Human has variety of needs and desires in all their life, and companies are set up to serve all these different needs. With the development of society, people pursue more than ever before, that’s why numerous new startups were built every year. Some companies are dedicated to develop continuous competitive strengths for satisfy a certain people needs for long term growth and profit, however, there are also many companies change from one area to another, always trying to pursue the most profitable business and died quickly.
Maslow’s hierarchy of needs make assortment of mankind’s needs and desires in to 5 levels, from bottom to top are: Physiology needs, Safety, love and belonging, self esteem, self actualization and self transcendence.
Maslow’s hierarchy of needs is often portrayed in the shape of pyramid, most basic fundamental level of needs at the bottom and the need of self actualization and self transcendence on the top.
Maslow’s theory suggests that the most basic level of needs must be met before the individual will strongly desire (or focus motivation upon) the secondary or higher level needs. However, The human brain is a complex system and has parallel processes running at the same time, thus many different motivations from various levels of Maslow’s hierarchy can occur at the same time. Sometimes, people of a certain need, but some other time, some needs will be intertwined.
Next, let’s analyze all the 5 level of needs, see how all these needs are met by the services of different companies provides, and try to get some conclusions that from where great business most likely be born.
1. Physiology needs, including all basic needs, such as cloth, eat, live, travel, and sex. These physiology needs are most basic and most of them should be satisfied daily.
People wear clothing since man entered in civilized era, even wear leaf to shelter some sensitive body parts in the beginning. So clothing is mankind basic and eternal need, and the textile industry have thousands years history in China. People have different kinds of needs for clothing also. In China shopping malls, most are clothing shops. However, the bar for entering the clothing market is low, and the fashion trends often come and go, there are intense competition in each area of clothing market, companies are hard to get enduring competitive strength. The ones who standing long term in the market are focusing on quality, nice feeling, and create unique brand for a segment of customers. Brand will label people character, society and provide esteem. So great clothing companies will not just provide normal clothes for people daily usage as basic needs, but also satisfy people higher level needs.
For example, Nike is one of the greatest sports clothing companies. Every young adults want to buy Nike clothes or shoes, not only because of its good quality, but have a superstar feeling when wearing the clothes. Columbia is one of the most famous clothing brand, which is aiming to the traveler market.
The above two pictures are showing Nike and Columbia shops in Greenbelt in Makati.
This picture showing the shoe shops in one of shopping market in Runan.
The second of physiology needs is about eat. Chinese people love eat food especially. And eat food is a basic need for human, if u don’t eat and drink in one day, you will feel very bad; if u don’t eat and drink in three days, you will get sick; if u don’t eat and drink more than one week, you will die. Eat is a huge business industry all over the world.
This picture showing that there are all kinds of delicious food selling in the street in Runan.
I don’t want to waste much time to discuss how big the Eat industry. I just want to express my opinion that there is a chance to build a lasting competitive strength in the Eat industry. Because people have special taste in different area and hard to change as time passed by, since it was influenced by long time history and culture.
For example, Mou Tai and Wu Liang Ye, the two famous Chinese white wine I have talked about before, have captured Chinese tastes for hundreds of years. This taste is so special that the Whisky or Vodka from abroad is hard to compete, and the special location of Mou Tai and Wu Liang Ye creating good wine makes other local wine hard to compete as well.
The third physiology need regards to living. People always need a place to live, and pursue good living environment. From the beginning of human history, people live in cave, till now, people want different good living places. So in China, real estate is the one of biggest industry to propel China economy fast growth. In Runan, there are many new building for people buying.
Numerous real estate companies made great fortune by building better living environment for 1.3 billion Chinese people during the last 30 year. Vanke (万科) is one of the most successful real estate companies, growing from a small startup company in Shenzhen in 1980 to the largest public real estate in the world, because Vanke is dedicated on providing good living environment, keeping great property service for its customers and building a sound brand.
The fourth basic need is about traveling. People love traveling, it’s our nature. Xu Xiake (徐霞客), travelled all over China by walk in Ming Dynasty. Now, the transport development makes people traveling much more convenient than ever before, such as by car, train, and air plane.
This picture showing people are traveling by China South Airline (中国南方航空) in Guangzhou Bai Yun Internet Airport (广州白云国际机场).
In next few years, Chinese government will devote huge investment in infrastructure, such as high speed road, high speed train, and airport in more cities. The transportation industry is in its blossom time.
The last basic need is Sex. Without sex, people can not breed, and sex is the basis of human history and culture. Sex industry always survive not matter how the world develops, and people always looking for sex. Today, Sex is also a key reason for Internet fast developing. The Internet provide an easy way for people to find sex. Just think about how Facebook developed in the beginning, haha.
