The demand for goods and services is never static. There are always periods of higher and lower demand. On the demand for a particular product can be influenced by seasonal factor – the time of year, holidays.
In this article we’ll analyze in details what is the seasonal demand, the types of seasonality, how to find out the seasonality of the product or service, how to prepare for the beginning of the season, and how to keep sales in the off-season.
Seasonal demand – definition, types
Seasonal demand is the fluctuation in demand for a good or service under the influence of external factors. The change can be sharp (a sharp increase or decrease in sales) and moderate. The season lasts for a certain period – days, weeks or months.
Types of seasonal demand
Seasonal demand is divided into types by two factors:
- The definition of the season (holidays, vacations);
- The degree of influence on demand;
Types of seasonality by definition:
Seasons. There are goods that sell well only in winter or summer. For example, real estate in the private sector is more actively chosen and bought in the warm season (it depends on the area), in winter the number of viewings of the objects decreases sharply. Winter clothes are bought more in the fall and winter, and less in summer.
The holiday season. Some goods are more actively bought on St. Valentine’s Day, others on New Year. For example, no one orders Christmas tree toys for March 8, but there is a growing demand for flowers, gift baskets for girls, cosmetics. Usually the demand increases during the pre-holiday period – during the month before the holiday date, it peaks in the last 2 weeks before and during the season.
The beginning of the school year. Between August and September, the demand for school supplies, uniforms, stationery grows.
Promotional period. Black Friday and Cyber Monday have higher than usual demand for merchandise.
Business activity. This includes the vacation season, off days due to holidays.
*Frequently there is a decline in sales during vacations or official vacations. This phenomenon is called the “dead season”. A typical example is the period from January 1 to January 14, when people have already spent a lot of money before the holidays and are resting for the vacations. They are not inclined to make a lot of purchases at this time.
Irregular events. The FIFA World Cup, the Eurovision Song Contest, the Muz-TV awards – there may be a surge in demand for themed goods at such times. Or, for example, if the country becomes the world champion in hockey, children may want to play hockey, and then the demand for the appropriate equipment may increase. Events can also negatively affect demand. For example, during a pandemic, a lot of people are out of work or their income has decreased, and the ability to pay has decreased accordingly.
Trends. If a trend appears for a product, service or phenomenon, there is a sharp increase in demand. An example is the high demand for sip-dip and pop-it, after they became popular in Tic Tacs. Before that, there was a similar situation with spinners. After the series “The Queen’s Turn” came out, there was a rise in demand for chess.
These types of seasonality can also be combined into two groups: cyclical seasonality (the change of seasons, the holiday season, Black Friday, business activity) and event-driven seasonality (the influence of trends, events and info-trends). Cyclical seasonality is more predictable and easier to prepare for. With event seasonality business must react quickly, and there is less time to prepare.
Types of seasonality according to their influence on demand:
Rigid seasonality. The product is in demand for a short period of time. Demand rises sharply and also declines sharply. A typical example is Christmas trees and Christmas toys. Mostly, such demand depends on holidays and occasional events.
Bright. Demand decreases and increases by 30-50%, and this period is stretched over time. Demand is affected by changes in the time of year, the vacation period. For example, skis are most often bought for winter, but that does not mean that the rest of the year they are not taken at all.
Moderate. The changes in demand fluctuate within 10-15%. This type of demand refers to goods that are bought at any time of the year. For example, flowers. The increase in demand can be observed before March 8, February 14, the New Year, but in general, this product is bought all year round.
There are goods that are minimally affected by seasonal factor. For example, food, medicine, hygiene products, household chemicals, the entertainment industry are always in demand.
How to know the demand for goods and services
Tools to help determine the demand for a particular product. And also understand what kind of seasonal demand it refers to:
1. Google Trends. Here in addition to the history of requests you can see the dynamics of demand for goods by region, as well as see separately the data on product cards and news. Also in Google Trends you can compare data on several queries.
When entering a query, Google Trends prompts you to specify its type. For example, if you simply write “chess,” the service will show all queries with that word. But some users searched for the game, and others for information about the musical “Chess”. To get more accurate data, it is better to specify the request right away.
