Needs. Wants and Demands

Needs. Wants and Demands

human need

The most basic concept underlying marketing is that of human needs. A human

A state of felt deprivation. need is a state of felt deprivation. Humans have many complex needs. These include basic physical needs for food, clothing, warmth and safety; social needs for belonging and affection; and individual needs for knowledge and self­expression. These needs are not invented by marketers, they are a basic part of the human

make­up. When a need is not satisfied, a person will do one of two things:

1. look for an object that will satisfy it; or

2. try to reduce the need. People in industrial societies may try to find or develop objects that will satisfy

their desires. People in less developed societies may try to reduce their desires and satisfy them with what is available.

human want

H u m a n wants are the form taken by human needs as they are shaped by

The form that a human

culture and individual personality. A hungry person in Bahrain may want a need takes as shaped by

vegetable eurry, mango chutney and lassi. A hungry person in Eindhoven may culture and individual

want a ham and cheese roll, salad and a beer. A hungry person in Hong Kong may personality.

want a bowl of noodles, char siu pork and jasmine tea. Wants are described in terms of objects that will satisfy needs. As a society evolves, the wants of its members expand. As people are exposed to more objects that arouse their interest and desire, producers try to provide more want­satisfying products and services.

People have narrow, basic needs (e.g. for food or shelter), but almost unlim­ ited wants. However, they also have limited resources. Thus they want to choose products that provide the most satisfaction for their money. When backed by an

demands ability to pay ­ that is, buying power ­ wants become demands. Consumers view Human ^ants that are

products as bundles of benefits and choose products that give them the best backed by buying power.

bundle for their money. Thus a Honda Civic means basic transportation, low price and fuel economy. A Mercedes means comfort, luxury and status. Given their wants and resources, people demand products with the benefits that add up to the most satisfaction.

Outstanding marketing companies go to great lengths to learn about and understand their customers' needs, wants and demands. They conduct consumer research, focus groups and customer clinics. They analyze customer complaint, inquiry, warranty and service data. They train salespeople to be on the look­out for unfulfilled customer needs. They observe customers using their own and competing products, and interview them in depth about their likes and dislikes. Understanding customer needs, wants and demands in detail provides important

input for designing marketing strategies.

Wiiat is Marketing? • 11

Products and Services

People satisfy their needs and wants with products. A product is anything that

product

can he offered to a market to satisfy a need or want. Usually, the word product Anything that van be suggests a physical object, such as a car, a television set or a bar of soap. However,

offered to a market for the concept of product is not limited to physical objects ­ anything capable of

attention, txccfuisition, satisfying a need can be called a product. In addition to tangible goods, products

use or consumption that include services, which are activities or benefits offered for sale that are essen­ might satisfy a want or need. It includes

tially intangible and do not result in the ownership of anything. Examples are physical objects, banking, airline, hotel and household appliance repair services. Broadly defined,

services, persons, products also include other entities such as persons, places, organizations,

places, organizations activities and ideas. Consumers decide which entertainers to watch on tele­

and ideas. vision, which political party to vote for, which places to visit on holiday, which organ­ izations to support through contributions and which ideas to adopt. Thus the term

service

product covers physical goods, services and a variety of other vehicles that can Any activity or benefit satisfy consumers' needs and wants. If at times the term product does not seem to

that one party can offer fit, we could substitute other terms such as satisfier, resource or offer.

to another which is Many sellers make the mistake of paying more attention to the physical prod­

essentially intangible ucts they offer than to the benefits produced by these products. They see them­ and does not result in selves as selling a product rather than providing a solution to a need. The ownership of anything.

importance of physical goods lies not so much in owning them as in the benefits they provide. We don't buy food to look at, but because it satisfies our hunger. We don't buy a microwave to admire, but because it cooks our food. A manufacturer of drill bits may think that the customer needs a drill bit, but what the customer

really needs is a hole. These sellers may suffer from 'marketing myopia'. 4 They

are so taken with their products that they focus only on existing wants and lose sight of underlying customer needs. They forget that a physical product is only a

tool to solve a consumer problem. These sellers have trouble if a new product comes along that serves the need better or less expensively. The customer with

the same need will ­want the new product.

Value, Satisfaction and Quality

Consumers usually face a broad array of products and services that might satisfy a given need. How do they choose among these many products? Consumers make buying choices based on their perceptions of the value that various products and sendees deliver.

