Latent Demand: Apple's Trillion Dollar Secret
Steve Carlotti, CEO of The Cambridge Group, says Apple's success is due to the company's ability to uncover latent demand.
If Apple's growth continues on its current pace, The New York Times recently pointed out, the company will be worth $1 trillion on April 9, 2015 at 11am. Apple would be the first company ever to reach this valuation.
According to Steve Carlotti, CEO of The Cambridge Group, Apple's success is due to the company's ability to "close the gap between the current product that’s bought and the ideal product that the consumer would like to use," a concept known as latent demand.
What's the Big Idea?
Carlotti outlines three types of demand:
Current demand: "If you look at the world today, that’s the demand that you see. So you see people buying things, and that’s the demand that you see."
Emerging demand: "What you can just start to see if you look at the world the right way. You’re still looking at what people are doing, but you can just start to see the trend.
Latent demand: "The demand that you can’t yet see. It is the gap between what the consumer wants, and what they use."
Here are some examples of products where there is latent demand: I want to eat bacon that is really good for me. I want a computer with a battery that lasts a long time.
In other words, if the consumer is "hiring a product or a service to do a job for them," Carlotti says, "latent demand is the gap between the product they hire today and the product they would ideally like to hire.” And if you, as a company, can figure out how to close the gap between that current product that’s bought and the ideal product that the consumer would like to use, that is, in fact, the secret to growth."
In the video below, Carlotti shows how two Apple products -- iTunes and the iPad -- are a perfect illustration of latent demand.
Watch the video here:
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