Importance of Demand Analysis in Business Decision Making | Demand | Microeconomics |BBA | BBA-BI | BBA-TT | BCIS | Management Notes
Importance of Demand Analysis in Business Decision Making: The quantity of goods and services that consumer is willing and able to purchase in the market at various prices during a period of time is called demand. The proper analysis of demand is very much important in Business Decision making because of the following reasons:
Importance of Demand Analysis in Business Decision Making
To Forecast Sales
The proper Market study helps the firm to maximize its profit. The market study helps to analyze the demand for the commodity and factors influencing it. This, in turn, helps to forecast sales of the product.
To determine Profit
For any business, the main objective firm is to maximize profit. Profit can be maximized when sales volume increases. Sales volume depends upon the market demand. So, demand analysis helps to determine profit.
To make a marketing decision
Demand analysis helps to understand the different factors that affect the demand for a product. The adverse effects of these factors can be minimized through advertisement and sales promotion efforts.
To make a production decision
The amount of production not only depends upon the cost and technology of the firm but also depends upon the demand for the product. If the demand is in increasing trend the producers should have to prepare to increase in production and vice-versa.
To make financial decisions
On the basis of the market demand of the product, the firm should make their financial decision or investment decision. It is in the sense that increasing the trend of demand indicates that producers should have to increase financing in the firm.
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