---
title: "Short note: methods of demand analysis"
subject: "Engineering Economics"
chapter: 1
key: "semester_6/engineering_economics:short-note-methods-demand-analysis"
source: https://www.bctengineer.com/q/semester_6/engineering_economics/short-note-methods-demand-analysis
site: BCT Engineering
---

# Short note: methods of demand analysis

Engineering Economics · Chapter 1: Introduction

- Asked in: 2065 Chaitra, 4 marks
- Video: [What is Demand Forecasting?](https://www.youtube.com/watch?v=KgmNg2d8XDk) — Educationleaves
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_6/engineering_economics/short-note-methods-demand-analysis
- Whole chapter: https://www.bctengineer.com/md/semester_6/engineering_economics/chapter-1

## Question

Write a short note on methods of demand analysis.

## Short answer

Demand analysis methods include survey methods like consumer surveys and expert opinion, statistical methods such as trend projection and regression, and others like test marketing and end-use analysis. Combining statistical models with survey judgment yields reliable forecasts.

## Answer

Demand analysis studies the factors that determine demand and estimates present and future demand. It is used for sizing a project and deciding plant capacity. The methods are:

#### 1. Survey (opinion) methods
- **Consumer survey / market research:** questionnaires and interviews with all or a sample of buyers on their buying intentions.
- **Expert opinion / Delphi method:** forecasts from sales staff, dealers or experts, refined over rounds.
- Useful for new products with no past data; depends on honest answers.

#### 2. Statistical methods
- **Trend projection** by least squares, moving average or exponential smoothing, using past sales.
- **Regression analysis:** demand related to price, income and so on, Q = a + bP + cY.
- **Correlation and econometric models.**
- Objective; needs past data and assumes patterns continue.

#### 3. Other methods
- **Test marketing:** sell the product in a small area and extend results.
- **End-use (consumption level) method:** demand for an intermediate product from the demand of the industries that use it.
- **Barometric method:** use leading indicators such as GDP, construction permits or cement sales.
- **Market-share / competitor analysis.**

A good forecast often combines a statistical method with judgment from surveys.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. Why are survey and opinion methods useful?
   A. They work for new products that have no past sales data, though they depend on honest answers
   B. They need long past sales records to project trends
   C. They are fully objective and never depend on respondents
   D. They only forecast intermediate products
   Answer: A. Surveys collect buying intentions directly, so they suit new products lacking history. (Key point: Survey method suitability)

2. Which set belongs to statistical methods of demand analysis?
   A. Consumer survey, Delphi, test marketing
   B. Trend projection, regression analysis, moving average/exponential smoothing
   C. Barometric, end-use, market-share analysis
   D. Questionnaires, interviews, dealer opinion
   Answer: B. Statistical methods use past data with objective techniques like least squares trend and regression. (Key point: Statistical methods)

3. What does the barometric method use?
   A. Opinions of experts refined over rounds
   B. Sales in a small trial area
   C. Leading indicators such as GDP, construction permits or cement sales
   D. Demand of industries that use the product
   Answer: C. Barometric forecasting relies on indicators that move ahead of demand. (Key point: Barometric method)

4. What is the end-use (consumption level) method?
   A. Selling in a small area and extending the result
   B. Questioning a sample of buyers
   C. Fitting a straight line to past sales
   D. Estimating demand for an intermediate product from the demand of the industries that use it
   Answer: D. It derives demand for an intermediate good from its using industries. (Key point: End-use method)

## Related in Engineering Economics

- [Short note: statistical approach to demand analysis](https://www.bctengineer.com/question.md?key=semester_6%2Fengineering_economics%3Ashort-note-statistical-demand-analysis) — Engineering Economics, chapter 1

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