3 Elements of Demand

The 3 Elements of Demand are

Cost
Quality
Delivery

The 3 elements of demand dictate the success of any product or service. We need to break them down individually to understand what they are and to assess their individual and collective role in the overall success of a product or service.

First Element of Demand : Cost

The first element of demand is cost, which is critical in any purchase decision a customer makes. Also, cost is a function of the supply, demand, and competitive landscape associated with the product or service. The customer always compare the cost when making a purchase decision. This is in addition to the perceived and actual value of a product or service. Let’s say, you have a product with high perceived value. In such case, if the cost for a product or service is high, the customer is likely to follow through with the purchase and demand it. On the other hand, if perceived value of the product or service is low, the customer may choose not to purchase the product or service due to the high cost. Hence, cost has to be in proportion to the actual or perceived value of a product or service.

Second Element of Demand : Quality

The second element of demand is quality, which is a key factor in driving demand and repeat customers. It is a direct result of the quality of the product or service offered by the company. It also is one of the primary factors in customer loyalty and repeated purchases. If the quality of the product or service is high, customers are more likely to purchase it more regularly and create more demand for the product or service. On the other hand, if the quality of the product or service is low, customers are less likely to purchase it and demand for it may decrease significantly.

Third Element of Demand : Delivery

The third element of demand is delivery, which is one of the most overlooked yet essential elements of any product or service. Timely delivery is essential in creating demand for any product or service. Customers want to receive their product or service in a timely manner. Not only because it meets their needs, but also because it helps build trust. If the organisation assures the customers, that they will deliver their product or service on time, they will be more likely to purchase it. This invariably leads to increased demand. On the other hand, if delivery is not timely, customers may be less likely to purchase the product or service, leaving it with lower levels of demand.

To conclude, cost, quality, and delivery are the three key elements of demand when it comes to the success of any product or service. Each has its own unique role in creating demand and ultimately driving the success of the product or service. Companies must carefully evaluate each of 3 elements of demand. And they should try their best to address each of them. That is the only way to ensure that their product or service is successful in the current market.

By the way, do check out the Certified Lean Six Sigma Black Belt Handbook – it is one of the most essential guide for anyone trying to get certified as LSS Black belt or in general wants to understand LSS and improve processes. – check it out here.

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Sachin Naik

Passionate about improving processes and systems | Lean Six Sigma practitioner, trainer and coach for 14+ years consulting giant corporations and fortune 500 companies on Operational Excellence | Start-up enthusiast | Change Management and Design Thinking student | Love to ride and drive