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The stimulations that lead to the acquisition of new customers, keeping existing customers, and growing the overall demand of each customer for the company or organization's products and services. This may also include increasing demand by taking an innovative approach to the way in which traditional products and services are delivered to customers, which has the effect of expanding demand. For example, Amazon.com delivers traditional products in an innovative way, thereby increasing its total market demand to a far greater level than a local or national bookseller. It can also involve extending the company's brand into new products and services that are based upon its core competence. For example, Disney has a core competence in entertainment that started in animated films, then extended into general movie production, theme parks, music and book publishing, television broadcasting, retailing and merchandising, tourist and holiday packages (such as cruises), and property development, such as resort timeshares. The Disney brand is used to develop new market areas and generate overall demand for the Disney Company's overall products and services.

The assessment of demand is also crucial, particularly in terms of strategy and pricing. There are five types of demand:Historic demand is based on the extrapolation of historical market demand data from customers who have bought a product or service in the past, and is often used as a guide to future demand, which can cause problems, as it does not take into account discontinuity in market demand.Existing demand uses data from customers who are currently buying the products and services.Latent demand is a reference to inactivated demand that could be developed if certain marketing strategies and programmes were developed but which otherwise remains dormant.Potential demand makes a forecast based upon customers who might buy products and services in the foreseeable future if the circumstances (such as their disposable income, or special offers, or prices) are right and the market environment is favourable.Price-related demand is the main instrument available to marketers to convert latent or potential demand into existing demand. This makes use of the instrument of pricing to increase market demand for given products and services. The law of demand states that quantity demanded varies inversely with price. Economists expect that demand will diminish if prices increase. The maximum price a buyer is willing to pay for a good or a service, rather than do without, is called the reservation price. As a group, buyers' reservation prices for a given quantity of a good can vary because of differences in their preference for the good or service, their knowledge of the price of substitute or complementary goods and services, their disposable income, and their expectations about what will happen to their income or the price of the good in the near future. The quantity of a good demanded by buyers in a market varies with market price, if all these other influences are held constant. As market price rises, fewer buyers will have a reservation price high enough to make the purchase worthwhile. That's because as price rises, substitutes for the good start to look more attractive. As price falls, more buyers will have a reservation price low enough to make the purchase worthwhile. That's because as price falls, substitute uses for this good start to look more attractive.


Subjects: Marketing.

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