Q. Discuss the terms need, want and demand. Why these terms assume significance for every marketers/business. Discuss.
The concepts of need,
want, and demand are fundamental in
understanding consumer behavior and shaping marketing strategies. These terms,
although closely related, have distinct meanings and play a crucial role in the
development and implementation of marketing strategies. They are central to how
marketers perceive their customers and how they address the gaps in the market.
Understanding these terms allows businesses to identify their target audience,
create appropriate offerings, and develop effective communication strategies.
In this
discussion, we will explore the definitions of need, want, and demand, their
significance in the context of marketing, and how they influence
decision-making for marketers and businesses.
Need: The Fundamental Human Requirement
A need
can be described as a basic human requirement. It refers to something that is
essential for human survival, well-being, or functioning. Needs are inherent in
humans and are not influenced by external factors. They are part of the
physiological, psychological, and social frameworks of human existence. The
most basic human needs are biological, such as the need for food, water,
shelter, and clothing. However, as humans develop and experience life, their
needs expand to include emotional, social, and psychological elements.
Maslow's
Hierarchy of Needs is a
well-known framework used to categorize human needs, starting from basic
physiological needs at the base and progressing toward self-actualization at
the top. The hierarchy is a valuable concept for marketers to understand
because it can help them recognize where their products or services fit within
the spectrum of consumer needs. For example, a marketer for a grocery store
focuses on the basic needs of food and nutrition, whereas a
marketer for luxury goods may aim to address higher-order needs like esteem and
self-actualization.
Example:
- Food and Shelter: Everyone
needs food and shelter to survive. A company that produces basic food
items (e.g., rice, bread, vegetables) satisfies this primary human need.
Needs, in the
marketing sense, are often framed in terms of solving a problem. Businesses that
understand the underlying human needs can create solutions that address those
fundamental requirements. Needs-based marketing tends to focus
on the essential and universal aspects of consumer life.
Want: The Desire for Specific Fulfillment of Needs
While a need
is something essential, a want is a desire for a specific way
of fulfilling that need. Wants are shaped by an individual's culture, personal
experiences, education, social influences, and marketing efforts. A want is not
necessary for survival but is driven by human psychology and external factors.
Needs are universal, but wants vary from person to person and culture to
culture.
For instance,
while everyone needs food (a need), people may want different kinds of food
depending on their preferences, culture, and social influences. One person may
want a pizza, while another might prefer sushi. Similarly, the want for shelter
might manifest as a desire for a modern apartment, a house in the countryside,
or a penthouse in a city center.
Marketing plays a
significant role in shaping consumer wants. Advertisers often create
aspirational messages that appeal to emotional and psychological desires,
convincing consumers that certain products or services will fulfill their wants
in a way that others cannot.
Example:
- Food: The basic
need is food, but the want could be a gourmet meal at a fine dining
restaurant or a takeaway pizza. These wants are driven by individual
preferences, tastes, and lifestyle choices.
Importance of Want in Marketing:
Marketers must distinguish
between need and want because while needs
represent a fundamental requirement, wants provide the avenue for
differentiation in the market. Businesses that understand and can influence
consumer wants are able to target specific market segments and offer products
that resonate on an emotional and psychological level, not just fulfill basic
needs.
Demand: The Willingness and Ability to Pay
Demand is a more specific term than want. It refers to the
desire for a product or service backed by the willingness and ability
to pay for it. In economic terms, demand is the quantity of a good or
service that consumers are willing to purchase at a given price. If a person
desires a luxury item but cannot afford it, that desire alone does not
constitute demand. Demand only exists when there is both a desire for a product
and the purchasing power to obtain it.
In the context of
marketing, demand is what drives the market. Consumers must not only want
something but also have the financial means or other resources to buy it. The
relationship between price and demand is central to economics and is often
represented by the demand curve, which shows how demand
changes as the price of a product rises or falls.
For marketers,
understanding demand is critical for pricing strategies. If a product is priced
too high, demand might be low, even if there is a desire for it. Conversely, if
a product is priced too low, it might lead to an oversupply or a loss of
perceived value. Demand can be influenced by various factors, including price,
income levels, consumer tastes, and the availability of substitutes.
