Nobody wants to invest all their money in a business and find out that the product or service is not in demand. That is why before launching a startup or entering new markets, they conduct marketing research into consumer demand. Experts from “Tochno.” tell us how to analyze demand and apply research results in this article.
What is market demand
Demand is a conscious need for a how to build phone number list product, supported by solvency. It is changeable: today everyone wants skateboards, and tomorrow – Segways. Therefore, companies monitor trends and customer needs.
If the need for a product is not supported by material means, it is a desire, not consumer demand. And vice versa – if a person has money, but does not need the product, this cannot be considered demand.
Research into consumer demand is the starting point for any marketing activity. Marketing research results help
Identify market trends
this way you will find out which products are in demand now. The results of demand marketing research also show hidden trends and, knowing about them, you will get ahead of your competitors.
find out what your customers want – you will not miss out on profits and will add products with high demand to your assortment matrix.
develop an effective marketing strategy – you will know your target audience, will be able to correctly position the product and set a price at which people will buy a lot and consistently.
Let’s look at an example
An entrepreneur opens a ski equipment store. He needs to know what products will be in demand in order to form a range. He spends a month on marketing research and finds out:
Its main audience is students of ski schools and clubs. They are interested in equipment for beginner skiers and small-sized equipment.
There are few professional athletes in the city and they prefer to order expensive equipment from abroad.
Professional athletes will only go to the store for components or consumables.
The results of the marketing research showed that there is no need to offer customers a large selection of expensive ski equipment. The store’s main profit will come from beginner skis of different price categories, and to prevent customers from going to competitors, it is worth offering them discounts on equipment sets.
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Types of consumer demand
The primary result of marketing research on demand for goods is the determination of the type of demand. It can be:
Full – when demand equals supply. For example, you are ready to import 10 heavy trucks from abroad per month and you know that companies in your region will quickly buy them up.
Excessive — when demand exceeds supply. For example, during the holiday season, demand for hotels and daily apartment rentals in coastal regions is higher than the volume of offers on the market.
Irregular – when demand for a product depends on the season or trend. For example, the fashion for leopard print in clothing is cyclical, and building materials are in greater demand in summer and autumn than in winter.
Hidden – when buyers need a product that is not yet on the market. For example, the demand for gluten-free products arose before they appeared on the market.
Zero — when buyers have not formed a need for the product. For example, in a southern seaside city there will be no demand for winter fishing products.
Falling – when interest in the product decreases. For example, if a popular TV series has ended and products with its attributes are no th phone numbers longer in demand.
Negative – when the market boycotts the product. For example, if consumers refuse to buy a brand’s cosmetics after learning that the manufacturer tests them on animals.
If consumer demand for a product is zero, declining, or negative, there is no point in entering the market with it.
How demand is formed
Demand does not exist on its own – it is influenced by external circumstances↓
Price : the higher the price, the lower the demand. If demand is greater than supply, increasing the cost of the product will help reduce it. That is why prices for masks and antiseptics rose during the pandemic demand exceeded supply on the market.
Number of customers : If there are few people in a town or location, demand will not be high. If, according to preliminary estimates, you need to sell 6,000 cans of protein per month to cover the costs of opening a sports nutrition outlet, and the population of the area is 5,000 people, it is not worth opening a store in this place.
Season : The demand for a product is unevenly distributed throughout the year. For example, holiday home decor products will sell irregularly, with sales peaking at Christmas. Knowing that the product will be in high demand during this period, the retailer will increase the range of products at the beginning of the season and raise the price to manage demand.
Economy : income level and inflation. If the population’s income falls, the demand for goods and services will also decrease.
Society : influence of friends, fashion trends and tendencies. For example, the fashion for gyroscooters quickly gained momentum and also quickly lost it.
Culture : national characteristics, traditions. In some countries, people do not eat certain products because of religion, and there will be no demand for them in the country.
