Delivering the keynote address at CII's Marketing Summit in Mumbai this March, Rick Kash, founder and Chairman of The Cambridge Group, a growth-strategy consulting firm, introduced the audience to the ‘Demand Revolution'.
The Cambridge Group, established in 1975, was acquired by The Nielsen Company in 2009. Kash is also member of the 36-member United States Senate Business Forum, a group of businesspeople that meets US Senators and cabinet members each quarter to provide independent views on the US economy and the country's business performance.
The book is a practical and contemporary guide to the future of businesses in a consumer-driven age, even as it draws upon in-depth examples from Hewlett Packard, McDonald's, Hershey's and (hot dog company) Ball Park Franks, among others.
Making the case to create and service ‘demand profit pools' instead of demographic customer segments, they say, “These should be defined not simply by who these customers are or what they purchase but, most important, on why they make the decisions they make.” Beyond which, businesses should understand the economics of each demand pool, and ensure a quarter-to-quarter evaluation of the organic demand landscape dynamically updated with new metrics, contend the authors.
In conversation with BrandLine during his India visit, Kash speaks on the demand revolution, emerging markets, the need for Indian companies to go global, and the need to view social media for what it is, beyond being ‘media'. Excerpts from the interview (part one of two):
Tell us something about the ‘Demand Revolution'.
I introduced the term ‘Demand Revolution' for the first time in the world, here in India, at this CII Summit.
In my first book, The New Law of Supply and Demand , published 11 years ago, we outlined what our chief economist (The Cambridge Group) predicted – the tectonic shift of the global plates. He predicted that we are going to be in a long-term over-supply. With technology finding its home in places such as India and China, we predicted that companies will lose their pricing power. It was also abundantly clear that with the Internet, people would have ‘perfect' information.
When there is no pricing power, there is over-supply and there is perfect information, what becomes abundantly clear is the primacy of demand. We had spent the last 20 years focusing on the supply chain. It was evident that companies that grew the fastest would be the ones that understood demand.
The idea of marketing as we know it may have become old. Marketing suggests you start with supply, and to get you to buy my supply, I market it to you. For the companies for which we have put in a demand business model, they are first very clear about where the profitable demand is, and then they adjust or create their supply so that it is differentiated from their competitors, and it better aligns with the profitable demand. The idea is to go from marketing to fulfilling.
The demand revolution is not about companies; it's more about consumers. Consumers now demand that you meet their needs. That's evidenced by what's going on in Egypt, Bahrain; evidenced by consumers forming groups. The real issue for marketers is that if they don't meet the demand represented by the demand revolution, their competitor will.
What has been the level of appreciation of the concept of demand revolution in emerging markets? Are Indian companies adapting?
We currently have two teams working here in India. We are setting up a demand model for an OTC company and one in the apparel space.
Companies in emerging markets are adapting faster. Emerging markets are more open. They don't have business models that are 100 years old. They are more entrepreneurial, more inquisitive, more intellectually curious and less firm in their ways.
When I went to China, there were 900 people standing in line for me to sign my book. The Minister of Finance in China had read my book thoroughly and said, ‘This is what I believe our country should do'.
One of the reasons emerging markets are ‘emerging' is because they are embracing new ideas. And those ideas are being embraced by consumers. Emerging markets are where demand will happen the fastest, and that is where the demand revolution will unfold fastest.
How would you distinguish latent demand and emerging demand?
Latent demand is demand that people have but no one has discovered it yet.
Many years ago, The Cambridge Group was doing strategy work for MasterCard. One of my partners walked into a room full of MasterCard executives, and she asked them, ‘Who are your competitors?' They thought the question was silly, but we asked them to play along. They named Visa and American Express. She said, ‘No, your competitors are cash and cheques. Credit cards are only 9 per cent of total payments.' It became abundantly clear what people needed and wanted. Within weeks, the debit card was born.
We told Anheuser Busch that there's an opportunity coming, because alcoholic drinks seemed to be getting sweeter. They initially said beer is supposed to be bitter. We studied the similarities between alcohol and beer. One of my partners took out a piece of data and said, ‘Here's the spirits industry. The fastest growing part of the spirits industry is vodka. And a 100 per cent of vodka's growth is from sweet vodkas.' Within a year, Anheuser Busch introduced Bud Light Lime, which became the second fastest growing beer in 30 years. No one ever asked for Bud Light Lime beer or the Walkman or the debit card. That's latent demand.
Emerging demand is something that's brand new and it's starting to grow. Telemedicine would be an example ... the ability to electronically transmit X-rays, sonograms and things like that. It's growing a little bit at a time. Medical tele-presence is going to erupt. One or two companies now, in the Europe and the US, are building networks.
(To be continued)