NEEDS-BASED APPROACH. Share of pocket

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Having explained the pyramid of Maslow's needs It is worth making some considerations regarding the implications for marketing in particular and entrepreneurship in general. When we say that the function of marketing is to satisfy needs, or that a business opportunity is only a business opportunity when we have identified a need in the market, we are giving an incomplete view.

Clearly, need is a basic element that triggers entrepreneurial activities aimed at satisfying it, but it must first pass through two filters:

• The first refers to desire, that is, the way in which a person wants to satisfy a need. If I want to get around, I have a wide range of options, public transport by car, bicycle, motorbike, etc.
• The second sieve is that of demand, which is none other than desire backed by a certain purchasing power. 

Therefore, when we say that we are going to satisfy a need, what we really mean is that we are going to satisfy a demand. It is therefore logical that a correct market segmentation refers not only to the profile of the typical individual to be satisfied, but also to his or her purchasing power. Satisfying needs is a euphemism that is taken for granted by everyone.

Needs orientation

One of the mistakes that is often made in entrepreneurship, and also when developing marketing plans and actions, is to focus on the product, or the service, or on ways of producing, or to become obsessed with profitability. These simplistic orientations can lead to undesirable circumstances that are difficult to redirect. It is essential that the orientation is always needs-oriented and therefore customer-oriented. It is a problem of breadth of vision. If my strategic focus is on the product, my competitive angle of vision will be very limited and I will only be concerned with products and services of the same nature as ours. Dairy versus dairy, motorbikes versus motorbikes, hotels versus hotels.

If the focus is on needs automatically the field of vision opens up and we will assume that our competition can be found in products of a different nature but which can satisfy the same order of need: dairy versus fruit, motorbikes versus small four-wheelers or hotels versus holiday rental flats. Kodak made the strategic mistake of focusing on its product, photographs, and its services, fast laboratories, without realising that the battle would end up being fought in the field of the immediate, manipulable, shareable image, etc. It was of no use for him to be the developer of digital photography, because he was afraid of a paradigm shift in his sector. 

Share of pocket:

In addition to the desirability of needs orientation, there is another, no less important phenomenon, the so-called share of pocket. The phenomenon of share of pocket is a form of competition between products and services that have nothing in common in nature but attract the attention of the same customer. 

E.g: In the leisure sector it is quite normal that a theme park can compete with cultural events, or even with the purchase of a book.

Companies in the FMCG sector are concerned to check how the customer allocates his household shopping budget. Part of your competitive war will always be in the customer's pocket and to a greater or lesser extent depending on the sector you are in. So watch your orientation in understanding your business and establishing a dialectic with your natural market. Needs-based approach and Share of Pocket (SOP) are two concepts related to market analysis and segmentation. A needs-based approach refers to a marketing strategy that focuses on the specific needs of the consumer, rather than simply promoting a product or service per se. On the other hand, Share of Pocket (SOP) refers to the portion of a consumer's budget spent on a given product or service compared to their total expenditure. To assess the Share of Pocket (SOP), it is necessary to identify consumer needs and offer a product or service that meets those needs more effectively than the competition.

The objective is increase the proportion of consumer spending that is spent on our product or service. To achieve this, various marketing strategies can be used, such as developing a clear and differentiated value proposition, segmenting the market and identifying niche markets, promoting quality and customer satisfaction, and constantly improving the product or service offering. In short, needs approach and Share of Pocket (SOP) are two interrelated concepts used in market analysis and segmentation to develop effective marketing strategies. By focusing on specific consumer needs and offering a product or service that effectively meets those needs, you can increase the proportion of consumer spending that goes to your product or service, which can lead to greater success in the marketplace.