1

TITLE : DEMAND ANALYSIS

NAME : GUNJ BHUPESH PATEL

DIVISION: D

ROLL NO : 17
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PROJECT REPORT

ON

DEMAND ANALYSIS

IN THE COURSE

SYBMS

SUBMITTED BY

GUNJ BHUPESH PATEL

ROLL NO

SDMS017D

(SEMESTER 3)

UNDER THE GUIDANCE OF

DR. BLESSY EASO MA’AM

ACADEMIC YEAR

2022 - 2023
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CERTIFICATE

This is to certify that Mr. /Ms GUNJ PATEL roll number

SYDMS017D of first year BMS Semester III(2023- 2024) has
successfully completed the Project per the guidelines of KES’
Shroff College of Arts and Commerce, Kandivali(W),
Mumbai-400067.

Teacher In-charge Principal

Name & Signature Dr. L. Bhushan
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DEMAND ANALYSIS
SERIAL TITLE PAGE
NO. NO.

1. INTRODUCTION 5-6

2. REVIEW 7

3. IMPORTANCE 8-10

4. TYPES 11-12

5. DIAGRAMS 13

6. BENEFITS 14-15

7. LIMITATIONS 16-17

8. IMPACT OF COVID-19 18-19

9. EXAMPLES 20

10. CONCLUSION 21

11. BIBLIOGRAPHY 22
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INTRODUCTION
Demand analysis is the research conducted by companies that aim at
understanding customer demand for a certain product. Businesses
generally use it to determine whether they can successfully enter the
market and obtain the expected profit. During this process, the
management decides on cost allocation, production, advertising,
pricing, etc.

The concept of demand is always explained from the point of view of the
customer as the other meaning for demand is nothing but want of goods and
services by the customer for a specific price from the producer, which is the basis
for existence of any producer of business. There is a direct relationship between
the price and demand of the goods and services, which means the prices of goods
impacts its demand. Customer always wants goods and services for a reasonable
and low price from the producer. If the prices of goods and services are low,
customers shows interest to purchase more goods and services, otherwise the
customer purchases less goods and services if the prices are high.

Therefore, analysis of demand or law of demand proves that demand of the goods
and services and price of the goods and services are inversely related to each
other. Demand for the goods and services always fall down if the price of goods
and services are high, dissimilar demand for the goods and services always
increases if the price of goods and services are low .

The success of any business largely depends on sales, and sales depend on market
demand behaviour. Market demand analysis is one of the crucial requirements for
the existence of any business enterprise. Analysis of market demand for the
product is necessary for the management in order to take decisions regarding
production, cost allocation, product pricing, advertising, inventory holdings, etc.
How much the firm must endeavour to produce depends mainly upon the demand
for its product. If demand falls short of production, the two must be balanced by
creating a new demand through more and better advertisements. If there is no
demand for the product, its production is unwarranted. If the future demand for
the product is likely to be more, the more the inventories that the firm should
hold.
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Demand analysis is a tool used in business to understand how much a product or

service is wanted and how much it is needed. Demand can be measured in terms
of quantity demanded (quantity bought) or quality demanded (quantity bought
at a particular price). Demand can also be measured in terms of willingness to
pay. The four basic factors that affect demand are price, availability, substitute
products, and promotion.
Price is the most important factor affecting demand. When the price of a
product goes up, the quantity demanded (the number of units bought) goes
down. When the price of a product goes down, the quantity demanded (the
number of units bought) goes up. The law of demand states that when the price
of a product goes up, the quantity demanded (the number of units bought) will
go down and when the price of a product goes down, the quantity demanded
(the number of units bought) will go up.

Availability is another important factor affecting demand. When the availability

of a product goes up, the quantity demanded (the number of units bought) goes
down. When the availability of a product goes down, the quantity demanded
(the number of units bought) goes up. The law of supply and demand states that
when the availability of a product goes up, the quantity demanded (the number
of units bought) will go down and when the availability of a product goes down,
the quantity demanded (the number of units bought) will go up.

Substitute products are another important factor affecting demand. When the
substitute products for a product become available, the quantity demanded (the
number of units bought) for the original product goes down. When the
substitute products for a product become unavailable, the quantity demanded
(the number of units bought) for the original product goes up. The law of
demand states that when the substitute products for a product become available,
the quantity demanded (the number of units bought) for the original product will
go down and when the substitute products for a product become unavailable, the
quantity demanded (the number of units bought) for the original product will go
up.

