What major impact did the protestant reformation have on the catholic church?

 It challenged Catholic traditions, forcing people to reassess the Catholic religion.

Context and further detail:

The Protestant Reformation is noted as beginning with Martin Luther's posting of what are commonly called "The 95 Theses."  The official title of Luther's document, which he put forth on October 31, 1517, as theses for debate, was: Disputation on the Power and Efficacy of Indulgences.  Indulgences were papers issued by the authority of the pope that granted the person obtaining them the removal of penance owed in regard to their sins.  Luther objected not only to the fact that these papers were being peddled for money, but questioned many of the doctrinal foundations behind the use of indulgences.

As Luther continued his reform efforts, he protested not only indulgences, but the revering of relics, prayers to saints, the authority of the pope, and more.  Many of the long-standing Catholic Church traditions were challenged.  Other reformers, such as Ulrich Zwingli and John Calvin, also became part of the Protestant Reformation activity.

Luther and the other Protestant reformers proclaimed salvation as a gift of God's grace, rather than something earned by human efforts.  The Roman Catholic Church spoke of God's grace also, but as an enabling power that helped human beings do the works required for obtaining salvation.  The reformers still preached that we should do good works, but said those works were a fruit of being saved rather than a source of salvation.

demand is the need and oportunity to buy a given good or service.