Smart Demand

Smart Demand

The idea that consumers are deeply informed about their needs and the choices they have and consequently seek out the most appropriate products.


Much economic ink has been spilled writing about the concept of "smart demand," namely that consumers should be well-informed about both their needs and the available options that might satisfy those needs. In 1970 economist George Akerlof wrote a paper, "The Market for Lemons: Quality Uncertainty and the Market Mechanism." (He received a Nobel prize for the work in 2001.) Among other points, Akerlof observes that uncertainty slows down a market: in other words, when buyers have significantly less information about products than do the sellers, the market slows down. 

In 2011, Kim Smith, a cofounder of consulting firm, Bellwether Education Partners, wrote a paper with Julie Petersen called "Push and Pull: Strengthening Demand for Innovation in Education." Here's how they describe the need for "smart demand" in education:  

 "...public education in the US has had a notoriously weak“demand” function—that is, educational buyers as a whole are rarely seen asclamoring for products that will make dramatic improvements in the way theywork or the outcomes they accomplish, and the needs and preferences offorward-thinking users are rarely the basis of development and innovationcycles, which are more often organized around the largest customers or thelowest common denominator across customers. To fuel innovation in education, weneed a “smarter” demand function in the ecosystem—including cutting-edgecustomers and buyers that have high expectations for new products and servicesthat will meet their needs, who have the power to push suppliers to create andinnovate, and then drive adoption for those solutions that lead to betteroutcomes at the same or lower costs."  

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