What Is a Market Demand Analysis?

Geri Terzo

A market demand analysis can be a productive activity for a number of organizations, ranging from for-profit corporations to non-profit charities, and hospitals. The analysis could help determine or justify a desire for expansion in a particular sector or just to assess the health of a sector. Although the process may be performed differently based on the type of organization or study, participants may still share some fundamental procedures based on market conditions. These core strategies could include assessing the target market, reviewing trends that are forming, and determining the current market share. A market demand analysis should also involve projecting future activity.

Market demand analysis is performed before beginning any type of expansion project.
Market demand analysis is performed before beginning any type of expansion project.

Market demand analysis is often performed before any type of development or expansion project is begun. Considering the large investment that may be required in order to build infrastructure or incorporate new businesses and assets, an organization may prefer to determine just how ripe conditions are for the new plans. With some framework in place, corporate executives or public officials may be able to garner the support needed from a board of directors or otherwise in order to pursue change.

Future projections are also typically helpful when performing a market demand analysis.
Future projections are also typically helpful when performing a market demand analysis.

One common characteristic that is measured during a market demand analysis is a review of the current population. If trends dictate that people are moving into or out of an area, these behaviors could affect the potential of a project. In a market demand analysis, population may be measured based on current conditions in addition to some gauge of the future composition of a region.

It is also useful throughout a market demand analysis to identify who the organization's target market is. In doing so, the analysis could expand to include details pertaining to where the ideal demographic for a product or service can be reached. Some of the factors that may be included are a series of averages for income in a given region as well as age and real estate values, for instance.

Future projections are also typically helpful when performing a market demand analysis. Any anticipated shifts in economic or business conditions could impact the demand for some endeavor. This could work against or in favor of a potential project depending on what the financial estimates may be. Economic projections could influence items such as the level of investment that is generated for an endeavor. The results of a market demand analysis could be very clear and indicate whether there is demand for some product or service or if a particular market may be over saturated.

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Discussion Comments


@NathanG - Personally, I believe the biggest target demographic in the coming decades won’t be Generation X or Y, but the millions of retiring baby boomers.

I think a lot of businesses are targeting this group with special services and products that they need. Even businesses that don’t directly market to baby boomers are tailoring some of their offerings to them, or at the very least offering senior citizens’ discounts.


@Mammmood - I watched a program on television about the fast food industry in China. Believe it or not, it has been growing. This particular program focused on McDonald’s, and how they were expanding into China.

As they prepared to expand, they studied demographic shifts. They could see that more people were moving into the more densely populated cities and that China was becoming more Westernized, and thus more amenable to fast food offerings such as the kind that McDonald’s offered.

The one guy I saw on television claimed that it would be possible to open up thousands of restaurants in China in the coming decades.


@nony - Yeah, market analysis is not magic really. As they say, “the trend is your friend.” A person I admire in his ability to tap into what the market was doing is the late Steve Jobs.

He transformed Apple, Inc. from a company that built computers to a company that built portable electronic devices that people wanted. Jobs did not stumble upon this transformation by accident.

According to everything I’ve read, he did a market analysis and could see that more and more people were wanting their multimedia and communications experiences to be increasingly mobile. He also saw the influence of young people in this emerging market.

This analysis led him to spawn the iPhone, iPod and iPad, among the list of Apple’s commercial successes. Everyone else has been playing catch up in my opinion.


The town that I live in is close to an area that was listed as one of the ten best places to live in America (by a consumer magazine). I find that interesting because about fifteen years ago I was planning to build a business. As one of the prerequisites to establishing a business, I starting thinking about location, location, location.

I got hold of a market study and it gave me some insight about demographic trends. It said that most people were moving and relocating near this town nearby. At the time I didn’t think much of it because there was still a lot of undeveloped land, but what a difference fifteen years has made.

It has been bursting at the seams since then; a lot of quality establishments have been set up as well as upscale residential districts. I am amazed that a simple market analysis foretold this expansion fifteen years ago!

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