Demand Side Analysis

Posted in Operations and Supply Chain Terms, Total Reads: 789

Definition: Demand Side Analysis

Demand side analysis is used to find out how much demand exists for a particular product or service. A demand analysis takes into account data related to customer’s income level, price of product, price of supplementary product or any buying constraints or stimulus. It helps companies in taking decision whether to go ahead with a particular product or service. The result of demand side analysis is referred as final demand expectation.

There can be various methods for demand side analysis but the basic components remain same that are as follows:

• Market identification

• Business cycle

• Product differentiation

• Growth potential and

• Competition


As demand analysis is highly important for companies, it has to be carried out in systematic way. The key steps involved in demand side analysis are as follows:

• Situation analysis and defining objectives

• Secondary study and data collection

• Conduct market survey

• Market characterization

• Forecasting of demand

• Market planning

Several statistical tools are also used to extract relevant information out of the data. Based on demand analysis, companies also find out expected profit and breakeven point.

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