Demand analysis is one of the important consideration for a variety of business decisions like determining sales forecasting, pricing products/services, marketing and advertisement spending, manufacturing decisions, expansion planning etc.
For a new company, the demand analysis can tell whether a substantial demand exists for the product/service and given the other information like number of competitors, size of competitors, industry growth etc it helps to decide if the company could enter the market and generate enough returns to sustain and advance its business.
Below is the demand analysis for US restaurant industry (Source: Dun & Bradstreet)
It shows that market activity is highest in East North Central area. The figures are arrived by tracking the annual sales in each region.
Demand analysis helps in identifying key business areas where demand is highest and areas which needs attention as very low demand indicates different problems like either the customers are not aware of the product/service and more focus must be in advertisement and promotion or the customer needs are not met by current product/service and improvements are needed or competitors have sprung up with better offerings etc.