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demand analysis

Evaluating the Importance of Demand Analysis for Your Business

What is demand analysis?

Demand analysis involves understanding the customer demand for a product or service in a particular market. Companies use demand analysis techniques to determine if they can successfully enter a market and generate expected profits to advance their business operations. It also gives a better understanding of the high-demand markets for the company’s offerings, giving them a fair idea on which markets to invest in. Demand analysis is one of the most important considerations for a variety of business decisions including sales forecasting, pricing products/services, marketing and advertisement spending, manufacturing decisions, and expansion planning.

Identifying market opportunities and meeting the market demand can prove to be challenging without appropriate expertise. Request a free brochure to learn how experts at Infiniti Research can assist you with smart solutions that cater to dynamic business needs.

Key factors affecting demand analysis

demand analysis

Common steps in market demand analysis

While there may be several methods of market demand analysis which varies according to the complexity of operations in the business, we have curated some of the commonly used steps for demand analysis:

Market identification

Identifying the specific and target market for the company’s products or services is one of the first market demand analysis steps. Surveys or customer feedbacks can be used to determine the current customer satisfaction levels. Comments indicating dissatisfaction can lead to improvements that will eventually enhance customer satisfaction. Although companies usually identify markets close to their current product line, new industries may be tested for business expansion possibilities.

Business cycle

After identifying the potential markets, the next step is to assess the stage of the business cycle in which that particular market is in. A business cycle ideally comprises of three stages: emerging, plateau and declining. Markets that are in the emerging stage indicate higher consumer demand and low supply of current products or services. The plateau stage depicts the break-even level of the market, where the supply of goods meets the current market demand. A declining stage indicates lagging consumer demand for the company’s goods or services.

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Product Niche

Once the market and their respective business cycles have been reviewed, companies will need to develop products or tailor their services to meet a specific niche in the market. Products must be differentiated from other peers in the market, so that they meet a specific need of consumer demand, creating higher demand for their product or service. It is also advisable to conduct tests in sample markets to determine which of the potential product styles is most preferred by consumers. Companies can also develop their goods in order to prevent competitors from easily duplicating their products or business strategies.

Evaluate competition

A crucial factor of demand analysis is determining the number of competitors in the market and their current market share. Markets in the emerging stage of the business cycle tend to have fewer competitors. This translates to a higher profit margin for your company. Once a market becomes saturated with competing companies and products, fewer profits are achieved and companies will begin to lose money. As markets enter the declining business cycle, companies must conduct a new market demand analysis to find more profitable markets.

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IT services industry

Realizing Savings of 27% in Year for a CPG Company with the Help of Demand and Supply Analysis

Business Challenge 

The client, a leading CPG company in South America, was facing predicaments in effective supply and demand planning. With retailers increasingly producing and selling private label products and major competitors moving towards direct-to-consumer (D2C) models, the client, who continued to sell through distributors and retailers, faced challenges in creating best possible customer experience for end users. Also, complexities in their supply-demand planning, product development, sourcing, and production pressurized them to better manage inventory. With an appropriate demand and supply analysis, the client wanted to accurately manage product demands and fulfill customers’ demands seamlessly.

Is your inability to meet customers’ orders resulting in revenue losses for the company? Demand and supply analysis helps companies to thrive in today’s competitive market by identifying target stock levels to meet the rising market demands. Request a FREE Brochure to learn more about our demand and supply analysis solutions.

Solutions Offered and Value Delivered 

By examining historical sales data, product orders, shipments, and current sales, the experts at Infiniti Research helped the client to make smart decisions about inventory and production levels. Infiniti’s demand and supply analysis also helped the client to respond to dynamic market demand and focus on customer-centric metrics. By focussing on consumer-centric metrics, the client was able to increase adaptability to demand volatility. Our demand and supply analysis solution subsequently helped them plan inventory supply against demand and helped them to reduce the company’s inventory levels. Infiniti’s demand and supply analysis solution the client was able to improve return on inventory assets, reduce excess inventory, and meet customers’ delivery requirements.

With Infiniti’s demand and supply analysis, the client was able to achieve a 13% reduction on unfilled orders and increase demand forecast accuracy. This helped the company to realize savings of over 27% in a year.

Mismatch in demand and supply planning can result in excessive inventory costs. Is your company facing the same challenge? Our demand and supply analysis solutions have helped various companies reduce excess inventory and meet delivery requirements. Request a FREE proposal to know how our solution can help your business.

What is Supply and Demand Analysis? 

Demand and supply analysis is a type of supply chain management process that analyzes customers’ needs to determine the capabilities of the supply chain. With the right process in place, management can match supply with demand proactively and execute the plan with minimal disruptions. The demand and supply analysis process is not limited to forecasting. It includes synchronizing supply and demand, increasing flexibility, and reducing variability. If the demand outstrips resources, businesses can improve production or alert consumers about the revised shipment times. If demand seems low, the sales and marketing team might develop promotions or push for a product launch.

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