The concept of demand is inextricably linked to supply – the volume of products that companies are able to supply to the market. As supply increases, demand decreases, which is true for both an individual company and the market as a whole.
There are six types of demand:
Full demand means that supply and demand are equal. In other words, consumers buy as many units of a good as are produced.
Excessive demand occurs when the volume of production is not high enough to satisfy all consumers, which leads to a shortage. This is usually due to seasonality or unforeseen chinese overseas europe data package factors. For example, during the pandemic, demand for sugar increased sharply. Soon, there was no more sugar left in stores, and entrepreneurs were forced to immediately look for sources to replenish the deficit.
Latent demand means that the desired products, such as drugs without side effects, have not yet been developed.
Missing demand occurs when people have no desire to buy a product. This is typical for new types of products that have not been previously marketed, if after viewing advertising, consumers have formed an incorrect idea about them.
Falling demand is associated with a decrease or even a complete lack of interest in the product. For example, when a new iPhone model is released, the previous one is in less demand.
Irregular demand is caused by periodic changes in the population's need for a product. Such demand is mainly experienced by seasonal goods at the end of the season. For example, sales of Christmas tree decorations increase in November and December, while in other months the demand for them is extremely insignificant.
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5 Reasons to Consider Demand-Driven Factors
Enter a new market
Here it is important to obtain information about competitors' products, prices for complementary products, incomes and consumer expectations. Having concluded that the product will not be in demand, it is worth choosing another option for business development.
Plan the production volume
Based on the calculations, the required production volume can be estimated. To develop an optimal strategy, it is necessary to take into account the factors affecting the aggregate demand.
Production volume planning
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Considering only the price, it can be calculated that the monthly output of pencils should be the same throughout the year. If the seasonal factor is ignored, there may be a shortage of goods in August and September or an oversupply the rest of the time.
Develop a marketing strategy
If the demand dynamics are known, it is possible to allocate funds for promotion more accurately. When demand is low, it makes sense to invest more in advertising.
In winter, the number of tempting offers from travel agencies increases. To neutralize the seasonal factor, the emphasis is on low prices and ensuring a decent vacation.
Select assortment
Studying the factors influencing demand for a product helps optimize the product line. Thus, in connection with the popularization of a healthy lifestyle and concern for the environment, restaurants have begun to actively offer vegetarian dishes, and coffee shops - alternative milk. The discrepancy between the assortment and the latest trends inevitably leads to an outflow of customers.
Form prices
The highest price for a product is determined by the amount that customers are willing to pay for it. Trade in branded products and seasonal rush provide high demand, which makes it possible to raise prices. However, when consumer incomes decrease, companies have to change their target audience or offer discounts.
For example, at the beginning of 2023, due to falling incomes, people began to make fewer purchases. The Magnit supermarket responded to this by announcing the planned opening of a new chain of low-price stores.