Maslow’s 26 hierarchy Differentiating market positioning What the model looks like and how it works Every business needs to understand what drives the behaviour of its custom- ets, At a superficial level we can ask people what motivates them to do something and we receive an answer. But can we believe what they have told us? Do people really know what made them choose that Porsche, join that gym, or train as a nurse? Maslow’s hierarchy of needs (Figure 26.1) helps us to understand motivations. It is a theory described as five levels in a pyramid, Each level is a need fulfilled and leads to the desire to reach the next level and move upwards through the pyramid. In its simplistic form, Maslow believes that the levels in the hierarchy follow in sequence, This can be observed in carly life stages of a child When a baby is born its only needs are physiological - food and warmth, Up to the age of five, children have a need for all the physiological require- ments plus safety, love and belonging. When they start school between the ages of five and seven, they start to show that they care what people think of them. This progression from one level to another is obvious in a young child. As we mature, the five levels are still recognizable but they can appear in a different order or be absent altogether. In fact, Maslow was of the view that very few people make it to the highest level ~ that of self-actualization, This does not detract from the wide appeal of the theory, which describes the complications of behaviour in a very easy-to- understand way The most basic needs, those that sit at the bottom of the pyramid, are required for our physiological functioning. These are the need to eat, drink, hhave sex, stay warm and sleep. ‘Once our basic needs are met, there is a desire for personal safety, includ- ing health and well-being. Financial security is also part of this need.‘Maslow's Hierarehy Figure 26.1 Maslow’s hierarchy of needs Fulfilment needs Peychologieal needs Basie Physiologica! SOURCE Wasow (1943) cs When we feel safe and secure we are in a position to seek love, friendship and company. This isa tribal instinct; a need to belong. It is why people feel patriotic, join clubs and support sports teams, ‘Moving up through the pyramid there is now a search for social recog- nition, status and respect. These are the values of esteem and they give a person a sense of value. There are two levels of esteem. A lower level yearns for respect from other people and could come from a desire for status and recognition. A higher level of esteem and self-confidence comes from an inner strength that follows the mastering of a skill At the top of the hierarchy is self-actualization. This is achieved when people reach their full potential. It is a poet and their poetry. It is a féted artist. At this level a person has achieved everything they are capable of achieving. Maslow claimed that only 2 per cent of the population reach this level. In 1970 he published a list of a small number of people who had achieved self-actualization, living or dead, and he came up with just 18 names, including Thomas Jefferson, Albert Einstein and Maslow himself The origins of the model Abraham Maslow was born into a Brooklyn slum in 1908. His parents were Russian Jews and he faced anti-Semitism as a child in New York. It is claimed that he had an IQ of 195. 157‘The Business Models Handbook He published his theory of human motivation in a paper in 1943. It followed the work of previous psychologists who were more concerned with psychology dominated by the psychoanalytic and behavioural approaches. Maslow focused on the human potential rather than the nega- tive emotions. He believed that behaviour is not driven by external forces but rather internal ones that motivate us to do better and improve, His model does not assume that we do things because we have been condi- tioned to do so by our parents and our upbringing; it is based on aspiration and a desire to improve. In many respects, his pyramid describes levels of achievement towards the American dream. His psychology was based on optimism and the abil- ity of human beings to move onwards and upwards. As a psychoanalyst, he differed from many of his colleagues in that he was not interested in finding out what goes wrong for people, he focused on what could go right for them. Unlike other psychologists, who wrote for their colleagues, Maslow ‘wrote for the general public. His theories have practical uses, particularly in business. Developments of the model ‘As with many sequential models, life is never that simple. Not every- one moves up through the pyramid in a neat and orderly way. Maslow’s theory was based more on observations and ideas rather than empirical evidence. After Maslow’s death in 1970, research by Clayton Alderfer suggested that Maslow’s five groups of needs could be reduced to three ~ existence, relatedness and growth (the ERG theory).! The argument here ‘was that human beings need to be satisfied in all three arcas and, if this is not the case, then there would be a natural inclination to boost one of the categories Consultants and business writers have embraced Maslow’s model and modified it to relate to organizations rather than individuals. Figure 26.2 shows a pyramid developed by B2B International reflecting the hierarchical needs of businesses. Level 1: survival needs A successful company needs the basic physiological requirements of an offer —the right product, at the right price, at the right place, with the right promotion.159 ONUANYY ‘sa lvs ‘NoWonaowd “SONVNLS SNUBRW "SONVN ‘SaTWS ONUSHYN LoNISvHOuNd ‘ONL “yea ‘SPH ‘uit SNOLVHSdO. oye SNE ‘yd “LNWOT3A3O SSANISN SNUADRW“ALTIEISNOSSSE Two0s a1vwOaH0D ‘hq payuouseydu evan mojew vo poses (510%) uoReuIOwI ze aDWNOS osiedsajes © sowoysno ‘oesuen 0 Ay!ae ‘sasueid ianpoud a103 ‘spury 01 s5800y ‘SQ33N TWAIAUNS Buyoyew pepuerx ue ajdoad “Alyqeiyesd "ses, ‘SO33N LNaNOTAA3O waweBeBve aahojswe “aoewnu! s9uiesng SGHaN atwSNOWWIRY Uosueexe ‘woo ‘usiape sue ‘pe S033N NOWINDOI34 ‘lysi9pea} yBn0N) uS9) [hoo ajesedion 89 SQ33N NOLWZnWnLa¥s13s u xa WU0D ssaUISNG ® Ul A zoe ainsi‘The Business Models Handbook Level 2: development needs Once established, the company must now become sustainable. The business that began with a product focus must think about adding value to its offer. If the