20 Jun 2018
In the 21st century consumer landscape, customer appetites for ‘the next big thing’ are insatiable, with preferences and allegiances more unpredictable than ever before. In the face of increasing consumer demands, a competitive market has become cut-throat, prompting the need for organisations to take measures to ensure that they don’t fall behind. With Market Demand Management, companies can meet the needs, wants and expectations of an increasingly fickle customer base.
Crucially, the implementation of Market Demand Management is only possible in organisations which have completed Phase One of Oliver Wight’s Business Maturity model, and have probably achieved a Class A Milestone. Driven by a detailed Market Segmentation, the best in business utilise the latest technology, promote a culture of collaboration and actively manage market plans to anticipate – and even influence – consumer demand.
We’ve put together a short overview of the key defining characteristics and processes in Market Demand Management.
The single-model approach has been swiftly replaced by demand segmentation, by the best in business. By classifying products, customers and channels into groups that share similar characteristics, organisations can successfully align their roadmaps with the customers and company’s values. The brand strategy is then deployed through a multi-year timeline,and updatedwith new insights annually to maintain a competitive edge. Market roadmaps are further broken down into market segment roadmaps to accordingly refine, respond and align the organisation’s business model and supply chain as demand evolves over the strategic horizon.
Owned by sales and marketing and cross-organisationally incorporated using Integrated Business Planning (IBP), demand plans are used to drive and communicate the volume, revenue and margin projections at the monthly demand review. By forging operating links between day-to-day planning and execution, organisations can enforce a consumption-driven demand management process, subsequently providing visibility, consistency and improving the customer experience for optimised cost-to-serve.
Using embedded analytics to understand each segment of the market, businesses can become more responsive to the diverse needs of customers, as well as consumption demand. Modelling and analytics can generate a distinct competitive advantage if used to construct strategic models, for scenario planning, and in the evaluation of risks and opportunities. Here, the role of the demand analyst is essential; they interpret the streams of incoming numbers and translate them into the data which informs the monthly demand plan. There is a sense of trust engendered by the ‘one true set of numbers’, which are subsequently used to inform the monthly demand plan and rooted in fact and figures, as opposed to individual predictions (as in the past).
Segmentation captures more accurate profiles of product and customer profitability to enable an accurate market segment plan for successful alignment with the overall strategic plan of the business. Having broken down the market into more logical groupings based on customers’ varying requirements, the market plans can articulate more intelligent pricing, service decisions, product placement, promotions and people across the extended supply chain.
In a more collaborative organisation, there are strategic partnerships throughout the value chain to enable manufacturers and different tier suppliers to fully understand the buying patterns at the point of consumption, thus understanding demand.
In this ‘diamond model’, the demand signal comes direct from consumption of the product. Subsequently, the leadership team can use the short-term, real-time information for planning, execution, performance management and the generation of a joint business plan to deliver shared objectives and partnerships.
Demand execution needs be focused on delivering the demand plan as closely as originally planned, before even contemplating adjustment, and demand must be managed based on what businesses are capable of supplying in the short term execution window. In the modern market, the savviest organisations employ demand sensing to respond effectively to a constantly fluctuating and unpredictable market. Demand Sensing assists the most effective execution of the demand plan by enabling organisations to respond to real-world events, market shifts and ever-changing consumer buying behaviour on a daily or even hourly basis.
Efficient demand sensing and execution processes take the chaos out of short-term planning. They’re levers which ignite actions to real-time signals or responses of customers and with lightning-fast reactions, companies improve customer service and increase sales revenue.
By harnessing the ever-evolving developments in technology, organisations can respond in record time, more accurately anticipate future demand and gain a true competitive advantage. Innovation must be supported by investment in the latest industry appropriate technologies, from Customer Relationship Management (CRM) tools to identify all sales opportunities, to the utilisation of demand sensing systems to facilitate rapid supply responses to changing market conditions.
By establishing clearly defined performance measurements across the organisation, with key measures consistently reviewed to provide focus to Demand Management process improvement, organisations can strive towards Class A performance. These measures should identify opportunities, vulnerabilities and crucially, monitor the customer experience; how well are consumer expectations being met, complaint rates, customer retention, new business and turnover can all be used to track the organisation’s performance.
This blog is based on Chapter Six of 'The Oliver Wight Class A Standard for Business Excellence'. You can buy it here.
Partner, Oliver Wight EAME
Debbie has amassed over 15 years experience in Sales and Marketing in the FMCG, healthcare and pharmaceutical industries. She offers organisations invaluable practiced insight into the challenges of effectively managing the supply chain from both a demand