{"id":1075,"date":"2022-04-10T22:04:00","date_gmt":"2022-04-10T20:04:00","guid":{"rendered":"https:\/\/support.centreforelites.com\/4-characteristics-of-business-market-demand-2\/"},"modified":"2024-03-14T09:39:53","modified_gmt":"2024-03-14T07:39:53","slug":"4-characteristics-of-business-market-demand-2","status":"publish","type":"post","link":"https:\/\/support.centreforelites.com\/en\/4-characteristics-of-business-market-demand-2\/","title":{"rendered":"4 CHARACTERISTICS OF BUSINESS MARKET DEMAND"},"content":{"rendered":"\n<p class=\"\">Four demand characteristics differentiate the business market demand from the consumer market: (i) Demand is derived, (i ) demand tends to be inelastic, (i i) demand is widely fluctuating, and (iv) the market is well informed<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img data-recalc-dims=\"1\" decoding=\"async\" src=\"https:\/\/i0.wp.com\/www.businessstudynotes.com\/wp-content\/uploads\/2015\/10\/stylish-social-media-and-marketing-elements-in-shape-of-up-side-growth-arrow-for-business-concept_L.jpg?ssl=1\" alt=\"CHARACTERISTICS OF BUSINESS MARKET DEMAND\" title=\"CHARACTERISTICS OF BUSINESS MARKET DEMAND\"\/><\/figure>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d76c6d2a822\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d76c6d2a822\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/support.centreforelites.com\/en\/4-characteristics-of-business-market-demand-2\/#_DEMAND_IS_DERIVED\" >&nbsp;DEMAND IS DERIVED<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/support.centreforelites.com\/en\/4-characteristics-of-business-market-demand-2\/#DEMAND_IS_INELASTIC\" >DEMAND IS INELASTIC<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/support.centreforelites.com\/en\/4-characteristics-of-business-market-demand-2\/#DEMAND_IS_WIDELY_FLUCTUATING\" >DEMAND IS WIDELY FLUCTUATING<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/support.centreforelites.com\/en\/4-characteristics-of-business-market-demand-2\/#BUYERS_ARE_WELL_INFORMED\" >BUYERS ARE WELL INFORMED<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"_DEMAND_IS_DERIVED\"><\/span>&nbsp;DEMAND IS DERIVED<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"\">The demand for a business product is derived from the demand for the consumer&nbsp;products in which that business product is used. Thus the demand for steel depends partial y on consumer demand for automobiles and refrigerators. But it also&nbsp;depends on the demand for butter and CD players This is because the tools machines, and other equipment needed to make these items are made of steel<\/p>\n\n\n\n<p class=\"\">There are two significant marketing implications in the fact that business market&nbsp;demand is a derived demand. First to estimate the demand for a <a href=\"https:\/\/motivemeaning.com\/fundamental-product-concepts\/\">product<\/a> a business marketer must be very familiar with how it is used. Second, the&nbsp;producer of a business product may engage in <a href=\"https:\/\/www.centreforelites.com\/en\/marketing-of-services-3-outstanding-strategies-to-consider\/\" data-schema-attribute=\"about\">marketing<\/a> efforts to encourage the sale of its buyers&#8217; products. The idea is that increases in consumer demand&nbsp;will in turn trigger increases in derived demand for these business products.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"DEMAND_IS_INELASTIC\"><\/span>DEMAND IS INELASTIC<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"\">Another characteristic of the business market is demand elasticity of business products. Elasticity of demand refers to how responsive demand is to a change&nbsp;in the price of a product.<\/p>\n\n\n\n<p class=\"\">The demand for many business products is relatively inelastic, which means&nbsp;that the demand for a product &#8220;a&#8221; responds very little to changes in price.<\/p>\n\n\n\n<p class=\"\">The demand for business products is inelastic because ordinarily the cost of a single part or material is a small portion of the total cost of the finished product.<\/p>\n\n\n\n<p class=\"\">The cost of the chemical is a small part of the price a consumer pays for paint. As a result, when the price of the business product changes, there is very little change in price of the related consumer products. From a marketing point of view, there are three factors that can moderate inelasticity of business demand.<\/p>\n\n\n\n<p class=\"\">i.&nbsp;&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/motivemeaning.com\/price-and-pricing-decisions\/\">Price change<\/a> must occur throughout an entire industry, not in a single firm<\/p>\n\n\n\n<p class=\"\">The second marketing factors that can affect the inelasticity of demand is time.&nbsp;Much of our discussion here applies to short-term situation. Over the long run the demand for a given industrial products is more elastic. The third factor is the relative importance of a specific business product in the cost of the finished good. The greater the cost of a business product as percentage of the total price&nbsp;of the finished good, the greater the&nbsp;elasticity of demand for this business product.