The guiding concept is customer value. Customer value is the difference

customer value

between the values the customer gains from owning and using a product and the The consumer's costs of obtaining the product. For example, Federal Express customers gain a

assessment of the number of benefits. The most obvious is fast and reliable package deliver;'.

product's overall However, when using Federal Express, customers may also receive some status

capacity to satisfy his and image values. Using Federal Express usually makes both the package sender

or her n<xds. and the receiver feel more important. When deciding whether to send a package

via Federal Express, customers will weigh these and other values against the money, effort and psychic costs of using the service. Moreover, they will compare

the value of using Federal Fjxpress against the value of using other shippers­UPS, DHL, the postal service ­ and select the one that gives them the greatest delivered value.

Customers often do not judge product values and costs accurately or objec­ tively. They act on perceived value. Customers perceive the firm to provide faster, more reliable delivery and are hence prepared to pay the higher prices that

12 • Chapter 1 Marketing in a Changing World

customer satisfaction Federal Express charges. Customer satisfaction depends on ­A product's perceived The extent to ­which a

performance in delivering value relative to a buyer's expeetations. If the product's product's perceived

performance falls short of the customer's expectations, the buyer is dissatisfied. performance matches a

If performance matches expectations, the buyer is satisfied. If performance buyers expectations. If

exceeds expectations, the buyer is delighted. Outstanding marketing companies the product's

go out of their way to keep their customers satisfied. Satisfied customers make performance falls shore, repeat purchases, and they tell others about their good experiences with the of expectations, the

buyer is disatisfied. If product. The key is to match customer expectations with company performance.

performance matches or Smart companies aim to delight customers by promising only what they can deliver, then delivering more than they promise. exceeds expectations the 5

buyer is satisfied, or Customer satisfaction is closely linked to quality. In recent years, many delighted.

companies have adopted total quality management (TQM) programmes, designed constantly to improve the quality of their products, services and marketing

total quality processes. Quality has a direct impact on product performance, and hence on management (TQM)

customer satisfaction.

Programmes designed to In the narrowest sense, quality can be defined as 'freedom from defects'. But constantly improve the

most customer­centred companies go beyond this narrow definition of quality. quality of products,

service and marketing Instead, they define quality in terms of customer satisfaction. For example,

processes Motorola, a company that pioneered total quality efforts in the United States,

stresses that 'Quality has to do something for the customer ... Our definition of a defect is "if the customer doesn't like it. it's a defect".' Customer­focused defini­ tions of quality suggest that a company has achieved total quality only when its products or services meet or exceed customer expectations. Thus, the funda­ mental aim of today's total quality movement has become total customer satis­

faction. Quality begins with customer needs and ends with customer satisfaction. Today, consumer­behaviourists have gone far beyond narrow economic assumptions about how consumers form value judgements and make product choices. We will look at modern theories of consumer­choice behaviour in Chapter 7. In Chapter 11, we will examine more fully customer satisfaction, value and quality.

Exchange, Transactions and Relationships

Marketing occurs when people decide to satisfy needs and wants through exchange

exchange. Exchange is the act of obtaining a desired object from someone by The act of obtaining a

offering something in return. Exchange is only one of many ways people can desired object from

obtain a desired object. For example, hungry people can find food by hunting, someone by offering

fishing or gathering fruit. They could beg for food or take food from someone else. something in return.

Finally, they could offer money, another good or a service in return for food. As a means of satisfying needs, exchange has much in its favour. People do not have to prey on others or depend on donations. Nor must they possess the skills to produce every necessity for themselves. They can concentrate on making things they are good at making and trade them for needed items made by others. Thus exchange allows a society to produce much more than it would with any

alternative system.

Exchange is the core concept of marketing. For an exchange to take place, several conditions must be satisfied. Of course, at least two parties must partici­

pate and each must have something of value to offer the other. Each party must also want to deal with the other party and each must be free to accept or reject the other's offer. Finally, each party must be able to communicate and deliver.

These conditions simply make exchange possible. Whether exchange actu­ ally takes place depends on the parties coming to an agreement. If they agree, we must conclude that the act of exchange has left both of them better off or, at least,

What is Marketing? • 13

not worse off. After all, each was free to reject or accept the offer. In this sense, exchange creates value just as production creates value. It gives people more

consumption choices or possibilities. Whereas exchange is the core concept of marketing, a transaction is

transaction

marketing's unit of measurement. A transaction consists of a trading of values A erode between i between two parties. In a transaction, we must be able to say that one party gives parties that involves at least two things of value,

X to another party and gets Fin return. For example, you pay a retailer £300 fora agrecd­upon conditions, television set or the hotel £90 a night for a room. This is a classic monetary trans­

a time of agreement and action, but not all transactions involve money. In a barter transaction, you might

a place of agreement. trade your old refrigerator in return for a neighbour's second­hand television set.