Tuesday, June 30, 2009

Need versus Demand

I am in danger of quoting the complete book. I am so taken by it.

Here's another gem from Economics In One Lesson: The Shortest and Surest Way to Understand Basic Economics by Henry Hazlitt

But need is not demand. Effective economic demand requires not merely need but corresponding purchasing power. The needs of India today [the book was updated in 1962, remember] are incomparably greater than the needs of America. But its purchasing power, and therefore the "new business" that it can simulate, are incomparably small.

Things have now obviously changed for the better. India has the need and a better purchasing power than it had in 1962. But those who are in marketing profession (and that means all employees of a company, actually - designating a separate department as the Marketing department is the biggest mistake all company do. They should call it front-end or something similar and get all other employees to start thinking like marketing chaps - but I am digressing) should take this lesson to heart: Quantitative and Qualitative Market Research will give you the 'need'; do not confuse it with 'demand'.

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