Aug OtR abstract: Latent Demand: Opportunity or Indictment?
Latent Demand: Opportunity or Indictment?
Our friends in Jupiter FL have recently returned to the “latent demand” argument supporting the current health and rosy future for the game of golf. It’s part of a larger restatement of the golf consumer base from “players” to “total addressable market.” By that I mean the 1-2 punch of them now showing growth in the participant base by including off-course participants (i.e. exclusive range, TopGolf and simulator golfers) as well as lumping in latent demand (defined as non-golfers who are very or somewhat interested in trying the game). With these two magic tweaks, the NGF’s 2018 State of the Industry view goes from meeting the harsh reality of a declining consumer franchise head on to the days of wine and roses. If only it were so (or so easy).
As I looked at the graphic of Joe Beditz’s presentation at the 2018 Golf Business Symposium in Dallas that shows the ascending bars representing increases in latent demand between the years of ’13-’17 increasing from 9M-15M it brought the following line of thinking to mind:
- What tangible value is there in measuring “latent demand”? As analysts, we’re constantly looking for cause and effect relationships; if latent demand matters to the industry in any way, there should be some correlation between this steep increase and our core metrics of participants, rounds, spending or all three
- If the number of participants is declining and latent demand is increasing, doesn’t that mean that our conversion rate is getting worse? If so, then increasing latent demand isn’t an opportunity, it’s an indictment that our ability to convert the interested uninitiated into the game is getting worse
- Latent demand most likely includes a number of former golfers which isn’t a bad thing but, if so, our conversion rate should be higher. How do we appeal specifically to former golfers who should be the latent demand “low hanging fruit”?
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