2. The second level is safety needs, including life safety, health safety, financial safety, information safety, etc. For the safety business, I think the most important factor is that you have to build trust with customers, and make your best to keep the trust always. The first business about safety I come into mind is the Insurance. Insurance will provide safety and harbor when people suffering loss. The moat can be created easily in insurance, once an insurance company has large float backup, good reputation, fast and professional payment when people suffer loss. More and more customers will pouring in, and wider moat will be created. However, if the company can not keep the trust and don’t provide good service to pay customers fast by policy, the moat can be disappear in one night.
In China, with the improving living environment, people care about their relative safety issues. Insurance business is developing very fast last few years. Ping An of China (中国平安), HQ in Shenzhen, have become the largest public insurance company since found in 1990. As people wealth grows, I think the insurance industry good day still lies ahead.
Another example is Temple, if you pray sincerely and obey the rules, you will be promised to get very good life in next generation even you are suffering bad life. Since we can not prove if this is true for next life and the culture pervasive, some temples can last thousands years because we can find safety feeling here.
3. The third level of needs is regarding to love and belonging. No one wants to live alone in their whole life, and always want to be loved and cared. Social life is essential for everyone. In the ancient time, people gathering in the center of village to chat daily life. In nowdays, Internet connect each other all over the world, the social websites and APP are very popular among young adults especially. In China, the most successful Internet company is Tencent (腾讯), which has two most influence IM APP, QQ and Wechat. The latest MAU(Monthly Active User) of QQ and Wechat are around 800 million and 900 respectively. QQ is popular in young adults for entertainment connection, in contrast, Wechat satisfy people daily communication needs, especially for business.
The moat of IM APP and website is about connection of users, the more users using this APP, the more new users will intend to use, and It’s hard for other similar APP to compete. And It’s easy to monetize the traffic once you have a large user base. That’s why Tencent growing fast and have affluent cash flow every year, becoming the largest public Internet company in China.
4. Moving forward is about another layer: Self esteem. Everyone wants respect from other people. In human society, people always judge and be judged. If there’s a friends gathering, most people will show their best clothing even if he lives a poor life. And you can see many people selfi in high end restaurant, or meeting famous people, and post in Wechat, Facebook, or other social APP.
The respect can be earned from different aspects: your social status, your belongings, your job, your wife, etc. It’s Hard for most people to have a high social status, a beautiful wife, or an admiring job, nevertheless, you can pay some money to get a luxury belongings to show your friends. LV, Gucci, etc are the dream luxurious brand for most people.
Apple, Steve Jobs has dedicated all his life to build, has won a large loyalty fans worldwide. Once there is a new Apple product launched, numerous fans will rush to buy and price is the least thing they will care about. Why there are so many fans buy Apple products always and don’t care about money? I think it’s mainly because they will be labeled as a special one once they have Apple products, and have a high Self esteem feeling.
So Apple is different with other electronic companies, because Apple gives people high self esteem, and other products just provide basic functions for people normal needs.
5. The last one level is about self activation and transcendence. In deep mind, everyone has a dream that is far from realistic, and that’s the eternal force for keeping people fight for their life.
Internet game provides a second life, you can become a hero, a king, or a ruler which you can not get in real world. You can process magical power, you can fly, you can do whatever you want here. Warcraft, the world most famous game, makes fans easily pursue their dream in the fantastic world.
Currently, in China, body exercise becomes very popular, you can see many people running, doing body exercise in gym. Why people spend money and make them so tired? one reason I believe is that they want to keep good body and energetic forever. This is internal needs for self activation.
Regarding to Self transcendence, in my opinion, is related to altruism. People want self transcendence will make benefits to others, and dedicate to make world better. The example jump in my mind first is about the charity, the rich man setup charity funds to help poor people, and reduce disparity. Another one is teacher, especially the one who teach others their experience just want them become more successful. Warren Buffett and Bill Gates are the two examples for Self transcendence.
Bill Gates setup the world largest charity foundation to help solve the difficult disease issues, especially help the Africa poor people. Warren Buffet, not only give away most of his fortune to Bill Gates charity foundation, but also preach his value investment truth to all people. Most of value investors can beat the market and know how to enjoy life, just because of learning earnestly from Warren Buffet.
Maslow’s hierarchy of needs gives us a unique way to understand why business exist, how it will develop, and how long it will survive and grow. In my opinion, The great business will always focus on satisfying one or two level needs, or several mixing needs, building competitive strength for them. The needs are basic and uneasy to change, and the way the great business provides is unique and hard for others to compete.