Blog Demand Management and its connection to Social Media by Walter Verdiesen and Madelon Bufill Eland
Blog Demand Management and its connection to Social Media
This youtube
video gives you an explanation about what demand management is:
Demand management is about understanding what the consumer wants. It is
a planning methodology and consists of 4 main components:
· -Forecasting
· -Customer order processing
· - Making customer
commitments
· -Interfacing between the
marketplace and manufacturing systems
Demand management contains a set of processes, capabilities and
recommended behaviors for businesses that produce goods and services.[1]
In recent times we have a lot of technology and also social media. The world is
getting more interconnected and this gives businesses new ways to connect with
(potential) consumers and new ways of advertising the company's products or services. Social
media can become an invaluable resource. This is because via social media (potential)
consumers can directly express their demand or need for certain products or
services, which business can pick up on. But businesses can also use social
media data to optimize the total process of buying and selling so that it benefits both
the company and the consumer.[2]
It is shown that 74% of consumers say
they use social media to make purchase decisions[3],
which tells us that it is getting more and more important to understand the
impact social media has on retail.
Due to social media there is a lot
of data available about consumers. When a company is able to filter out the
useful data, social media can be very useful in demand management and
especially forecasting the demand. If this is done right it can lead to higher
customer satisfaction, but at the same time it can also optimize warehousing and
storage of stocks by knowing approximately the right amount of product that
needs to be in stock. So by foreseeing and meeting consumer demand and
expectations, companies
can build better, stronger and longer lasting relationships with their
consumers.3
In the traditional way of demand forecasting it is very hard to anticipate on profitable trends that emerge (and vanish) quickly. The traditional way makes use of historical data to predict future sales with the help of linear regression models. But to anticipate on unexpected events, the traditional way does not work properly to predict future demand. Social media provides a better solution in this case.
The big advantage of social media
data is that the data is very up to date and that it can be used immediately.
For example, two years ago, Drake released his successful song ´Hotline Bling´.
The song and in particular the music video went viral and became very popular
with currently 1,3 billion views on YouTube. A company from Illinois, called
The Yetee discovered due to Social media data that there was a strong demand
for a new product. They were aware of the importance of this song going viral
and anticipated on this very quickly. They created a ‘Hotline Bling’ holiday sweater,
which was a very big success. With traditional ways of demand forecasting they
would not be able to have seen this unexpected demand.
So, the use of social media for
demand management is quite innovating, because it allows companies to make
demand forecasts more precisely and react on a new market trends way faster.
Furthermore, the data of Social Media is very recent. Companies are almost
obliged to make use of it, because if you do not make use of it, there is a big
risk that a company is left behind in the competition.
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