Monday, May 16, 2011

"Demand Generation" is a Misnomer

Why do marketers call it "demand generation"? They're not creating demand.

Check your microeconomics text to be reminded of the difference between a "change in demand" Vs. a "change in the quantity demanded".  This has nothing to do with what the marketing automation vendors are espousing.

Instead, they should be calling it "lead generation".  That's the best they can hope for. Either of two situations determines demand and the quantity demanded.
  1. The environment [social, economic, governmental regulations, technology, and competition] is what drives and enables demand for commodity products for buyers who are employing traditional deductive problem solving techniques e.g. here's the pain caused by my problem and here's the root cause of the pain.  After evaluating potential solutions, they find the best price/performance fit. Marketers influence the quantity demanded based on their pricing and campaign tactics.
  2. For those companies who are lucky enough to have a new paradigm e.g. Apple iPad, potential customers can be persuaded to find the funding to purchase them based on deductive reasoning e.g. here's a new idea or product; what can I do with it to improve my current position?  Pricing is probably elastic and producers can associate their capacity with the quantity demanded based on how they price the product.

No comments:

Post a Comment