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Demand Generation Business Model Vs Traditional Business Model

Demand Generation Business Model Vs Traditional Business Model

Hi, there this is Rajat from Startup Frat. How are you guys doing today? So, for the people who are new and who don’t know what’s going on, I just walk you through what’s going on. We are on to something, we’re up to something, and we are on to something, and I am gonna walk you through what I have in store for you. So, on this momentous occasion of us crossing 10000 community members, I have something very special coming up for you. And I’ll just walk you through what is gonna be about and then I’ll give you a chance to sign in to the event.

So, this forum is about having and building your own startup in order to provide yourself financial stability and protection like building a strong wall against the ravages of things like covid and other kinds of social, and political issues that always attack your income levels and things like that. Build a solid wall around it using this model that we call the demand generation model. Which is very very you know in the Indian business context it’s kind of relatively new although it’s existed in the west for like for almost 20 years now probably more than that.

Demand Generation Model

The demand generation model, how does it work? and how can it help you and me to build a solid income layer in addition to whatever you doing today? You know I won’t say any but your majority of social, political, financial, health-related problems like covid and all these things cannot affect. How do we do it? What is the difference between the demand generation model and the traditional business model, I walk you through that, and then then you probably have a better idea.

What is the difference between the demand generation model and the traditional business model? So, India has been a rich economy forever. You know there was this time when right after Independence Day was a little bit of strife and drought and all the other stuff. But ever since the 70s 80s India has been pretty much a rich economy. So, there was no reason for Newman to worry about how to generate sales? how to generate demand for a product and service? Just like there’s so much demand. What should I produce? Like you see a lot of traditional business people shutting down their traditional businesses and getting into the hand sanitizer business is something like that.

Why? Because traditionally they only thought about what the people demanded? and how to supply it? Supply-driven economy. But today’s economy demands or requires you to generate the demand for whatever it is you are producing in market or bringing to the market. And that is something that I feel most business houses and apart from business houses people like corporate professionals, certified professionals like doctors, lawyers, chartered accounts, etc. have never learned.

Because they never needed to learn. Today is a market where you need to go all out and have people not only know and understand what you’re offering the market but also buy them from you at a predictable rate. So, you can build a career in the income of business on top of it.

Compare Tradition Business and Demand Generation Business

Traditional business is product-based. The demand generation business is more personality-based or message-based. There are definitely production services that are being exchanged in return for the money. But traditional business model leads with the product they say this is what we do this water product is this what the services we provide this water company does it etc.

Apple

The demand generation model says this is what I stand for. This my friend is what I stand for. Do you agree with me? So, they have a core message or they have a personality type that says I stand for something, and hence you and I can probably agree on some idea and potentially do business. Things Steve Jobs, said I stand for something. I believe that computers should not only be simple and easy and cheap on all of that. But it should also be beautiful, it should be functional, and it should be the interface, should be simple to use. Where the platform which is the intelligence that runs the machine should be able to make things simpler for everybody to use.

This is why you know apple has the most is easy to use user interface. You know very very good aesthetics, very simple to use, and intelligent. You know synchs all your devices together so regardless of what device you know all of the data is pretty much synched. Now by Indian Standards, Apple technology is not cheap by any means. But if you look at it, in terms of performance how much it contributes to improving your performance in your job in your business or whatever you see some of the top performance on the planet going and using Apple so for them it’s cheap.

Because the return that comes from getting into an Apple environment is manifold right. So, personality-based people did not buy Apple because it said all of these things. People bought Apple because they believed in Steve Jobs. So, just a quick story for you when the iPod came out there were literally hundreds of other devices on the market which would play MP3 audio. Which were competing on the base of product features. You know this thing as so much of processing power, so much storage, so much of whatever internet connectivity, whatever it was. MP3 players and all that.

But when Steve Jobs came he didn’t complete those points. He didn’t say my product is better, has better computing power, small compact size, and all of that. None of that stuff. He said you will have 10,000 songs in your pocket that’s pretty much 10000 songs in your pocket. Simple, straightforward, and because people connected with him as a personality you know the products sold the resurgence of apple. Apple having a bad time as a company and the iPod you know basically redeemed it from the ashes.

