Answer to Question #275962 in Management for muhammad ali

Question

Why does demand for a product or service play a significant role in starting a new business? Give any two reasons

Answer 1

Demand for a product determines the price at which it will be sold. Therefore, before starting any business it is important to consider this factor so as to determine whether the price range given will provide losses or profits, hence determine whether or not it will be suitable to put up the given business.

Also, demand for a product provides an opportunity for growth of the firm, therefore it is important to consider a product with higher demand in the market if you aspire for the business to grow.