Demand analysis is a marketing study used to determine what type of customers are willing to buy a particular product and how many units they are likely to buy and at what price range. This information is then used to plan advertising strategies, determine selling cost and make product modifications.
A demand analysis takes into account the target customer's income, preferences and expectations. It also uses competitive pricing data to calculate an average price for similar products and to identify any consumer restraints. Demographic data is used to determine the size of the market segment. The outcome of a demand analysis is known as a final demand expectation.