In a diversified and expanding economic setting, market demand serves as the pivot of all economic activity. In simpler words, market demand is the demand or need for a product measured by its consumption, requirement and usage rate in the consumer market. 

If the market demand for a product is more, the more becomes its supply, and as a consequence, the product may generate more revenue. A more precise definition of market demand is the subtotal of individual demand. If more buyers enter a market owing to an increase in demand, the market demand for a product rises.

What is Market Demand?

Market demand has been defined by marketers in various ways, depending on their product strategies and several other factors. In traditional terms, the meaning of market demand is to estimate the demand for a product in its specific industry, demography, region, or specific use-cases. 

Market demand is seasonal or cyclical, and therefore, the time factor is always considered while estimating demand for a product. Moreover, many products and services have constant and uninterrupted needs. So, all of these factors are essential to arrive at a market demand estimate.

What are the Types of Market Demand?

Products are interconnected, and sometimes demand comes from the least expected sectors. Some of the essential types of product demand are illustrated below:

  • Direct Demand: Also called autonomous demand, direct demand is the demand for a final product—for example, demands for mobile phones, laptops, shirts, etc. 
  • Indirect Demand: The demand for a particular product or commodity used to produce another product is called Indirect Demand. Also, the demand for the final product is dependent on the demand for the item. For example, demand for wood is indirectly reliant on the demand for furniture.
  • Joint demand occurs when the demand for one product directly increases the demand for another product. For example, the demand for cars would also increase the demand for petrol.
  • Composite Demand: It is the demand for those products that can be further utilised. For example, apart from direct consumption, milk can be used to make cheese, yoghurt, cream butter, and many other products.
  • Latent Demand: The demand for a product that the buyers cannot satisfy due to a lack of awareness or information about the product or service. There are three frameworks in which this happens:

Firstly, when the consumer doesn’t have the necessary means to purchase the product. In other words, they want it, but they can’t afford it. 

Secondly, when the product that consumers demand isn’t available in the market.

Lastly, when the consumers are not informed whether the product exists or don’t know if a particular product would fulfil their needs or not.

So while conducting a product demand analysis, it’s always important to differentiate between these types of demand and see the connections wherever possible.

How to Create Market Demand for a Product?

A market demand analysis involves “understanding the customer demand for a product or service in a particular market.” Demand analysis techniques are typically used to determine if companies can successfully enter a market or generate expected profits to enrich their business operations. 

It’s an endeavour to get an accurate estimate of future sales of your product and understand how competition, seasons and other related events influence the sales of specific products.

Here are the different steps to understand more clearly:

  • Forecast demand for new products:  Forecasting the total market demand helps the business make better-informed supply decisions to forecast the entire sales and revenue of the company for a future period. 
  • Define your market: Businesses should define their market as a group of people and the job they are trying to get done.
  • Access the market: It is necessary to assess the market’s maturity to know in which growth phase the demand for the product is. It is essential to know if the demand for a product is increasing, stable or declining? 
  • Identify the niche: It is highly recommended to identify your market niche to decide your USPs.
  • Evaluate the competition: Lastly, evaluate the competition to understand the need for your product and make it different from the others. 

How to Determine the Market Demand for a Product

The significant factors that help you determine the market demand for a product are:

Search Engine Optimisation Tools

A large number of free SEO tools are available to gather insights, from which you can determine the search volume for your product. Moreover, you would also find keyword suggestions to bring organic traffic to your product pages by going through SEO tools. It helps you get a broader view of creating demand for your product and strictly focus on your marketing efforts.

Social Media

Social media is another powerful platform that helps you create demand for your product. You can run various social media ad campaigns, such as Facebook ads, Twitter ads, Instagram ads, or YouTube, to target your potential customers globally. Also, you can consider influencer marketing and reach out to influencers with many followers in your niche. 

Past Demand Analysis

After reviewing past sales records and adding up the total sold units over a given period, businesses can identify and isolate seasonal spikes or dips in sales.

Competitor Data

For small businesses which lack sufficient internal sales data, competitor analysis can prove to be especially useful. By analysing the demand for competitors’ products and services, small businesses will have an idea about the craze of the product in the market. 

Paying close attention to the state of both local and global economic trends is helpful to determine the market demand. It has been often noticed that product demand is very much affected by periods of local financial struggle or global depression to varying degrees. 

Recent Performance Estimations

Estimating future purchases based on recent sales performance can help determine the market demand, especially for new products that lack specific historical sales records.

How to Find and Evaluate Market Demand?

Understanding the market demand before launching your products or services is the key to success. Market demand analysis measures the customers’ demand for a product or service in the target market. The Market demand evaluation can be done by monitoring the product market and grab the opportunity in the perfect time. Learn more about evaluation of market demand on market demand evaluation.


Market demand analysis provides the background needed to make pricing decisions, forecast sales and formulate marketing strategies. It is one of the main factors that determine production and financial decisions. A business can adopt an appropriate investment policy with a proper market demand analysis.

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