2. Professional services for the collection of the semantic core. You need to choose such services, where in addition to the list of keywords and their frequency, you can view the dynamics of changes in the number of queries over time.
3. Data from analytical systems. Study how the dynamics of requests, which users navigated to your site.
*This method of analysis is best used in conjunction with Wordstat and Google Trends, rather than as an independent tool.
4. Data from CRM. If you’ve been selling for at least a year or even more, you can compare your CRM data to seasonal reports from Google Trends to get a clearer picture of your store specifically.
How to prepare for the start of the season
You need to prepare for a period of high demand ahead of time – purchase merchandise, prepare your website pages, and create a marketing strategy. If the product falls under a cyclical type of seasonality, you should start preparing 1-1.5 months before the holiday season and 4-5 months before the vacation season. During the vacation season, the change in demand is smoother than during the holiday season. As mentioned above, in the case of events seasonality (trends, info-trends) you have to act immediately, so the preparation period will be even shorter. Exceptions – events that are known in advance, such as the FIFA World Cup. First you need to divide the products into segments according to seasonality, to determine in which period it is advisable to start preparing.
By the beginning of the season you should have the following points decided:
Availability of merchandise in stock. The worst thing is to refuse customers during a period of high demand because of a trivial lack of goods.
The ability to quickly replenish the stock. It is impossible to 100% predict how many units of product will buy from you, so in case the product still runs out, an operative additional delivery to the warehouse should be arranged. This point you need to run through with suppliers in advance.
Delivery. In a period of demand, people want to get the goods as quickly as possible. For example, if a person buys a gift by March 8, he doesn’t need delivery on March 10 – he will just buy the goods in another store.
Personnel optimization. In periods of high demand increases the burden on the staff. Perhaps you should temporarily recruit additional staff (eg, couriers with daily payments, call center operators). Or motivate the current staff with bonuses and overtime bonuses.
Prompt processing of orders. Here it’s the same as with delivery. In times of high demand, customers won’t wait long for their order to be processed. Although the need for fast order processing is no longer dependent on seasonality – it will be a plus at any time of year.
Fix all the technical errors on the site. Before the season starts, you need to test the site for errors and fix them promptly. If during high demand, you have no opening of the landing page, a long loading page, or an error when trying to checkout/pay for an order – it’s a disaster.
Ready marketing strategy. You need to prepare the advertising budget in advance, decide on the types of ads, create creatives, plan the date and time of the launch. It is necessary to start advertising before the season starts.
Smoothing out seasonal fluctuations in demand
Is there life after the season ends? Of course, keeping sales at seasonal levels is difficult. But there are several ways to minimize losses when demand drops:
Run promotions. For example, announce a sale of leftovers from the warehouse or simply offer a discount on seasonal goods. Many people like to buy things in advance, when the rush dies down. Especially if there is a motivation in the form of a discount.
Expand the assortment. In order not to live from season to season, you can add additional product items. For example, sell sports equipment for winter and summer sports, not only for winter sports.
Employ seasonal employees or outsource part of your business processes during times of high demand. Rather than expanding your staff and paying year-round wages when your staff is underemployed. For example, you may have 10 couriers on a permanent basis, and hire the rest in the season. The main thing here is not to make a mistake and engage seasonal employees in advance, to avoid a shortage of personnel at the peak of orders. The requirements for such employees must be adequate. A mid-level manager with a university degree will not wait to be hired as a courier for the New Year holidays. But it is quite realistic to hire a student.
Avoid untargeted expenses. A typical mistake newbies in business make is to start actively spending what they earn after making money during the high-demand season. Money is spent on expanding the staff, buying additional equipment, repairing the office, buying large quantities of goods, and personal needs. As a result, by the beginning of the next season may not have money left for the really necessary things – the launch of advertising campaigns, staff training.
Swings in demand for seasonal goods are common in sales. It’s important not to ignore the seasonality factor, but to prepare for it in advance (the article says how). If you have a product tough seasonality (eg Christmas trees) makes sense to work in parallel with other areas. For example, to develop two online stores. On one will be Christmas trees, and the other moderate seasonal products, say, clocks. Then you won’t have to depend so much on the change of season.