Market demand analysis

Market demand analysis

1. MARKET DEMAND ANALYSIS BY, MATHEW V JOSEPH MBA MARIAN COLLEGE,KUTTIKANAN, KERALA

2. M arket demand analysis Companies use market demand analysis to understand how much consumer demand exists for a product or service. This analysis helps management determine if they can successfully enter a market and generate enough profits to advance their business operations.

3. B asic components of an economic market which are : Market identification Business cycle product needs growth potential competition

4. Market Identification The first step of market analysis is to define and identify the specific market to target with new products or services. Companies will use market surveys or consumer feedback to determine their satisfaction with current products and services. Comments indicating dissatisfaction will lead businesses to develop new products or services to meet this consumer demand .

5. Business Cycle Once a potential market is identified, companies will assess what stage of the business cycle the market is in. Three stages exist in the business cycle: emerging, plateau and declining. Markets in the emerging stage indicate higher consumer demand and low supply of current products or services. The plateau stage is the break-even level of the market, where the supply of goods meets current market demand. Declining stages indicate lagging consumer demand for the goods or services supplied by businesses.

6. Product Needs Once markets and business cycles are reviewed, companies will develop a product that meets a specific niche in the market. Products must be differentiated from others in the market so they meet a specific need of consumer demand, creating higher demand for their product or service.

7. Growth Potential While every market has an initial level of consumer demand, specialized products or goods can create a sense of usefulness, which will increase demand. Examples of specialized products are iPods or iPhones, which entered the personal electronics market and increased demand through their perceived usefulness by consumers .

8. Competition An important factor of market analysis is determining the number of competitors and their current market share. Markets in the emerging stage of the business cycle tend to have fewer competitors, meaning a higher profit margin may be earned by companies.

9. The key steps involved in   market demand analysis  are as follows: Situational analysis Collection of secondary information Conduct of market survey Characterization of the Market Demand forecasting Formulation of the Market Plan

10. Situational analysis In order to get a feel of the relationship between the product and its market, the project analyst may informally talk to customers’ competitors, middlemen and other in the industry. Who are buyers of the new product/service? What is the current demand for the new product/service? How is demand distributed geographically ? What is the breakup of demand for the new product/service of different sizes?

11. Secondary information: General sources of secondary information: National Census National sample survey reports Plan reports statistical abstract of national union Statistical year book Economic survey Guidelines to industries Annual survey of industries Annual reports of the Department of commerce and industry.

12. Conduct of market survey Demand in different segments of market Income and price elasticity’s of demand Motives for buying Purchasing plans and intentions Socioeconomic characteristics of buyers Unsatisfied needs Attitudes toward various products Distributive trade practices and preferences Satisfaction with existing products

13. Characterization of the Market: Based on the information gathered from secondary sources and through the market survey, the market for the product or service to be offered may be described in terms of the following : Effective demand on the past and present Breakdown of demand Price Methods of distribution and sales promotion Consumers Supply of competition Government Policy

14. Demand forecasting After gathering information about various aspects of the market and demand from primary and secondary sources. An attempt may be made to estimate future demand. These may classified in three categories as shown Qualitative Methods Time series projection Methods Causal Methods Jury of executive opinion Method Chain ratio Method Consumption level Method

15. Market planning Current marketing situation Where is your organisation now? Who are your customer groups? What are their needs and requirements? How large and diverse are they? What kinds of products and services do you currently provide? Opportunity and issue analysis  (S.W.O.T. analysis). This identifies key issues and opportunities for your organisation and it comprises an analysis of your internal operations Strengths Weaknesses Opportunities Threats

16. Objectives . Having identified the key issues affecting your organisation These guide the development of strategies and action plans. Objectives should meet certain criteria e.g. financial, and marketing which will be customer focused . Marketing strategy . This is the game plan that needs to be implemented to achieve the objective Whom are you now targeting? What do you want your position to be in terms of new product/service delivery? Do you want to change your organisation profile and will you need to rebrand your organisation ?

17. Action program.  This describes: What will be done When will it be done? Who will do it? How much will it cost? Budget and controls .  The Budget is essentially a cash flow statement and profit/loss statement to support the marketing plan