Needs, Wants, and

Demands
Marketing Origins,
Exchange, and Value
Ellen Eve C. Marikit
Teacher 1
Mambago-B National High School - SHS
Lesson Objectives:
At the end of this topic, I will be able to:
 Know the concepts of needs, wants, and

demands;
 Understand the dynamics that drive consumer

demand;
 Understand the evolution behind the

principles of marketing;
 Know the difference between marketing and

non-marketing-based sales techniques.

Motivation and Analysis
1. Using your own words, define “value”. Try to
really go as deep into its meaning as you
can.
2. Give three examples of what you think are
valuable products and explain why you
think these are valuable.
Needs, Wants and Demands

We all have needs.

We need food, clothing, shelter.
We need to be educated.
We need to be heard, to be loved,
to be understood.
Needs
 Is
a state of felt deprivation about
something that is deemed to be
necessary.

At the most primal level, we go back to

the physical needs of food, clothing and
shelter which we literally need to stay
alive and fundamentally comfortable.
 Case in point: basic need of water.
In 1943, psychologist Abraham Maslow
proposed a hierarchy of human needs
that eventually and popularly came to
be represented as a pyramid , the most
basic needs set at the bottom (Maslow
1943).
Maslow’s Hierarchy of Needs Theory
The premise behind Maslow’s Hierarchy of Needs
Theory was that the most basic needs must first be
met before the individual can feel a strong desire
for the higher level needs.’

But while Maslow’s hierarchy seems to make a lot of

sense, it is now considered a bit outdated especially
when human needs are viewed from an evolutionary
context. Seen from a more anthropological and
sociological perspective, needs are derived more
from a complex mix of “subjective pleasure, social
status, romance, and lifestyle…as a product’s
mental associations become more important than
its actual physical qualities” (Miller 2009)’
Wants
 Are the specific manifestation of needs.

You need comfort, and you crave for a scoop

of creamy gelato and find it there. You need
transportation, but in particular you want a
classic Mustang convertible. You need a writing
instrument for communicating, but you want a
Pelikan M640 Polar Lights Special Edition
fountain pen.’
Demands
 Are wants that are backed by purchasing power.
Without this purchasing power, a want is simply
something on someone’s wish list.

A homemaker may aspire for an expensive home

water distillation system. But if the household
does not have the budget for it, then they may
just settle for a more practical and conventional
carbon filtration system or maybe just ordering
jus of filtered water from the neighboring
supplier.’
Activity
 Think of a very expensive product that you
aspire to have. Assuming that you do not
have the budget for this, think of a cheaper
alternative. Now, imagine buying this cheaper
alternative and having it with you right now.
Are you happy with it? Are you contented with
it?
Application
(answer in your activity notebook)
1. Explain why there is a multitude of different types
of shampoos in the market shelves, many of
which are from the same manufacturer.
2. Speculate how specific products can communicate
their effectiveness in satisfying a particular need.
Use a popular brand of product as an example.
3. Discuss how much a consumer must spend in
order to satisfy a particular need. Is a need ever
satisfied, or will the state of self deprivation last
for life? Simulate this by using a hypothetical
character who has particular needs.
 Marketing Origins,
Exchange, and Value
Stage 1: Supply < Demand
Seller’s market – when supply is less than
demand, manufacturers generally have no
problem selling whatever they produce. Sellers
have the upper hand in these situation since
the market is hungry for the product and has
the disposable income to pay for it.
Production Orientation – the mindset that tells
that the demand is here, so you just have
to produce as much of your product as you
can in order to meet it.
Stage 2: Supply < Demand,
Competition Growing
The entry of competitors in a potentially huge
market space generally leads to innovations as
challengers strive to make their offerings
different enough.
Product Orientation – the mindset that tells that
innovations such as improved quality, new
and better features, better comfort, better
designs – all of which are undertaken with the
hope that the product will speak for itself and
that consumers will choose your products
based on the merits of your ware.
Stage 2: Supply < Demand,
Competition Growing
Product Orientation – often colloquially referred
to as “building a better mousetrap”

