Part 1 of 3
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There are three forms of consumer demand that pertain to value creation. They are salient, incipient and latent demand. Taken together, they bring us back to the notion of finding a need and filling it – and where necessary, doing it better than any competitor can. At the same time, each has its own separate marketing strategy ramifications.
It’s worth noting that the last two in particular can affect the product lifecycle for an already established product or service in the market. Sometimes they help to extend the lifecycle; sometimes they pose a threat to its continued existence; and sometimes it can go either way.
Starting with salient demand in Part 1 of this 3 part series, let’s take a closer look at the influence of each on value creation.
Salient demand refers to serving current needs and motives in a presently active market. The needs and motives are visible for everyone to see and understand. Fast food is an example: the market is currently being served, and it has an active and ongoing demand. Other examples include the demand for lawyers, accountants, garbage disposal services, heating/air conditioning products/services, automobiles, hotels and virtually anything else that is present and active.
The challenge of value creation with salient demand stems from its present and active state. This typically translates into a market already filled with providers, sometimes to the point of being saturated by too many similar products and services. Though there are exceptions, it characteristically involves products that either have reached the maturity stage of the product lifecycle or are on the brink of passing into it. For this reason, it’s not unusual to find high barriers to market entry, and high levels of competition once entry is made.
Survival in this environment rests with aggressively forging a strong brand identity or presence. This might be accomplished through the use of value-added benefits, strategic product positioning (differentiation), a particularly good location or a market niche concentration. Let’s look at a few illustrative examples:
- Burger King has tried several value-added propositions over time, including “Flame broiled,” “Have it your way,” and “It takes two hands to hold a Whopper.”
- Wendy’s started with “Old Fashioned Hamburgers,” then switched to a “Where’s the beef?” campaign, and presently uses “never frozen fresh 100% North American beef.”
- Meanwhile, a small family-owned fast food restaurant in Phoenix, Arizona – one that could hardly hope to compete with yet another type of hamburger – instead found success by carving out a market niche for itself after blending Chinese and Mexican food preparation into distinctly unique menu items. (What really makes it work, however, is the leveraging of a key physiological trait that is well-known in the restaurant industry as cravability. The product benefit rests with the psychological gratification that accompanies the act of satisfying a craving.)
Each of these examples reflects the challenge of finding the right mix of product/service attributes for positioning it well enough to gain a competitive edge in a highly competitive atmosphere. As we’ll see in parts 2 and 3 of this series, this quest is somewhat unique to salient demand. It requires a talent for making the enterprise stand apart in an otherwise crowded space.
In part 2, we’ll look at incipient demand – how it differs from salient and latent demand; and the ramifications that come with either actively trying to cultivate it, possibly defend against it, or necessarily confront the inescapable reality of being displaced by it.