So, it’s more personality-based. The second thing is traditional business because it is a product based more transactional. Now all of these there shades of grey to everything. Everything is not black and white but broadly traditional businesses are more transactional.

Where are you now unless you are in the channel partner, supplier, collecting forwarding agent, wholesaler, or stockiest or something? Unless you are that kind of person, in a traditional business when and where is your next customer gonna come from. Every day is a new day, where you have to have your product compete in the marketplace with other products. It’s more transactional.

Demand generation business on the other hand is more lifetime customers. Again think Apple yeah most Apple customers at least Steve Jobs with their lifetime customers which mean whatever they come out with you know the Apple customers gonna buy. Then the next point is obvious when you have a product-based business and you’re going out in the market and dealing every day and on a transactional basis. You have more of this discount stuff going on we have 5% of today, 10% off today, Diwali discount, New Year discount, etc. 10% cheaper than the next best product, etc.

The demand generation-driven business is more value-based. What is value-based? what problem is it following for you? How much is that problem worth? and based on that how much does a product cost? I just mention some of the world’s top performers, CEOs, top thinkers, authors, and all of these guys who use Apple devices. Why? Because it helps them to produce so much more. It is minimalist it doesn’t have a lot of junk, clutter it synchs.

The Apple environment ensures that the people who are on the app store all this different software are basically tailored maid for Apple and all of that. So there is no synching and all of those issues. You know it’s restricted in terms of its functionality as compared to maybe windows or something. But whatever is there and there is meant for production. Which are you know everything is simple minimalistic you just get in there get your thought process flowing and you can belt out.

You know whatever you are doing. If you are a CEO of a company then you need to do a lot of thinking. If you like a creative guy I like an author or a designer then you know you need to do work in that capacity. It’s very important to keep your brain clear and have a device that kind of enables more production rather than more clutter. So it’s more value-based that’s why Apple devices a price so high.

Because they say hey we are gonna you know whatever your values in the market you know it’s worth billions will help you potentiate that will help you are a list that rather than get stuck with all kinds of clutter and technology and all of that. So, demand generation is more value-based. Traditional business is more discount-based. What’s the next? The connection with your customers again all of these leading into the same thing is the most superficial connection. Customers will forget you tomorrow if all you dealing with is on the product level.

I will just give you a very good example. Demand generations are more lifetime connected or deeper. Lemme just give you an example of all the different brands that you use to use and buy for all the different appliance uses and all that convenient stuff that you used in the house. You don’t remember, I at least don’t remember any of those brands anymore. Because I do business with Amazon. And Amazon gets me whatever I need and it’s the same brands that I buy but the main thing is I don’t recognize any of them it’s Amazon that provides me the service Amazon that stands for something.

So, I buy from Amazon. If those brand names changed then there were some other brand names that came in their ad. I still buy them because the guarantees provided by Amazon stand for something. Very different from somebody like a Big Bazaar. Big Bazaar was also an aggregator they use to get a lot of brands under their roof and used to go there by their staff and then Big Bazaar would probably give you better pricing. Then you stand in line and get the extra 1.5% in your loyalty points or whatever it is.

Pretty much the same model. But Amazon is personality-based, they say we stand for something we’re gonna bring it to you. You know regardless of what do they stand for. They say not only are we going to provide you products cheaper potential or whatever. We are gonna find a product from you for you from anywhere around the world. If that product exists in America, Brazil, China, Australia, or wherever you search for it and you will find it on Amazon. And if we have to get it for you from America, Brazil, Australia or whatever we are gonna do all of that for you. You don’t need to deal with the customs, you don’t need to deal with duty and etc.