Promotion is another important factor affecting demand. When promotion for a

product increases, the quantity demanded (the number of units bought) for the
original product goes up. When promotion for a product decreases, the quantity
demanded (the number of units bought) for the original product goes down.
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REVIEW

Estimation and Analysis of Food Demand Patterns in

Vietnam
Household food consumption is a crucial area of research for economists, as it helps to
understand how food demand responds to changes in food prices and household income. This
information is essential for evaluating the welfare effects of economic shocks, trade
liberalisation, and tax policy changes. Demand analysis can be based on aggregated time-
series data or household surveys, but in many developing countries, the availability of
reliable time-series data is limited. In contrast, household surveys provide rich and reliable
micro data on household consumption patterns.

Food demand analysis based on household surveys has become increasingly used in recent
years, particularly in developing countries where a large percentage of household expenditure
is allocated to food. Consumer expenditure surveys are particularly useful in providing
information on specific subpopulations of households that are more likely to be affected by
changes in commodity prices or household incomes. Therefore, policies aiming at increasing
household income (income policies) may be ineffective compared to policies that control
prices (price policies). In contrast, income policies may be more effective in enhancing meat
and fish consumption than price policies, as the expenditure elasticities of these foods are
higher than their own-price elasticities.

There is extensive literature on the price and income elasticity of food categories in the
world, with food away from home, soft drinks, juice, and meats being most responsive to
price changes. The elasticities differ between low and high income countries, with poorer
households being the most adversely affected by increases in food prices.

Several papers have been written on household food demand in Vietnam, particularly rice
demand. Benjamin and Brandt (2004) used panel data from the 1993 and 1998 Vietnam
Living Standard Survey to estimate Engel curves for Vietnam, with the expenditure elasticity
of rice estimated to be 0.49 and 0.41 for the urban North and urban South, respectively, and
0.64 and 0.63 for the rural North and rural South. Minot and Goletti (2000) used the Almost
Ideal Demand System (AIDS) functional form to estimate household food demand in
Vietnam in 1998, with expenditure elasticities of rice being 0.48 for the North and 0.11 for
the South, while the estimated own-price elasticities were −0.2 in the North and −0.38 in the
South.

In conclusion, household food consumption in Vietnam is a crucial area of research for

economists to understand the impact of economic shocks, trade liberalization, and tax policy
changes on food demand.
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IMPORTANCE

Basically, the demand theory identifies and analyses the basic The knowledge of the
determinants of consumer needs and wants. The knowledge of demand provides powerful
tool for managers. It provides background needed to make pricing decisions, analyse sales
formulate marketing strategies.

The demand analysis is the basis of many decisions made by the business demand analysis in
business decisions can be explained under following headings:

Importance of Demand Analysis

1. Sales Analyzing
2. Pricing Decisions
3. Marketing Decisions
4. Production Decisions
5. Financial Decisions
6. Demand Policy

1. Sales Analyzing

The demand is a basis of the sales of the product of a firm Hence, sales analyzing can be
made on the basis of demand.

For example, if demand is high, sales will be high and if demand is low sales will be low.
The firms can make different arrangements to increase or reduce production or push up sales
on the basis of sale analyse.

2. Pricing Decisions

The analysis of demand is the basis of pricing decisions of a firm. If the demand for the
product is high, the firm can charge high price, other things remaining the same. On the
contrary, if the demand is low, the firm cannot charge high price.

The demand analysis also helps the firm in profit budgeting. If demand is high price can be
charged high and profit will be high. Hence, the profit or sales, in part, depend on the demand
for a commodity.

3. Marketing Decisions

The analysis of demand helps a firm to formulate marketing decisions. The demand analysis
analyses and measures the forces determine demand.
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The demand can be influenced by manipulating the factors on which consumers base their
demands, example, consumers may base their demand on attractiveness. So good packaging
may lead to an increase in demand.

4. Production Decisions

How much a firm can produce depends on its capacity, but ho could produce depends on
demand. Production is not re is no demand. But continuous production schedule salary if the
necessary if the de s than the quantity of production, new y means of promotional activities
such as demand is less demand for the product is relatively stable.

If the demand is expected to be high in future, the firm should hold more inventories.
Similarly, the personnel manager must set up recruitment and training programs to ensure
availability of different work force to produce and sell the products.

5. Financial Decisions

The demand condition in the market for firm's product affects the financial decisions as well.
If the demand for firm's product is strong and growing, the need for additional finance will be
greater.

Hence, the financial manager should make necessary arrangement to finance the growing
need of the capital.

