Needs, wants and demands are 3 important terms in marketing. No matter how similar they might seem, there are more differences in these terms that you might think. There are many layers within them and they play a vital role in arriving at segmenting the TG, targeting a particular target group and most importantly defining a sharp positioning for a brand. Needs “Needs” is the basic human requirements like shelter, clothes, food, water, etc. which are essential for human beings to survive. If we extend this further, other needs are education, healthcare or even a social thing, for example, belonging to a certain society or self-expression. One can say that the products which fall under the needs category of products do not require a push. Instead the customer buys it themselves. But it’s actually not true. in today’s world with thousands of brands competing in the same categories with identical offerings satisfying the same needs, even the “needs category product” has to be pushed in the consumers’ mind. Example of needs category products / sectors – Agriculture sector, Real Estate, Healthcare etc. We all know about Maslow’s hierarchy of needs which categorizes needs into 5 levels starting from physiological needs at the bottom and going up to self-actualization needs. But what’s important as a marketer to know which level of need is your brand targeted to. Let’s look at some of the examples of brands which are targeting different levels of needs 1. Physiological Needs – Food companies (Nestle, Pepsi, Coca Cola) 2. Safety Needs – Insurance companies (ICICI Prudential, Tata AIG, HDFC Life) 3. Social Needs – Social networking sites (Facebook, Twitter, Instagram) 4. Esteem Needs – Luxury brands (iPhone, Mercedes, Estee Lauder) 5. Self-actualization needs – Non-Profit organizations and NGOs (UNICEF, Teach for India) In marketing, there is another way to categorize needs. There are basically five types of consumers’ needs: 1. Stated Needs – As the name suggests, in this case, the consumer explicitly states what he wants. For eg. “I need a phone”. 2. Real needs – This is more specific. So when the consumer wants a phone to remain connected to his friends, family and colleagues, the actual need be a phone with high battery backup and not high camera resolution. 3. Unstated needs – The consumer also expects warranty and other sorts of after sales service when buying a phone which he might not say explicitly. 4. Delight needs – The consumer would like the phone manufacturer or the dealer to give him some free gift or a promotional item (phone case, tempered glass, free SIM etc.), but he doesn’t clearly express that he wants something with the phone. 5. Secret Needs – These are the needs which the consumer feels reluctant to admit; for example the consumer wants the phone for his status symbol but he feels uncomfortable to admit that status is important to him. In the above example, responding to only stated need ie., “I need a phone” doesn’t help in arriving at a right product proposition. As a marketer, it is important to dig deeper and uncover not only the real, but also his other needs: unstated need, delight need and secret needs. Wants "Wants" are a step ahead of needs Wants aren’t essential for humans to survive, but it’s associated with needsSimply put, A want is a product desired by a customer that is not required for us to survive. So, want is the complete opposite of need, which is essential for our survival. Wants aren’t permanent and it regularly changes. As time passes, people and location change, wants change accordingly. Wants are directed by our surrounding towards reaching certain needs. Therefore, human’s wants can be varied depending on each individual’s perception, environment, culture, and society. For example, an Indian needs food but he may want a Dosa or Paratha while an American may want Burger or Sandwich. Example of wants category products / sectors – Hospitality industry, Electronics, FMCG, Consumer Durables etc. DemandsWants turn to be Demands when a customer is willing and having the ability to buy that needs or wants. The basic difference between wants and demands is desire. A customer may desire something but he may not be able to fulfill his desire. Consequently, for people, who can afford a desirable product are transforming their wants into demands. In other words, if a customer is willing and able to buy a need or a want, it means that they have a demand for that need or a want. You might want a BMW for a car or an iPhone for a phone. But can you actually buy a BMW or an Iphone? You can, provided you have the ability to buy them. Example of demands –Luxury cars, 5 star hotels etc. Many people want a BMW, but only a few can buy one. So, it’s very crucial that one must measure not only how many people want their product, but also how many are willing and have the ability to buy it. So, its not only important to discover different consumer needs, but also to figure out what consumer actually wants and how much is he able to pay ie. how much demand can be created for the product or service. Lastly, let’s try to answer “Can marketing create a need?”. I believe that marketers do not create needs. They might promote some specific products or services, and make people want those products or services for their needs. For example, Marketers might promote the idea that an Insurance can satisfy a person’s need for safety; they do not create the need for safety.
Economic utility can be defined as the total amount of satisfaction that someone experiences when they consume a particular product or service. It helps measure how much fulfillment someone requires in order to satisfy a particular need or want. Companies strive to increase the utility or perceived value of their products and services to enhance customer satisfaction, increase sales, and drive earnings. The concept of economic utility falls under the area of study known as behavioral economics, which is designed to assist companies in operating a business and marketing the company to attract the maximum amount of customers and sales revenues. There are four types of economic utility, which include form, time, place, and possession. Companies that can understand and recognize areas that are lacking in their marketing schemes can assess consumer purchase decisions and pinpoint the drivers behind those decisions, thus boosting their sales and profits.