Example:
- Demand for Cars: A person may
want a particular brand of car (such as a Tesla), but only if they can
afford it and are willing to pay the price. The demand for Tesla cars,
therefore, depends on the price point and the consumer's financial
ability.
Importance of Demand in Marketing:
Marketers need to
understand demand in order to set appropriate prices and forecast sales. Demand
is a key determinant in deciding the volume of products to produce, the markets
to target, and how to position the product effectively. For example, demand
forecasting is a crucial activity for businesses that helps them
optimize production, manage inventory, and plan their marketing efforts. When
demand is high, companies may increase production or engage in promotional
activities to capture more market share. When demand is low, they might reduce
prices, adjust marketing strategies, or innovate the product.
Significance of Need, Want, and Demand in Marketing
Understanding the
distinctions and interplay between need, want,
and demand is essential for effective marketing and business
strategy. Each of these concepts affects how businesses approach the market and
interact with consumers. Let's discuss the significance of these terms in
detail:
1.
Identifying
Target Markets: Marketers must understand the needs and wants of
their target audience in order to create products and services that resonate
with them. By recognizing that different people have different needs and wants,
marketers can segment the market into distinct groups based on various criteria
(e.g., demographics, behavior, psychographics). This segmentation allows
businesses to create personalized offerings that appeal to specific groups and
tailor marketing messages accordingly.
2.
Product
Development: Understanding consumer needs and wants directly
influences product development. A business must create
products that solve problems (i.e., meet needs) and fulfill desires (i.e.,
satisfy wants). For example, a company that sells health products might develop
supplements that address specific health issues (e.g., vitamin deficiencies,
joint pain), meeting the need for better health while also catering to the want
for a particular health solution (e.g., natural or organic supplements).
Businesses that develop products that match consumer wants and needs are more
likely to succeed in the marketplace.
3.
Pricing
Strategy: Demand plays a significant role in setting a pricing
strategy. If a product satisfies a need and is in high demand, a
business may be able to charge a premium price. Conversely, if the demand is
low, the business may have to lower the price to make the product more
attractive. Understanding demand dynamics helps marketers set prices that
reflect the value consumers place on the product, their ability to pay, and
their willingness to purchase at various price points.
4.
Advertising
and Communication: Marketing and advertising campaigns often target
consumers’ wants and desires rather than just their needs. By appealing to the
emotional, social, and psychological factors that drive consumer behavior,
marketers can create powerful campaigns that influence purchasing decisions.
For instance, advertisements for luxury cars do not just promote the car's
utility (a need) but also emphasize prestige, style, and status (wants).
Effective communication involves understanding these underlying psychological
motivations and tailoring messages that appeal to both the rational and
emotional aspects of decision-making.
5.
Customer
Satisfaction and Loyalty: Businesses that understand the difference between
needs, wants, and demand can better meet customer expectations and enhance
satisfaction. By offering products that address real needs while also catering
to wants, businesses can build long-term relationships with their customers.
Customers are more likely to return and become loyal if they feel that a
company understands their desires and delivers value that aligns with their
needs.
6.
Market
Positioning: Market positioning refers to how a
product is perceived in relation to competitors. By identifying unmet needs, businesses
can position themselves as the solution provider. For example, a company that
offers eco-friendly packaging might position itself as the best choice for
environmentally-conscious consumers who are looking to fulfill their need for
sustainability. This positioning, based on understanding both the needs and
wants of the target audience, can create a competitive advantage.
7.
Supply
and Demand Dynamics: Marketers also need to understand how demand changes
in response to various external factors such as trends, economic conditions,
and consumer preferences. Demand can fluctuate based on price sensitivity,
income levels, technological advancements, and consumer behaviors.
Understanding these dynamics allows marketers to anticipate changes in demand
and adapt their strategies accordingly. For example, demand for health products
might increase during a pandemic, while demand for luxury goods may decline
during economic recessions.
Conclusion
In conclusion, need,
want, and demand are crucial concepts in the
field of marketing. While needs are fundamental requirements
for survival, wants represent the desires for specific ways of
fulfilling those needs. Demand, on the other hand, is the
desire for a product backed by the financial ability and willingness to pay for
it. These concepts are interconnected, and understanding them is vital for
businesses to create effective marketing strategies, develop appropriate
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