How Do You Create Demand In A Saturated Marketplace?

Every business that you look at feels like a fish place. However, read this guide to learn how to create demand in a saturated marketplace.
create demand in a saturated marketplace

When faced with an intensely competitive and saturated marketplace, businesses have long opted for a strategy that involves differentiation, price reduction, and extensive marketing in order to spur demand, often at the expense of margins and profitability.

This is referred to as demand generation, and it can quickly turn into a race to the bottom, especially in crowded marketplaces, with the margins getting thinner and thinner until it is no longer easy to create demand in a saturated marketplace.

Another approach in this regard is demand creation, which involves creating a new solution, product, or service, that consumers had no idea they needed. Essentially creating a brand new category in itself because you don’t want to compete in the existing category.

Understanding Demand Creation

When the competition was getting increasingly fierce in the candle industry in the late-19th Century, businesses started to adopt mass industrial manufacturing techniques to outstrip competitors on price, along with a host of other features, such as better air quality and different colors, among others.

Then came Thomas Edison with his invention of the light bulb, creating a brand new category overnight. Edison could have competed with the giants in the candle industry by trying to one-up them, but instead chose to lead with a product that consumers had no idea they wanted. This is by far one of the earliest examples of demand creation and disruptive innovation in action.

Another example that best illustrates this concept is Apple, with the launch of the first iPhone in mid-2007. Nobody needed a smartphone with a touchscreen, apps, and video games, but people were nonetheless willing to pay 8 to 10 times more than classic feature phones when it was first unveiled.

Since then, the company has consistently created new categories, often taking existing products, and reinventing them with such perfection, that consumers barely even remember the classic models.

While it may not be that realistic to spar on course with the Cupertino giant, demand creation as a concept can be very beneficial for businesses of all sizes across sectors and industries. In this article, we will cover steps to effectively execute the demand creation framework for your business.

Steps To Execute The Demand Creation Framework

1. Know Your Target Market

This is rather standard for all business, marketing, and sales endeavors, but bear in mind that when it comes to demand creation, you don’t approach this from the traditional lens. This is mainly owing to the fact that most consumers themselves are largely unaware of what they need.

During Henry Ford’s time, consumers would have asked for a faster horse over a cheaper automobile, and the same applies to most products and services today. The key is to get a feel for the problems, challenges, and desires of the consumer, but not take them at their face value.

2. Create a Unique Value Proposition

The key to avoiding the dreaded commodity trap is by having a unique value proposition (UVP) for your product or service that effectively differentiates it from competitors. A UVP can be a different feature, patented IP, branding, quality of service, or anything else.

Creating a UVP doesn’t always require something groundbreaking or a disruptive innovation, and oftentimes, it can be as simple as a strong reputation on Yelp and Google Local Search. Even if your products are pricier than competitors, customers are likely to prefer yours, given the presumption of quality.

3. Build Wide Moats

A key component of demand creation in a saturated marketplace is the availability of wide moats to stave off competition. A moat is essentially a competitive edge that prevents upstarts and even incumbents from challenging your territory.

In recent years, Google-parent Alphabet has been the perfect example of this, with its Chrome browser, Android operating system, and all other ancillary services aimed at protecting the turf of its flagship search business, which is also its core revenue driver.

4. Be A Trendsetter

From the iPhone to fast fashion and Starbucks Coffee to the humble post-it note, these are all products that the world can easily do without. Nobody asked for them, and if they were to disappear tomorrow, the world would continue to function just as well.

However, the loyal following and broad frenzy these products have managed to garner over the years show an entirely different picture. This is largely a result of their extensive efforts in redefining trends and molding consumer behaviors in their favor.

Companies such as Apple and Starbucks and Fashion giants like LVMH are often considered to be textbook examples and case studies of demand creation, as opposed to demand generation. Make sure to dive deep into their stories before getting started with your own demand funnel.

Final Words

Creating demand in a saturated market is always challenging, but the right approach has the potential to help a business leapfrog ahead and make it a lot more resilient to uncertainties and changing global conditions.

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