Many passionate entrepreneurs operate this

way, sincerely believing that if they can make the
best product out there, then the market will
come storming into their doors.
In today’s climate of pervasive social media
utilization, well thought-out products that
receive a lot of online endorsements can do very
well.
Stage 3: Supply > Demand
When business begin to crowd into a limited
market space, then competition can get quite
fierce. Especially if the businesses are not
particularly savvy in either offering least cost
options or in differentiating their products.
Sales Orientation - using sales organization to
push your product. The sales force becomes
the front liners who take matters into their
hands and push the products directly to the
customers.
Stage 3: Supply > Demand
When Sales Orientation works, it can work for
the benefit of all parties. Insurance, for instance,
is sold this way.
On the other hand, when it does not work, a
sales orientation can quickly turn into hard
selling, which can be annoying to some
customers.
Stage 4: Supply > Demand, Customer-
centric strategies emerge
As competition becomes fierce, firms soon
realize that a better way to compete would be
prioritizing customer needs more than their own.
Marketing orientation - begins with identifying
and understanding a particular target market
because you cannot please everyone. Products
are then designed according to what could best
fit the needs of the target market, priced
according to their typical budgets, sold where it
is most convenient for them, and promoted in a
way that best catches their attention.
Stage 4: Supply > Demand, Customer-
centric strategies emerge
A well thought-out marketing strategy could
lead to products that delight costumers, leading
them to become loyal patron who will buy
products from your company again and again.
Happy customers are an asset because they will
tell an average of five people about their
delightful experience.
Exchange
 occurs when the buyer and seller have gained
something of equal value. Both the buyer and
the seller have gained something that satisfied
their unmet needs.
Question:
If you and your seatmate both have identical
looking apples, would it make sense for you to
swap these with one another?
Concept of exchange
The only reason you would want to exchange
one think for another is if that other thing
offers more value to you than the item that
you currently have.
The same principle lies at the heart of
marketing transactions.
Case study: Canteen and your 100 pesos
Concept of exchange
Marketing is about fostering such positive
exchanges. It is imperative that the customers
feel better off after a transaction because
otherwise, they may feel that they should have
spent their money elsewhere – a feeling which
will prevent them from becoming loyal
customers.
What can make customers feel like they are
not getting their money’s worth?
Case study: Selling tickets to a friend
Value
- suggested retail price in goods and services
in the market. It can also be very subjective or
a function of the buyer’s personal condition,
experiences, personal history, social
interactions, perceptions, education, and so
much more. Consumer generally value a
product or service when it provides them with
utility.
5 kinds of Economic Utility
1. Form Utility
2. Place Utility
3. Time Utility
4. Possession Utility
5. Information Utility
Form Utility
A product, by its form, saves the consumer
from the effort of having to make the product
himself. A person will value vegetables sold in
a market because it saves her the effort of
having to grow the vegetables herself.
Place Utility
The convenience offered by making a product
available around the proximity of the customer
is also valued.
Between buying product X from store Y, that is
located 1 kilometer away, and from store Z,
that is located just next door, a customer will
perceive more value in the service of store Z
and will be willing to pay a little bit more for
this convenience.
Time Utility
If a firm can offer a product or service far
quicker than alternative providers, the
costumers will also value this speed of service.
This is why express couriers such as DHL or
Federal Express are able to charge delivery
rates that are several times more expensive
than regular mail.
Possession Utility
For some products, mere ownership is already
valued by the costumer. This is especially true
for branded items that command a premium
over commodity substitutes. This is also most
evident in auctions where bids are raised
based on how valuable ownership is deemed
to be by the respective bidders.
Information Utility
Knowing certain things about the product can
already imbue it with value. For instance, a
recognized brand can instantly generate trust
while advertising helps build the assurance of
the product. On the other hand, quality
packaging can also generate information or
inferences among consumers about the quality
of the product inside.
Exercises
1. Recall a time when you were not happy with
a purchase. Analyze exactly what made you
unhappy about it. Was it the price? The
quality? The reality versus the expectations?
2. Explain the concept of sentimental value.
What type of utility is at play here?
Goals of Marketing
The goals of marketing can be
summarized as follows:
1. Understand the market and its consumers,
and satisfy their changing needs and wants.
2. Introduce and innovate products and
services that improve human condition and
the quality of life.
3. Design and implement effective customer-
driven marketing strategies.
4. Develop marketing programs that deliver
superior value to consumers.
The goals of marketing can be
summarized as follows:
5. Build and maintain mutually beneficial and
profitable customer relationships.
6. Capture customer value to create profits.
7. Promote value transactions with full regard
to the well-being of societies.
Traditional Approaches to Marketing
1. The Production Concept.
This concept assumes that customers prefer
products that are inexpensive, affordable, and
widely available. Efforts is concentrated
towards expanding distribution, and improving
production efficiency. The objective is to lower
production costs resulting in lower prices.
However, this concept is relevant only if
customer tastes and preferences are stable
and product demand is high.
Traditional Approaches to Marketing
2. The Product Concept.
This concept assumes that customers will
always prefer and patronize products of high
quality. Resources are focused on product
improvement and innovation. Product
attributes and features are continuously
enhanced. While this may be important, too
much preoccupation on product quality may
neglect the customers’ changing needs.
Traditional Approaches to Marketing
3. The Selling Concept.
This concept emphasizes aggressive selling
and promotional efforts. It assumes the
customers are generally timid and must be
persuaded into buying. The objective is to sell
what is manufactured rather than manufacture
what the market wants.
Contemporary Approaches to
Marketing
1. The Marketing Concept.
This concept considers the needs of both
the customer and the product offered. The
objective is to provide solution to the
customer’s actual or perceived problem. The
key is to be more effective in the creation,
communication and delivery of this value to
customers.
Contemporary Approaches to
Marketing
2. The Relationship Marketing Concept.
This concept believes that all marketing activities
are for the purpose of establishing , maintaining,
and strengthening meaningful long-term
relationships with customers. Extensive customer
databases are created, maintained, and updated.
Customer profiles, purchase habits, and
preferences are tracked and monitored. This is to
ensure that customers’ needs are fulfilled and
the relationship with them are maintained.
Contemporary Approaches to
Marketing
3. The Social Marketing Concept.
This concept is similar to the marketing
concept. However, beyond providing solutions
to customers, the societal marketing concept
also includes considerations that protect the
customers’ well-being and interests of the
environment and society.
Terms to remember:
 Consumer goods – goods that are purchased for
personal consumption and/or for household
use.
 Industrial goods – purchased in order to make

