Lesson 1: What is market demand and its importance?

For a specific period of time, market demand refers to how much people desire your goods. The amount of individuals looking for your goods, how much they’re prepared to pay for it, and how much of your product is accessible to customers, both from your firm and from rivals, are all elements that influence demand.

Market demand may, and often does, shift over time. This might be due to a variety of circumstances, some of which are seasonal and predictable, while others are more unpredictable, such as a natural disaster or even a pandemic.

A rise in market demand occurs when more individuals seek a certain sort of goods. Prices usually rise in these situations because more people want it and are ready to pay for it. When market demand falls, however, prices usually fall with it. It gets a little more complicated after that, but we’ll get to it later.

One typical business blunder is failing to evaluate market demand for your endeavor, particularly when developing new products. You don’t want to waste money on things that no one wants—sitting stock cuts into revenues and takes up warehouse space.

On the other hand, you want to make sure you have enough to satisfy your consumer base at all times. Out-of-stocks are costly and might sabotage your chances of gaining a new long-term customer.