Understanding Consumer Demand

I’ve explained this concept to founders over 100 times, so I figured it was time to put it in writing.

Every founder wants two things: a way to generate demand and an effective way to meet it.

Economics textbooks list seven types of demand, but I don’t find that breakdown particularly useful. So, I’ve simplified it to just two types. I’ve done some Googling and haven’t seen demand explained this way before—curious to hear what you think.

This is the simpler type to understand—it’s when someone is actively looking for a solution. The classic example is someone searching Google for “accounting software for freelancers.” They already have an intent to find a solution for this issue, so the demand is already there.

Understanding where a consumer’s head is at when they have intent opens up some interesting strategies. If someone intends to use software like yours, consider:

There are times when intent-driven strategies make sense—and times when they don’t. For instance, a cool, unique TikTok gadget might not be something people search for actively, but they’d still buy it if it catches their attention.

If you’re anything like me—a hopeless consumer always wanting the latest shiny thing—you’ve probably fallen for an ad. You’re scrolling, and suddenly, you spot a cool new anime T-shirt. (Okay, maybe this example won’t hit home for everyone!)

This demand type is a bit different. I didn’t set out to buy a shirt; I just saw it, thought it was cool, and clicked.

This actually happened when I was walking home in Sydney CBD where I found a guy selling anime t-shirts on the street. I soon departed with $65 and walked away with a great new t-shirt.

With hook-driven demand, we’re literally pulling people in with how cool, interesting, or helpful the product appears. It’s about messaging that’s compelling enough to pull someone out of their current activity.

A Facebook or TikTok ad, for instance, is reaching people who aren’t actively shopping—they’re just scrolling for entertainment. So, your offer has to be incredibly compelling to make them stop and pay attention.

One example that worked well for newsletters was a hook from “The Hustle,” which later got copied by countless others. The ad read:

It was a powerful hook that stopped people in their tracks.

Understanding these two types of demand helps you figure out which strategy might work better for your company and how a consumer might be thinking across different channels.

Consider whether people are actively searching for solutions to the problem you’re solving, or if your hook is strong enough to drive them to your site. In hook-driven marketing, your creatives and messaging are critical—without a clear, compelling hook, it’s a tough sell. For intent-driven strategies, make sure your messaging feels tailored specifically to that user’s needs.

Use this understanding to gain some ‘channel-market’ fit → picking a marketing channel that works well for this market segment and ‘product-channel’ fit → picking a marketing channel that works well for your product.

Until next time,

Ajay

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