6. Investment Policy

Demand analysis helps firm adopt appropriate investment policy. Based on the nature of
demand for a particular product in a particular market, firms can make their investment
decisions.
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For a new company, the analysis can tell whether a substantial demand exists for the product/service
and given the other information like number of competitors, size of competitors, industry growth etc.
It helps to decide if the company could enter the market and generate enough returns to sustain and
advance its business.

Demand analysis helps in identifying key business areas where demand is highest and areas
which needs attention as very low demand indicates different problems like either the
customers are not aware of the product/service and more focus must be in advertisement and
promotion or the customer needs are not met by current product/service and improvements
are needed or competitors have sprung up with better offerings etc.
Steps in the Demand Analysis
Demand analysis process needs to be done in a structured manner for a particular market
and affects the business strategy and decisions. Some of the steps which are to be followed
for the analyzing the demand are:
1. Market Selection
Demand is linked to a market. Without knowing the market properly, demand cannot be
analyzed. Every business would be operating in a single or multiple markets but it should be
clearly known. The first step is understanding the market and knowing the demand trends
for the particular product or service.
2. Product/Service category analysis
Next step would be to make sure which product or service is being used to analyze the
demand. A company may be having a product portfolio of 20 products. Total demand would
not give a picture at an individual level. It may happen that demand is huge for 5 categories
and low for the rest of 15 but still overall demand is high. For analysis, the product category
has to be selected. e.g. if a company is selling smart devices it needs to select phones or the
tablets only for its purpose.
3. Understanding Business Parameters
Demand is never constant across a single year or a time. A less demand in a particular
month may not be a sign of an issue with the product line but it may be that due to climate
change, the demand of an item like an air conditioner may go low but it may again rise in
summer season.
4. Understanding the competitors and partner trends
For an accurate demand analysis, we also need to see what our partners, vendors and
suppliers are predicting in the market as they are also in the same market and product
category. Also competitors performance and past sales can help us analyze the demand
correctly.
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TYPES

Different Types of Demand in Market

There are generally seven types of demand considered in the market. They are as
follows −

• Joint demand
• Composite demand
• Short-run and long-run demand
• Price demand
• Income demand
• Competitive demand
• Direct and derived demand
Let us briefly look into each type of demand in market.

Joint Demand
This is the demand for products that compliment each other, or in other words, the
products or services that are brought together.

For example, consumers generally buy a pack of butter or jam along with bread, or
they buy certain accessories or insurance along with a new vehicle.

Composite Demand
Composite demand rises when one product has multiple uses.

For example, sugar is used for making ice-creams as well us chocolates. So, if the
demand for sugar for making ice-cream rises, the less it will be available for making
chocolates.

Short-Run and Long-Run Demand

American economists Parkin and Bade have defined short- and long-run as: “The
short run is a period of time in which the quantity of at least one input is fixed and
the quantities of the other inputs can be varied. The long run is a period of time in
which the quantities of all inputs can be varied.”

For example, a cricket bat manufacturer can produce 100 bats in day. Now when the
demand goes up, the production can be increased to 150 by increasing the variables
such as labour and raw material, but not altering the infrastructure or machinery.
This is a short-run demand.
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Similarly, if the manufacturer decides to increase the overall production without

considering the seasonal demands and by adding to the infrastructure and
machinery, that is a long-run demand.

Price Demand
Price demand has reference to the amount a consumer is willing to spend on a product.
Businesses use this information to figure out what would be the right price point for a new
product to enter the market. Price elasticity refers to how the demand will change with
fluctuations in price.

Income Demand
As the consumers’ income increases, the quantity demand increases as well. In simple words,
people tend to buy more when they earn more. Consumers will often buy a product or service
they can afford. They may also opt for lower quality products. However, the demand for these
lower-quality products will decrease as income increases.

Competitive Demand
Competitive demand arises when the customers have the option to choose from alternative
services or products.
For example, if we consider the entry level car segment in India, consumers have an array of
choices to select from, based on their budget and requirement.

Direct and Derived Demand

Direct or autonomous demand is the requirement for a final product such as food,
clothes etc. This demand is not dependent, directly or indirectly, on the demand for
any other product.

On the other hand, derived demand is the demand for a product that arises from the
usage of other products.

For example, the increased demand for cricket balls will result in an increased
demand for leather and sewing threads as well.
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DIAGRAM
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BENEFITS

What Are the Benefits of Demand Analysis ?

