The background
We are seeing clients deploy demand spaces in every category from food and drink to restaurants and retail, and when they are well executed, they help bring a precise focus on the drivers of choice at work within a particular category.
Demand spaces are powerful because they accommodate the reality of customer behaviour, namely that different contexts drive different demands.
Traditional segmentation models are often based on one of the 5Ws:‘Why is a product or service being sought?’ or ‘Why do we need it?’, but we know that people are messy, irrational beings, with their needs changing as the context changes. The kind of restaurant I might choose for a large celebratory event is likely to be completely different from the one that I’d choose for a romantic meal with my partner.
Demand spaces help us to accommodate this reality. Alongside key needs, they introduce the Ws that most influence customer behaviour in the context of a specific category.
In categories like haircare or fashion, choices are driven by who the person is. Whereas in alcoholic drinks, the occasion, ie where and when the consumption is taking place, matters much more. Introducing these contextual factors gives us a much richer insight into how decisions are being made.
Combining the most discriminatory consumption drivers into a demand spaces framework is a powerful tool for marketers. It simultaneously offers a strategic map of the biggest consumer-driven opportunities in the category, whilst also providing the extra level of richness necessary to make them actionable.
In categories like FMCG, the uptake in demand spaces has been so near complete that clients are no longer asking how to create them but looking to understand how to extract more value from them. Some of the most common questions now being asked include:
- How do we keep our demand spaces fresh, agile and/or dynamic?
- How do we further activate our demand spaces for growth?
- How can demand spaces and the other frameworks we are using add value to one another?
Over the course of this article, we will look at each of these themes in turn. We will look at the latest applications of demand spaces and how to get more out of them. We will also look at how we think they will evolve so they continue to add value in the future.
1. 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.
2. How to activate demand spaces for growth
One of the frustrations we hear from clients about demand spaces is that despite being a compelling conceptual framework for understanding the broad dynamics of a category, they can be difficult to activate.
Interestingly, this is both true and false at the same time. On the one hand, demand spaces are a strategic tool, designed for medium/long-term planning, rather than tactical campaigns or launches.
But good demand spaces should have multiple layers to them, enabling a wide range of different initiatives. Activity including portfolio planning, positioning and innovation can all benefit greatly from well-constructed demand spaces.
The where and the how
All good growth strategy answers two fundamental questions: where to play and how to win. You must have both a clear understanding of where the opportunity is and a plan for how you will unlock it.
Demand spaces are a hand-in-glove fit for answering the first of these two questions. In any given category or sector, they provide us with a map of where the consumer demand is. They help us to see the demand that underpins the category and identify spaces in which to participate.
And whilst all growth strategy needs to answer both the where and the how, some activities lean more heavily on answering one of these questions over the other.
For example, for portfolio strategy, it is critical to understand where the demand is located so you can best arrange your portfolio to capture as much as possible. It is no surprise that some of the most enthusiastic adopters of demand spaces are businesses with large portfolios of competing products eg Unilever, PepsiCo, Heineken, and Diageo.
Demand Spaces can also be incredibly powerful for other where-based activities like positioning. The depth of understanding on who you are targeting, what you need to deliver, what you need to enter the consideration set, and how to differentiate, can provide an extremely tight brief for creative expression. By anchoring a positioning in a tightly defined demand space, successive creative iterations can build on each other to create a long-lasting and distinctive brand narrative, centred on a driver of consumer behaviour.
What about the ‘how’?
Given that demand spaces naturally lend themselves to more where-based activities, it’s worth thinking about how we use them to answer the how? How do they give us the ingredients we need to make the strategy real and execute it?
It’s a fair challenge, as one of the benefits of working with demand spaces is their bias toward fewer, bigger opportunities – to create scale. But when populating an innovation pipeline, we need focus; we need to break the demand spaces down into smaller, discrete pieces and explore the niches and nuances where the winning ideas are found.
One of the ways to do this is to break each demand space down into a handful of ‘sticky’ and ‘springy’ growth platforms. When constructed well, these will evoke curiosity, inspire ownership, generate FOMO and be creatively rich and inviting.
They will also answer the following brand and consumer questions:
- What is the consumer problem we are solving?
- What are the under-met consumer needs?
- Where are categories/brands/products falling short of fully meeting expectations?
- Where are needs being fulfilled by other categories, activities, or behaviours?