Form utility refers to how much value a consumer receives from a product or service in a way that they actually need. Form utility is, therefore, the incorporation of customer needs and wants into the features and benefits of the products being offered by the company. Companies invest time and money into product research to pinpoint exactly what products or services consumers desire. From there, company executives strategize on the development of the product with the goal of meeting or exceeding those needs to create form utility. Form utility may include offering consumers lower prices, more convenience, or a wider selection of products. The goal of these efforts is to increase and maximize the perceived value of the products. For instance, a cosmetics company may conduct focus groups and testing to identify holes in the market related to different skin types and skin tones. The company may decide to produce and market new offerings to cater to and complement the needs of a more racially diverse clientele. The company can increase its sales while adding value to these new consumers.
Utility doesn't necessarily have to be measured in numbers—just in perceived value. For instance, someone may choose to walk rather than take the bus or drive because they perceive the health benefits from the exercise to be greater than the speed and ease associated with being transported in a vehicle. This type of utility occurs when a company provides goods and services when consumers demand or need them. Companies analyze how to create or maximize the time utility of their products and adjust their production process, logistical planning of manufacturing, and delivery. So when demand increases, the company should respond by producing and delivering more of the product to the market. Creating time utility includes considering the hours and days of the week a company might choose to make its services available. For example, a store may open on weekends if customers typically shop for a certain product at that time. Time utility might also include 24-hour availability for a product or the company's customer service department through a phone number or website chat function. Failure to factor time utility into the equation can lead to a drop in the customer base, which can result in a loss of revenue.
Economic utility can also be referred to as utility marketing. That's because product development and design require companies to persuade consumers to make purchases. Place utility refers to making goods or services available in locations that allow consumers to easily access products and services. While most people typically think of place utility as a physical or brick-and-mortar location, such as a retail store or shopping mall, the digital age helps broaden the definition of availability. For instance, companies can maximize place utility through their website. Those with effective search engine optimization strategies can improve their place utility. Increasing convenience for customers can be a key element in attracting business. For example, a company that offers easy access to technical support gives consumers an added value compared to a similar company that does not offer a similar service.
Making a product available in a wide variety of stores and locations is considered an added value since it is more convenient. Apple (AAPL) sells iPhones and laptops through its retail stores, but also offers its products through other electronics retailers, including Best Buy (BBY). Possession utility is the amount of usefulness or perceived value a consumer derives from owning a specific product and being able to use it as soon as possible. The basic premise behind this utility is that consumers should be able to use a specific good or service as soon as they're able to purchase or obtain it. For instance, someone who purchases the latest iPhone won't get much utility for the product if Apple has it on backorder and can't manufacture and ship it to the consumer in a timely fashion. That's why it's important for companies to increase the ease of ownership, which boosts the product's possession utility or perceived value. Consider lenders who offer favorable financing terms toward owning a car, appliance, or home. They would likely create possession utility for these products, leading to an increase in sales and, therefore, revenue.
The term economic utility refers to the total degree of satisfaction someone gets from using a product or service. It may be a car, house, food, clothing, financial services, or housekeeping. Companies that offer them can study the behaviors of their consumers and figure out what drives them to make purchases. One example of an economic utility is the value customers receive from the latest iPhone model. Apple responds to the needs and wants of its consumers by updating and upgrading its phones on a regular basis.
There are four main types of economic utility. The first is form utility, which means the amount of value someone receives from goods or services that they actually need. Time utility has to do with the amount of time it takes for companies to respond to the needs and demands of their consumer bases. The third utility has to do with place, which refers to a centralized location where consumers can easily access the products and services they need. Possession utility is the final type of economic utility. It measures a product or service's perceived value based on a consumer's ability to obtain and use it as soon as the need or want arises.
There are many steps that businesses can take in order to improve utility for their customers. This includes research and marketing activities, such as focus groups and testing. Companies can also consider increasing the speed with which they conduct their production process, resulting in the ease in bringing products and services to market. Companies can also make their products and services easily available (in retail locations and online) at lower costs. People purchase goods and services to get some benefit or satisfaction. This allows them to fulfill a need or want when they consume it. This phenomenon is called economic utility. There are four basic principles that fall under this umbrella, including form utility, time utility, place utility, and possession utility. Companies can boost their sales and revenues by understanding and tailoring their marketing and production efforts to the way individuals purchase and consume their products. |
Which of the following is the ability of a product to satisfy a human want or need group of answer choices?
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