12 lessons on consumers’ needs and wants | Inquirer Business

12 lessons on consumers’ needs and wants

/ 01:56 AM September 23, 2022
The drinking water industry is now marked by cutthroat competition

DISTILLED, MINERAL OR PURIFIED? The drinking water industry is now marked by cutthroat competition. —Contributed photos

 

Marketing is commonly associated with stimulating consumers’ needs and wants that will hopefully lead to sales revenues. While marketing clearly goes beyond that, talking about “needs and wants” infers that there is a difference between the two that is certainly worth a marketing conversation.

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Needs are essential to survival while wants are not. From a consumer choice architecture, needs are basic and therefore, nonmotivating to the consumers; it is a minimum requirement or dimension. Wants are higher-level needs that motivate a customer toward purchase and consumption, a determining dimension. When a lower-level hierarchy of needs is satisfied, human beings tend to want to try or move to the next level.

But how does one know which are needs versus wants, and which should marketers focus on? Here are some tips.

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Market segmentation

A market may have different segments, each having different needs and wants. For drinking water, a segment may favor taste, while another segment may decide based on price, another on convenience.

In market research, the first set of answers given by consumers will typically be basic needs. The subsequent answers will be the wants. Safety or cleanliness, for example, will come out first when consumers are asked what they are looking for in bottled water, even if it seems obvious that consumers will not buy bottled water unless they know it is safe. Safety is, therefore, a basic need.

Still, early players will want to be associated with the basic need of their market category because it promotes commonalities instead of segment differences. For example, Wilkins, which started in 1997 as bottled distilled water, targeted infants and children by associating themselves with the dimension of safety, i.e., if it’s safe enough for babies, it’s safe enough for the rest of the family.

When a position is already “owned” in the consumers’ mind, marketers will have to find other opportunities. Viva, the subsequent entrant, highlighted the benefits of having minerals that do not give a flat taste in its bottled water.

It did not associate itself with safety, which was already owned by early entrant Wilkins. Viva chose to communicate to a target segment—people with active lifestyle who want to indulge themselves while also maintaining a healthy lifestyle.

A need must be satisfied before a want. When violated, such as when a campaign highlights a want but weakly delivers basic needs, the message will not work. Viva’s positioning worked because it delivered the message of being both safe and better tasting with its mineral content.

Brands evolve with consumers’ needs and wants. Wilkins is distilled water. Viva is mineral water. There are other bottled water variants, such as those that are less costly (since distillation consumes a lot of electricity), as well as flavored variants.

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Disruptors

While brand positioning is a good concept that encourages marketers to think about what’s in the consumers’ minds, it can be disrupted by a new category. Water refill stations later on entered the market, offering lower price, delivery and convenience.

Over time, wants can become a basic need if all the players are communicating and delivering exactly the same benefit. It then enters into a commoditized red ocean competition where price and promo wars will often erupt. This was seen when consumer preference of price-conscious buyers shifted in favor of the water refill station channel, rather than costly bottled water from supermarkets.

Just look at the price of water refill stations through the years; profitability has been compromised amid decreasing prices and increasing expenses. It has become tougher and tougher to maintain product quality as many operators try to cut cost and postpone expenses.

In fact, a previous survey found that seven out of 10 water refill stations were not complying with the 20-item checklist required by the Department of Health, thereby going against consumers’ basic need for safety.

Unlike in the bottled water space, no water refilling station shifted from satisfying purely functional and economic needs to satisfying emotional and social needs like Wilkins, Viva, Absolute and the like. This elevated commoditized products into brands, which is an important consideration when there is heightened awareness of the need for safety.

When asked about dislikes and wish lists for water refill stations, housewives complained about delayed delivery, heavy lifting of five-gallon water bottles, extra storage space requirement and acidic water. They also lament the hygiene of the delivery man (holding the bottle neck while accepting payments), and having to fall in long line at the store daily during extended power and water outages.

Some needs are latent and need to surface at the level of customer awareness. The budget for drinking water from the water refill station is between P150 to 200 weekly, adding up to a lifetime cost of P500,000 to P700,000, assuming the average lifespan of Filipinos is only 70 years.

Furthermore, most refill stations use reverse osmosis technology, which removes minerals and wastes as much as five to six times the amount of clean water produced, creating a sustainability issue. Here enters another category, the home water purifier, which hopes to answer the weaknesses of water refill stations.

Change is constant

As the market evolves, new features emerge. Waters Bio Mineral Pot, for instance, aims to bring the home water purifier several notches higher by offering several benefits beyond the basic safety and purified water needs. This includes quality 3-in-1 drinking water: with alkaline, mineral and is purified. It is available on installment terms comparable to what consumers pay water refill stations, addressing needs and wants of practical shoppers. They also give consumers many extra filters with a test reagent kit to ensure safety and quality, and even provide a business opportunity that allows enterprising individuals to sign up as independent distributors.

As can be seen above, the market is constantly evolving, with needs and wants of consumers constantly changing. Their pain points are opportunities to create new wants, those that can tap into a new market segment and even create a new category. How is your market changing? —contributed INQ

Josiah Go is chair and chief innovation strategist of Mansmith and Fielders (www.mansmith.net). He retired as CEO of Waters Philippines over a year ago. The points raised in this article were part of the Waters case study on market-driving strategies.

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TAGS: consumers, market segmentation, Marketing
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