What is Latent Demand? Definition of Latent Demand, Latent Demand Meaning and Concept
The demand latent occurs when people want a product to fill a need, but can not find the right product on the market.
This demand arises when in the competitive environment, a strong unsatisfied need is perceived by a group of consumers, but for some circumstance they do not have the possibility of obtaining a product that is suitable to satisfy it.
- Latent demand can also be understood as a demand that is detected for a product that does not yet exist in the market. However, it is observed that it would be strongly required by a considerable group of people. Latent demand faces a potential consumer.
- It becomes a latent demand when the consumer looks for the ideal product for their needs and does not find any company that has the capacity to offer it. You may also find it, but it is a product that does not fully suit your need.
- Companies should be attentive to these situations, because if they are capable of detecting this unsatisfied need, they can take advantage of it as a timely situation in the market, to venture with products adapted to that particular need.
It is the person who, based on market research, could become a demander of a product that the company could offer to the market. It is considered potential, because it is not yet an action that cannot be carried out.
- A latent consumer could be an institution, a company or a person who are not yet buyers or our clients, but if we consider their purchasing power and the profile they possess; could be considered as a good option for the future of the company.
- This group is important for the company, since they could be future income generators for the business and become an excellent opportunity.
The basis of current marketing success is knowing or detecting the unmet needs of the market, because this becomes a business opportunity, because if the right product is developed and introduced to the market it will be a total success.
- Marketing must be aware of the latent needs of people, because this type of need sometimes not even the consumers themselves are fully aware that they have them or they simply do not have the ability to communicate and externalize them.
- A latent need could be found in a young person who has a tendency to baldness, it could be an excellent demanding of a product that solves that problem.
Estimation of latent demand
In the current context in which companies compete, it is essential to estimate their latent demand, because today to compete requires constantly resorting to the introduction of more and better products in the market. But if we do not estimate latent demand correctly, we could de-economize and waste resources such as money, time and any other type of scarce resource.
- Market studies have to be well focused so as not to overestimate demand (make a higher projection than the existing one) or underestimate demand (estimate a data lower than the real one), since we could leave dissatisfied customers, have production or delivery delays of the products, or have cancellation of orders.
- Any of these situations is dangerous, because the client moves to the competition and we would lose that potential market.
Latent demand example
For example, if we observe people who change their cell phone regularly due to the improvements that the device brings; If the company prepares better and better solutions for improved and innovated products, we know that we will have a latent demand or a potential consumer who still cannot find the totally suitable product to meet their need.
We could also consider latent demand, people who like to consume carbonated water, but do not want to gain weight. So they cannot fully cover their need, for that reason companies prepare new dietary or sugar-free offers; and they are sure that they will be in high demand for the product.
In conclusion, we can affirm that it is not enough to find unsatisfied needs in the market, to turn them into a source of opportunity. The idea of the development and delivery of a new product must be based on the existence of a potential market and a latent demand, when we say demand we mean that apart from needing a product, people have the purchasing power to be able to pay for it. For this reason, it is necessary to do a good market study, to obtain valid, reliable and current data to make the decision to offer new proposals to the market.