Product Demand Analysis: How To Determine Market Demand For A Product Using Technology

Market demand is a crucial part of any business strategy and basically describes the demand for any given product and who wants to purchase it. A number of different factors are involved in working this out but it is determined by how willing consumers are to spend a certain price on a particular good or service. As market demand increases, naturally, so does price due the higher interest. When demand decreases, the prices will go down in turn to encourage more purchases. Product demand is the total of what everyone within a specific industry desires and is of great help to retailers when building an eCommerce site.

While some may prefer to use their gut on issues such as these, new product demand forecasting approaches are needed to help evaluate whether a business venture is viable or not. After all you don’t want to begin trying to sell something only to realise that there isn’t a market for it. Knowing the supply and demand in your industry is critical to informing your entire business plan moving forward, which is why there are some key questions you’ll need to ask yourself, namely:

• What is the market demand for a product?

• How do you forecast demand for a product?

• How do you calculate market demand for a product?

Market demand can, and will fluctuate over time, the pandemic is living proof of this. In most cases this could be due to a variety of factors, some seasonal and predictable, others more out of our control, however being able to forecast, calculate and analyse market demand is something all business owners will need to do.

The Benefits of Product Demand Analysis

Calculating market demand does a whole lot more than just confirm people would be interested in your product. On top of this, it informs pricing strategies, helps craft marketing initiatives, illustrates purchasing needs, and many other fundamental factors which are required.

Demand can be determined by several factors, not just the number of people actively searching for a product like yours, but also how much they’re willing to pay for it, and how much of your product is available to consumers, both regarding your company and any competitors.

It’s always important to consider market demand for any business venture you are embarking on, but especially as it relates to product development. After all, the nightmare scenario is investing a lot of capital in products which no one will buy, leading to dead stock eating your profits and taking up warehouse space. Contrastingly, you want to make sure you always have enough of a product to serve your customer base with out-of-stock issues leading to missed conversions and the loss of potential future customers. Proper market demand analysis helps to alleviate these issues by presenting the necessary information before it becomes problematic, as opposed to afterwards, helping generate efficient eCommerce returns.

How Technology Helps Determine Market Demand

While in person interactions can help provide valuable insights, given the current global situation, there are better ways to acquire this data in a more efficient, technologically savvy way. The two great pieces of technology for determining market demand are:

Search engine optimization tools: There are many free SEO tools you can use to gather insights. From which you can determine search volume, keyword suggestions, and estimated organic traffic for all ranked pages as you determine market demand. This can also be a source of inspiration after typing in keywords, phrases, and topics to see how frequently users search for these and related terms. It also gives you the option to filter by time period, country, and even city, letting you be extremely specific with your brand insights into where you should focus marketing efforts should you decide to move forward. Other areas you’ll want to focus on include Long Tail Keywords, High Search Volume, and Competition.

Social Media: Social media can help provide a wealth of data you can utilise on products, industries, brands, and anything else you need. Many tools allow you to filter conversations, target specific geographic locations, and pull summarised reports to be used in combination with other data sets. Essentially, you enter a few keywords and you can pull social media posts that mention or are relevant to that specific keyword or phrase. This allows you to determine the overall sentiment behind, where people are talking about it, and what they’re saying, giving you far more data than just 1-1 interactions ever would.

Best Practices for Demand Analysis and Businesses

Accurately understanding the current and future market demand for your business helps inform the decision making process. Therefore, many business owners will have to conduct market demand research in the ways previously mentioned. This research can also involve researching studies, finding supporting data and gathering general information about an industry or sector. While this research needs to be thorough, it doesn't mean entrepreneurs require an entire marketing department to determine market demand. There are several other methods and best practices that can be used by SMBs when analysing market demand which include:

Surveys: Social media networks are also excellent places to post surveys about products, industries and services you may be able to offer. This allows you to find out what route is the best one to take based upon public feedback. You can send out a survey or questionnaire in an email or through social media, but the important aspect is to spread it to as many people as you can. The greater scope you can create, the better the market research will be. In some cases you may even be able to find surveys or case studies online which you can download and utilise.

Experimentation: Planning, building and executing experiments is time consuming and expensive, but they can be incredibly beneficial to an eCommerce store and the subsequent platform it leads to. This could begin with offering a new product at a discounted price for a limited time to determine the overall demand for it as well as the feedback you can receive from those who buy it. While this will require a lot of customer interaction and a commitment to tracking results over time, the data and insights you can generate can help form the foundation for your entire business approach.

Observation: Observing both in the physical and the digital world will help inform market demand. This may seem very simple, but oftentimes it can be the most effective way to do so. Observing trending topics and products on sites like Twitter and Pinterest can provide insight into almost every industry while spending time to study potential competitors will help determine the necessary elements you need as well as identify gaps in the market you can capitalise on. By combining all of these approaches together, while incorporating technology at every opportunity, you can help find and forecast the proper market demand analysis you need to make key decisions regarding your eCommerce operations.

Final Thoughts

Getting excited about a business idea is great, being able to effectively prove that the great idea will work is better. It’s equally important to logically and objectively analyse the viability of your product by first determining and displaying that there is a clear, positive market demand for it. Equally, this works the other way as proper product demand analysis can illustrate when the idea is likely to fail, saving you the time, effort and money you would have otherwise put into it. When you understand and utiles product demand analysis, it becomes much easier to accurately forecast the scope it can have, as well as avoiding problematic pitfalls like purchasing either too much or too little inventory.

If you are looking for a demand strategy that will help your product get in front of the competition, contact us! Appnova is the creative digital marketing agency that you should talk about your project!