What is negative demand?

Negative demand results when consumers use their purchasing power to reject a brand or company by not buying its product. Usually, this type of demand happens because the company or brand receives negative press. Consumers may even be willing to pay more to avoid the brand.

As an example of negative demand, if trace amounts of heavy metals are found in one brand of regular oatmeal, consumers may turn to other brands. Some consumers may even switch to organic oatmeal to try to avoid the issue of chemicals altogether. Organic brands are usually more expensive, so the consumer is essentially paying more to avoid the brand that has picked up negative demand.