Amazon

We are gonna show you a price on the screen if you like the price it’s yours. You pay the price and the product will be there at your doorstep within the specified time. Not only that, if anywhere during this duration you have any change of mind or heart. No questions asked and you can get your order canceled and get your money back. In addition to that, if any time during this entire period or even during the post-purchase period, you have any question whatsoever even 2 O clock at night. You hit that button there in the customer support that says call me and somebody gonna call you even if it’s 2 O clock in the night. Somebody gonna call you in the night within 1 minute. That is what we stand for.

100% customer assurance. Regardless of the quality of the product is bad no problem hit the button will come and pick it up return your money and throw it back in the face of the guy who manufactured it. that’s what we stand for the customer is a full right to have 200% satisfaction guaranteed. We can provide it to you regardless of who makes the product. Very different from Big Bazaar which says I have all these are the different choices for you please come everything is discounted 5% 10% and 20% against your groceries and will give you the extra 1.5% loyalty points. For which you can stand in line for 1 hour. Very different model, lifetime connect deeper lifetime connect. Nobody goes to Big Bazaar anymore at least not the smart ones.

Then you have commodity-based. Again coming to the Big Bazaar example this is more commodity-based which is we will find a hundred brands of whatever it is. We think you need in your house and put them under one roof and give them to you at a 10% discount. While this thing is more community-based. The people that because it’s a value base lifetime. Engagement that people that aggregate around you will also chance are they stand for the same thing they either consume the same thing that you are supplying or they stand for the same values that your projecting and community forms around.

You think Apple again the people initially when the iPod came out when you know you’re traveling in a local metro train or something and those white wires were hanging out the wire loop white wire loop us hanging out a somebody’s pocket in the early days. You look at them and say hey man that’s an apple person I am an apple person man. You know we’re better, We high quality whatever. You know we’re better people because we stand for better things like Steve Jobs.

So, it’s a little bit of a kind of community. So, you don’t need to go out and sell your product to the masses. You will have a small number of customers they will be with you for life and slowly this community becomes stronger and stronger and stronger. Think Tatas, people who work in Tata swear by the Tatas. People who buy from the Tatas swear by the Tatas. People who were not buying from the Tatas still today after the covid, you know during whatever the help they provided to people and to the government people are like I am going by Tata. Why? The community has formed. People who believe in the same things that let se Ratan Tata believes in projects of the same value. So that’s how the thing works.

Now, this thing is more because commoditizing this more convenience-based. Demand generation is more problem-solving-based. So, by default, because traditional business is convenience-based. the products that can be sold under this umbrella are generally small products that solve very well-defined problems and save somebodies time and money. The ticket size will usually be lower. Demand generation is problem-solving based which is a long complex problem that requires a change in thinking, a change in tools and techniques that you require, and a change in the actual product that is used to solve the problem.

So, it’s not your average garden hose kind of a market. yeah, it’s more like the golf market not only do I need to understand, but how the game is played? The mindset where do all the people where do all the smart ball golfers hanging out. The community what is it that the players are not getting? Where are the best golf courses to be found? What is the best golf brunch for a perfect day at golf? And then feeling brunch along with that you know little concepts and marketing gimmicks you can play in there.

But it’s more driven around a complex problem. Becoming a good golfer and becoming part of a good golf community is not an easy task is not your average garden hose purchase. It’s something that brings a customer closet you bring them into our community and if they agree with what you stand for with your messages, they will be with you for life, no questions asked. Not only that in addition to seeing you as a supplier they will see you as a leader. They won’t see you as a vendor and supplier, they will see you as a leader.

Because he helped them solve a problem very difficult to solve. Now chances are that problem may be easy for you to solve because you have slightly more interest or more experience in that. This is where I get to right now in 2 minutes. And then the traditional model is more mass production based. Where do the profits come from? Mass Produce. I can mass-produce stuff. Then It can be cheaper and cheaper and then people were hopefully buying my product versus my competition.

