As a budding entrepreneur this is a question that you will have to consider at some time. The more accurate your answer, the more likely you are to build a successful business. Newcomers to the business world often forget that success depends on fulfilling the customer’s needs, not their own whims and desires.
You may have a great concept, product or service. You may think it is what everybody wants. Your friends and family may tell you that it is bound to be successful. But it may turn out to be an absolute failure in the real world. Why?
Satisfy Consumer Needs, Not Your Desires
Many entrepreneurs get carried away with what they think will be a success, rather than what will realistically be in demand. For this and many other reasons, market research is probably one of the most important steps in your business plan – long before you even name your business or start trading.
Unfortunately not every entrepreneur has the time, money or know-how to conduct market research. Sometimes you can just turn to the media or search for relevant statistics through organisations like Stats SA. But consumers are people. And people have certain needs that they want satisified.
Your product or service MUST fulfil the consumer’s needs. If you can do this then your chances are pretty good that your business will be a success provided that you do not forget the other fundamentals of starting a new venture, like marketing and after sales support.
So what do South Africans want? Pretty much the same as every other person, and to some extent this can be answered by Maslow’s hierarchy. If you have done any psychology, sociology, economics or business management courses then you will undoubtedly be familiar with Maslow.
Maslow’s Hierarchy of Needs
Abraham Maslow was an American psychologist who attempted to explain the stages of human growth and the patterns of motivation that people move through in life. It can be represented as a pyramid (below). He is not the only theorist to tackle this conundrum but his theory has been widely accepted as a good indicator of human needs.
Why is this important? Because a business fulfils the needs of consumers at some level or it would not be a business. So let’s look at this hierarchy of needs in greater detail.
- Physiological needs refer to food, air and water. That is pretty much self-explanatory.
- Next is the security or safety needs. It refers to clothing, job security and financial protection (like pension plans).
- Higher up on the pyramid are the social (‘belongingness’) needs referring to friends, family, life partners and colleagues.
- Then comes the esteem needs which looks at the need for recognition from outside but also self-respect and self-image which to a large extent also depends on how others see you.
- Lastly are the self-actualisation needs. It is a broad category in that it can differ from one person to the next. Self-actualisation focuses on career growth, decision-making opportunities, skills development and so on.
The Needs of South African Consumers
South Africans are not different from consumers elsewhere in the world. It is understandable how the needs of South Africans would be pretty much the same as the needs of a consumer anywhere else in the world.
The question is how are you as an entrepreneur going to fulfil one or more of these needs? As you can see from Maslow’s pyramid, the base which is the largest portion is made up of the physiological needs. While every consumer needs food, water and air, not every person will want career growth.
The higher up the pyramid you go, the smaller the demand. However, it is also interesting to note that the higher up the pyramid, the higher the cost to fulfil these needs. For example, a person could survive on R1,000 worth of food a month (physiological need) but would have to pay as much as R20,000 per month to get an MBA from a prestigious university (self-actualisation need).
When all else fails and you still cannot identify your opportunity in the market then it may be worthwhile turning to the media. The gloom and doom articles about how South Africa is faring will often highlight potential business opportunities to the astute entrepreneur.
And when all else fails, sit at a busy spot in your suburb, town or city and observe. You will be amazed at how much you can learn about human behaviour just by observing the daily going-ons around you. If you truly have the creativity and innovation characteristic of the entrepreneurial spirit, you will spot the opportunity.