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3 Forms of Consumer Demand and their Value Implications pt 2

Consumer Demand

Part 1 of 3

Part 2 of 3

Part 3 of 3

(Editor’s Note: This snippet of content was drawn from our FREE 50 page business eGuide: How to Properly Vet a Value Proposition.  Watch the video promo for it, and then download the pdf version by clicking on the title.  Share the guide with colleagues, friends and others.)

In part 2 of this series, we’ll briefly look at incipient demand.

Incipient Demand

Incipient demand speaks to the ability for developing new solutions to current or emerging needs/motives.  The luxury hotel example mentioned during an earlier post about consumer motives, in which a previously unsatisfied motive for women traveling alone was identified and filled, fits into this category.  Another example is fracking, which is the hydraulic fracturing of shale rocks to release and capture the natural gas inside.  Though somewhat controversial, it nonetheless amounts to a new approach for serving what has become a longstanding demand for this particular resource.

Sometimes, too, incipient demand feeds off of consumer whimsy or striking a chord with the impulse buyer.  For instance, the Cheesehead headpiece that has become wildly popular with Green Bay Packers fans was first invented in 1987 by Ralph Bruno.  As reported by Greg Garber of ESPN.com, Bruno crafted it with a turkey slicer.  Then, “after fortifying his courage with a few beers in the parking lot, he wore the cheddar-yellow, wedged-shaped headpiece into County Stadium for a Brewers game.”  In retrospect, it was his good fortune to have it catch on, first as a novelty item and later as a symbol vested with a social and psychological motive incentive.  As Garber notes, “More than anyone on earth, Bruno has helped turn what was once a derogatory term for Wisconsinites (said to be coined by folks in Illinois) into a source of unabashed pride.”

[Source: http://sports.espn.go.com/nfl/playoffs/2010/columns/story?page=hotread21/Cheesehead]

Incipient demand might also take the form of transformative value, whereby an enterprise unlocks value that was otherwise hidden in an already existing product/service.  The energy drink called Lucozade, for example, was initially marketed as a boost for sick children with common illnesses like a cold or influenza.  Later, it was rebranded and targeted to athletes as a sports drink.

Cultivating this kind of demand relies on a knack to be forward-looking and/or keenly anticipatory (referred to in a current TV commercial as the next big thing).  It commonly involves the process of mining an untapped consumer motive/need; or re-inventing a current product/service solution through some kind of metamorphosis; and then be quick with getting it to the market for attracting early adopters.  This makes foresight, timing and adaptability common keys for success.

Once incipient demand takes hold, it can impose a change in “business-as-usual” for each and every other enterprise affected by it.  A first-mover in this category typically stands to gain the most from it.  After that, the implications can widely vary in type and severity depending on factors like:

  1. Where you stand with respect to the innovation curve for it (e.g., first-mover, close follower, late follower, laggard, etc.).
  2. The magnitude of the change it has produced within your industry; or to the product lifecycle for a specific type of product/service; or maybe just a facet of it.
  3. The nature of its ripple effects, particularly as it pertains to the other industries, products and services affected by it.
  4. Whether it poses an opportunity or a threat to your enterprise (or perhaps both, depending on the timeliness and appropriateness of your response).
  5. Whether it invites new forms of competition and/or creates a stir in the current competitive climate.

These factors can become intermingled in numerous ways, and it’s not always easy for an enterprise on the lag side of the innovation curve to predict or recognize the effect it will have.  Let’s consider a few examples.

Incipient demand can force an existing enterprise into some form of adaptation or adjustment, like the necessity to re-tool in order to stay modern, relevant or viable.

For instance, owners of established sports bars eventually had to replace their older television sets with newer flat screens to prevent the appearance of being outdated.  In this situation, one product lifecycle ended (the older television sets), a new lifecycle began (flat screens) and the ripple effects from this evolutionary event in one industry went on to exert an influence on other industries, with sports bars being among them.  Can you see how the incipient demand created by the development of the flat screen TV might have helped those who were able to leverage it as an opportunity, while hurting those who somehow misread or mishandled the implications it wrought?  How it, in effect, produced an opportunity for some and perhaps a threat for others?

Hasbro, maker of the iconic Easy-Bake Oven, had to re-design a key component of its product — the heat source – due to a federal government ban on incandescent light bulbs, following the introduction of the more efficient compact fluorescent light bulb.  Ironically, it was the inefficiency of the incandescent bulb that generated the heat for the original oven.  The subsequent ban compelled Hasbro to replace the light bulb with a heating element.  After the company’s initial announcement about this change, some industry analysts wondered whether it might lessen, if not eliminate, the child-like charm and appeal of the Easy-Bake Oven.

[Read about Hasbro’s latest venture to cultivate incipient demand for the Easy-Bake Oven. http://marketing-strategy-management.com/2012/12/at-the-intersection-of-brilliant-branding-and-childs-play/]

On a still larger and more unmerciful scale, the newspaper industry got thrust into the thorny position of having to rethink its entire business model after technologies like the Internet, personal computers and mobile devices started offering new means and methods for accessing news and information.  With their higher perceived value, these technologies displaced the once dominant newspaper – or more precisely, its former power to sustain a wholesome revenue stream.  Though the consumer appetite for news and information has remained firmly intact, the motives and means for obtaining it have shifted dramatically.  This dilemma has forced many newspapers into closing their doors.  Others are still in the midst of struggling to find a solution.

But check this out.  Equally noteworthy is how incipient demand can lower the barriers to entry for those who are a step ahead on the innovation curve.  As an example, witness what happened to classified ads services when newspapers failed to grasp the online potential ahead of someone else, like Craig’s List.

Incipient demand is like a window of opportunity.  Keep in mind it can open and shut rather quickly – and also, rather indiscriminately.  Depending on the circumstance in which it unfolds, and how it gets handled, it can be a friend or a foe.

In part 3, we’ll introduce another form of consumer demand that stands apart from the other two; it’s called Latent Demand.

Twitter: http://twitter.com/KenRudich
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Email: ken@marketing-strategy-management.com

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