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Homework answers / question archive / Artifact:Forecasting Total Market Demand Drivers of Demand Forecast the drivers of demand in the market segments that were identified in Part 1
Artifact:Forecasting Total Market Demand
Answer:
1. Drivers of demand in the market segment: There are 5 important factors that determine the demand in the market segment. These are very crucial factors in analyzing the market.
1. The expectations from the consumers on the type of the product and price variations of the product. The length to which the product rate will increase or decrease.
2. The Actual pricing of the product
3. The potential of the consumers that is the income scale of the buyers.
4. The prices of the products in par with the actual product. That is the substitutes of the original product pricing.
5. The preferences and expectations of the customer based on their taste drives the demand for a product.
2. The above said drivers of demand vary based on certain economic and other factors. These are the macro economic factors that have higher influence over the drivers of demand and thereby affecting the demand of a product or service.
1. The wages or income of an individual influence the purchase of a product.
2. Pricing of the product that are directly affected directly to high inflation rates, influence the demand
3. Interest rates in the economy impact the spending on goods and services.
4. Regardless of the finacial barriers, customers opt for a product if they are completely satisfied with it. This satisfaction increases their confidence in purchasing more volume of goods thereby increasing the demand.
3. Sensitivity analysis: it is the model that illustrates how a target variable is affected by the changes in the input variables. In this analysis the variables used for the input are utilized from the historical data. In forecasting demand, the input variables are the price of the good, the income level of the consumer, the expectations of the customers, price fluctuations. For an accurate demand forecast the pricing of the product should be made lower in comparison with the competitors. If the historical data reveals that the customers are satisfied with the products, then the influence of the admissible price variation will not affect the demand of the product. The inflation and the dilute market situations may influence the forecasts of Demands.