Demand Analysis

PRESENTED BY :-BABASAB PATIL

The sources of Data Collection for Demand Forecasting

Through a market research a variety of information .
Qualitative and quantitative is called as DATA. This have to be collected to estimation of Demand function and demand forecasting. These information may be pertaining to varies aspects of market and demand.

Cont.

Demand in Past and Present.

Nature of product.
Types of consumer-

Domestic consumers and Industrial consumers.

Age.
Sex. income of the consumers.

Attitude.
Preferences. Tastes.

Habits.

Price Quotations in the retail and wholesale markets.

Urban. Rural.

Local.
National. International or Global.

Sales Promotion.

Advertising . Free samples.

Discounts.
Window display.

As well as the expenditures so incurred or involved.

Primary and Secondary Data

Primary Data: Primary data or information are original in character which are collected for the first time for the purpose of

analysis. Primary data are raw data and require statistical

processing.

Secondary Data
Secondary data or information are those which are

obtained from someone elses records. These Data are already in existence in the recorded or published forms. Secondary Data are like finished products since they have been processed statistically in some form or the other.

Secondary Sources of Data

Official publications of the Central, state and local

Governments.
1) 2) 3) 4) 5) 6)

Plan documents. census of India. Statistical Abstracts of the Indian Union. Annual Survey of Industries. Annual bulletin of Statistical of Exports and Imports. monthly studies of production of selected Industries.

7)

Economic Survey, National Sample Survey Reports.

Trade and Technical or Economic journals and publication

Economic and political weekly. Indian Economic journal. Stock exchange directory. Basic statistics and other information's supplied by the centre

1)

2)

3)

4)

for monitoring Indian Economy.

Official publications of International Bodies

IMF.
UNO. World Bank etc.

1)

2)

3)

Market reports and trade bulletins published by stock exchange

Trader associations. Large business houses. Chambers of Commerce, etc.

1)

2)

3)

Publications brought out by research institutions

1)

Universities.

2)

Associations. etc.

Unpublished Data
1)

Firms account books

1) 2)

Sales. Profits.etc.

secondary data should not be taken at their face value and are never to be used blindly.

Statistical Methods of Forecasting Demand

There are various methods adopted to estimate potential demand.

Statistical methods are obviously more scientific, against crude value

judgment used to estimate future demand.

One must take a mid-way by combining statistical results with the value

judgment.

Again different statistical forecasting methods are not mutually exclusive. They are to be used in combination for accuracy and cross checking purposes.

For forecasting purposes, it is essential to estimate the structural form and parameters of the demand function empirically.

Two types of data for demand estimation:

Time series data Cross-sectional data

Time series data

Time series data refer to data collected over a period of time according historical changes in price, income, and other relevant variables influencing demand for a commodity.

Time series analysis relate to the determination of change in a variables in relation to time. Usually trend projections are important in this regard.

Cross-sectional Data

Cross -sectional analysis is undertaken to determine the effects

of changes in determining variables like price, income etc. On

the demand for a commodity, at a point of time.

In time series analysis for instance, for measuring income elasticity of demand, a sales income relationship may be established from the historical data and their fast variations in

cross-sectional analysis, however different levels of sales

among different income groups may be compared at a specific point of time.

The Important Demand Forecasting Methods are:

Consumption Level Method Trend Projection Method Regression Analysis and Econometric Method

Consumption Level Method

Consumption Level demand may be estimated on the basis of the coefficients of income elasticity and price elasticity of demand.

Viewing projected income level and income elasticity of demand

relationship, demand forecasting may be made as under: D*=D(1+M*.em)

Where, D*=Projected per capita demand

D=Per capita demand M*=Projected relative/percentage change in income. em=Income elasticity of demand. per capita

Trend Projection Method

A time series analysis of sales data over a period of time is considered to serve as a good guide for sales or demand forecasting.

For long-term demand forecasting trend is computed from the time based demand function data.

Trends refers to the long-term persistent movement of data in one direction upward or downward.

There are two important methods used for trend projections:

The method as moving averages. The least square method

The Method of Moving Averages.

A moving average forecast is based on the average of a certain number of most recent periods.

One can select the number of months or years or other period

units in the moving average according to how for back the

data is relevant to future observations.

The least square method

The method of least squares is more scientific as compared to the method of moving averages.

It uses the straight line equation y= a+bx, to fit the trend to the

data.

Regression analysis and econometric model building

Most commonly for demand forecasting proposes, the parameters of the demand function are estimated with regression analysis.

In demand regression equations relevant variables have to be included with practical considerations and relevant data have to be obtained.

Examples:

Personal

disposal

income

towards

demand

for

consumer product.

Agricultural or farm incomes towards demand for the

agricultural equipments, fertilizers, etc.

Construction contracts for demand towards building material such as cement, bricks, steel, tiles etc.

Automobile registry over a period towards demand for car spare parts, petrol etc.

Thank you