1. Optimal Inventory ManagementInventory management is critical for any business
that wants to maximize its profits and minimize its waste. The accuracy of demand
analyzing helps in successful stock optimization as it helps accurately determine the
amount of materials required to fulfill the customers’ expectations. This lowers the
risk of lost sales due to stock-outs or wastage of resources due to excess stock.
Planners can use different analyzing methods, such as survey, barometric, statistical,
and trend projection methods, to analyse consumer orders. These methods can help
identify patterns in buying behaviors, which can then be used to generate more
accurate analysis and achieve optimal inventory management.

2. Better Production PlanningBusinesses with accurate data analysis can make

informed decisions about production schedules by analyzing past sales data,
upcoming trends in the market, and other relevant factors. By analyzing the demand
accurately, organisations can schedule production cycles and allocate resources
accordingly, reducing the risk of stock-outs or excess manufacturing. This ensures
that the business can meet the orders promptly and efficiently
.
3. Improved Resource AllocationDemand analyzing can help planners allocate
resources more effectively, including personnel, equipment, and raw materials. This
way, businesses can ensure they have the necessary resources to meet orders without
overspending. This not only helps in increasing efficiency but also prevents the
wastage of resources.

4. Enhanced SustainabilityOne of the prominent benefits of demand analyzing is

enhanced economic as well as environmental sustainability. As the planners have
accurate predictions for future orders, it will help them keep their stocks and
inventory at the optimum level, further leading to effective utilisation of resources
while preventing any wastage of material or resources. This results in the better
economic and environmental sustainability of the business’s operation.

5. Improved Sales and RevenueAnalyzing demand can have a big impact on sales and
revenue. Businesses may make educated decisions on production, inventory
management, pricing, and marketing tactics by accurately anticipating how much
customers want their products or services. This, in turn, can result in increased
revenue. Executives can schedule production accordingly, ensuring that they have
enough inventory to fulfill client expectations if they know which products will likely
be in high demand. They can find new market opportunities by analyzing data and
establishing more effective sales and marketing strategies. This might assist firms in
increasing their consumer base and revenue.
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6. Better Pricing StrategiesDemand analyzing is important in pricing strategy since it

gives critical information about consumer buying behavior, market trends, and sales
potential. Companies can use analytics tools to adjust their pricing strategy in order to
maximize earnings while limiting risks. By examining historical data and market
trends, it helps them determine the best pricing points to enhance revenue and
profitability. If a product's orders are higher at particular times of the year, businesses
may adjust their price strategy to capitalize on the increased demand.

7. Increased Supply Chain EfficiencyAccurate demand prediction helps planners plan

every operation of the supply chains while focusing on the possible customer orders.
This way can help the planners optimize their operations, such as inventory
management, production planning, and raw material procurement, make more
efficient while maintaining the lower cost.

8. Risk ManagementDemand analyzing is an important risk management strategy

because it enables firms to predict and plan for variations in consumer requests.
Effective allows businesses to modify production levels, manage inventory, and
allocate resources to meet future demand. It considers different factors, including
economic indicators, market trends, customer behavior, and seasonality, allowing
planners to foresee possible disruptions in the entire supply chain network and change
their plans accordingly.

9. Competitive AdvantageAccurate prediction of demand enables businesses to ensure

that they have enough stocks to fulfill those orders and never have to face stock-outs.
This helps them in enhancing the level of customer satisfaction. This creates trust and
gives them added leverage over their competitors, allowing them to outperform their
competition.

10. Improved Customer SatisfactionWhen businesses can give their customers the best
quality products in the right quantity at the right time and place, it can help increase
buyer loyalty and retention and attract new consumers through positive word-of-
mouth recommendations.

In summary, demand analysis can provide businesses with a competitive advantage by

improving supply chain management, enhancing the customer experience, increasing
efficiency, and informing strategic decision-making. By anticipating changes in market
trends, organisations can position themselves for success in an increasingly competitive
marketplace. With 3SC’s demand analyzing solutions, you can accurately anticipate
consumer behavior and ready your supply chain to meet consumer orders and ensure better
consumer satisfaction.
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LIMITATIONS

What Are the Limitations of Demand Analysis ?

1. Unpredictable Events
The accuracy of prediction can be greatly impacted by unexpected events, which include
natural disasters, economic slowdowns, or any sudden change in consumer buying behavior.
These unexpected events can cause a sudden change in demand that cannot be predicted
using only historical sales insights.

2. Limited Historical Data

The base of any analyse is data, and more data corresponds to higher accuracy. Predicting
order requires a lot of high-quality info from different sources such as past year sales,
marketing, and finances. In case this is not available, it is not possible to predict demand
accurately.

