With such a glut of commercial leftovers, it stands to reason there exists a gap between perceived demand and actual demand ― or put another way, the consumer audience which thinks it will buy a product (creating the demand suppliers must meet) versus the smaller portion which has committed to purchase.
Ostensibly, this is the culprit behind over-production and overstocking, ultimately resulting in drastic markdowns after the shopping season has come and gone. These days, such missteps are magnified ten-fold for any manufacturer trying desperately to compete with low-cost production centers like China; whether it's warehoused or put on clearance, unsold merchandise is expensive.
Of course, retailers would rather order and stock more product rather than less so as not to offer bare shelves to willing buyers. The argument then moves to which is worse: customer dissatisfaction generated by lack of inventory, or the financial penalty of stocking too much product. (That's why merchandisers who season after season accurately predict the right amount of orders are worth their weight in gold to retail companies.)
It is here that marketing, intent on driving awareness and furthering consideration ― alongside its oldest catalyst, social networking ― narrows and even eradicates the distance between perceived and actual demand, propelling the consumer right across the gap and into the checkout line.
This is key for advertisers and their agencies to understand. When the tipping point for a single influential consumer is reached, the impact is ― courtesy of modern communications technology ― instant and widespread. To achieve this, you must know what your target audience values and expects, and make the message uniquitous, shareable, and on their terms.
We know that the value of a friend's purchase recommendation (or even the mere mention that a friend bought something, implying a recommendation) affects dozens, who in turn push hundreds of more prospects across the divide. For marketers who’ve done their homework and put in place the right conversation machine between brand and consumers, on and on it will go, fueling a near-untraceable fractal geometry of awareness, influence, and purchase throughout the social sphere.
You simply must arm your consumer audience with all of the tools they need to close the Demand Gap for you.
Within the framework of the four brand currencies featured in my forthcoming book Currency of the Mind: Money, Information, Loyalty, and Time, the jump from perceived demand to actual demand is accelerated when the consumer has:
- higher levels of money and/or loyalty
- lower levels of information and/or time
NOTE: These are generalizations, of course; just as in human psychology, there are very few hard-and-fast rules.
This is known by another name: impulse buying ― operative word impulse. Used as an adjective, it is rife with negative connotations. Buying something “on impulse” is synonymous to admitting one's purchase behavior was irrational, on-a-whim, irresponsible.
So by its very nature, a purchase is made on-impulse only when one has too little information and/or not enough time; conversely, if a consumer has a lot of money or is loyal to a brand, the purchase can't be considered “on-impulse.” (In fact, in classical mechanics, an impulse is defined as the integral of force with respect to time. Here, that translates to forcing a rigid body — the uncommitted consumer — into changing its momentum, or converting a prospect into a purchaser.)
This last point is based on my long-time assertion that a marketer can only directly change a consumer's loyalty and information, and can only indirectly affect the consumer's amount of time or money.
Want proof that the impact of social made a difference in jettisoning customers across the Demand Gap this year? According to a comScore study, social media has played a significant role in driving sales, with 28% of consumers surveyed stating that social media (Twitter, Facebook, etc.) influenced their decision to buy. (In fact, Thanksgiving Day and Black Friday 2009 saw double-digit percentage growth over 2008.)
“In the comScore weekly holiday survey, comScore asked respondents about the influence of social media on their holiday shopping behavior. According to the most recent survey, conducted on Dec. 4-7, 2009, 28 percent of those who have begun their holiday shopping this season indicated that social media has influenced their purchases.”
The types of social media and their efficacies among comScore’s respondents:
- 13% of respondents read a consumer-generated product review
- 11% read an expert product review
- 7% followed a Facebook fan page for special offers and deals
- 6% were influenced by a friend’s Facebook update about a product
- 5% followed a company on Twitter for special offers and deals
- 3% were influenced by a friend’s “tweet” about a product
