The difference between needs and wants lies primarily in how essential they are to our survival. We must meet the needs to support daily activities.
On the other hand, we don’t always have to fulfill wants because they are less essential. At most, we are disappointed because we cannot satisfy our desires. However, it does not pose a serious problem.
Knowing the difference between needs and wants is important for us in making everyday decisions. As consumers, by identifying the two, we can prioritize existing resources more. For example, we spend money on what we really need, not on what we want.
Meanwhile, assume you are a business owner. Understanding your consumer’s needs and wants is the first step to success. Then, after identifying the consumers’ needs and wants in your target market, you must design the right marketing mix. Finally, you must be able to satisfy them with your product. And, once you have to do it better than your competitors, the money will continue to flow into your business.
What are needs and wants?
Needs are something we require for survival. Fulfilling them makes our lives stable, healthy, or safe. For example, we need food because it allows us to have the energy to carry out our daily activities.
Needs are different from wants. The latter refers to our hopes or desires. Not making ends meet can cause our lives to become unstable or even die, but not for wants. Wants are less necessary for us to survive.
Take a simple example. We want organic food because we crave a healthy lifestyle. But when such food is unavailable or is not affordable for our money, we can put it off. But that doesn’t mean we don’t eat at all.
In economics, when supported by purchasing power, needs and wants can become demands. In the above example, our purchasing power does not support buying healthy food because we have limited money (resources). But, if we have enough money, we will ask for healthy food products.
Needs become the wants when they are directed to a particular object. And, in this case, the wants represent unmet needs.
Then, a want can become a need if something is vital to our life. For example, we need healthy food to prevent our diabetes from getting worse. So it is no longer a want but a need.
Why is identifying needs and wants important?
Identifying needs and wants is important for several reasons. I will take two perspectives: consumer and business. As consumers, we can optimize the resources (money) we have. We can allocate it to the best use.
Meanwhile, businesses can generate high profits when they satisfy the needs and wants of consumers. And that requires them to do it better than their competitors do.
Prioritizing resource allocation
We have limited resources. For example, our money is limited and cannot fulfill all our needs and wants. Hence, we must make a choice to allocate it.
Identifying needs and wants is the first step to managing money wisely. It becomes even more necessary, particularly when facing difficult times like economic recession. So, spending money wisely helps us survive.
We may often find it difficult to distinguish between needs and wants, especially when we are shopping. We buy something, but we don’t really need it. Sometimes, we also buy a new item even though we already have a similar item with the same function. Eventually, our money runs out to buy what we want but don’t really need.
Thus, identifying between needs and wants is important in making decisions in everyday life. With it, we can prioritize spending money. And, finally, it’s available when we really need it.
Then, the resource we have is not only money. Our time is equally valuable. Spending more time having fun is sacrificing the money we might earn by working. We may not feel the effects now, but when we are no longer fit to work in the future.
Business exists to fulfill our needs and wants. They do it for profit.
But, at the same time, businesses must also compete in the market. Many businesses operate. They may offer similar products to the same target market as their competitors.
For profits to be sustainable, businesses must satisfy consumer needs and wants better than competitors do. If they succeed in doing so, the consumer’s money will continue to go to them.
Being able to satisfy consumers requires businesses to create value. They must be efficient and innovative. It not only makes existing customers loyal, but also competitors’ customers are likely to switch to them.
When they generate a superior business position compared to their competitors, they achieve a competitive advantage. They generate higher profits than the average competitor.
But, because competition and the business environment are dynamic, competitive advantage can become a disadvantage if caught off guard. Hence, they must constantly adapt to the changing environment.
Consumers’ tastes and preferences are constantly changing, as are their needs and wants. And, such changes offer both opportunities and challenges for businesses in developing new products and services.
Needs and wants change due, for example, to changes in lifestyle and technology. Businesses must be responsive to these conditions. Therefore, they have to come up with innovative ideas. For example, they offer other variations of existing products. Or, they may also need to design an entirely new product.