- What are the points of parity needed to enter the consideration set?
- What are the potential points of difference that will drive choice?
- What is most valued and how do we make it visible?
These growth platforms provide the connecting link between the demand space and the innovation jobs to be done. They help ensure that any new products or services are solving a big enough problem to achieve scale and provide the detail to increase their chances of success.
Beyond ‘marketing’
The final opportunity to activate your demand spaces is by driving their adoption beyond insight and marketing. And it’s potentially the lowest hanging fruit of them all.
Delivering for our customers takes more than just the marketing team. The whole organisation needs to share responsibility for being customer centric. When developed correctly, demand spaces can add tremendous value to this.
By using them to organise around the needs and behaviours of your customers, you can ensure that all organisational activities and resources are aligned against common opportunities.
Much like how a who-based segmentation creates a common language across the business about whom you are targeting, cross-functional teams armed with demand spaces have a common language describing where growth will come from.
When grounded in insight, sized appropriately and with an inspiring and stretchy vision of the future, driving wider take-up can be a very quick way to get more value from your demand spaces.
3. How demand spaces can enrich other frameworks
We never find a client with a shortage of frameworks. During the initial ‘rewind’ phase at the outset of a new engagement, we are often presented with multiple frameworks: segmentations, need states, trends, innovation territories, category visions, 5Ws, customer journeys, occasions, category maps and brand archetypes – all of which explain an element of the market or how a consumer makes choices.
They are usually created by a team in the marketing function. Some are created to solve a specific, tactical problem (eg pitch a retailer or fill a product pipeline), whereas others are more strategic, becoming embedded in decision making and part of the common organisational language.
Framework fragmentation
We often find frameworks designed for a specific purpose in one marketing function, eg a pipeline developed by innovation can help to answer seemingly unrelated questions faced by another part of the organisation, such as the trade marketers responsible for presenting retailers with a category vision.
When we work with some of our bigger clients, we are often introducing them to frameworks that they were unaware of, developed by other teams, that can help them with the problem that they are working on.
This dissemination of frameworks, each used in isolation, presents several challenges:
- Firstly, the potential of the framework to deliver value and return on investment is limited to the job for which it was designed
- Secondly, with different parts of the business working to alternate ‘versions of the truth’, it is inevitable that silos occur resulting in both duplication and fragmentation and getting in the way of ‘fewer, bigger, better’ marketing
How do demand spaces help?
Demand spaces are a consumer and customer-centric map of the opportunities available to a brand or business. Underpinned by the drivers of consumer choice and behaviour, and with a scope as wide (eg refreshment, retirement etc.) or as narrow (eg carbonated soft drinks, savings) as needed, they allow marketers to see where current and future growth is likely to come from.
Good demand spaces should encompass all the potential suitable opportunities available to a brand or business, regardless of the marketing team working on them. This means demand spaces are, in effect, an overarching framework which creates visibility, synergy and direction for the whole marketing function.
When we see clients using demand spaces to organise their marketing efforts it results in greater intentionality and consistency of effort resulting in more effective marketing investment.
Creating an ecosystem
Demand spaces are at their most useful when placed in the middle of an ecosystem of other useful frameworks. They should set the strategic direction of subsequent pieces of work. For example, when constructing a customer journey map, demand spaces should be consulted first to inform which opportunities to explore.
They should also be developed in such a way that they can enrich the other frameworks in the ecosystem, for example adding extra detail about what’s driving behaviour, or how to win in a particular opportunity. The demand spaces help to make any subsequent marketing execution more customer centric.
And this enrichment is a two-way street. Demand Spaces can, in turn, be enriched by other frameworks too. When conducting new research, proxy questions can be added to the quant survey to identify which demand space a particular consumer typology, shopper mission or innovation territory belongs in. This means that the demand space can be continually updated as new insight is commissioned and as they get richer over time, they become increasingly useful to other frameworks – and the virtuous circle continues.
Finally, connecting demand spaces to proprietary, internal databases is another way to add value to both. Customer data can sharpen the spaces and inform how well you are delivering them. And the spaces can provide a lens through which to view your customers helping you to better understand their needs and identify opportunities to provide more value to them.
When consumer needs and motivations are captured in demand spaces that are then used as the organising framework of your ecosystem, your consumers and customers are placed at the centre of any strategic activities – whether brand, comms, innovation, or planning.
