Demand is the most important market mechanism that ensures the movement of goods and the functioning of the economy. There are many factors that affect it, and there are also several varieties. Let's talk about what pent-up demand is, what are its specifics and how marketers work with it.
The concept of demand
The market seeks to meet the needs of people and profit from it. The expression of this desire is demand. It is defined as the ability of people to purchase a product or service.
Demand is a market expression of need, it shows the correspondence of a product to its value. Let's take a closer look.
The basic law of the market is built on the triad of demand - supply - price. The first term means the overall level of sales of a product at a specific cost in a certain period of time. It signals whether the price is right for the consumer, whether there is enough goods on the market or there is an overabundance of it. It is the demand that is the main concern of the marketer. He tries to shape and increase it, making it stable. Fluctuations in demand are a sure indicator of the state of the market. Therefore itmust be constantly studied, monitored and stimulated.
Types of demand
In marketing, it is customary to consider various classifications of demand.
The following types are distinguished by the frequency of occurrence:
- Casual. One that does not know recessions and is characterized by constancy. For example, food - bread, milk and others.
- Periodic. The one that appears at some intervals. For example, seasonal clothing, ski equipment, Christmas toys.
- Epic. Occurs at indefinite intervals. For example, jewelry, cars, black caviar.
The following types of demand are distinguished by the degree of satisfaction:
- Real. This is the level of sales for a certain period of time. It is measured in the amount of money that can be spent on the purchase of any product at the current price.
- Satisfied. This is realized demand, that is, it is the volume of purchased goods for a certain period. It is always less than the real one, as some buyers could not purchase the goods for various reasons.
- Unsatisfied. This is a demand that has not been satisfied due to the high price, unsuitable quality of the product or its lack of availability. In turn, this type can be explicit when the consumer has the financial ability to purchase the product, but he did not buy it. There is also hidden unmet demand. This is when the buyer purchases a substitute product, but this does not fully satisfy his needs. There is also unsatisfied pent-up demand. In this case, the buyer needs the product, but he is forced to postpone the purchase, most often due to lack of financial resources, and the need remains urgent.
Demand is either elastic or inelastic depending on price. In the first case, it directly depends on price changes. For example, when the price of cars rises, the population abruptly begins to buy less of them, i.e., demand falls. And in the second case, the price dynamics does not affect the volume of purchases. This usually applies to essential goods.
Factors affecting demand
Demand, as a market mechanism, is subject to various influences. The most important factor influencing it are the prices of goods. But this is the tip of the iceberg. Experts divide all indicators into the following groups:
- Economic. These include the general state of the economy, the level of production and income of the population, the state of prices for different groups of goods, the purchasing power of the population, market saturation.
- Demographic. This includes the population size, its structure, the ratio between urban and rural residents, migration rates, etc.
- Social. The development and condition of society and its culture affect the demand for various goods.
- Political. The situation in this area can activate or, conversely, reduce the demand for certain products. Thus, in a state of political instability, the need for durable goods increases.
- Naturally-climatic. In different seasons, demand for certain product groups increases or decreases.
The concept of deferred demand
Consumers always seek to satisfy their needs, but do not always have the opportunity to do so. Sometimes people have to put off buying a product or service until circumstances change.
So, an increase in prices always causes a change in demand. As a rule, it decreases. There may even be a stagnant period, the duration of which is not predictable.
There is a deferred demand - this is a situation when the consumer has a need, but there are not enough resources to satisfy it. It can be not only financial, but also temporary or informational reasons. Sometimes a consumer has every opportunity to satisfy a need, but postpones it until a more appropriate moment. For example, a person has saved up for a car, but will not run to make a purchase at the same moment, but will wait for promotions and discounts from the seller.
Application in marketing
When the volume of unsatisfied demand grows, it is necessary to plan special events that will push a person to buy. A marketer must constantly study demand in order to take the necessary measures in time to maintain or stimulate it.
If people are postponing purchases due to a lack of information, then it is necessary to plan a campaign to inform the target audience about the properties and features of the product. If the acquisitionis postponed in anticipation of a profitable offer, then it may be necessary to carry out some kind of action that will make further waiting unprofitable. If people are massively delaying purchases because of the high price, then it is worth running a campaign to justify the high cost of the product or start reducing it.
Examples
There are many examples of deferred demand in the history of the consumer society.
First of all, this phenomenon is observed with a sharp increase in prices. So, immediately after that, consumers "hide" and stop buying expensive goods and luxury goods.
At the beginning of the season, many buyers also put off buying things for this time of year, hoping that they will buy them at a discount at the end of the period.
Marketing has accumulated a rich practice of overcoming pent-up demand. These include discounts, promotions, communication campaigns, and promotional events.
