demand, latent

Definition:
A demand which the consumer is unable to satisfy, usually for lack of purchasing power. For example, many housewives may have a latent demand for automatic dishwashers but, related to their available disposable income, this want is less strong than their demand for other products and so remains unsatisfied. In other words, wants are ranked in order of preference and satisfied to the point where disposable income is exhausted. From the manufacturer's point of view the problem is to translate latent demand into effective demand by increasing the consumer's preference for his particular product vis-à-vis all other product offerings. Marketing is largely concerned with solving this problem. Latent demand may also be thought of as a vague want in the sense that the consumer feels a need for a product, or service, to fill a particular function but is unable to locate anything suitable. If such a product exists, marketing's role is to bring it to his attention; if it does not exist, then marketing should seek to identify the unfilled need and develop new products to satisfy it. Potential demand exists where the consumer possesses the necessary purchasing power, but is not currently buying the product under consideration. Thus, where a marketer has identified a latent demand and developed a new product to satisfy it, the potential demand consists of all those who can back up their latent want with purchasing power. In another context, potential demand may be thought of as that part of the total market (effective demand) for an existing product which a firm might anticipate securing through the introduction of a new, competitive brand.

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