Consumer demand analysis

In Economic Analysis Team

Analyses conducted by EY encompass a wide variety of solutions aimed at delivering insights into consumer willingness-to-buy and customer segmentation. We help our Clients in planning production volume and pricing in the view of various changes in market environment: competitor landscape or prices of the substitute products. We identify main demand drivers and quantify their impact on sales.

Related topics Economic Analysis Team Consulting Data and decision intelligence Consumer products and retail Growth

The team

Marek Rozkrut

Marek Rozkrut

EY EU & CESA Chief Economist; EMEIA Economists Unit Head

What EY can do for you

Consumer demand analysis, conducted by EY EAT, focuses on:

  • People’s willingness-to-buy (incl. estimation of demand elasticities)

    Applying a model-based approach, EY EAT supports the Client in identifying factors influencing people’s willingness-to-buy and, what is of utmost importance, quantifies their impact on the demand for the Client’s product. The analysed determinants of demand most often include:

    • Price of the Client’s product
    • Prices of the competing (so called substitute) products
    • Prices of the complementary products (e.g. fuel prices in the case of the demand analysis for cars)
    • Consumer income and wealth
    • Other determinants (like macroeconomic situation, demographics, consumer habits, regulatory changes)

  • Customer segmentation

    • Customer segmentation aims at dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing or other purposes (such as age, gender, interests and spending habits). It helps to adjust sales/marketing strategy to appropriate customer segments.
Consumer demand analysis may be combined with:

  • Regulatory impact analysis

    Regulatory impact analysis - since various regulations influence determinants of the consumer demand for the Client’s product (e.g. changes in taxation may differently affect various customer segments). Find out more.

  • Spatial analysis

    Spatial analysis (e.g. branch location optimisation) - since better understanding of the consumer demand (incl. customer segmentation) may improve optimal location of the Client’s Points of Sale. Find out more.

What are the outcomes?

The analysis of consumer demand may give answers to such questions as:

  • How many customers would switch to alternative products if the Client increased the price of its product (i.e. what is the price elasticity of the demand for Client’s products)?
  • What brands/products are the main competitors for the Client’s product (some of them may not be obvious, e.g. is beer a competing product for wine? Are soft drinks or juices also competing products for wine?)
  • What are the common demand patterns across customers?
  • Which groups of customers drive the demand for the Client’s product (more or less affluent, younger or older, etc.)?
  • How considered changes in taxation may impact the Client’s sales?
  • What are the potential outcomes of various market scenarios for the Client?

What purpose can it serve?

  • Enhances the understanding of crucial drivers of the demand for the Client's products
  • Develops the knowledge on the Client's customers and competitors
  • Offers insights that will allow the Client to improve the pricing and marketing strategy
  • Adjusts sales tools to customer preferences, improving customer service, and hence, customer loyalty

How does it work?

We apply the model-based approach to analyse consumer demand in a more organised and comprehensive way.

In our approach, we usually apply advanced econometric modelling that allows us to capture the formal statistical relationship between the demand for the Client’s product(s) and the factors that influence it, as well as key differentiators that divide customers into specific segments. Furthermore, the results can be enhanced by in-depth data mining with the statistical matching techniques.

 

How EY can help

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Publications

Our selected published reports and selected scientific articles of the members of EY EAT team.

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