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3 Forms of Consumer Demand and their Value Implications Pt3



Latent Consumer Demand

by Kenneth Rudich

Visit Part 1 to learn about Salient Consumer Demand

Visit Part 2 to learn about Incipient Consumer Demand

Latent Consumer Demand

‘We’re gambling on our vision, and we would rather do that than make “me too” products. Let some other companies do that. For us, it’s always the next dream.’
Steve Jobs, former Chairman and CEO of Apple Inc.

Latent demand refers to needs and motives that are not presently evident or known but are capable of becoming visible or active. They usually are hidden, or underlying and unstated. Consumers often are unaware they have such needs/wants/motives until a product or service manages to awaken the recognition of it.

value creation

Latent demand often is built on transformative value, and it can (and often does) interrupt the lifecycle of one or more existing products, perhaps even making them obsolete. The revolutionizing nature of this consumer demand category frequently summons to mind descriptions like visionary, disruptive, discontinuous or game-changing.

Seeds of Latent Demand

value creation

Sometimes it begins with a promising idea for satisfying a yet-to-be-recognized need (where proof of concept and/or a product incubation period is required); other times it’s about conceiving a solution to a need that is conceptually vague or extremely embryonic.

In either instance, it’s not uncommon for this kind of value to depend on someone assuming an exceptionally strong leadership role to shepherd it through the incubation period; and for the solution itself to spark a sense of excitement, wonder or renewal once it gains traction among consumers — like having found something that you didn’t know was missing.

creating value

For instance, the Internet search engine once lived in someone’s imagination as a kernel of thought, well before people commonly knew what it was or does. To go from that bare existence to a profitable enterprise would hinge on spurring demand for an idea cloaked in some vague promise. Until then, few people in the day-to-day world would accept the search engine as something they wanted or needed — at all, let alone on a regular basis.

The effort it took to foster a sufficient level of consumer demand, at least enough to make a go of it, coincided with the notion that products based on latent demand often pass through an incubation period. Part of the process consisted of a “feeling out” for arousing consumer demand, and part centered on steadfastly crafting the product to refine or improve its fit with the demand. This is where the value formula  (shown above) comes into play.

creating value


Here’s what happened.

The first web search engine, W3Catalog, appeared in 1993. Though it clearly represented a step forward, its primitive nature fell far short of really being market ready. On the other hand, it did establish proof of concept and thereby set the stage for more to come.

Yahoo! entered the market in 1995, Google in 1998 and Bing in 2009. These three hardly stood alone, but they are the most well-known of all for creating a demand around concepts like Pay per Click (PPC), Organic Rankings, Search Engine Optimization (SEO) and Inbound Marketing.

As you can see by this example, it took a healthy imagination, in conspiracy with perseverance and inspiration, to be at the helm for driving this innovation forward. But when all is said and done, it’s latent demand that deserves the credit for bringing it to life. Were it not for the ever-present possibility of arousing latent consumer demand, these search engine terms and their associated services probably would never have seen the light of day.

value creation

Similarly, the Internet itself took an unexpected turn early on in its development due in large part to latent demand.

For those unfamiliar with this story, the Internet originally appeared in the 1980’s as a humble communications network for academic institutions to share research and other information. That was about the full extent of the plan for it back then. Around the mid-1990’s, however, it started down a path of steady expansion to become the massive network it is today.

Along the way it also served as a springboard for a long list of never-before-seen products and services, many of which were likewise founded on latent demand.

creating value

Successfully tapping into latent demand typically comes with the reward of being first to market. Sometimes it’s a lasting advantage, but it also can be short-lived. Should it become popular — that is, visible and active — there’s the risk of it getting converted into salient demand. After that, the enterprise with the original solution may be forced to cope with competitive upstarts who earnestly want to displace it. Because of this, continuous innovation often is necessary for preserving an enviable market position.

The Internet of today is a good example. Though it originated in the United States, the effort to upgrade it or make it more robust has been somewhat woeful ever since. As a result, the U.S. Internet is now slower and more costly than it is in many other parts of the world.

In this instance, the U.S. went from being at the forefront of the innovation curve to presently being on the lag side of it.

Demand is as Demand Does

It’s important to be aware of all three forms of consumer demand — salient, incipient and latent — because each carries its own implications for achieving and sustaining success. Equally important is the recognition that no business enterprise is immune from being impacted by any one of them.

Such knowledge about consumer demand can make the difference between flourishing, faltering or folding as a business.



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