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Demand Shaping

The Future of Demand Planning

Shaping demand is a marketing and promotional strategy to ensure that a product or service meets the desired demand levels. It involves creating incentives to influence consumer behavior, such as discounts and promotions, and creating campaigns to increase awareness and visibility of the product or service. Shaping demand is essential for businesses to ensure that their products and services align with consumer demand.

Demand shaping strategies influence customer demand for a product with product placement, among other tactics. Demand shaping aims to increase customer demand while creating a sustainable competitive advantage in the market. Effective Demand Shaping strategies will stimulate sales and increase market share.

There are several strategies that businesses can use to shape demand, including the following:

  • Price Changes: Changing the price of a product or service can have a significant effect on demand. For example, lowering the price of a product may create more demand, while raising the price may limit demand
  • Promotions and Discounts: Offering promotions or discounts on specific products or services can increase demand
  • Advertising and Marketing: Advertising and marketing campaigns can be used to create or increase awareness of a product or service, which may lead to increased demand for it
  • Product Innovation: Introducing new or improved products or services can create demand
  • Creating Scarcity: Creating a sense of scarcity by limiting the availability of a product or service or offering it for a limited time can create demand

Using Demand Shaping to Optimize New Product Introduction

Optimizing new product introductions is integral to an overall product launch strategy. Optimizing is strategically launching a new product to maximize its potential success; this includes marketing strategies, pricing, packaging, and distribution efforts. It also involves analyzing customer feedback, understanding the competitive landscape, and ensuring the product meets customer needs.

Trade promotion can shape demand through tactics including marketing and pricing strategies, product positioning, product design, and product features. For example, companies can run promotions to attract new customers, increase price points to target high-end customers, or offer product bundles to encourage customers to buy more. Additionally, companies can use product positioning to differentiate their product from competitors or design it to meet specific customer segments' needs.

Improves your forecast accuracy by calculating various key performance indicators (KPIs) that highlight your planning process's effectiveness and efficiency. These KPIs include measures of forecast accuracy, such as mean absolute deviation (MAD), mean and absolute percentage error (MAPE), and bias. Out-of-sample testing validates and improves the forecast accuracy metrics.

You can also review built-in waterfall forecast error reports, drilling down to identify items with chronic accuracy issues and drive continuous improvement. Run complete forecast simulations to see the potential impact of price changes, marketing campaigns, weather shifts, demand upside, and other events. Advanced users can also simulate forecasting models and parameter changes to fine-tune the machine-learning forecast.

Incorporating Demand Consensus

Demand consensus is a form of consensus-building that focuses on understanding, addressing, and meeting the needs of all stakeholders involved in a demand decision-making process. It ensures that all voices are heard and that all points of view are considered. It's a decision-making process that is mutually beneficial to all parties involved.

It can also incorporate an economic model that proposes that the collective demand of its users should determine the value of a product or service. Using this model, users can determine the price of a product or service based on what they believe it is worth. This model encourages collective decision-making, leading to better products and services.

Modern-day demand management tools help you evaluate demand-shaping strategies to select the most significant impact and enable you to reconcile cross-functional forecasts by comparing them at the plan level to illustrate the variance over time or across different product segments. Built-in exceptions such as "deviation between sales and final shipments forecast" help you align the sales forecast with your estimates. You can easily audit and trace forecast changes made by different stakeholders. Once you collaboratively shape the demand plan, you can share it with executives in the Sales & Operations Planning process to drive enterprise-wide alignment.

The future of Demand Planning is now. The benefits to organizations can include:

  • Increased Profits: Improving demand planning helps to ensure that production and inventory levels are aligned with customer demand. This reduces overproduction and underproduction, increasing profits throughout the supply chain.
  • Improved Cash Flow, Accurate demand planning ensures that the right amount of product is produced and delivered at the right time. This reduces the need for unplanned discounts and rush orders, leading to improved cash flow.
  • Enhanced supply chain visibility, Accurate demand planning gives businesses greater visibility into their supply chain. This allows for proactive planning and management of the supply chain, leading to increased efficiency.
  • Reduced supply chain risk, Improved demand planning minimize the chances of production and inventory disruptions. This leads to improved customer satisfaction and fewer supply chain delays.
  • Improved productivity, Accurate demand planning enable production and inventory levels to be more closely aligned with customer demand. This increases productivity and helps businesses to better meet customer demands.

Through this series, we've discussed benefits and best practices for demand sensing, predicting and shaping as critical parts of a customer-centric approach.

Learn more about how Kalypso can help you enable techniques such as market segmentation, customer segmentation, customer analytics, customer experience design and customer engagement to create a tailored approach to meeting each customer's needs.

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