DEMAND DISTINCTIONS

The main purpose is for the business objectives. The business people are required to make a thorough study of demand analysis with a view to solve the business problems. In order to study the demand potential for goods, they are classified into several types. They are as follows: 1. Producers goods and consumer goods. 2. 3. 4. 5. 6. 7. Durable and non-durable goods. Derived demand and autonomous demand. Industry demand and company demand. Short run demand and long run demand. Short term demand fluctuations and long term demand trends. Market demand and market segments.

PRODUCERS GOODS AND CONSUMERS GOODS

Producers goods are those goods which are used in the production of goods. E.g., yarn, steel. Consumer goods are those goods which are available for the final consumption. E.g., machines, ready made clothes.

Whether goods are producers goods or consumers goods, it is based on Who buys. Why he buys E.g., If a coal is used for cooking, it is a consumers goods. If the same coal is used in a railway engine, it is a producers goods.

DURABLE GOODS AND PERISHABLE GOODS

Durable goods are those goods which satisfy their owners for a long time to come if they are maintained properly. In durable goods, only the services are consumed. The sale of durable goods add to the stock of the existing goods which are still serviceable.

Perishable goods are goods which can be consumed only once. Perishable goods are themselves consumed. The sale of perishable goods are made to meet the current demand which depends upon current changes.

DERIVED DEMAND AND AUTONOMOUS DEMAND

When the demand for the product is tied with another product, it is called derived demand. E.g., demand for steel is related to the production of machinery. Some products are tied to others in their uses. E.g., television antennas Derived demand facilitates forecasting when proportions of the two products are fixed. E.g., when the demand for the car industry decreases, then it will force the tyre manufacturers to cut production.

INDUSTRY DEMAND AND COMPANY DEMAND

Industry demand refers to the demand for the products used by all firms in a particular industry. E.g., total demand for cotton, steel, etc., in an economy. Company demand refers to the demand for the products of a particular company. Demand for SANTRO car refers to the demand for the product of that company. Demand for cars refers to the total demand for cars of all firms put together, i.e., demand for the car industry.

DEMAND ANALYSIS IN TERMS OF MARKET SHARE

1. 2. 3.

The market share concept of company demand is now being used in the demand analysis. The market demand for a product may be 10 million tones of steel. But a companys output may be 2 million tones. Then the companys share in the market is 20% The market share may help in persuading people to buy the product of the company. Factors determining the market share are--The price differentials. Promotional expenditure. Product improvement.

SHORT RUN DEMAND AND LONG RUN DEMAND

Short run demand refers to the existing or current demand.
Long run demand refers to demand which ultimately exists due to changes in prices or promotion of product improvement. E.g., A cut in price of electricity will induce the existing users of electrical appliances to make greater use of them. This is short term change in demand. In the long term more people will be induced to buy them, ultimately leading to a greater demand for electricity.

DEMAND FLUCTUATIONS AND LONG TRENDS

Fluctuations in demand causes more problems for the producers since demand shifts in passage of time. Forecasting as to how sales fluctuate from year to year and projecting long term trends in demand post difficulties.

For long term, much of the settings namely competitive structure, market position, quality remain constant. But the trend is different

TOTAL MARKET AND MARKET SEGMENT

Total market for a product refers to its total demand E.g., total market of soaps Market segment refers to the part of the total market such as foreign market, local market, regional market and national market. Market segments can also be carved out by sub-products, the use of the products, sensitivity to price, etc. When demand forecasting is to be made, total market has to be taken. When pricing, distribution is taken up, their market segment is preferred.