It seems that Demand Spaces are the new black in the world of segmentation. The shiny new toy that everyone is talking about. And there’s good reason for that. They are consumer derived; they help us understand how a category operates and depending on who has created them, they can be linked directly to rich continuous data sources to give us an on-going picture of our landscape.  A huge advantage! 

In principle, this ‘new’ approach has evolved to combine the established 5 or 6W’s models into a single axis onto which the key opportunity areas or Demand Spaces are defined. As a consequence, this simplified evolution should illuminate fewer, bigger, better opportunity spaces – that allows us to target with scale and to drive growth.  And they should simplify the key market drivers in a way that makes them both easy to action and to remember. 

In theory this sounds like a significant evolution and an ever stronger strategic tool. But if Demand Spaces are so useful in helping understand a category and providing clarity on opportunity areas, why are we working with so many clients who are finding that their Demand Space models are simply not helping in achieving their growth ambitions?

Are Demand Space Frameworks blunt or broken?

In our view, there are 2 key issues. 

The first is about ‘WHAT’ demand spaces are. They are often ill-defined and either over or under-segment a market in a way that doesn’t actually explain consumer behaviour

The second, and more important one is ‘HOW’ they are used. Too often they’re applied with a level of rigidity that hampers the very growth it’s meant to unlock

So, what’s going on with our new toy. Why isn’t it working like it should?

It’s probably sensible to start by asking what Demand Spaces actually are? We ask, because we’ve seen very different versions and we’re nervous we’re all getting a bit Emperors New Clothing about them. We’ve seen Demand Spaces simultaneously being used to define what in the old world, were shopper missions, we’ve seen them being used to define what we used to call needstates and we’ve also see them used as the sexy new title for occasions. 

SO, WHAT ARE THEY REALLY?

Where we see ‘Demand Spaces’ working best, is when they are only used to define differences that actually exist in how consumers behave in a category. They reduce our previous 6 dimensions of the classic 6 w’s segmentation model into a single framework that allows each Demand Space to be anchored against which W is the key driver of behaviour. As a consequence, they create partitions in the market of shared and significant opportunity and can clearly and simply describe what drives behaviour in each space – whether that’s the who, the when, or the why.

Where we see them working less well is where the desire to reduce everything to a single axis means we remove a key axis that drives behaviour. And we’ve seen this too. Where clients take a view on a single W that drives their market and use this as the only lens against which to define Demand Spaces.

Very often, this single dimension doesn’t explain real behaviour enough! As a result each Demand Space needs to get ever more granular to compensate. And while the ‘Demand Spaces’ created may statistically hold true, a model with 15, 16, 17 ‘Demand Spaces’ is not useful simplification!

All that does is define tiny ‘opportunity areas’ and means we end up running the risk of micro targeting our brands. And while no one can deny focus is key for brands, micro-targeting is the death knell of growth!

In a bid to hyper understand one dimension, we run the very real risk of obscuring the others.

So what should we do? 

In our view, to get maximum value from your framework means we have to ensure we are creating Demand Space frameworks that realistically reflect what drives consumer behaviour in our categories and allows the key axes at play to both be present in the framework. It might sound like we’re stating the bleeding obvious, but we’re frustrated clients aren’t getting bang for their Demand Space buck.

That said, our biggest frustration with Demand Spaces is not what they are, but how they are being used.

Which leads us to our second key issue.

HOW DEMAND SPACES ARE USED

In the bid to create portfolio clarity, we’re too often seeing a resolute focus on brands being assigned single pieces of the Demand Space landscape. Forcing them to only innovate or only communicate against one small slice of the opportunity pie. 

Very often this is in huge conflict with a business saying it wants to behave entrepreneurially. No entrepreneur would limit their potential growth because it didn’t adhere to one Demand Space…. But we’ve seen examples of exactly that.

If the growth job to be done is one of frequency; then a single-minded, single-Demand Space focus can be very helpful. But if the growth job is one of penetration, and in many FMCG categories, it frequently is, it’s perhaps not surprising that the very tool which should be used to illuminate growth, is in fact handcuffing it.  

In these instances, a rigid Demand Space focus imposes limitations on our brands rather than unlocking opportunity. Why? Because it doesn’t easily allow us to look at adjacent Demand Spaces through the window of different attitudinal groups and thus find new ways to expand our brand footprint and engage more users with our brands.

Often our brief is to look for innovation opportunities with scale. But those just don’t exist in a small box. This hyper focus on occupying a single space is killing innovation. No brand got great by taking babysteps. Richard Pascale puts it beautifully when he says…

“The incremental approach to change is effective when what you want is more of what you’ve already got”

Coke’s “within arm’s reach of desire” strategy is a prophetic reminder. Great brands have the ability to stretch across occasions and people, and they can do this without the need for complicated sub-brands. Mars are a great example of taking their brands across multiple demand spaces by format and product innovation. 

And yet it’s not at all unusual to see businesses choose the costly and resource intensive option of creating and sustaining multiple sub-brands in a single category to tackle an opportunity they could much more efficiently manage through 6P flexibility with a single brand. Why? You guessed it … because their Demand Space model demands different brand solutions to ‘fit’ each Demand Space.  

In our view, while segmentation and Demand Spaces should help to aid focus and where and how to play to drive growth, we need to get much more comfortable using them as flexible frameworks, that we line up against commercial ambitions. We need to start by asking what are we trying to achieve, and with whom, rather than what does the Demand Space for brand x mean we can do.

Clearly brands need focus, and portfolios need distinction. But if we start by putting Demand Spaces front and centre in our brand decision-making, we’ll continue to find it hard to consider broader growth opportunities. We need to use our Demand Spaces as a flexible guiding tool, a cross reference to ensure decisions are being made that will achieve and align our desired strategic brand ambitions, rather than the only way to grow. Demand Spaces shouldn’t be a tool that short cut decision-making… they should be a tool to illuminate considered choices about where to play and how. 

The most powerful application of Demand Spaces isn’t the end of thinking about where brands can play, it’s just the start. 

With thanks to WallPaperWeb for the use of the image