Demand Management in the Second Decade – A Structured View – Part 2

This is the 2nd in the 3-part Structured series.
For part 1 go HERE. For part 3 go HERE.

Demand Creation

Of late, marketing organizations and solution providers have been adopting the term Demand Creation instead of Marketing. It makes sense, since it integrates Marketing and Marketing Automation analytics with the rest of the organization, particularly the Supply Chain. It plants marketing firmly in the value chain, and makes it an essential value-creating step in the chain, rather than an isolated department adept only at sponsoring golf tournaments and procuring t-shirts and hats.

In our model (from A Structured View – Part 1, Figure 2) Demand Creation takes the next step with the strategic data that we gained from Market Discovery (the activities of strategic marketing, strategic supply chain and strategic sourcing), and puts that data to work.

Our goal is not to provide a treatise on specific areas of marketing. There are ample sources for this information, some of which we have indicated in various articles in the brief. And there are Marketing and Demand Creation professionals and authors who do a great job discussing these topics. However, the integrative power between Marketing and Supply Chain is our focus, and we want to reinforce the need to take a structured approach, since doing this well pays off.

Some marketing thought leaders use a phased approach such as Acquire, Develop, and Retain. They view Demand Creation in terms of structured phases that demonstrate total, consistent concern and interest in the customer. The phased approach makes visible your attempts both to understand your customers, and to model services and products around them. In addition, the integration between Marketing and Supply Chain allows for the design of an attractive and successful Customer Experience Strategy, one that goes beyond just fast check-outs at the supermarket. (These topics will also be discussed in upcoming articles in the brief.)

Here’s the challenge: Most Demand Forecasting packages look at forecasting in product terms, from large aggregates of product families down to SKUs. Marketing looks at the data in various demographic categories, such as economic and geographic, and turns it into market and customer segmentation models. Sales/CRM systems, another pivot point, look at the large geographic territories of an internal sales organization and drill down to specific sales professionals and their customers.

So, to create an integrative approach is to blend all this data in a way that ties these separate demographic groups to specific product offerings and assortments, and also yields an understanding about which customers want those offerings. Additionally, there has to be the ability to track decisions back up these chains of data. Take a look at Figure 1 to understand the issues at a high level.

There are great systems out there that support these functional areas (Sales, Marketing, Supply Chain), but not many that successfully integrate them. What is being done has been based on innovative organizational efforts to take this structured view. It is interesting to note that in the last few years, many companies have abandoned their multi-channel research and web development just as the real science of web effectiveness is bearing fruit: gaining and harvesting rich data about customers! (For example, you see which customers progress from browsing your site to buying on your site or in your store.) When you work with your customers to integrate their marketing and supply chain data, superior customer data and better forecasting emerge, leading to better product design, customer acquisition, and increased profit. Having more precision in all data and more integration of these areas makes powerful results.

Demand Creation is a Partnership

Integration within the enterprise is essential, but it is also essential beyond the enterprise. We need our customers, channel partners and suppliers to play! CRM and Marketing Automation are used sparingly today. Most people think of them as merely playing the role of “getting the lead list.” Demand Creation, on the other hand, takes data (or contacts), and creates relationships.

Relationships are not relationships just because someone buys, or doesn’t buy…yet, as Henry Bruce mentions in his white paper on Relationship Marketing.

Many companies use a wasteful, inefficient, out-of-date marketing model: bombard the target market with product information, generate leads and pursue the customers who are ready to buy. Henry calls this, “One and done marketing… because it usually involves just one contact with the prospective buyer and then they attempt to qualify and sell the lead. If the person isn’t interested in buying, the sales rep moves on to the next one and marketing never follows up again. This routine requires generating a large quantity of leads, most of which get permanently discarded.”

Henry is an advocate of Relationship Marketing, a permission-based marketing method. Talk to Henry on his blog for more.

Relationships need to be nurtured. As we discussed multichannel, the new reality in a previous Demand Management article in the brief, each channel needs to be understood for its value and nurtured appropriately throughout the whole supply chain. A cohesive strategy to support both the channel and the cross-channel must be developed and supported.

Using unique partnerships and channels, using marketing automation software technology, and using the data from partnerships, field, and Market Discovery to feed Demand Forecasting can assure a real connection with your markets, both current and future customers.

We look forward to your comments, questions and contributions to this series.

To view other articles from this issue of the brief, click here.