Demand management is an economic planning methodology utilized to predict, plan for, and manage the global demand for goods and services. This is at both macro-level as in international economics and at the micro-level within individual companies. For instance, in international economics, a central government can intervene to control market interest rates to stabilize market inflation. Similarly, at the micro level, companies may decide to adopt supply-side techniques to increase the volume of goods and services while reducing their operational overhead.
The methodology of demand management can also be used to analyze the relationships among various domestic and global factors that affect it. It begins by considering two broad perspectives: supply and demand. Supply is defined as the ability to produce or obtain a certain commodity at a fixed price. The demand is likewise defined as the ability to buy or require a certain good at a certain price. Each of these perspectives is analytically examined by the process of demand management.
In supply-side analysis, the goal is to determine the relationship between prices, revenues, and surplus. Factors that affect this demand segment include the quality and quantity of capital goods and raw materials, the pricing structure of these goods, the technology used to produce them, the infrastructure of the production plants, and the preferences of the consumers. An excellent supply-side management strategy can successfully maintain the competitiveness of the entire organization through a balanced mix of mechanization and manual work. On the other hand, excessive specialization at the cost of lowering overall capacity utilization can lead to excessive job losses and detrimental effects on the employment sector.
On the other hand, demand segment analysis looks into the global expansion of markets. This demand segment describes the activities of customers in relation to the ability to acquire the product or service within a particular time period at an acceptable price. The analysis also considers the factors that limit the ability of customers to obtain these products or services at an acceptable price. Some of the factors that limit the ability of customers are price, reliability, availability, and service quality.
Within a global demand segment, the analysis focuses on the factors that affect the opening and closing of accounts for the unit. The location of the factory, its sales volume, its manufacturing capacity, and its sales channels are all considered. The analysis also takes into consideration the historical performance of the company, its customer base, and the operating profitability. All these factors have a bearing on the ability of the company to satisfy the needs of the customers worldwide.
In a wholesale demand segment, the focus is on assessing the relationships between prices, the amount of inventory, and the supply of the products demanded by customers throughout the market segment. The analysis also takes into account the relationships between prices and the demand of the product or service within the market segment. Price elasticity is a key concept that is used in supply-demand analysis. This concept determines that the changes in the price level are not abrupt; instead, they are spread out over a reasonable time frame.
In demand product management, the identification of ideal customers is analyzed to forecast the market demand in the near and long term periods. Supply chain management seeks to ensure adequate supply of the raw materials needed for production of the segments in question. Analysis includes the identification of critical inputs required by the company to meet the segment's sales target, such as machines, robots, and other equipment. Identification of the barriers to supply, such as labor, equipment, or space are also taken into account.
In supply-demand analysis, it is important to distinguish between direct and indirect competition. Indirect competition occurs whenever there are actions taken by a company to act in competition with its competitors. Direct competition, however, occurs when a company acts in a manner that is designed to reduce its competitors' exposure to the segment. Direct competition can result from the prices, services, and other aspects of a business structure. These aspects include research and development costs, R\u0026D expenses, and the adoption of new technologies.