Latent demand is an unsatisfied consumer need/want. Latent means ‘untapped’, and such demand scenarios exist because the consumer is either not aware of products satisfying his need or is unable to buy them. There are also instances when the product just doesn’t exist.
For example, mobile phones didn’t come with built-in cameras initially. Therefore, any demand back then for a mobile phone with camera was futuristic and latent. This latent demand was eventually met with camera phones. To address latent demand scenarios relating to pricing, companies can reduce product price or offer flexible payment plans, such as EMIs or hire purchase.
At times, there are specific product types or attributes the customer doesn’t realize he wants or would benefit from. For instance, before the launch of the first full-touchscreen phone, customers were happy with their QWERTY or hard keypad phones. But when the virtual keypad-equipped phone came along, people found it to be much more convenient and flexible.
Latent demand is basically the consumer’s hunger to experience more and improved product features. Companies can identify latent demand through their internal research resources; or survey potential consumers through interviews, focus group research, surveys, etc. to discover fresh demand cues.