Demand Generation

Abstract

Demand generation refers to strategies focused on generating demand for a firm’s goods or services. In the modern marketplace, this is accomplished through a gradual and holistic process largely based on online resources. Demand generation may work in tandem with conversion strategies, inbound cycle marketing, and other methods closely linked to the process of generating leads for potential future sales or with sales at various steps of the process.

Overview

The term “demand generation” refers to an online-based marketing method, aimed at the execution of marketing strategies that increase interest in and awareness of the company’s products or services. There are several components to the demand generation process, which may vary according to company, resources and tools, products, and market. Some of these processes are to: generate awareness about the brand, product, or service; position the brand, product or service effectively and relevantly for search engines, social media, and other dynamic online venues; buttress brand or product validation; and encourage positive commentary about the product or service, especially online. The purpose is to create exchanges between buyers—or potential buyers—and sellers, which will stimulate them to share information, access downloads, register contact information, and so on. That is, the strategy should incite the participation of the audience in any activity that will eventually generate more demand.

Although the need to generate demand has existed since businesses were first developed, demand generation as a named strategy is relatively new and commonly aimed at generating traffic to a company website. Although all firms are faced with the need to generate demand for their product, the challenge is especially critical for new companies or startups. The challenge is deeper in highly competitive markets, where all marketing communication strategies must operate and create brand awareness in an already crowded market. Although often confused with other marketing strategies, such as lead generation, demand generation is a distinct and more complicated process.

For an established company, the goal may be a higher demand for their products; however, demand generation is of critical importance for new products. Firms promoting new goods or services are frequently faced with the need to create a demand that does not yet exist, such as for a new beverage, new software, online tutorial services, or innovative forms of traditional services. Moreover, according to experts, the success of the strategy also depends on the fit and integration between marketing and sales processes.

Demand generation strategies are the province of the marketing department and, though their primary goal is not to generate leads, a good demand generation strategy will also generate qualified leads for the sales teams. Relevant demand generating strategies include the following: (1) branding, (2) search engine optimization (SEO), (3) viral marketing, (3) social media, (4) e-mail marketing, and (5) search marketing.

All firms and companies have a brand. Branding, then, refers to making the brand appealing, by connecting with feelings and creating expectations, and engaging in actions that satisfy those feelings and expectations among users and prospects. SEO is the process of creating or modifying online content to effectively attract traffic to a website from search engines and search results. These are also known as “organic,” “free,” or “natural results. SEO is an important part of search marketing, as is pay-per-click advertising. Search marketing seeks to gain high visibility among the results that appear whenever an individual types words in the search box. These words call for search engine results, but also require the creative identification of “adwords,” that is, keywords that make specific clickable advertising appear.

“Social media” is often used interchangeably with “social networks,” and though they are part of the same mechanism, important differences exist between both terms. Social media is a vast system of platforms on which people, communities, groups, companies, and others interact and socialize, with the purpose of sharing news, interests, ideas, and even rumors and urban legends. It is, however, different from mass media, in which the content is generated by a single massive medium. Social media relies on its users as the main generators of content. It also relies on the constant interaction of users with each other, which is a very different phenomenon from the one-way communication that occurs among radio or television consumers. It is important to bear in mind, however, that mass media has, to a large extent, converged with the Internet and social networks, creating and interacting with communities that consume their online content, such as Internet radio stations and streaming services.

E-mail marketing is the process of sending commercial messages directly to groups or individuals. E-mail marketing has undergone significant changes since the inception of the Internet, and many e-mail programs and providers have anti-spam security features. People’s reading habits have changed, as well, and users are unwilling to read long e-mail texts. Nevertheless, about 70 percent of investment in brand marketing continues to be dependent on e-mail marketing, and managers have had to develop highly efficient and attractive marketing strategies, which include personalized e-mails, visuals, and clickable links.

Applications

Complementary strategies can facilitate the generation of leads. These may include the production and publication of information resources, such as webinars, whitepapers, and free downloads. Apps, demos, and invitations to register for programs or events attract the user to participate or interact with the content.

Demand generation can be incorrectly conflated with sales conversion. The conversion of demand into sales is an independent task that occurs after the generation of demand. For conversion to occur, firms involve different organizational resources and develop complementary tasks, such as classifying leads, lead nurturing, sales calls, and others. Therefore, while implementing demand generation strategies may lead to the generation of leads, demand generation and lead generation are two different stages. Demand generation aims to reach clients or customers; it tends to focus on an emotional appeal and/or an appeal to the organizational values of the prospect. Lead generation, on the other hand, is focused on increasing sales, as well as generating fidelity or brand loyalty.

Demand generation focuses on three key aspects: (1) to spread knowledge in the market about a new product or service (especially among the target market), (2) to position the brand or product relevantly in search markets, and (3) to promote brand validation by generating positive opinions from satisfied clients. This strategy is often used in business-to-business and business-to-government markets, where long-term relationships are cultivated. It complements well with other marketing strategies, such as inbound cycle marketing and account-based marketing, among others. From the standpoint of inbound marketing, for instance, the generation of leads is a holistic process, which includes accompanying the sales process from its inception—that is, from the moment there is brand awareness among customers—moving on through the process of conversion and sales closure, to the final step of creating fidelity. In other words, the generation of leads is a consequence of the demand generated by demand-based generation strategies.