3. Changes in Consumer Behavior

In today’s times, market scenarios change rapidly. Consumers are bombarded with new
solutions, products, and services every day. This Impacts their buying behavior quickly,
making the past demand analyse invalid and inaccurate
.
4. Lack of Data on New Products
Whenever a company launches a new product in the market, it is extremely difficult for
analysts to analyse their demand. As the offerings are new in the market, there is limited data
available from past sales. Demand analyzing for new products makes it difficult for planners
to anticipate how consumers will respond to newly launched merchandise.

5. Model Limitations
Analyzing models have several limitations, such as lack of accuracy, external factors, time
consumption, limited scope, and assumption based. These models can be valuable tools for
businesses, but they should be used in conjunction with other sources of information. They
should be regularly reviewed and updated to ensure that it is precise
.
6. Human Error
One of the demand analyzing constraints is the lack of expertise in data analysis, data
science, market research, and statistical analytics. If the people involved in the process do not
have that expertise, it increases the possibility of human error impacting the accuracy of the
analyse.
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7. Data Inaccuracy
The demand analyse is as accurate as the data used for analytics. Most companies struggle
with data capturing, storage, and maintaining their health. Even if the companies can capture
enough info to project customer requirements, ensuring it is high quality and precise is very
complex and difficult. And inaccurate data cannot provide correct predictions.

8. Seasonality
Seasonality is cyclic fluctuations in demand because of different variables such as weather
patterns, holidays, or cultural events. Seasonality can make analyzing more difficult, as
historical data may not represent future patterns.

9. Market Competition
When there is fierce competition in the market, many competitors offer more alternatives.
Because of such a high number of product alternatives, analyzing demand for that product
becomes extremely difficult.

10. Geopolitical and Economic Factors

Geopolitical and economic changes can have various impacts on analyzing, including
changes in trade policies, political instability, natural disasters, climate change, energy
policies, and diplomatic relations. Planners must stay current on these changes and adjust
their plans accordingly to account for potential impacts on demand.

As the global markets are changing rapidly, the importance of demand analysis for businesses
increases to stay in the competition and enhance their customer experience. This is why they
need to find more accurate solutions that ensure higher accuracy of the analyse.
3SC’s demand planning solutions use highly complex AI/ML-based algorithms to analyze
historical and real-time data while considering factors such as market conditions, weather,
and seasonality to provide accurate predictions.
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IMPACT OF COVID-19

While the covid-pandemic caused a physical shift in the ways of the world, the Indian consumer
has also evolved. And brands must latch on if they want to enhance the effectiveness of their
marketing strategies. The customers, today, have become self- reliant and have adopted to the
DIY culture. Extended spells of lockdown have resulted in the creation of a self-reliant Indian
who has learnt to tackle concerns on their own and post about it on social media. The Indian
Consumer looked inwardly, pushed themselves, learnt, and emerged with a solution to their own
challenges. Whether it was learning to cut their hair, groom themselves, regular house repairs, or
even larger chores for those who didn’t know cooking, cleaning or learning a work skill or
taking on that extra work responsibility for which we initially had the luxury of relying on
another.

This is accelerating the creation of new gadgets by startups and gadget companies in Asia,
where the novel coronavirus first appeared, and customers are known to be early adopters.
Eventually, the current surge of new consumer devices and the data they generate have the
potential to result in significant technical advancements.

During the pandemic and post the pandemic, health devices, beauty and personal care devices,
fitness gadgets, headphones and certain home essentials took precedence over other purchases.
The pandemic has produced a massive surge of health awareness, igniting this product category.
The fear of infection has hastened the use of health monitoring machines as a method of feeling
more secure. The Covid-19 pandemic has also altered Indian consumer buying behavior. Their
spending habits express their concern about their health. The pandemic sped this industry with
consumer adopting to health DIY devices, beauty and personal care DIY devices, and home
essential DIY Products. However, the worldwide pandemic has radically affected the market.
With the prospect of working from home becoming a reality, Indian consumers began to invest
in consumer durables to improve their ability to multitask.

The Indian consumer has also grown through a shift in the buying markets and preferences. The
Tier II and Tier III cities that are driving the acceptance of new products. Coupled with the
pandemic, growth of internet and electronic wallets have fueled this change and growth across
geographies in India. The openness to adoption has brought in a swing in consumption pattern in
the smaller towns over the past two years. This has resulted in higher purchasing power on
discretionary items from these markets. Another major contributor has been the Women
Shopper. In today’s India, a woman’s purchases are no longer limiting themselves to grocery
shopping. Women are now actively participating in decision-making. With the availability and
variety of products and services, social media and online purchase channels, be it the beauty and
personal care devices or health devices, Indian women are making more informed purchasing
decisions across categories.