other goods, to serve as a raw material or input

in the production of other goods.
 Undifferentiated goods – products whose

physical characteristics are so identical, that it

would be difficult, if not impossible, to
distinguished one purchased from one vendor
or another.
Terms to remember:
 Differentiated goods – varied in their
characteristics and features that make the,
distinguishable from pone another.
 Branding – the ability of manufacturers to

successfully distinguish their products from

other competitors.
 Brand Equity – the appreciation in a brand’s

value from the point of view of customers.

Terms to remember:
 Consumable – a product whose benefit can
only be used by a consumer for a short
period of time.
 Semi-durables – provide benefits to the

consumer for a longer period of time, usually

spanning several months.
 Durables – products that are manufactured to

last a long time. They are capable of

providing consumers with years of beneficial
use.
Terms to remember:
 Convenience goods – products that are
purchased frequently, are usually inexpensive,
and do not require much purchase effort and
evaluation.
 Shopping goods – purchased less frequently

and are relatively more expensive, and require

some amount of information search and
evaluation prior to purchase.
 Specialty goods – are goods that require an

unusually large effort on the part of consumers

to acquire .
Terms to remember:
 Unsought goods – are goods that consumers
seldom actively look for, and are usually
purchased for extraordinary reasons, such as
fear or adversity, rather than desire.
 Primary demand – refers to the total demand

for all brands of a particular product or

service.
 Selective demand – is a demand for a specific

brand of product or services.

Terms to remember:
 Potential demand – emerges when there is no
demand yet for a particular product/services,
but their exist a market with sufficient financial
capability to purchase.
 Latent demand – results when customers in a

market are unable to satisfy specific desires

because no products/services exist in the
market that can satisfy them.
 Current demand – defined as the number of

people of a particular market at present that

would actually purchase the product or service.
Terms to remember:
 Satisfaction – is the measure of how well
customer expectations from a purchased
product or service have been met.
 Competitor – any company in an industry or a

similar industry that offers similar

product/services.
 Market share – share of a company’s revenues

divided by the total revenues of its industry in a

particular year.
 Market leader – company with the largest market

share in the industry.