Basic Marketing Concepts Demystified! – Part Three: Demand Generation

Marketing November 6, 2013

What Is Demand Generation?

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No point of being in business if there’s no demand for what you’ve got, right? Luckily for most of us, it is possible to create demand – within limits and context of course.

For demand to exist, a couple of things must happen. Your market will have to be:

  1. Aware of your offer (or your existence, for that matter)
  2. Aware of their need

 
Demand generation involves making one or both these things happen.

Almost everything you do that gets public notice figures into demand generation by helping your market recognize your brand. Recognition isn’t the only goal, however. Most businesses would benefit from having a positive association with their brand.

The second part of demand generation is helping your market recognize that they have a need.

“Need” as used in a marketing sense is related to, but quite different from colloquial use and can refer to anything a customer feels like acquiring.

Not all needs are the same. “Hunger” and “variety” for example, are needs with different characteristics. Everyone gets hungry eventually, but few want to eat the same thing all the time, even if you could.

Major Channels for Demand Generation Campaigns

1.) Branding

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Brand names and logos should communicate (or at least suggest) what a business is all about. The value of a descriptive yet concise brand name and logo can’t be overstated, especially when you haven’t started building up your brand yet.

2.) Inbound marketing/Permission marketing

Smart Phone Apps

This is normally taken to mean “earned” marketing, where businesses passively offer something of value to customers, or ask permission before proceeding with the rest of the sales process. It’s sometimes called “permission marketing”, after Seth Godin’s book of the same name. Inbound marketing includes:

  • Search engine optimization
  • Viral marketing
  • White Papers
  • Social media marketing
  • Content marketing
  • Email marketing
  • Pay-per-click marketing

 
3.) Outbound marketing/Interruptive marketing

With A Megaphone By A Wall

Outbound marketing once meant “marketing communications” in general. However, it’s now increasingly used to refer to “interruptive” marketing, in contrast to “permission marketing”. Depending on who you’re talking to, this could lead to miscommunication.

In any case, while often seen as more obnoxious than inbound marketing ads, they remain effective in the proper contexts, and it would be a mistake to rule these out. Some examples include:

  • Telemarketing
  • Door-to-door marketing
  • TV
  • Radio
  • Traditional Print
  • Pop-ups/Pop-Unders (arguably)
  • Outsourced lead generation
  • Outsourced appointment setting

 

TOFU!

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One buzzword making its way through marketing departments and ad agencies all over the world is “TOFU” or Top Of the Funnel. You will often encounter this or some other similar acronyms and ideas wherever demand generation and lead generation are discussed.

The funnel here refers to any of a number of sales and purchase funnel models, the most popular being “AIDA“, representing Attention, Interest, Desire, and Action. There are hundreds of similar takes on the idea of a funnel, usually modified to suit specific industries, and occasionally hubris and ego.

Here are just a few examples of different sales funnel models:

funnel 6 funnel 5funnel 3 funnel 2 funnel 1 sales-funnel

There is no real single correct model and there is no real standardization of terms. It helps to understand that demand generation is almost always placed at the top of any sales funnel model, with lead generation either under it or at the same level.

Some managers consider demand generation “strategic” and lead generation “tactical”, while others consider them complementary. Both are often necessary for growing any business. In the end, your actual sales funnel model is a lot less important than understanding the principles behind it and why demand and lead generation are on top.

Demand Generation Vs. Lead Generation

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There is plenty of confusion about the differences between these two ideas, and some companies or marketing departments that claim to do one are often doing the other. While both are “TOFU” practices, they have a very different set of goals.

In contrast to demand generation’s more classic “awareness-building” approach, lead generation involves:

  1. Collecting market information (i.e. through registration forms, etc)
  2. Build a database for future campaigns.

 
The direct outcome of lead generation is new contacts available for targeted sales or marketing efforts. In contrast, demand generation is just that – drumming up demand.

But Wait! There’s More!

To make things more confusing, increased awareness (not necessarily demand) can also result from a lead generation campaign. Think of all those promos and offers that you’ve seen on and off line for stuff you don’t really want at the moment. Those are direct examples of lead generation campaigns that also help with demand generation. You might not be interested now, but you might be in the future.

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On the flip side, structure or execute a lead gen campaign badly (by making it look spammy for example – you’d think we marketing types would have learned by now), and people who don’t act might develop some awareness of your brand — for all the wrong reasons.

Why does it matter?

There is one very good rationale for not confusing demand and lead generation. When these ideas and goals are confused with each other, it’s often way too easy to choose the wrong channels or develop the wrong processes and content for the desired outcomes.

In other words, mix up your definitions of these two and you’ll waste time, money, and plenty of opportunities.

Conclusion

Demand generation is an absolutely crucial part of growing your business. While it’s a simple concept, the misuse and non-standardization of terminology- even among marketing professionals – has made its role confusing for many managers and entrepreneurs. Hopefully we’ve helped clear up some of the confusion.

 

Tell us about your demand generation strategy! We’d love to know! Comments welcome below.

Other parts of our Basic Marketing Concepts series!

The Marketing Mix: The 4 P’s of Marketing

Customer Relationship Management

The Sales Process

The Purchase Funnel

 

Sources:

  1. “Basic Definitions: Advertising, Marketing, Promotion, Public Relations, Publicity, and Sales”. Managementhelp.org.
  2. McNamara, Carter. “Marketing – A Commonly Misunderstood Term”.
  3. Mirna Bard, NuReachGlobal,
  4. “telemarketing definition and meaning”. Investorwords.com.
  5. “direct mail definition”. wordnet.princeton.edu.
  6. “Outbound Marketing – Traditional Isn’t Always Best”. WordStream.
  7. “Email Blast Definition – Direct Marketing Glossary”. Marigoldtech.com.
  8. Inbound Marketing vs. Outbound Marketing .
  9. Outbound Marketing Traditional is not always best
  10. Halligan, Brian (2010) Inbound Internet Marketing Blog
  11. Inbound Marketing vs. Outbound Marketing
  12. leadformix.com – Demand Generation vs Lead Generation – Tell them apart
  13. b2bmarketinginsider.com – Lead generation, Demand generation and Content marketing
  14. smallbusiness.chron.com – Basics Marketing Demand Generation
  15. work.deerdigital.com – What Is Demand Generation Anyway?

 

Image Credits

Funnel: Charles Haynes via photopin cc
Tofu: arimoore via photopin cc
Cash: quaziefoto via photopin cc
Analysis: kenteegardin via photopin cc
Cattle Brand: Steve Corey via photopin cc
Megaphone: garryknight via photopin cc
Phone: socialmediaexaminer.com

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