Potential demand is RELATIVE. In the simulation game, total demand is divided between the competitors based on some factors. Price, product image, product quality are three most important factors.
Higher product image, and higher product quality result in higher potential demand while higher price results in lower potential demand.
The effects of these factors on potential demand are also RELATIVE. You may think you have done a lot, but your competitor have done even more, so your potential demand does not increase, or worse, decreases.