company does not develop at this stage, like many start-ups, it will fail within the first year or two, or at best stagnate, Level 3: relationship needs At the time of the sts rt-up, sales are everything. As the business matures, there is a greater focus on tactical marketing and key account management. Within the business itself, employee engagement becomes important. An engaged workforce is more likely to work harder and satisfy customers. Level 4: structural needs “The growing business needs to slough its informal ways and impose structures and reporting hierarchies. IT systems and customer relationship management (CRM) systems are installed. Middle managers are appointed with responsibil- ities for departments, which in turn reinforce the need for reporting structures. Level 5: recognition needs ‘The company is now large and has a brand that must be cherished and protected, There will be vision and mission statements that ensure that the company is seen to have a clear direction. The brand will be recognized as an important asset and a ‘guiding star’ for employees. Level 6: self-actualization needs Just as Maslow believed a very small percentage of people reach self actualization, so too we can surmise that there are very few businesses that reach this level. This is the level where a company places great emphasis on corporate social responsibility (CSR). Profit may still be important but not at the expense of the brand and what it stands for. The model in action In business, the hierarchy of needs has many applications. It is used by managers to identify the needs of staff and help them feel fulfilled. In marketing itis used to segment customers who buy products and services to meet their different needs. It is used by advertising companies who want to develop messages that resonate and trigger actions.‘Maslow's Hierarehy Engaging with staff A large mining company was finding it difficult to recruit staff. The company had a number of mines and processing plants scattered around the country. The products mined and processed were not particularly inspiring compared to working for a finance or digital company in a large city. The mining company commissioned a survey of employees and potential employees to find out what motivates people to seek employment at a company of this type. ‘Two factors emerged as basic requirements. The salary and the location of the company had to be acceptable. However, beyond these two basics, there was a strong appeal for joining the company if it could offer opportu- nities for career growth. Also job security and work-life balance proved to be important drivers. These motivational needs, beyond the basics, became the focus of the recruitment campaign and proved highly successful. Segmenting customers A major manufacturer of caustic soda found itself under pressure. Caustic soda is considered by many customers as a commodity. It accounts for a high proportion of a product's cost and the manufacturer of cau under severe price pressure. Customers were classified as small, medium or large. As might be expected, larger accounts received more attention, However, this size-based classification was also used by other suppliers of caustic soda and so it gave no advantage. soda came ‘The manufacturer commissioned research to identify the more subtle needs of its customers. The research showed that price was a significant driver influencing the choice of caustic soda supplier but it was by no means the most important, Other than price, the biggest challenge facing custom- ers was logistics, particularly the planning of deliveries of the product. Customers of ll sizes faced logistical challenges. Using the findings from the research the company segmented its custom- ers according to their needs for the better planning of volume deliveri Safety also proved to be an important driver of supplier choice because caustic soda is an aggressive chemical. Safety was made a watchword for customers of all sizes. Improved planning of logistics enabled the company to better serve large, medium and small companies and to do so with greater efficiencies. The new segmentation was delivered at a higher level than the basic delivery of product and price. By meeting the higher-level needs for safety, the caustic soda manufacturer significantly improved levels of customer satisfaction and its own profitability, 161‘The Business Models Handbook Developing messages that resonate Advertising agencies know it is a waste of time promoting features and benefits around the bottom of Maslow’s hierarchy. These are basics that every company supplies if they play in the market. Ad agencies know that customers are motivated by emotional factors higher up the pyramid. Meeting psychological needs or self-esteem needs are much stronger draws than hitting on the basics. David Ogilvy is sometimes referred to as the grandfather of ad men. He ‘was recruited by Rolls-Royce to design a campaign to promote one of the company’s new cars. Ogilvy did not talk about the amazing quality of the car, He did not talk about its reliability, which was legendary. He never mentioned status. His headline ran: ‘At 60 miles an hour the loudest noise in this new Rolls-Royce comes from the electric clock’ The message was clear. The car itself had reached self-actualization. There was nothing more to be said about the perfection of the ear other than the noise of the clock. The ad, quite rightly, became world famous. Some things to think about © Marketers must, of course, get the basics right. They must have the right product, at the right price, in the right place. However, emotions are what distinguish companies and drive demand. The most effective comnmunica- tions and segmentations are based on the top end of Maslow’s hierar They address psychological and fulfilment needs. © Use focus groups and qualitative research to understand emotions and use quantitative research to measure and quantify how important these emotions are for your customers. Notes 1. Kremer, W and Hammond, C (2013) Abraham Maslow and the pyramid that beguiled business, BBC World Service, | September 2. Maslow, AH (1943) A theory of human motivation, Psychological Review, 50 (4), pp 370-96 3 Alderfer, CP (1969) An empirical test of a new theory of human needs, Organizational ebavior and Human Performance, 4 (2), May, pp 142-75