It is not just the people who buy a product who need to be considered as customers. The general term ‘customer’ includes two kinds of people:
Most commercial organisations tend not to make a distinction between customers and consumers. This is because they have to satisfy the needs of both groups with their products or services.
Pet food manufacturers, for instance, have to make sure that their food is nutritious and tasty for the cat, and they also have to package it and present it in a way that is attractive to the owner. The distinction is still important as it is the customer who has to be encouraged to complete the exchange process with the organisation, and they may want something different out of the exchange from the consumer.
There is a further distinction. In some households one person may shop and pay for the pet food with their own money, but their partner may have told them which pet food to buy. For the pet food company, the person who makes the decision or recommendation that leads to the exchange of money is also a customer.
Some organisations have to deal with quite different groups of customers and consumers. Many charities raise money from government funding, donations and sales in its shops, and from financial investments. The people who buy products in the shops and give donations can be called customers, yet what they receive from the exchange process is not the service that the charity provides.
Some customers may benefit from a ‘feel-good factor’ as they buy the products because they wish to support the charity. They are not interested in any help that the charity can give them.
For charities and most public services, it is the consumers who do not pay for their services who are paramount. These consumers have needs which have to be met in order to satisfy those customers - taxpayers, funders, donors - who pay for the services.
Organisations will have several different groups of customers and consumers, who all expect different things from their relationships with organisations. We can take this even further and introduce other parties who neither buy nor directly use an organisation's services. We use the term ‘stakeholder’ to mean those who have an interest in an organisation because they can affect, or be affected by, what it does.
The survival of an organisation depended on its effective management of a broad range of stakeholder interests. Satisfying the multiple and often conflicting stakeholder expectations is the role of every manager within an organisation.
Each of the stakeholders in an organisation will want something from it, and it is important that managers understand what these things are.
However, our main focus here is on customers and how to deliver value to them. When trying to deliver value to customers and also fulfil the requirements of stakeholders, managers may have to compromise and seek to balance their activities.
Stakeholders can be defined as those who have a stake in the organisation's performance. Customers are those who buy, pay for or recommend a product or service. This definition includes people both inside and outside an organisation.
Customers are concerned with decisions about the quality and availability of goods and services because they wish to obtain those goods and services and use them, or give them to others to use.
Consumers, if different from customers, are also directly interested in the quality and availability of an organisation's products and services.
Other stakeholders are concerned about the quality and availability of goods and services only in so far as they affect or are affected by the organisation's performance. The distinction is important, as ISO 9001:2015 outlines the importance of both.
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