This other stuff i.e. Demand generation is more learn do and teach. Because I have a limited community and use stand for some values, they stand for the same values and needs are evolving. Because the relationship is life and they may be many things that you don’t have figured out that they need. So, What should do is? You learn it on the go and as long as it resonates with the same values at your projecting that there are attracted for ok you can do it and tested out for yourself and then say I did not know the answer to a problem but here is what I did. I went out and tested 5 different tools, and techniques, know products, concepts, and mindsets and I feel this is the one that works for me the best.

Again, I’ve tried it only for 30 days or 60 days or 90 days or half-year 1 year and for now, it’s working for me. So, if you want you can try the same thing. and it just saves them 6 months of hard work or 12 months of trial and error and they respect you for that, they respective for saving their time. So it’s more learn do and teach. You don’t need to have all the answers, you don’t need to make the cheapest, you know over here you need to have you need to make the cheapest product cause you are always competing against some other commodity.

Then which brings me to the next point that the competition is huge in traditional business. There is literally no competition in the demand generation. Why is there huge competition because you are generating a product that anybody else can copy? In demand generation, you are projecting a persona. Nobody can copy you because you are unique my friend. No competition. Now, what does that mean for you and me? What we do is perfect something called lean startup. The lean startup is based on the demand generation model.

Now, why have you perfected this model? Because it works for us, it works for the average dude and the average gal. How does it work? What it does do? It takes away your 4 biggest fears. Is there gonna be a lot of money involved in developing a product, you know building a factory having office employees, etc? The answer is no because you are mainly focusing on problem-solving and learning to do and teaching. So, you don’t need to have all the answers, you don’t have a big brand, you don’t need to have a big office, you don’t need to literally have all of these things. All you need to have is the story and a mission and something that you stand for and then people resonate with you based on that. that’s number 1.

What is number 2? Do you need to have all the knowledge, how complicated business knowledge etc. In fact in demand generation, you don’t need to have any complicated business knowledge. Because you are not supposed to be an expert. You are supposed to be standing for something and as long as you do your best, you know people will connect with you and then will remain with you for life.

The third thing is what is the risk? As long as you are true to your self there is no risk. Because remember you are not fighting on products, you are not fighting on product features, you are not fighting on pricing. You are fighting to be standing for something, having a message that other people connect with, and trying your level best to help people to solve a problem that potentially either you have solved for yourself or you try your darndest best to help others people solve for themselves.

What do you need to have? In a mission, you need to stand for something, and you need to have a message. So, the risk is you need to stand to that message forever and that needs to show up in your actions that’s the risk. If you are not willing to take action, then this is going to be very short-lived. You gonna break a lot of people’s hearts too. Because people will start looking up to you. To help to solve their problem.

What is the next thing? Time, business know-how money, and risk. I think I have covered all of them. When I say, you will have a small but faithful loyal community. Does that mean you will have a small income? The answer is No. What is the kind of income we’re looking at? In the startup launch program, we talked about hitting at least a consistent 100000 rupees a month within the first 90 days. Now there are people in the industry who are utilizing the demand generation model to make things like 1 crore rupees a month as well.

But I am not gonna talk about that, because I am not there so I can’t teach you how to solve that problem. Maybe you know at some point you can find some of those people and go learn from them. But over here what we are doing is beard trimming down all of the requirements that I needed to put ourselves in the market. Whether it’s a corporate professional or a certified professional like a doctor, lawyer, accountant, architect, etc., or a small business owner. We are stripping down everything.

Stripping down the need for repetition, stripping down the need for previous you know I am so and so has spoken of so many Tedx stages, etc., co-founded so many big brands, and all none of that stuff is required. You stripping it down to the bare bones. What do you stand for? What problem are you gonna help people solve? What is your message to the market? Then how do you get people?

How do you build engagement model where people can actually do business with you and pay you to solve that problem? So we stripped it down to the bare bones. And we keep a high benchmark which is you know if we can generate a lack rupees of the month starting next or the month after that. After that, we can think about scaling and think about different ideas. You can even think about quitting your job and thinking like that.

Again not my business to be telling you what to do? But we can reach you to this level and there have been many many many case studies you must have seen over the months, and all of them follow the same model.

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