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Problem Recognition - Meaning, Importance, Types & Example

Published by MBA Skool Team in Marketing and Strategy Terms Last Updated: November 15, 2023Read time:

What is Problem Recognition?

Problem recognition is the initial step in the consumer decision making journey when a consumer recognizes a need or a want which is not being fulfilled by any of the existing products or services available. It starts when a customer is unable to fulfil current or future needs with the products at disposal and starts to identify the gap which now has to be filled with a purchase of a product or a service. It is also defined as a gap between the current state and the desired state from the customer's perspective.

Problem recognition is followed by information search, evaluation of options, actual purchase and post-purchase.

Importance of Problem Recognition

Problem recognition is the most important part of the consumer decisioning process as this is the point where a person becomes a potential customer and can start the process of buying a new product or a service. This is not only important for customers but also for the organizations, manufacturers and marketers. The entire product lifecycle revolves around the problem statement of the customers. If the problems ceases to exist so would be the need for the product.

Features phone still function but not many people want them as now the problem recognition is just not about being able to talk but also to have a multimedia device which can give many additional features like internet connectivity, social media, apps. If a company does not recognize the changing customer behavior they would never be able to define the problem statement and may become obsolete. 

With technological advancements the problem recognition keeps getting refined and now may be solved with an improved product or an entirely new product. Paper based documentation was very critical few years back and many products like printers, scanners etc. were solving the problem. As technology improved and automated solutions cut down the need for papers and work started happening digitally, for the same need, paper based documentation became not a problem anymore.

Types of Problem Recognition

There are multiple types of problem recognition. The two most important are:

1. Expected and Active Problems

These are the problems about which the customers are actively aware and plan to solve it themselves by looking out for a potential product or a solution which resolved the problem. These are expected like broadband plan getting expired, Need to enroll for a college course after schooling, buying a refill for printer, buying a bus ticket to travel to another town to meet a friend. These are examples of expected and active problems which are to be solved by the customer while being aware of them. 

The marketers normally present the product which can solve the problem without defining the problem again to customer as he or she is already aware. The benefits and resolution is what the customer is interested in.

2. Unexpected and Inactive Problems

These are the ones where the customer does not know if they require to solve them or not. An example can be insurance policy in which a customer has to be made aware that there is a need which is fulfilled by buying an insurance policy and will eventually solve a future problem if it arises. 

In B2B sales especially in technology, we see this problem recognition state. Many customers have been working in the same way since many years but the new technology sellers convince them that the new digital and automated solutions are much better for them as that would help in cutting a lot of costs and increase efficiency. The customers were not aware until explained and also were not expecting to solve them immediately. But once a customer is convinced about solving the issue, then it becomes an active problem.

Many times, there can be some unexpected events in life which can lead to immediate problems that require you to buy new products or services 

Examples of Problem Recognition

The problem recognition might be due to:

1. A product being out of stock like Oil, floor, raw materials can lead to a problem
2. Dissatisfaction with the current product or state
3. New needs/wants based on the lifestyle and hierarchy in life
4. Related products/purchases e.g. After buying an expensive phone, people look to buy a case immediately to protect the phone
5. Marketer induced problem recognition which are inactive problems
6. New products and categories e.g. When an iPad was launched, people were working on phones and desktops. After the launch, a new category got created in the market called Tablet PCs.

Hence, this concludes the definition of Problem Recognition along with its overview.

This article has been researched & authored by the Business Concepts Team which comprises of MBA students, management professionals, and industry experts. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

Browse the definition and meaning of more similar terms. The Management Dictionary covers over 1800 business concepts from 5 categories.

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