Demand and supply is easy right?

Demand and supply. It’s the fundamental lynchpin to the commercial structure of virtually every economy on Earth. If there is sufficient demand, the market will recognise it, and some clever entrepreneur, or multi-national conglomerate, will produce and distribute just enough of it to fulfill that demand. If marketed right, that demand will then increase – when those without see those who ‘have’.

The demand and supply system can, however, stumble, where consumers say they want something, but act differently. Focus groups, surveys and feedback may indicate that consumers are demanding something – better services, more interaction, new products etc, but that really only tells half the story. And that is the fine-line between demand and desire.

I observed a real life example of this in action a few years back, working with a small established retail clothing company. The company had a loyal customer base and high walk-in traffic. They’d hung up a sample shirt behind the counter to gauge customer reaction before confirming production. They knew the shirt pattern was ‘out there’, and producing a run of 200 shirts was a big investment for them.

Consumer feedback during the two weeks was overwhelmingly positive. Nearly every customer said they’d buy the shirt if it was available for sale. Much of the time the customer wasn’t even prompted for their opinion, it was offered.

What more encouragement to produce the shirt did they need? They had what they thought was sufficient demand and they had the resources to produce the shirts. Bada-bing-bada-boom instant profit, right!?

Wrong. When the shirts were made, and the customers now had the chance to buy them – including many of the same people who had been so positive and had left their contact details to be told when they were in – they overwhelmingly walked away from the shirt. Cnosumers um’d and ah’d and ultimately the shirt was a financial loss for the company.

Why? Well there are many reasons to consider:

– Maybe the consumers said they liked it hoping to get on the good side of the seller for a discount on their immediate purchase

– Perhaps the consumers really did like the shirt, but because it wasn’t an immediate purchasing decision it was easy to say ‘yes’, than to really think about it

– People, generally, like to make other people happy – so why not tell the seller you like the shirt right?

– ‘Yes’ and a smile is easier than telling the seller ‘no, and here’s all the reasons why’

– Maybe they genuinely liked the shirt but just had other financial considerations at that time, and by the time that had passed they’d forgoteen about it

Lets not discount the fact that we’re talking about a few hundred people here with their own buying decisions, motives, thoughts, financial situations, emtional situations etc. Whatever the reason(s), ultimately this process of determining demand wasn’t successful. Thankfully for businesses everywhere this isn’t always the case, but the frequency of this sort of situation happening is surprisingly frequent. Consumer demand, especially consumer demand for entirely new products, or new potential products, can be a very fickle thing.

As for creating desire, well that’s a whole different post.

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