Q. Discuss the terms need, want and demand. Why these terms assume significance for every marketers/business. Discuss.
1. Need: The Foundation of Consumer Behavior
A
need refers to something essential for a person’s survival, well-being,
or functioning. It is a basic requirement that is universal and independent of
external influences. Needs are innate and are often related to biological or
psychological survival, such as food, shelter, safety, and social interaction.
In the context of marketing, a need is something that businesses cannot ignore
because people will always require products or services that fulfill these
needs.
Additionally,
needs can extend beyond the biological to include psychological needs. Abraham
Maslow's hierarchy of needs outlines this concept. Beyond physiological needs,
people also need security, social connection, self-esteem, and
self-actualization. For example, people need education for personal growth or
financial security for peace of mind. Understanding these diverse needs gives
businesses the foundation to create value.
2. Want: The Desire Shaped by Culture and Society
A
want is the form that a need takes when shaped by a person's cultural,
social, or individual preferences. It is influenced by a combination of
external and internal factors, such as societal trends, personal experiences,
and economic status. Wants are often seen as an enhancement or a specific
manifestation of needs.
For
example, while every person needs food, the want can manifest in the form of a
desire for a particular type of food – like a luxury sushi meal, a gourmet
sandwich, or organic produce. These are influenced by culture, taste, income
level, and personal preferences.
Wants
are also shaped by marketing and advertising. Through advertising, businesses
can appeal to emotional desires, associating their products with an ideal
lifestyle or status symbol. For instance, a brand like Apple has built its
identity not just around fulfilling the need for a communication device, but
around fulfilling the want for sophistication, exclusivity, and innovation.
Want-driven products may not be as essential to life as needs, but they are
highly influential in consumer decision-making.
Understanding
the difference between needs and wants is essential for marketers because,
while a need is constant and universal, a want can shift and be more
personalized. Businesses that create products or services catering to specific
wants can create targeted marketing campaigns that resonate with particular
consumer segments.
3. Demand: The Economics of Need and Want
Demand is the ability and willingness of consumers to purchase
products or services to satisfy their wants and needs. Demand, unlike need and
want, is a market-driven concept that depends on various factors like income,
prices, and availability. In economic terms, demand represents the quantity of
a good or service that consumers are ready to buy at different prices, and the
concept is central to understanding how markets function.
Demand
is influenced by several factors:
- Price sensitivity: As prices rise, the quantity demanded may decrease,
and as prices drop, demand can increase. This is described by the law of
demand.
- Income levels: The ability of consumers to pay for a product or
service plays a huge role in creating demand. Even if a person wants a
luxury product, their ability to afford it will dictate whether they make
the purchase.
- Substitutes and competition: If there are alternatives available, demand for a
product can decrease. For example, demand for one type of smartphone may
be reduced by the availability of a more affordable option from another
brand.
- Consumer preferences: Changes in tastes and preferences can drive demand in
unexpected ways. For example, during certain seasons or trends, demand for
fitness equipment or specific diet plans can skyrocket.
Understanding
demand is crucial for businesses because it helps them forecast sales, plan
inventory, set prices, and manage resources. The demand curve—an essential
economic concept—provides businesses with insights into how many units of a
product or service can be sold at a given price.
4. The Relationship Between Need, Want, and Demand in
Marketing
The
interplay between need, want, and demand is fundamental to marketing strategy.
Here’s how each concept interrelates:
- Needs Drive Wants: While needs are the foundation of consumer behavior,
they don't tell businesses how to cater to the customer’s desires
specifically. Instead, wants shape the actual product or service that
fulfills the need. For instance, a person needs food, but they may want a
gourmet pizza or a vegan burger, depending on personal preference and
available options.
- Wants Fuel Demand: Once a want is identified, demand comes into play. A
want must be backed by purchasing power for it to become demand.
Businesses must assess not just whether people want their products, but
whether the target market can afford them.
- Demand Guides Business Strategy: Understanding demand helps businesses optimize their
pricing, inventory management, marketing channels, and product launches.
By recognizing the elasticity of demand (how demand changes with price
changes), businesses can fine-tune their marketing strategies for maximum
profitability.
5. Significance of Need, Want, and Demand for Marketers
For businesses, especially in competitive markets, understanding the dynamics of need, want, and demand is crucial for several reasons:
5.1. Target Market Identification
By
understanding consumer needs, businesses can segment their target market more
effectively. Knowing which needs are universal (e.g., food, healthcare) and
which are specific (e.g., luxury experiences) helps marketers target the right
audience. For instance, health clubs may target consumers with a need for
fitness but segment them further based on their want for specific experiences
or the level of commitment they wish to make to their health.
5.2. Product Development and Innovation
A
company’s ability to create products that meet both the needs and wants of
consumers is a key differentiator in today’s market. Product innovation is
often born from understanding the gap between what customers need and what they
desire. A company that can address a particular want in a unique way is more
likely to succeed. This is why companies like Tesla didn’t just cater to the
need for vehicles but tapped into the want for cutting-edge, environmentally
conscious, and tech-savvy transportation.
5.3. Pricing Strategy
The
concept of demand plays a pivotal role in how products are priced. If the
demand for a product is high, businesses can price it at a premium. Conversely,
if demand is lower, businesses may need to adjust prices or offer promotions.
Demand elasticity also affects pricing decisions: A product with inelastic
demand can often bear higher prices without significantly affecting the volume
of sales.
5.4. Effective Marketing and Advertising
Advertising works to bridge the gap between need and want.
By emphasizing the emotional or practical benefits of a product, companies can
shape consumer wants in a way that leads to demand. For instance, advertisers
use psychological triggers—such as the desire for status or luxury—to turn a
basic want into a demand for their specific product.
5.5. Building Consumer Loyalty
Brands
that are able to continually meet the needs and wants of their consumers—while
evolving with market demands—build strong customer loyalty. Meeting needs is
one thing, but fulfilling wants (especially in innovative ways) ensures that
customers return. For example, Apple has successfully maintained customer
loyalty by constantly addressing evolving wants, not just meeting the basic
need for technology.
6. Challenges and Limitations
Despite
their importance, need, want, and demand are not static concepts. They are
affected by cultural, social, economic, and technological factors that
businesses must be aware of. The challenge lies in continuously adapting to
shifting consumer behavior. A business that once thrived based on fulfilling a
need or want may find itself struggling if consumer tastes change, or if demand
for its product decreases due to economic shifts or technological advancements.
For
example, the rise of digital streaming services has significantly impacted the
demand for physical media (e.g., DVDs and Blu-rays). As consumers shifted their
wants to on-demand content, companies that were once focused on physical
product sales had to adapt quickly.
7. Conclusion
In
conclusion, the terms need, want, and demand are not only
crucial to understanding consumer behavior, but they are also vital for the
strategic decisions that businesses make. While needs are fundamental, wants
and demand reflect the complexities of consumer preferences and economic
realities. Marketers must recognize and cater to both needs and wants while
anticipating and responding to shifts in demand. The interconnectedness of
these concepts provides businesses with the foundation to craft relevant,
competitive, and profitable marketing strategies. By successfully aligning
product offerings with consumer desires, businesses can build stronger customer
relationships, innovate effectively, and remain profitable in a rapidly
changing market.
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