SUPPLY CREATES DEMAND

Jane Snowball was a 72-year-old grandma living on her own in Gateshead.

She had a broken hip and the council decided to try an experiment designed for people with mobility problems.

It was 1984 and Michael Aldrich had just invented a device that could connect her TV remote-control to the shops via her telephone.

In the TV was a chip that used BT’s teletext service, called Prestel similar to the BBC’s Ceefax or Oracle.

The user pressed the button marked ‘phone’ on their remote, words appeared on screen andthey could then select from the various options.

Tesco offered 1,000 choices, Mrs Snowflake ordered eggs, margarine, and cornflakes.

Later that day these were delivered to her door, she paid cash because online credit-card transactions obviously didn’t exist yet.

Remember this was years before anyone had a PC or a laptop at home.

There were no pictures because WYSIWIG, the scroll-down menu, or the mouse hadn’t been invented yet.

In fact online shopping hadn’t been invented, Mrs Snowflake was the first person in the worldto do it.

It wasn’t seen as the massive world-changing invention it’s become, it was just Gateshead  council trying out a new way for housebound folk to get their shopping.

One old-age pensioner trying it out on a TV set and a phone.

And yet, by 2022 in the UK alone, online sales amounted to £24 billion a year.

Now it’s no longer for the elderly and incapacitated it’s for absolutely everyone.

The thing is, it’s the opposite way round from how I was taught economics worked.

In classical economics DEMAND dictates SUPPLY: there has to be a need for something (a market) before anyone can sell it (a product).

But in the case of online shopping, the product created the market, no one knew they wanted it until it became available: so SUPPLY dictated DEMAND.

It seems to me to be increasingly the way things work now.

In poorer societies where people need lots of things, demand dictates supply.

But as a society’s needs are met, demand dries up, then manufacturers need to create a demand for them to supply.

Which is of course where advertising comes in.

There’s no need for advertising to sell a product for which there is a demand, in that case theproduct is a commodity that the market needs and wants.

We only need advertising to create an artificial demand where none exists.

Which is exactly where BRAND comes in, there is never a demand for a new brand.

So in order to sell into a market like that we need to create a demand for what we supply, something to make it seem different, that’s why we create a brand.

And if the brand is the only thing that makes our product different, we need to create a demand for that brand.

Which explains advertising’s current obsession with brand.

If all products truly are like all other product, then the only way to differentiate one thing from another is by brand.

Then it’s advertising’s job to create a demand for that brand.

To make sure that supply creates demand.

Steve Jobs was an expert in supply-side economics.

Steve Jobs said,

“It’s not the man-in-the-street’s job to know what he’s going to want next year.

It’s my job to know what he’s going to want next year.”