Importance of demand analysis in business decision

The demand analysis and the demand theory are of crucial importance to the business enterprises.They are the source of many useful insights for business decision making.The success of failure of business firms depend primarily on its ability to generate resources by satisfying the demand of consumers.The firms unable to attract consumers are soon forced out from the market.
The importance of demand analysis in business decisions can be explained under following headings:

1. Sales forecasting :The demand is a basis the sales of the production of a firm.Hence,sales forecasting can be made on the basis of demand.For example,if demand is high,sales will be high and if demand is low,sales will be low.The firms can make different arrangements to increase or reduce production or push up sales on the basis of sales forecast.
2. Pricing decisions :The analysis of demand is the basis of pricing decisions of a firm.If the demand for the product is high,the firm can charge high price,other things remaining the same.On the contrary .If the demand is low,the firm cannot high price.The demand analysis also helps the firm in profit budgeting.
3. Marketing decisions:The analysis of demand helps a firm to formulate marketing decisions.The demand analysis analyses and measure the forces that determine demand.The demand can be influenced by manipulating the factors on which consumers base their demand on attractive packaging.
4. Production decisions:How much a firm can produce depends on its capacity.But how much it should produce depends on demand.Production is not necessary if their no demand.But continuous production schedule is necessary if the the demand for the production is relatively stable.If the demand is less than the quantity of production,new demand should be created by means of promotional activities such a advertising.
5. Financial decisions :The demand condition in the marker for firm's product's affects the financial decisions as well.If the demand for firm's product is strong and growing,the needs for additional finance will be greater.Hence,the financial manager should make necessary financial arrangement to finance the growing need of the capital.