If businesses don’t adapt, of course, their products don’t sell. If they can’t sell the product, of course, they’re not making money. Hence, they must continuously monitor market dynamics to keep up with changing consumer needs and wants.
What is the difference between needs and wants?
Several aspects distinguish between needs and wants. First, the two differ in their degree of urgency to our lives. Then, the two are also different in nature, whether limited or unlimited. Alright, let’s discuss it one by one.
Needs are essential while wants are not.
We have to fulfill our needs because they are essential for our daily life. We do this by buying goods and services. An example is our need for food, water, and shelter.
If we cannot make ends meet, it can have serious consequences, such as deteriorating our health or even death. For example, imagine what happens if we don’t eat for days.
On the other hand, a want is less essential for our survival. It refers more to our hope to have or get something, either soon or in the future. Fulfilling it makes our life more comfortable.
For example, eating becomes our need because with it we can support daily activities. But, eating at a fancy restaurant can be just a wish. That’s because, without going there, we can still eat.
Not fulfilling a want is not serious. At most, it only led to disappointment.
Indeed, by fulfilling wants, we can enjoy life and have fun. Vacations are a good example. It can make us enjoy happy moments, but without it, actually, that’s fine too.
Meeting needs is easier to measure than wants.
It is easier for us to measure whether we have met our needs or not. It is usually universal for everyone. For example, everyone needs food or clothing, regardless of their choice.
On the other hand, fulfilling a want is difficult to measure. That’s because we are never satisfied with what we have. So when we have fulfilled one wish, we crave for another.
For example, we want a motorcycle and buy it. But, other times, we might think about buying a car because we think it’s more convenient.
Take clothes as another example. If we have more money, we will choose clothes with the best materials and quality even though we already have them.
Wants will also vary between individuals. Everyone has different tastes. And, since everyone’s tastes are different, the standards for fulfilling wants will also vary. For example, people like fancy clothes, but they will have a different answer about what kind of design.
Needs are more limited; wants are unlimited.
Needs have a limited nature but not wants. We as humans have the nature of being dissatisfied with what already exists. When we have got something, we want something else.
Wants are often also constantly changing, correlated with how much resources we have. For example, as income increases, we want cars and no longer motorcycles. Likewise, as we get richer, owning a private jet and luxury car is ideal because it enhances our image.
Needs must be met, wants maybe just wishes.
Since it is essential for survival, we must make ends meet. But, that does not apply to fulfilling our wishes.
And, for such a reason, meeting needs should be a top priority before we satisfy our wants. Take a simple example. We have money and are faced with two choices: use it to feed us for a month or buy the smartphone we want.
Because we don’t have sufficient money, we have to choose and can’t get both simultaneously. Eating, of course, is our priority over smartphones. We can’t live without food for a month, even if it means we don’t have a smartphone.
We may be disappointed because we can’t buy a smartphone. But, it doesn’t cause us to die.
A want changes more often than need.
Needs are often constant and rarely change. We need food, air, water, clothing, and shelter to survive regardless of how we meet them.
For example, by eating, we meet the body’s need for protein. Whether we fulfill it from expensive food or not, it really doesn’t matter. Our basic need is protein. And, how do we fulfill it? It can become a wish.
For example, we might only get legume products for the money we have available. But, at some point, we may crave meat. But, because we don’t have enough money, it’s just a wish.
A want can change over time. It is closely related to our taste. And our tastes in goods and services can change due to factors such as our income level, the social environment we are in, our experiences, marketing, and even others’ opinions.
Needs are more objective, whereas wants are subjective.
If we think about how to meet our needs, it will usually force us to think objectively. I mean, we think more about what we really need without external influences. We are more concerned with the benefits we get when buying goods or services to meet needs.
On the other hand, external factors influence ours wants a lot. So, for example, when our friend buys a new car, we may want it even if it’s not what we need most.
In addition, a want is more subjective because each person has different tastes. For example, you prefer a black car. However, your friend may prefer white.