After reading this article you will learn about:- 1. Meaning of Demand 2. Components of Demand 3. Company Demand 4. Market Demand 5. Company Potential 6. Market Potential.
Meaning of Demand:
In evaluating the marketing opportunities, the step is to estimate total market demand.
According to Philip Kotler, “Market demand for a 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 defined marketing environment, under a defined marketing programme.”
Components of Demand:
From the above definition the following components can be drawn:
1. Product: How is it defined.
2. Volume: Measured in sales units or rupees.
3. Bought: Means volume ordered or purchased.
4. Defined customer group: Particular segment/segments or market.
5. Defined geographical area.
6. Defined marketing environment.
7. Defined marketing programme: Elements of marketing Mix.
It is the total volume that would be sold by the company in a definite time period. Company demand is the company’s share of market demand.
CD – MD x Cs
CD – Company demand, MD = Market demand, Cs = Company’s market share.
Market demand is the total demand of all the firms in the market (industry) in a particular time period.
Company potential is the maximum number of units (sales volume) that can be sold by the company in a particular time period.
It is the maximum number of units that can be sold by an industry in a particular time period. It is a maximum amount of sales that might be available to all the firms in an industry during a given period, under a given level of industry marketing effort and given environmental conditions.
Q = nqp
Q = Market potential
n = Number of buyers in the specific product/market
q = Quantity purchase by an average buyer
p = Price of an average unit.