Ian explores the spectrum of demand, identifying 7 types we should consider when market sizing.
This week in my Tuesday 2¢ LinkedIn newsletter, I shared some thoughts on Demand Generation. Specifically, before going to market with a new product or service, or investing in campaigns or revenue-generating motions, we should start with market sizing.
In summary, without market demand, no amount of graft or hustle in sales and marketing will generate revenue, and the post sparked an interesting conversation about the definition of “demand".
This led me to the idea that demand lies on a spectrum, influenced by market and category maturity and buyer awareness that I wanted to explore.
That exploration led me to the idea that there are seven types of demand, from zero interest in solving the problem, all the way through to expansion demand.
This pretty much is what it says on the tin, but it’s easy to oversimplify as “nobody would buy this” and so we should drill in a bit more, as an enthusiastic founder can always find a handful of early adopters, but that won’t necessarily answer the more important question: does a viable market exist?
A “No Viable Market” situation might include:
That last point is debatable, because unwillingness to pay might signal latent demand, but broadly, this type of demand is summed up by the line attributed to Clayton Christensen:
“You may hate gravity, but gravity doesn’t care.”
In other words, no matter how hard you market or sell, this market will not reward you.
The problem exists, but mainstream buyers don’t recognise it yet.
The word “mainstream” is important here, as early adopters and pioneering organisations may already be embracing the problem and happy to take a risk with a new solution, but scaling a company requires mainstream demand.
This is the toughest environment for genuinely innovative products (and I mean genuinely, not the “innovative” bullshit plastered on every B2B vendor tagline).
Stimulating demand here puts the most pressure on our marketing resources, as it needs to work on three fronts:
Here, the problem is recognised by a large enough market, but the approaches to solving it are unclear or buyers have an established workaround.
This might seem to be splitting hairs, with “Hidden Demand”, but there is a difference:
Hidden Demand → Buyers don’t recognise the problem.
Latent Demand → Buyers recognise the problem, but haven’t committed to a solution.
This is a more accessible market than Hidden Demand and requires a different marketing motion. You don’t need to market the problem, but your marketing resources will still be stretched between marketing the category and your position with it.
Hallelujah — the category has, in Geoffrey Moore’s terms, crossed the chasm. This is now a “thing.”
Buyers understand the problem, the solution category exists, and probably some bright industry analyst has given it a name. There are also established competitors who look like you (not spreadsheets or IT duct tape).
And crucially, there is a TAM large enough and with enough budget to sustain multiple vendors.
However, market sizing may still send you snakes and ladders style back to "No Viable Market" if:
Another mistake vendors make: assuming all their potential buyers are at this level of demand. They start differentiating with features and functions when the buyer may still need help understanding the problem or exploring approaches.
Still, with all the caveats, this is the sweet spot for lead generation.
OK, I may have gone a bit early with “the sweet spot,” because if buyers are searching for you by name, this is the real peak: demand for your brand and solution.
Think: “Nobody got fired for buying IBM” — or SAP, or any vendor who has achieved dominance in a category.
This demand is created through the classic Binet & Field “long and short” balance:
This is where I’m merging lead generation into the spectrum, because this is the moment anonymous demand becomes identifiable buyers and account-level opportunities. Here:
And, in a word, demand generation gets personal.
This stage often sits within business development or sales, but it’s still part of the broader demand picture, the continuation of stimulating demand for solving the problem, building awareness of the category, and positioning your place in the ecosystem
If marketing has done its job up to this point, BD is armed with the right messaging to convert demand into pipeline.
In SaaS, once you’ve established a beachhead in a market and crossed the chasm, a large portion of revenue comes from existing customers.
So it’s important to understand:
Expansion demand is a core part of sustainable B2B growth.
In summary:
This isn’t a linear buyer journey or a simple maturity model. It’s far more likely that different pockets of your TAM sit at different types of demand simultaneously, depending on:
Each type of demand needs a different sales and marketing motion, and I’ll explore those tactics in a future article.
If that interests you, please follow us on LinkedIn or subscribe below: