Latent Demand and Potential Industry Earnings

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Latent Demand and Potential Industry Earnings
(PIE)
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Latent Demand
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Latent demand refers to consumers desire for a
specific product/service that is present in a
particular market but is yet to be fulfilled.
Such situations can arise as a result of a number
of reasons for instance the consumers have no
information about the said product, the product
is not accessible in the certain region, or its
cost is rather high for most of the interested
buyers.
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Characteristics

• Hidden Market Potential This aspect suggests
  that there is a large volume of demand that can
  be termed as hidden or more specifically untapped
  demand. This perhaps, can be the biggest
  advantage that one can glean from this type of
  circumstance since it is often an untapped
  goldmine for the businesses that can find and
  take advantage of it.
• Future Growth Opportunity when a company
  identifies and fulfills latent demand, it paves
  the way for new sources of revenue and market
  share. This entails a significant prospect for
  future business development to undertake its
  business ventures.
• Consumer Insight Assessing what customers want
  and what they are getting/not getting can help
  understand consumer behavior, likes and
  preferences. This can help in deciding on what
  products to design and produce, what marketing
  strategies to use, and many more.

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Identification Methods

• Market Research Surveys, interviews, and focus
  group questionnaires may be used to determine
  what consumers want that they are missing out on.
  This direct feedback from potential customers
  produces valuable insights.
• Trend Analysis When it comes to identifying
  latent demand various factors need to be observed
  including changes and upcoming trends in the
  consumer behavior, advancements in technology,
  and transformations in the society. For instance,
  an increase in popularity of sustainable products
  can pave way to the emergence of eco-friendly
  products.
• Gap Analysis This involves examining the
  existing products in the market and analyzing gap
  between the needs of customers and what they are
  getting. This space is where latent demand exists
  because consumers wish they had access to more of
  what is available.

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Potential Industry Earnings (PIE)
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Potential Industry Earnings (PIE) is defined as
the amount of revenue an industry could gain, if
it full exploits the existing demand and latent
demand. This is a reflection of the optimum
earnings considering all the markets to be
exploited.
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Components

• Current Market Earnings This is the revenue that
  emerges with satisfying the current identifiable
  demand in the marketplace. It shows the revenue
  from products and services that have been in
  existence and stable to generate income from.
• Latent Demand Revenue This is the added revenue
  that could be generated from satisfying the wants
  and needs of customers in the market that are
  currently unmet. This shows that by satisfying
  latent demand, firms can greatly add to its total
  level of sales.

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Impact of latent demand on PIE

• Revenue Growth It is often beneficial to address
  latent demand as this can drive a considerable
  increase in revenues due to the introduction of
  new goods and services that are not currently
  available in the market.
• Market Expansion Some of the ways that can
  assist a business grow its market share and
  customer base include venturing into new markets
  and developing new products for the unsaturated
  markets.
• Competitive Advantage Businesses which are able
  to locate and fulfill latent demand are likely to
  receive more business than their competitors
  owing to their perceived creativity and
  attentiveness to the needs of the public.

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Strategies to Capture PIE

• Innovation This can involve capturing latent
  demand through the creation of new, unique
  products or services. Innovation in terms of
  enhancement of the existing product to meet the
  consumer needs to a greater extent.
• Marketing Rogorous marketing strategies can be
  adopted to educate consumers about the improved
  features of products to meet their needs.
• Distribution Making sure that the right products
  are available in the right location and at the
  right time is always important. This may require
  the improving distribution network and logistics.
• Pricing When it comes to pricing models, the
  competitive and value-based pricing strategies
  can play a vital role in targeting price-concious
  segments of the market and turning latent demand
  into actual demand.

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Conclusion
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• The concept of latent demand provides a great
  potential to increase revenue and market share
  for industries through making enhancements in its
  products or services or developing new products
  to meet the demands of customer. Any company that
  has the ability to discover and fullfill these
  unmet needs is sure to benefit.

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Thank You
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