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Difference between High Sales and High Demand

How would you determine the difference between high sales and high demand?

Also, if we conducted market surveys to determine the markets demand could that be misinterpreted if sales were low?

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Please see response attached, which is also presented below. I hope this helps and take care.

RESPONSE:

Hi,

Interesting questions. Let's take a closer look:

1. How would you determine the difference between high sales and high demand?

Remember that demand is defined as a prediction of the usage of a product during the upcoming period, and is based on past sales or expenditures (depending on what you use as a measure of demand). Therefore, if your demand prediction was high for the next period, other variables might impact the sales, so the sales might not be as high as predicted by the demand estimation (e.g., due to unforeseen changing market trends, seasonal products, etc.). Also, demand predictions have some margin of error. However, let's say that your demand prediction is high based on your survey data (or your sales and inventory count for the last period) (if you were a store owner).

How could you then determine the difference between high sales and high demand?

Simply by comparing your demand prediction (high), with the actual amount of sales for the period that you made the prediction. Thus, you would determine the difference between sales ...

Solution Summary

This solution describes how to determine the difference between high sales and high demand. When conducting market surveys to determine the markets demand, it also explores whether or not the results could be misinterpreted if sales were low.

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