Demand analysis; how do you use it in your business? Do you want to know how to do a demand analysis for your business? This note tells you the steps to follow to achieve it quickly and effectively. Look!
Before we talk about demand analysis, we must go back and talk about market analysis.
At a macro level, a market analysis provides information about industries, customers, competitors, and other variables. It also allows you to determine the relationship between supply and demand for a particular product.
Based on this knowledge, you can make informed decisions to achieve the success of your business.
One of the key points in market analysis is demand analysis. But what do we mean when we talk about demand? Keep reading, and we’ll tell you.
What is the demand?
In sales, the demand is the number of goods and services that a group of people is willing to acquire to satisfy their needs or desires in a period.
Believe it or not, income ( that is, the material possibility that a customer has to buy a product) is not the only factor influencing demand; there are more.
One of them is the tastes and preferences of the client. Especially today, with the advancement of the digital world, consumers know what they want and need. Therefore, it is essential to know your buyers thoroughly!
Related to this point, there are potential consumers, that is, those people who will probably acquire your product or service and who can be included within your ideal client or buyer person.
However, the demand may not be related to customer issues. For example, it may depend on the prices of other goods with which they are associated, which we call the price of related products.
What is demand analysis?
Now that you know what demand is, we can finally get to the point: demand analysis is a process through which we seek to understand potential consumers’ need for a particular product or service within a target market.
Why does it? We generally do it when we want to break into a particular market to test the terrain and evaluate possibilities. With the data we get from the analysis, we can determine the best offer that can launch.
How to do a demand analysis?
Demand analysis aims to answer two questions: how many people want my product? And of them, how many can buy it? Here’s how to answer these questions.
1) Define your target audience
There is no single way to do a demand analysis. The demand analysis you carry out will depend on the kind of market, the size, and the target or target audience.
For this, it can be beneficial to carry out surveys and interviews that help you know your current clients’ opinions. This way, you will be able to see their satisfaction level with your products and if they are ready to receive a new product or service.
Knowing the target audience allows us, among other things, to put a price on a product. For example, suppose we target a segment that we qualify as having high purchasing power. In that case, we can be freer when thinking about the value of the product we want to launch.
2) Identify the total money supply and demand
Logically, we want to perform a demand analysis that is as accurate as possible. Therefore, we must consider elements that have to do with the current state of the country or region where we want to launch the product or service. So, we use two currency indices.
On the one hand, we can use the money supply, that is, the total amount of money that exists in a country’s economy. On the other hand, we are oriented according to the total monetary demand, which consists of the wealth that companies and people keep in the form of money. Therefore, this term is closely related to the first and adds some liquidity.
But what is this data for? Knowing the amounts of money that are handled in a country allows you to determine its economic cycle. It describes the rise and fall of production of goods and services in the economy through the real Gross Domestic Product (GDP) or adjusted for inflation.
Identifying what economic cycle the market and economy of your country are in will help you define the actions you can take in your business. It is also helpful to know whether or not it is time to launch a new product or service on the market, for example.
3) Keep the product niche
Once you’ve determined if it’s an opportune time to release a new product, you need to make sure you find your niche. A market niche is a portion of the market in which individuals have needs that are not covered by the massive market supply. It is where your product or service comes in. At this point, it is crucial that your company and your products or services can demonstrate a competitive advantage. That is, what you offer has to be the best option compared to the competition that exists in the market. So how do you know if your product has a competitive advantage? Make sure you know your competition thoroughly.
First, evaluate your strengths and weaknesses to know your areas of opportunity and be able to develop your advantages fully. Achieving something distinguishable from the rest is the key to sales success.
Our advice is to remember that niches do not always remain the same because consumers change. Therefore, you have to be attentive to their evolution. Your company must adjust to the fluctuating needs of the market; this can be through a reinvention of the brand or rebranding, a design change, or a new article.
A case on-demand analysis
A trendy food restaurant in the United States wanted to increase its potential and added a new gastronomic option to its menu. The dish began to be tested in San Francisco, and although expectations were low, the new product was a success.
How do I do it? Through an analysis of demand, the restaurant verified that, during the first period and in the branches that offered the dish, it averaged 3% of sales. In turn, he found that 50% of customers who preferred the plate were meat eaters looking for a change.
He identified a particular target audience through surveys and a solid social media presence. He was able to narrow down the best markets in which to test the product. Once he considered the United States’ economic cycle, he realized that it was an excellent time to launch the product en masse.
The restaurant stood out for constantly including new gastronomic options on the menu to increase its influence, adjusting to its niche progressively.
Thinking in competitive terms, he discovered that there were no similar products, which was a new market.
Through this example, we can see that the successful inclusion of a new product in the market is only possible through a well-done demand analysis.
Now you know everything, you need to start doing a demand analysis. What are you waiting for to take advantage of it? Do not waste time! Start applying your new knowledge to translate it into sales.