Demand is the basis for starting a business, as the product decision and amount produced depends on prevailing market demand. Demand indirectly determines the factors of production required. Demand is defined as the various quantities of a commodity that consumers will purchase in a given market period at different prices. For there to be demand, there must be a desire for the commodity, sufficient resources to purchase it, a willingness to spend on it, and its availability at a certain price, place, and time. The determinants of demand include price of the product, consumer income, tastes and preferences, prices of substitutes and complements, consumer expectations, population, climate, and advertising. Demand is expressed as a function of these factors

1. Demand Analysis :
Definition and Determinants of Demand

2. Introduction to Demand Analysis
@Demand is the basis for the starting of any business, as
the product decision and amount of product to be
produced would be decided only on the basis of the
demand prevailing in the market i.e. depending on the
market survey and demand forecast.
@ Demand only decides indirectly the amount of factors of
production to be employed in the organization i.e.
money, men, material, machinery and management
required. Without proper demand analysis, if production
activity is undertaken the business firm may suffer huge
losses.

3. Definition of Demand
• According to Benham: “The demand for anything, at a given
price, is the amount of it, which will be bought per unit of time,
at that price.”
• According to Bobber, “By demand we mean the various
quantities of a given commodity or service which consumers
would buy in one market in a given period of time at various
prices.”
Requisites:
a. Desire for specific commodity.
b. Sufficient resources to purchase the desired commodity.
c. Willingness to spend the resources.
d. Availability of the commodity at
(i) Certain price (ii) Certain place (iii) Certain time.

4. Nature & Types of Demand
1. Consumer Goods Vs Producer Goods
2. Autonomous Demand Vs Derived Demand
3. Durable Goods Vs. Perishable Goods
4. Firm Demand Vs Industry Demand
5. Short term Demand Vs Long term Demand
6. New Demand Vs Replacement Demand
7. Total Market Vs Segment Market Demand

5. Bases & Examples for Types of Demand
S.NO TYPES & NATURE OF DEMAND BASES EXAMPLES
1 Consumer Goods Vs
Producer Goods
User: Individual or
Firm
Automobiles –
Steel, Rubber
2 Autonomous Demand Vs
Derived Demand
Dependability:
Direct or Indirect
Bike – Petrol
Computer-Internet
3 Durable Goods Vs.
Perishable Goods
Life of Good : Long
or Short
Home Appliance –
Bakery, Vegetables
4 Firm Demand Vs
Industry Demand
Totality: Single or
Aggregate
Airtel Demand –
Telecom Industry
5 Short term Demand Vs
Long term Demand
Duration : Short or
Long
Below one Year-
Above one Year
6 New Demand Vs
Replacement Demand
Newness : New or
Derived
Rexona to Hamam
Bank Account
7 Total Market Demand Vs
Segment Market Demand
Area of Demand:
Part or Full
Whole Market –
One State

6. Determinants of Demand
1. Price of the Product
2. Income of the Consumers
3. Tastes, Habits and Preference of the Consumer
4. Relative price of Substitute Goods
5. Relative Price of Complement Goods
6. Consumer Expectation
7. Population
8. Climate and Weather
9. Advertisement effect

7. Determinants of Demand
• Demand Function : The demand function for a commodity
describes the relationship between quantities of the
commodity which consumers demand during a specific period
and the factors which influence its demand. Mathematically,
demand function can be expressed as follows
( , , , , , , , , , )x x s c pD Y P P P T E N D U A 

8. Definition and Determinants of Demand
Thank You & Any Doubts