t the case; it is the fact that WalMart shows over and over again that the understand and respect the challenges many middle and lower-income families face with finding good products at a reasonable price. So it is the marketer, WalMart, attracting and keeping the price-conscious shopper, not the over way around. And to the critics of WalMart who say they drive down prices and make smaller retailers go out of business, consider that just 16% of the total WalMart customer base is loyal to them (WalMart Investor Relations, 2013).The foundation of all excellent marketing in general and the creation and strengthening of customer relationships specifically is predicated on customers seeing solid evidence that a marketer respects and reacts to their concerns (Foxall, 1994).

The paradox is that Walmart markets their empathy and respect for price-driven shoppers while at the same time driving up these shopper’s expectations of what they can buy on their budgets. This is a brilliant marketing paradox they make use of because on the one hand the price-driven shoppers see themselves in “control” of Walmart yet Walmart marketing is only delivering products they know they can drastically exceed customers’ price expectations with. Walmart is much better at marketing than many theorists and pundits give them credit for, because they are finely tuning expectations of superior products at low prices and over-delivering in terms of quality. This is why suppliers dislike selling to them. Walmart drives suppliers very hard to deliver extremely high quality at low prices because their product strategy must support their strategic marketing direction and unique value proposition. Walmart is really in the price and quality expectations management business. To reduce them to price warrior in the retailer industry is to miss the point. If this was the case then every one of their psychographic segments would be completely loyal and that is far from the truth. Marketers must shape consumer wants and needs even when price, the most powerful market mix factor there is, is being used as part of the positioning and unique value proposition (Foxall, 1994). This becomes clear after completing an analysis of the psychographic segments that WalMart relies on for its revenue. Using the last decade’s worth of filings with the U./S. Securities and Exchange (SEC) in conjunction with their annual reports, an assessment of their market segmentation has been created. Figure 1, WalMart Psychographic Market Segmentation shows the profile of the market segments that WalMart has defined through their attitudinal and consumer research (WalMart Investor Relations, 2013). Just 16% of their customer base is loyal, and this segment is appropriately called the Price Value Shopper in their filings and annual reports. Marketing shapes these customers’ needs and wants to make them loyal to Walmart; they have a myriad of options of where to shop and choose Walmart because the company lives by its unique value proposition.

Figure 1: WalMart Psychographic Market Segmentation

Source: (WalMart Investor Relations, 2013)

If consumers were entirely driven by price elasticity and entirely rational in how they made purchasing decisions, then the entire segment map would be to the left. Instead the major of consumers are less loyal to WalMart. This underscores how difficult it is for marketing to shape consumer needs and wants. Just 16% of all consumers who visit WalMart are loyal, which shows how marketing shapes these consumer’s wants and needs over time.

Implicit in how marketing shapes consumer needs is how WalMart has designed their value chain to be highly efficient at selling to consumers while maintaining internal process and pricing efficiencies (WalMart Investor Relations, 2013). For marketing to succeed in gaining the trust of consumers, and persuading them the retailer can meet their wants and needs, the entire value chain needs to be oriented towards this strategic goal. Figure 2, shows the WalMart value chain and how it is aligned to the goal of deliberately setting price and quality expectations with customers and then exceeding them. This is the nuance that many analysts and pundits completely miss when they consider how Walmart markets.

Figure 2: WalMart Value Chain

Source: (WalMart Investor Relations, 2013)

Conclusion

An essential part of any business is how it aligns all of its resources to set and exceed customer expectations. Walmart relies on marketing to shape consumer needs and wants through the use of price as a component of their value proposition, supporting their empathy for their most loyal segment the Price Value Shopper (WalMart Investor Relations, 2013). The bottom line is that marketing shapes consumer wants and needs, and even for global corporations like Walmart, all must be aligned to winning customers over by exceeding their expectations. Marketing is the catalyst that drives these behaviors in customers.

References

Chatterjee, P. (2010). Multiple-channel and cross-channel shopping behavior: Role of consumer shopping orientations. Marketing Intelligence & Planning, 28(1), 9-24.

Foxall, G.R. (1994). Behavior analysis and consumer psychology. Journal of Economic Psychology, 15(1), 5-5.

Hoyer, W.D., & Stokburger-Sauer, N. (2012). The role of aesthetic taste in consumer behavior. Academy of Marketing Science Journal, 40(1), 167-180.

Morgan, R.P. (2000). A consumer-oriented framework of brand equity and loyalty. Market Research Society. Journal of the Market Research Society, 42(1), 65-78.

Sirgy, M.J. (1982). Self-concept in consumer behavior: A critical review. Journal of Consumer Research, 9(3), 287-287.

Suranyi-Unger, T. (1981). Consumer behavior and consumer well-being: An economist’s digest. Journal of Consumer Research, 8(2), 132-132.

WalMart Investor Relations (2013). Investor Relations. Retrieved May 11, 2013, from Wal-Mart Investor Relations and Filings with the SEC:

http://investors.walmartstores.com/phoenix.zhtml?c=112761&p=irol-estimates

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