Updated May 2023
Primary versus Secondary Demand
Understanding what is the difference between primary and secondary demand is helpful for identifying growth opportunities in marketing.
Let’s now work through the difference between these types of demand.
What is Primary Demand?
Primary demand is the total demand for a product category (or overall industry). For instance, this is the level of sales that is commonly mapped onto the product lifecycle (PLC) curves – from introduction phase, to growth, to maturity, to eventual decline stage.
Here are some formal definitions of primary demand:
- “the size of the market for a product category” Kotler and Armstrong (2010)
- “the total demand for all brands within the product or service category” Kotler, Keller, Manceau, and Hémonnet-Goujot (2015)
- “the demand for a product class rather than for a specific brand” AMA Dictionary of Business and Management (2013)
As we can see, these definitions of primary demand are all similar, that primary demand refers to the total demand for a product category, not just a particular brand within that category.
What is Secondary Demand?
Secondary demand is the demand for a specific brand within the product category.
In this case we normally can measure secondary demand levels via our market share metric.
Here are some formal definitions of secondary demand:
- “demand for a specific brand” Jobber and Ellis-Chadwick (2012)
- “the preference for a specific brand within a product category” Kotler and Armstrong (2010)
- “the demand for a particular brand within a product or service category” Belch and Belch (2004)
These definitions of secondary demand are virtually identical, in that secondary demand is brand-specific demand.
Relationship Between Primary and Secondary Demand
We should note from the above definitions that secondary demand is derived from (and is a subset) of primary demand, and vice versa. That is, the sum of secondary demand for all brands equals primary demand.
We could even use a simple formula, as follows:
- Total Market Demand (Primary Demand) = Sum of All Individual Brand Demands (Secondary Demands)
Two Pathways to Growing a Brand, via the Market Size and/or Market Share
If we consider the different components of market demand – primary and secondary demand – then it becomes more evident that brands have two pathways to brand sales growth.
However, many brands tend to focus on growth through secondary demand only and ignore growth opportunities that may be achieved by stimulating primary demand.
Therefore, brand managers need to consider both types of demand and whether their brand (size, equity, resources, etc.) can also achieve growth through increased primary demand.
Examples of Brand Growth Using Primary Demand
Here are some examples of brands that have achieved growth through primary demand.
When the iPhone was first introduced, it stimulated primary demand for smartphones. Prior to the iPhone, smartphones were largely business-oriented devices.
Apple revolutionized the concept and made it appealing to the general consumer, thus creating a primary demand for consumer-oriented smartphones.
With its focus on electric vehicles, Tesla has significantly contributed to the primary demand for this category. The company has raised awareness about the benefits of electric cars, thus driving demand for the whole product category.
The company played a crucial role in generating primary demand for online streaming services. Before Netflix became popular, many consumers were not familiar with or interested in this type of service.
Beyond Meat has significantly stimulated the primary demand for plant-based meat substitutes, raising awareness of the category and its potential benefits for health and the environment.
By offering a unique combination of exercise equipment and interactive classes, Peloton created a primary demand for high-end, at-home workout experiences.
Examples of Brand Growth Using Secondary Demand
And here are some examples of brands that have achieved growth through secondary demand – which are far more common, as this is the normal pathway to sales growth. Note: There would almost ne no end of examples here, and a few common ones have been listed below.
While the primary demand for soft drinks (soda) is well established in the mature stage of the PLC, Coca-Cola drives secondary demand through their promotional mix, extensive retailer relationships, product line extensions, and other evolving marketing mix elements.
In the electronics market, especially smartphones, Samsung targets secondary demand through product line upgrades, new product features, sales promotions, expanded retailers and channels, and overall value offerings.
Even though online shopping is a well-established product category, Amazon continues to push for greater secondary demand by offering a wider range of products, faster shipping, and superior customer service compared to its competitors.
Primary and Secondary Demand and the PLC
There is no doubt that a brand’s focus in sales growth via primary and/or secondary demand is highly influenced by the phase of the product life cycle (PLC).
In the introduction stage of the PLC, there is little primary demand and all brands (as they are all early entrants) collectively (or independently) work to stimulate primary demand.
This is because sales (and profits) in the product category are relatively very low (as compared to more mature markets).
In the growth stage, there are many new players and competitors entering the marketplace (product category) and their combined efforts will drive primary demand levels.
As we know, it is mainly in the growth phase of the product life cycle where new consumers start purchasing the product category for the first time. As a result of these additional consumers, primary demand increases rapidly.
As primary demand increases, more competitors and consumers are attracted to the product category for the first time, creating a snowball effect on sales, driving primary demand even higher (which we see in the accelerated PLC curve in the growth phase).
However, in the growth stage (especially as the PLC approaches maturity), we will also start from consumers switching between competing brands – which we now know as secondary demand.
Note: In growth markets, competitive rivalry often increases to gain market share – as per a key underlying assumption of the BCG Matrix.
But generally, in the growth phase there are significant opportunities for all brands and/or firms to grow comfortably without an aggressive need to battle for market shares.
In the maturity phase of the PLC, there is a significant shift in brand strategy from primary to secondary demand.
It is in this PLC stage when market share becomes an important marketing metric. This is because, in a mature market, sales become a zero-sum game where growth needs to occur through increasing market share, as there is limited/no “natural” (primary demand) growth.
And, of course, usually most firms/brand will act quickly to recover any lost market share, which will escalate the level of competitive rivalry in the market. This has the effect of market shares going back and forth in most cases, without any real winners in the long term. A good example of this is the Cola Wars between Coke and Pepsi in the 1980s.
But it should be noted as an alternative growth strategy, that in a mature market there is the option to gain an increase in revenue market share, where the firm or brand is successfully able to increase its price premium (usually due to a stronger brand) and acquire a greater proportion of the consumer spend, without the need to increase unit market share.
The decline stage of the PLC will see a significant reduction in primary demand, as the product category is negatively impacted by new product categories, technology innovations, and/or shift changes in consumer lifestyles and needs.
There are only three strategy options for brands in the decline stage:
- Exit the product category and invest in new opportunities (common)
- Focus on enhanced secondary demand (as other players leave) and “milk the market” (maximize profits) in the few remaining years of the market/product category (also common), or
- Look to repurpose the product category to a new need or market to “restart the PLC” and rebuild primary demand (relatively rare).
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