Demand analysis estimates how many units of your product the market will actually buy, considering price elasticity, adoption curves, and competitive dynamics. It's more granular than TAM/SAM/SOM because it accounts for the rate and pattern of adoption.
Three methods for demand estimation: (1) Analogous products — study adoption curves of similar products, (2) Survey-based — ask potential customers about purchase intent, (3) Regression-based — use statistical models with market variables.
Adjusted Demand
Demand = Market Size × Awareness Rate × Consideration Rate × Purchase Intent × Ability to Buy
Key Takeaways
- Demand ≠ market size. Demand accounts for awareness, intent, and ability to buy.
- The purchase funnel dramatically reduces total market to actual demand.
- Use analogous products to validate your funnel conversion assumptions.
- Low awareness = marketing problem. Low intent = product problem. Low ability = pricing problem.