Demand is unstable: today a product is bought, but in a month it is not. To influence demand, it needs to be analyzed. Let’s figure out how to do this.
Types of demand
How demand is formed: main factors
Why conduct demand analysis?
Demand Analysis Methods
Expert advice
Types of demand
Table of Contents
Demand is the desire and ability of buyers to purchase goods or services. In marketing, there are several types of demand:
● Negative
When a large part of the market rejects a product. For example, a cleaning product company is found to be dumping its waste into a nearby body of water. People concerned about protecting the environment refuse to buy the company’s products in protest.
● Zero
The product does not arouse interest among consumers. For example, a new type of exotic fruit may not be of interest to consumers because they have never heard of it or tried it.
● Hidden
Consumers want a product that is not yet on the market. For example, before smartphones, people wanted devices that combined the functions of a phone and a computer.
● Falling
Interest in the product is decreasing, for example, due to lifestyle changes. People are choosing healthier food more often, so they buy less yeast bread and canned goods.
● Irregular
which changes depending on the season, time of day or fashion. For example, in the summer, ice cream, bottled water and kvass are bought more often.
● Full
The product satisfies the demand on the market. For example, a furniture factory produced 1000 chairs in a month, and everyone bought them. Or an industrial company with window profile manufacturing services has fully loaded production and works 24/7.
● Excessive
Demand exceeds supply. For example, a new smartphone goes on sale and people line up to be the first to buy it.
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How demand is formed: main factors
Consumer demand is formed under the influence of external and internal factors.
External factors affecting demand
Economic
Income level, price reduction, availability of credit.
Social
Opinions of friends and fashion trends.
Cultural
For example, national characteristics influence the choice of clothing and products: horse meat sausage is bought more in Tatarstan.
Technological
For example, smartwatches have more features than fitness trackers, so consumers may buy them more often.
Political
Some countries encourage the purchase of electric cars, so the demand for them in these countries is growing.
Internal factors influencing demand
Personal preferences
For example, people want to be healthy and active, so they buy memberships to fitness clubs.
Gender, age, education
For example, women visit cosmetologists more often than men.
Family life cycle
For example, families with children travel more within the country or prefer a quiet holiday in an all-inclusive hotel. People without children often choose to travel abroad or go on hikes.
Lifestyle
For example, ordinary people spend more time at home, while hedonists like to visit new places – restaurants, exhibitions, concerts.
Profession and occupation
Freelancers prefer to change their place of residence and not buy real estate, but rent housing.
Let’s look at an example of creating demand for a new fitness bracelet:
1. Market research:
○ Analyze economic conditions to determine the solvency of the target audience.
○ Study social networks and reviews to understand the trends and preferences of potential customers.
○ Research cultural characteristics and traditions to adapt marketing messages to the audience.
2. Market segmentation:
○ We divide the market into segments by age, gender, income, education and other characteristics.
○ We determine the target segments that are most likely to purchase a fitness bracelet.
3. Product development:
○ We take into account the needs and preferences of target segments when developing a fitness bracelet. For example, we add a sleep quality assessment for those who want to assess not only activity, but also the quality of rest.
○ We work on ergonomics and design so that the product also meets the expectations of the target audience in appearance.
4. Marketing strategy:
○ We develop a promotion strategy and plan the time frame for completing which tasks.
○ We create advertising campaigns that resonate with the target audience. For example, we use stories of successful people who have achieved fitness goals with the help of our bracelet.
○ We use influencers and opinion leaders to promote the product on social networks.
○ We organize promotions and special offers to stimulate initial purchases and create a positive perception of the product.
5. Analysis and adjustment:
○ Monitor consumer feedback and analyze sales data.
○ Make adjustments to the marketing strategy based on the data received. For example, change advertising messages, adjust the price, or refine the product itself and its packaging.
Why conduct demand analysis?
If you do not analyze the demand for your products, you risk making unfounded decisions and losing customers and money. Therefore, before you release a product or service to the market or change anything in them, you need to analyze the demand for them. What will this give you:
● Understanding customer needs
This helps develop products and services that meet their expectations. If a cafe conducts a demand analysis and finds out that customers want more vegetarian dishes, it can add these items to the menu.
● Optimizing production and inventory
Understanding demand helps a business produce exactly what it needs, without surplus or shortage. A retail store analyzes the demand for winter clothing and orders the required number of jackets. This helps avoid a situation where there is a lot of product left at the end of the season and it has to be sold at a big discount.
● Effective Pricing
Knowing how much customers are willing to pay helps set a price that is attractive to customers and profitable for the business. If an electronics manufacturer finds that customers are willing to pay more for additional features, it can price new models accordingly.
● Effective advertising and marketing
Marketing analysis of demand helps to determine the appropriate channels and methods of product promotion. A cosmetics company analyzes demand and finds out that its products are popular among young women. It targets advertising on VK and Youtube Shorts, where this audience is most active.
● Assessing market opportunities
For example, a beverage company conducts a demand analysis and notices a growing interest in juice drinks. It develops a new product line and successfully launches it to market.
To test demand for a product, you need to be able to test hypotheses, analyze the market and audience, and identify key consumer segments. This is taught in the course “Product Marketer”. Students begin with an introduction to the profession, and at the end of their training, they complete a full-fledged project.
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Demand Analysis Methods
The main methods of conducting demand analysis:
● Analysis of search queries in Yandex Wordstat
If people often search for certain products or services, the demand for them grows. For example, in spring and summer, the number of queries for air conditioners grows — purchase, repair, and cleaning of split systems. Yandex Wordstat searches by keywords, phrases, and offers similar queries. The result will be more accurate if you search not only by the name of the product, but also add the words “buy” or “order”. This will show demand, not just interest in the product.
● Free analytics on marketplaces
Not everyone searches for products through search engines — some go straight to marketplaces. A simple way to analyze the demand for a product on these sites is to enter a query and see how the product cards are ranked. The first lines are occupied by popular products. Customer reviews can also be a marker of demand. Marketplaces also provide analytics on the demand for products in the seller’s personal account. You can see which products and sellers are at the top, compare them with your offer and understand what to improve.
● Analysis of requests on classifieds sites
Avito provides analytics that will help you find out when demand for goods is high, in which regions, what wording people use in their searches.
● Competitor analysis using paid analytics services
Demand can be studied through competitor and sales analysis and at the same time assess how difficult it will be to enter a niche. For example, a superficial analysis showed that demand for a product is growing, but later it turns out that there are many competitors in this niche. If a company is just planning to enter the market and wants to withstand competition, it is necessary to think through marketing campaigns and set a budget for promotion. To study competitors, more complex services are needed: for example, SellerStats or MPSTATS.
● Make a test landing page and launch trial advertising campaigns
This option is suitable for a complex niche, products that are not sold on marketplaces, or services. For example, real estate, excursions, online courses, exclusive cosmetics. To test demand using a landing page, you need to:
1. Conduct an audience analysis and collect semantics – analyze search queries and make a list of keywords that need to be used in the texts on the site.
2. Develop the landing page itself, for example, using the Tilda constructor. The page contains information about the product and its advantages, photos, videos, and a call to action. For example, a form for collecting contact information or a pre-order button.
3. Launch advertising campaigns on social networks and through contextual advertising in Yandex Direct to attract traffic to the page.
4. Use web analytics tools, such as Yandex Metrica, to track visitor behavior, conversions, and interactions with landing page content. Data from these tools will help you understand the level of interest in the product, evaluate the effectiveness of advertising campaigns, and decide on the development of a product or service.
