demand-side market failures occur when,

Demand-side market failures occur when, in the words of Arthur Okun, “too many bad products are chasing too few buyers.” This is typically because a product or service that was once desirable has become unpopular due to changes in consumer preferences. Demand-side market failures can be broadly classified into two categories: 1) those that arise from a mismatch between what consumers want and what firms offer, and 2) those that arise from unfulfilled consumer needs. This article will explore both types of demand-side market failures and their implications for policy makers. Loss of Product or Service Demand: One type of demand-side market failure is when a product that was previously desirable becomes unpopular due to changes in consumer preferences. This may be because the quality of the product has declined, new products have come onto the market with better features for users, and/or consumers’ tastes change quickly over time. Marketers may attempt to combat this by changing their advertising campaigns but there are no guarantees they will succeed (and if they do then it is likely at an expense). For example, according to “The 12 Commandments” written by David Ogilvy in 1963 about how best to advertise on TV programs which were popular when he wrote his article, one rule states that people should not be shown