Learn: Needs vs Wants

Welcome!Building on what you've already learned about why businesses exist and the difference between goods and services, we're now exploring needs vs wants. This will help you understand why businesses target specific products or services.

What are Needs?Needs are essential items or services that people require to survive or maintain basic living standards. Examples include food, water, shelter, and clothing. Businesses often focus on producing goods or services that meet these essential needs.

What are Wants?Wants are things people desire but don't necessarily need for survival. Examples include holidays, gadgets, or branded clothing. Businesses often aim to fulfil wants as these can lead to higher profits and customer satisfaction.

Why is the Difference Important?Understanding the difference between needs and wants is crucial for businesses when deciding what products to offer. Businesses catering to needs often target large markets, while those addressing wants focus on niche markets or luxury goods.

How Do Businesses Respond?Businesses often prioritise needs during economic downturns, as customers focus on essentials. During stable or growing economies, businesses can target wants, offering luxury or niche products to maximise profit.

Review Time!Great work! You've learned about the difference between needs and wants. Now let's test your understanding further with a few final questions.