The Indian consumer has changed! They are more discerning. They expect a value proposition
from all of their purchases now and look for benefits from their acquisitions. What we have
 19

widely observed is that India is the world’s fastest developing economy and is a burgeoning
global hotspot in terms of trade. The country is a dream to set up company in since it is home to
the world’s youngest and most vibrant populace. The buying decisions of the average family are
being driven by an equal number of women populations, which is at the core of this increase. In
India, a woman’s purchases are no longer confined to grocery shopping. Women are now
actively participating in decision-making at all levels, from purchasing a pin to purchasing a
plane. With the availability and variety of products and services, as well as a plethora of retail
and online purchase channels, women have grown increasingly informed and demanding. They
tend to devote more time and effort to researching and comparing items, which heavily
influences their purchasing decisions.

What is also very evident after what we’ve been through in the past two years is a DIY (Do It
Yourself Trend), which we should accept is here to stay. From at-home-salon DIY, grooming
oneself at home, monitoring health by yourself, household chores as well as at-home-fitness,
you name it and we’ve done it all at home by ourselves. What gained popularity during this time
were the gadgets and services that came in handy during this difficult and learning times-
trimmers, epilators, BP Machines, IR thermometers, air brush and so on. Considering spending
so much time indoors, noticing every minute detail of their houses that they would have
undoubtedly neglected all along, the ‘Do-It-Yourself” movement is gaining popularity. With
what has hit us, health and easy to use things with quality seem to have become important
factors for consumers. Although it is a new year, the world continues to face similar difficulties
and threats, and we believe that fear will remain for a long time. Consumers in this digital age
are seeking greater transparency and are quick to call out deceptive marketing. They are looking
for tangible actions. Covid has merely served to remind us that there is still a long way to go for
this line of business and to sustain it.

With compelling evidence of economic recovery, India appears to be resuming overall

development, with Tier-II towns and cities emerging as the new growth engine. The essential
criterion for establishing a strong and long-lasting customer relationship is to recognize and
comprehend what the buyer desires from the brand and what is the need of the hour. Consumers
in India have reevaluated what is essential to them and are increasingly focused on their own
purpose, which has a direct influence on what, how, and why they buy now that India has
suffered three major waves of the Covid-19 crisis.
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EXAMPLE

Below is the demand analysis for US restaurant industry (Source: Dun & Bradstreet)

It shows that market activity is highest in East North Central area. The figures are arrived by
tracking the annual sales in each region. So for offering a particular product in this market, a
company needs to analyze if they can do business in multiple sub-markets with decent
demand or focus on sub markets or areas with high demand. Both aspects are part of
demand analysis to be done by the company based on product or service parameters.
Hence, this concludes the definition of Demand Analysis along with its overview.
 21

CONCLUSION

The concept of demand is always explained from the point of view of the customer as the other
meaning for demand is nothing but want of goods and services by the customer for a specific
price from the producer, which is the basis for existence of any producer of business. There is
a direct relationship between the price and demand of the goods and services, which means the
prices of goods impacts its demand. Customer always wants goods and services for a
reasonable and low price from the producer. If the prices of goods and services are low,
customers shows interest to purchase more goods and services, otherwise the customer
purchases less goods and services if the prices are high.

Therefore, analysis of demand or law of demand proves that demand of the goods and services
and price of the goods and services are inversely related to each other. Demand for the goods
and services always fall down if the price of goods and services are high, dissimilar demand
for the goods and services always increases if the price of goods and services are low .

The success of any business largely depends on sales, and sales depend on market demand
behaviour. Market demand analysis is one of the crucial requirements for the existence of any
business enterprise. Analysis of market demand for the product is necessary for the
management in order to take decisions regarding production, cost allocation, product pricing,
advertising, inventory holdings, etc. How much the firm must endeavour to produce depends
mainly upon the demand for its product. If demand falls short of production, the two must be
balanced by creating a new demand through more and better advertisements. If there is no
demand for the product, its production is unwarranted. If the future demand for the product is
likely to be more, the more the inventories that the firm should hold.
 22

BIBLIOGRAPHY

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5. https://sendpulse.com/support/glossary/demand-analysis

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