Types of seasonal demand and its impact on sales
Demand for any group of goods is never stable and depends on many factors. One of these factors is the global economic crisis, during which purchasing power decreases and demand falls. However, some circumstances constantly affect sales every year. For example, holidays and seasonal changes. They make up the seasonal demand.
Fluctuations in demand can appear unstable and can be characterized by both sharp jumps and moderate declines. The season is characterized by a specific period, which makes it possible to track the activation of demand and its decline more precisely.
There are several types of demand, depending on such factors as the definition of the holiday or vacation season and the level of influence on demand. By definition, there are the following types of seasonality:
- The seasons. During the summer vacation season, there is a dramatic increase in the demand for cottage rentals and related vacation items. Demand for warm clothing increases during the fall and winter seasons.
- Holidays. Demand for goods increases in the month before the holidays. During this time, people rush to buy gifts. The peak of popularity of goods is observed in the last two weeks before and during the season.
- Beginning of the school year. At the end of summer, parents prepare their children for the new school year. During this period, the demand for school products, school uniforms and stationery increases.
- Sales season. Sales significantly increase the demand for goods. The biggest rush is on Black Friday and Cyber Monday.
- Business activity. This period includes non-working days – holidays and weekends – when buying activity drops sharply. A good example is the New Year’s holiday. During the weekend after New Year’s, people try to make fewer purchases because they have already spent money preparing for the holiday. Such periods are called the “dead season.
- Rare events. Depending on the circumstances, these periods can either increase or decrease demand. For example, major sporting events such as the Olympics increase demand for certain products. Conversely, global socio-political events and disasters have a negative impact on purchasing power.
- Fashion trends. Trends help increase demand for certain goods and services. These may be specific beauty treatments or accessories. However, this phenomenon is temporary: demand quickly declines as the trend loses its relevance.
Types of seasonality in terms of their impact on demand include:
- Rigid. Periods when demand can both spike and plummet. This type of demand includes occasional events and holidays. For example, during the New Year period, there is an increased demand for related decorations: garlands, Christmas toys, and Christmas wreaths. In the summer, these products are not relevant and instead, there is an increased demand for swimwear and sun protection products.
- Bright. An increase or decrease in demand for certain goods by 50% over a period of time. For example, the demand for skis and snowboards increases in the winter, but they are available in specialty stores year-round.
- Moderate. A 10% to 15% increase in demand for goods that are available 365 days a year. These may be specific food items for which demand increases during the holiday season. Large supermarkets often hold seasonal sales of such products before the holidays.
It is very important to prepare for the season in advance. Make sure you have enough products in stock to meet customer demand. Customers may be disappointed if they can’t find current products and won’t return to the store. It is also important that the new goods should be brought in during the peak sales period. An important factor is the timely delivery of goods. The faster the customer receives his goods, the more loyal he will be to the company in the future. Fast order processing also contributes to this, as it determines the speed at which goods are shipped.
In the period of seasonal demand, there is a sharp increase in visits to the company’s website. To avoid technical errors, it is necessary to check its operation and eliminate possible bugs.