Market Demand

16/04/2020 0 By indiafreenotes

Market demand is similar to industry demand. It is a broader concept and it involves total demand of a product in an industry. For example, demand of two wheelers in India implies demand of two wheelers produced and marketed by all the companies. It reveals the broader picture of demand. Marketer should keep in mind the wider scenario of industry/market demand to see his position, often called market share of company in an industry. Market demand plays a vital role in formulating the broad marketing programme.

Philip Kotler: “Market demand for the product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing programme.”

Thus, market demand indicates total sales of the product to the specific groups of buyers in a specific period and in defined geographical areas in a given marketing environment.

Elements of Market Demand

Systematic analysis of above stated definitions necessarily reveals following elements:

  1. Product

Market demand indicates the total demand of specific products in an industry. The place or scope of product must be specified. In which category or industry the product of company falls. It can be decided on the basis of who are the users and the purpose of using the product. Thus, we must mention the market demand in relation to the specific product.

  1. Total Volume

It shows the total volume of sales in form of unit or value. It suggests the total sales of the product in the industry. For example, total volume means the amount (or units) of total demand of refrigerator in India.

  1. Purchase or Buying

Only the quantity, that is ordered and purchased is included in market demand. Market demand includes units, which are ordered, delivered, or consumed.

  1. Customer Groups

Market demand is expressed in term of different users. Total volume demanded by different groups of customers, such as industrial customers, institutional customers, and individual customers.

  1. Geographic Area

Market demand can be specified in term of different geographical areas or localities. It may be in term of country, state, region, district, or any geographic unit.

  1. Fixed Time Duration

Market demand is meaningful only if it is expressed in relation to time. For example, demand of two-wheeler during the year 2007. Time may be in term of week, months, quarter, or year.

  1. Marketing Environment

Obviously, market demand is influenced by several factors. These factors constitute the marketing environment. So, it is necessary to mention assumptions about marketing environment comprising economic, cultural, social, political, etc., forces.

  1. Definition of Marketing Programme

Market demand is affected by marketing programme/strategy. So, it is clarified with reference to a specific marketing programme including product, price, promotion, and distribution. Thus, market demand is stated in context with the definite marketing programme.

While estimating market demand, these all elements should be considered for meaningful picture of total demand. Here, we must distinguish market demand from company demand. Market demand is total demand of the product in an industry, and company demand means demand of the individual business unit’s products. Market forecast relates with market demand and sales forecast relates with company demand. However, market demand forecast and sales forecast are taken loosely (i.e., more or less similar).