In the Demand Economy, Companies Compete on Supply but
Win on Demand
The Traditional Approach: An Outdated Business Model
For more than two hundred years, companies have based their approach to business on supply-side economics, concentrating on creating products and services and then attempting – through marketing, publicity, distribution, and promotion – to stimulate demand for those products.
However, over the past 20 years, the market has fundamentally shifted. Sweeping technological advances, globalization and access to nearly perfect information have resulted in consumers who are better informed, more sophisticated, and far more demanding. Power has shifted from the seller to the buyer, creating fierce price competition in markets that are increasingly characterized by oversupply and commoditization.
A New Paradigm: Demand First, then Supply
To succeed in today's market, companies must start with a focus on demand. By first determining what current, latent and emerging demand exists, companies can then align their supply to best meet true customer needs. Rather than being forced to compete on price, they can beat the competition by competing on value — offering the options, features, products, and services that better meet demand and command price premiums.
This approach is illustrated below:
