Learn: Needs vs Wants

Welcome!Welcome! You've already learned about why businesses exist and the difference between goods and services. Now, let's explore the difference between needs and wants, a key concept in understanding customer behaviour.

What are Needs?Needs are essential items or services required for survival and basic living, such as food, water, shelter, and clothing. Without these, individuals cannot meet their basic requirements for life.

What are Wants?Wants are things individuals desire but do not necessarily need to survive. Examples include luxury items like smartphones, designer clothes, or holidays. Wants are influenced by personal preferences, trends, and advertising.

Why Understanding Needs and Wants Is ImportantBusinesses must understand the difference between needs and wants to satisfy customers effectively. Products that meet needs will always have demand, while products satisfying wants can create opportunities for higher profits.

Meeting Needs and Wants in BusinessBusinesses aim to meet both needs and wants. For example, supermarkets sell food to meet basic needs and offer luxury chocolates to satisfy wants. This helps maximise sales and meet diverse customer demands.

How Businesses Prioritise Needs and WantsBusinesses often focus on products that meet needs for consistent demand but also target wants for increased profit margins. For example, a business selling water bottles addresses a need but may also introduce stylish, branded bottles to appeal to wants.

Review Time!Great work! You've learned about the difference between needs and wants and how businesses address both. Let's test your understanding with a few questions.