Demystifying Demand Strategy: Shaping vs. Shifting in the Business Landscape
Demand shaping aims to smooth out peak demand, while
Demand shifting redirects demand to different products.
– Demand shaping involves adjusting the timing of sales to reduce peak demand, for example, offering discounts during off-peak hours.
– Demand shifting involves changing the product mix to appeal to different customer segments, for example, a fashion retailer shifting focus from traditional clothing to sustainable options.
Happy Lohri, everyone!
There’s a lot of confusion about whether companies are trying to SHAPE demand or SHIFT it around.
Different teams within a company might have different goals and incentives.
Sales teams usually want to see growth, while
Supply chain teams are more focused on cost.
This can make it hard for demand planning processes to get support from both marketing and sales.
Companies try to SHIFT demand by using tactics like
– changing prices or
– launching new products.
this can actually
– waste resources and
– make it harder to build strong relationships with customers and suppliers.
SHAPING demand:
This involves trying to
– increase demand and
– grow market share
It takes discipline, teamwork, and a focus on the market.
A lot of sales and marketing teams aren’t ready for that yet. They’re more focused on meeting their own internal goals than maximizing market potential.
Imagine a company that makes frozen pizzas.
The sales team is under pressure to meet a growth target. So they decided to run a promotion offering a discount on the pizzas.
This might temporarily increase demand for the pizzas, but it doesn’t necessarily change the overall demand for the product.
The company is shifting demand.
The company is using a promotional tactic to move demand from one period to another. But they are not increasing the demand for the product.
If the company were to focus on shaping demand:
They might try to increase the overall demand for frozen pizzas by
– improving the quality of the product,
– expanding their distribution, or
– investing in marketing to build brand awareness.
These efforts would need discipline, teamwork, and a focus on the market. But they might also lead to a sustained increase in demand for the product.