There are variations in demand-based generation, although most share the same fundamental goals: (1) design long-term strategy, (2) create attractive content, (3) generate demand (and, thus, create wider market share), (4) rely on social media, (5) aim for brand recognition, and (6) a cyclical process. The cyclical aspect is shared with other marketing strategies; it is linked to fidelity, that is, the cyclical process of demand, in which customers return to the firm over and over, creating constant and ever-greater demand.

Based on these general aspects, then, it is possible to see the benefits of an efficient and successful strategy of demand-based generation: greater rates of brand recognition; greater expectations among prospective customers; reaching and opening new markets; promotion of new features or products; and successful public relations and better relationships with existing customers.

One of the best known case studies of a successful demand generation strategy is that of Uber, a cellphone application that matches a nearby driver and car with a user who wants to travel somewhere. Conventional theories of marketing often stress the appearance of a product as satisfying an existing need. Before the appearance of Uber, however, the public who needed a personal form of public transportation relied on the traditional use of taxicabs, in general, a very popular system. However, the appearance of Uber was successful beyond expectations, generating huge demand for a product both unknown and, until then, nonexistent.

Finally, before the proliferation of the web and Internet-based commerce, or e-commerce, demand generation was a much costlier strategy and difficult to assess. This has changed radically with the Internet and the ease and relative inexpensiveness of many Internet processes. Firms can now have a website and search engine analytics; that is, artifacts are available to assess and measure the rate of response generated among its customers, for very little financial investment.

Not so long ago, only larger corporations were able to afford large-scale demand generation strategies; now start-ups have a vast array of free and inexpensive online features geared toward making their company a success. The main constraints in this case would be an unsuccessful marketing strategy or deployment, lack of resources for pertinent staff, market competition, negative word-of-mouth and/or unsatisfied customers, and, lastly, an economic downturn. Nevertheless, a viable and sustainable demand-based generation strategy should continue to perform even during a lean economy, for no economy will be down forever, and customers will return to those firms that showed them constant care and fidelity.

Further Issues

Social media tools and resources are, at their core, a means of marketing and communicating with an audience. As with any other business strategy, planning the social media presence of a firm is crucial and having a contingency plan for when things may go wrong is also a vital step in the process. The following key considerations have been suggested by marketing and business experts as appropriate before deploying a company to an online presence: goals, strategy, tools, implementation, and risk.

Clearly a final goal is to increase sales, but because the effects of social media can be diffuse and indirect, sales are difficult to measure. Moreover, because most people access social media mainly for experiences other than buying, trying to push products directly might backfire. Therefore, experts posit that social media is best used for public relations, such as branding and reputation cultivation and management (i.e., establishing a reputation as an influencer or expert).

Content developed as a branding strategy must be relevant, fresh, consistent, and carefully polished for the target audience. Strategy is crucial to branding and creating an online presence. Social media provides a friendly, inexpensive way for a firm to inform an audience. While a website is necessary and, to a large extent, a fixed presence, social media is made for people with shared interests to interact with each other and, ideally, create more content and enlarge the customer base.

Tools are related to all communication artifacts, resources, and media that can be used, including content, social media platforms, blogs, social networks, e-mail, websites, webinars, videos, apps, and analytics. The design of these, as well as their implementation, require careful consideration of goals, audience, and the image the firm wants to project.

Social media, blogs, and all the resources and tools mentioned above serve to increase brand awareness, corporate values and culture, and strengthen relationships. Implementation requires careful consideration of short-term, mid-term, and long-term goals, and monitoring methods to assess their efficiency and results at every step of the process. Having a good monitoring strategy helps address problems before they become viral and spread beyond company control. Developing checklists and protocols, for instance, is always useful to prevent and/or deal with future contingencies.

It is important for a firm to identify opportunities, as well as risks, for both are two sides of the same coin. Risks may include a lack of visibility, marketing, or advertising strategies that are out of step with the target market, a perception of illegitimacy among customers, or falling behind the competition. Each company must assess which are the greatest risks for its firm and prepare for them.

Strategies are useful ways for connecting with clients, customers and users in general, as well as with prospects or potential clients. Therefore, as with any other tool, it is best utilized and more effective when planned thoughtfully and monitored carefully.

Terms & Concepts

Brand Validation: Related to validation marketing, it is an assessment or of a brand’s position in the market.

Branding: Assigning a brand name and values and engaging in all actions meant to further the brand positively in the market.

Content: In the context of the Internet, the text, images, video, or music that are part of websites, e-newsletters, and e-mail.

Fidelity: Also known as loyalty, it is related to branding and is defined as feelings of loyalty toward a brand, its products, and its services.

Influencer: In marketing, a person who is considered a trend authority or who has leadership legitimacy capable of influencing the purchase behaviors of others.

Monitoring: Consistently and periodically checking the progress of something over a specific length of time period; analytics are used to monitor the efficacy of online engagement.

Strategy: Policies, sets of methods, or action plans aimed at achieving an overall end-goal.

Search Engine Marketing: A series of actions that form an Internet marketing strategy aimed at raising a website’s visibility.

Bibliography

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Suggested Reading

Lu, M. Y., & Jiwoong Shin. (2018). A model of two-sided costly communication for building new product category demand. Marketing Science, 37(3), 382–402. Retrieved January 1, 2019 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=130368618&site=ehost-live

Noakk, N. V., & Znamenskaya, A. N. (2015). Factors and phenomena of generating consumer demand for cinematographic content (theoretical and experimental studies). National Interests Priorities & Security, (22), 28–38. Retrieved January 1, 2019 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=103366659&site=ehost-live

What’s revving revenue management. (2016). Units, 40(9), 38. Retrieved January 1, 2019 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=119259736&site=ehost-live