Demand forecasting is an essential activity in sales and marketing. The demand forecasting has to be done so that the company does not store huge inventories and at the same time, does not under utilise its operation setup. By taking into considerations the various types of demand in the market, the firm can thereby have a proper forecast and can plan its inventories accordingly, meeting the objectives of the firm.
There are mainly 8 types of demands in Marketing which have to be taken into consideration by the marketing manager during demand forecasting. The various types of demands, and how to tackle the challenges for marketers in these various demands, is discussed below.
1) Negative Demand
Negative demand is a type of demand which is created if the product is disliked in general. The product might be beneficial but the customer does not want it. Example of negative demand is a) Dental work where people don’t want problems with their teeth and use preventive measures to avoid the same.
b) Insurance, which people should have but they delay buying an insurance policy.
Similarly, people would like to avoid heart attacks and hence may pay for a full body check up where the results might be negative, but still the customer has to pay. The marketer has to solve the issue of no demand by analyzing why the market dislikes the product and then counter acting with the right marketing tactics.
2) Unwholesome demand
Unwholesome demand is the other side of Negative demand. In negative type of demands, customer does not want the product even though product might be necessary for the customer. But in unwholesome demand, the customer should not desire the product, yet the customer wants the product badly. Best example of unwholesome demand are cigarettes, alcohol, pirated movies, guns etc.
3) No demands
4) Latent Demand
Latent demand is, as the name suggests, a demand which the customer realizes later. Thus, while buying the product, he might not desire some features. But later on, he might think about those features and buy the product. The best example of latent demand are normal phones vs smart phones.
People nowadays want more and more features in the smartphone. They might settle for a normal phone, but then later on they get the itch to buy a smart phone. Similarly, people might buy a petrol car. But most likely their second car will be a diesel car. A marketing managers job is to find out the features which people might be looking for later and market them to the customer in such a manner that he immediately wants them.
5) Declining demand
Declining demand is when demand for a product is declining. For example, when CD players were introduced and IPOD came in the market, the demand for walkman went down. Although there was still a demand for the product, the demand was a declining demand. A marketers job in such a case to think ways to revive the product so that the demand is not declining.
6) Irregular demand
Irregular demand can be demand which is not consistent. The best example of irregular demand is seasonal products like umbrellas, air conditioners or resorts. These products sell irregularly and sell more during peak season whereas their demand is very low during non seasons. The best way to counter irregular demand is to introduce incentives for the customer to buy the product.
7) Full demand
In an ideal environment, a company should always have full demand. Full demand means that the demand is meeting the supply potential of the company. It also means that the markets are happy with the products of the company and that people want to buy from the same company. The marketing challenge in this type of demand is to maintain the same level of interest in the product and the company.
8) Overfull demands
Overfull demands happen when the companies manufacturing capacity is limited but the demand is more than the supply. This can be observed in the cement industry occasionally. Generally, most cement industries have limited manufacturing capacity. And hence, brand switching in cement industry is high. Many companies use de-marketing techniques to counter act overfull demands. This is because if the company keeps marketing, but it is not able to supply the material, then the company might suffer badly in brand equity.
Above are the 8 types of demand which a marketing manager has to forecast and manage at all times. Each type of demand has its own challenges and the marketing manager needs to be quick on his feet to manage all the different type of demands.