In demand: the intersection of context and consumer needs, part 2

How to keep demand spaces fresh, agile, and dynamic 

One of the biggest concerns with investing in a new segmentation, or indeed other consumer-based frameworks, is the speed at which they can potentially go out of date. Recent events have brought this into sharp relief.

Even in relatively slow-moving markets like homecare or insurance, unexpected category challenges (e.g., Covid, the cost-of-living crisis) have emerged suddenly, undermining the ability of existing consumer frameworks to help us respond.  

This is not a new problem. It has troubled marketers and insight teams for as long as we can remember. However, two factors are now amplifying this challenge. Firstly, the pace of change wrought by the ongoing, tech-led disruption of almost every category imaginable and, secondly, the increasingly inter-connected global economy, making us more vulnerable to shocks from distant events.  

Against this context, we have been helping clients to evolve their demand spaces to be forward-looking, easier to keep up to date, and more actionable in the face of major events. To do this, we have been deploying a new iteration of demand spaces that we call dynamic demand spaces.  

Introducing dynamic demand spaces

Dynamic demand spaces are designed to include the two major forces that influence the development and direction of a given category or industry. Firstly, the needs, behaviours, and motivations of consumers (demands) and secondly, the provision of products, services, or innovations (solutions) that satisfy those demands.  

Often, in categories that are solution-led, eg homecare, the demand for a clean, fresh, and safe home remains constant, but the solutions offered to meet those needs evolve as manufacturers innovate. In Turkey, a surface cleaner brand called Asperox secured a 20% market share with a single SKU in 18 months, simply by targeting existing needs with a simple all-in-one solution. 

But it’s equally true that a category can also be driven by changes in consumer demands. The recent consumer interest in health and sustainability has led directly to the growth in non-alcoholic drinks and plant-based foods

A robust, future-facing model 

These two forces impacting a category – demands and solutions – form the two axes of a dynamic demand spaces model, both of which are capable of being sized. Importantly a wide range of primary and secondary data inputs can be employed to construct relevant, relative sizing, including trends, R&D roadmaps and demographic or wealth shifts.  

We can also visualise where the ‘momentum’ is, and we do this by looking at where/when consumers have spent their money previously, as well as how they are spending their money today. This helps us to see which of the demands or solutions are in growth (and which are flat or in decline). This robustness creates confidence around any strategic decisions that need to be taken. 

Freshness and relevance 

Crucial for the continued confidence of the model is keeping demand spaces relevant and up to date. You can do this in two ways:  

i) You can project the ‘momentum’ earlier. We all know that predicting and sizing the future is extremely difficult, and a pinch of salt should be taken with any model purporting to be able to do it. But what we have found is possible, is creating confidence around the direction of the category and the increasing or decreasing influence of the supply and demand side forces affecting it.

We have found that it is possible to project with confidence which solutions and demands are growing and are likely to continue to do so. 

ii) You can use light-touch quantitative studies to track the progress of demand spaces over time – deep diving into a space where rapid change is occurring, such as the growth in the need for ‘protection’ in the cleaning category during Covid – or via a light-touch, periodic (eg annual) study that tracks the growth and decline of all the spaces. It is also possible to create a hybrid of both approaches. 

Better marketing 

With their longer time horizons, dynamic demand spaces enable the marketing team to be less reactive to the immediate whims of the market (and the latest competitor activity), and by planning further out, innovation is more effective, brand communications more coherent, and longer-term activation becomes more choiceful and strategic. 

Furthermore, it presents an opportunity for cross-functional teams to de-silo and organise together around the biggest opportunities within the category. Teams with medium to long term (H2/3 ) time horizons eg those responsible for innovation, R&D, supply chain or M&A activity, can start to put plans in place to unlock the demand space in the future, whilst those with shorter horizons (H1 ) eg brand planning or sales, can leverage the opportunities presented today. 

By addressing concerns about an out-of-date demand space model and by introducing more dynamic elements, we see that it results in a more effective efficient and customer-centric organisation.  

Read the third part of the series here.

 Adam Rowles is a director at The Forge