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"DEMAND_IS_WIDELY_FLUCTUATING\"><\/span>DEMAND IS WIDELY FLUCTUATING<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"\">The market demand for most classes of business goods fluctuates considerably&nbsp;more than the demand for consumer products<\/p>\n\n\n\n<p class=\"\">The main cause of these fluctuations is the individual businesses concern&nbsp;about having a shortage of inventory when consumer demand increases or being&nbsp;caught with excess inventory should consumer demand decline. Thus they tend to overreact to signals from the economy, building inventories when they see signs of <a href=\"https:\/\/support.centreforelites.com\/en\/definition-of-growth-and-development\/\">growth<\/a> in the economy and working inventories down when the signs suggest stagnation.<\/p>\n\n\n\n<p class=\"\">When the action of all the individual firms are combined the effect on their suppliers is widely fluctuating demand. This is known as the&nbsp;<strong>acceleration principle.&nbsp;<\/strong>One exception to this generalization is found in agricultural products intended for processing.&nbsp;<strong>Can you explain why this is so?<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"BUYERS_ARE_WELL_INFORMED\"><\/span>BUYERS ARE WELL INFORMED<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"\">Typically, business buyers are better informed about what they are buying than ultimate&nbsp;consumers. They know more about the relative merits of alternative sources of supply and competitive product for three reasons.<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n<\/p>\n<ol>\n<li>there are relatively few alternatives for a business buyer to consider.<\/li>\n<li>the responsibility of a buyer in an organization is ordinarily limited to a few products; and&nbsp;<\/li>\n<li>for most consumer purchase, an error is only a minor inconvenience. However, in business buying the cost of a mistake may be thousands dollars or even the <a href=\"https:\/\/www.centreforelites.com\/en\/decision-making-in-conflicts-resolution\/\">decision maker<\/a>&#8216;s job!<\/li>\n<\/ol>","protected":false},"excerpt":{"rendered":"<p>Four demand characteristics differentiate the business market demand from the consumer market: (i) Demand is derived, (i ) demand tends [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center 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center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"wds_primary_category":139,"footnotes":""},"categories":[139],"tags":[264],"class_list":["post-1075","post","type-post","status-publish","format-standard","hentry","category-marketing","tag-market-demand"],"aioseo_notices":[],"jetpack_featured_media_url":"","jetpack-related-posts":[{"id":1073,"url":"https:\/\/support.centreforelites.com\/en\/4-characteristics-of-business-market-demand\/","url_meta":{"origin":1075,"position":0},"title":"4 CHARACTERISTICS OF BUSINESS MARKET DEMAND","author":"centreforelites","date":"April 10, 2022","format":false,"excerpt":"Four demand characteristics differentiate the business market from the consumer market: (i) Demand is derived, (i ) demand tends to be inelastic, (i i) demand is widely fluctuating, and (iv) the market is well informed\u00a0DEMAND IS DERIVEDThe demand for a business product is derived from the demand for the consumer\u00a0products\u2026","rel":"","context":"In &quot;Blog&quot;","block_context":{"text":"Blog","link":"https:\/\/support.centreforelites.com\/en\/category\/blog\/"},"img":{"alt_text":"4 CHARACTERISTICS OF BUSINESS MARKET DEMAND","src":"https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2022\/04\/pexels-photo-16729455.jpeg?fit=1200%2C800&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2022\/04\/pexels-photo-16729455.jpeg?fit=1200%2C800&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2022\/04\/pexels-photo-16729455.jpeg?fit=1200%2C800&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2022\/04\/pexels-photo-16729455.jpeg?fit=1200%2C800&ssl=1&resize=700%2C400 2x, https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2022\/04\/pexels-photo-16729455.jpeg?fit=1200%2C800&ssl=1&resize=1050%2C600 3x"},"classes":[]},{"id":1071,"url":"https:\/\/support.centreforelites.com\/en\/the-concept-business-market\/","url_meta":{"origin":1075,"position":1},"title":"The Concept Business market","author":"centreforelites","date":"April 10, 2022","format":false,"excerpt":"The business market consists of organizations that buy goods and services to produce other goods and services, to resell to other business users or consumers, or to conduct the organization's operations. It is an extremely large and complex market spanning a wide variety of business users that buy a board\u2026","rel":"","context":"In &quot;Marketing&quot;","block_context":{"text":"Marketing","link":"https:\/\/support.centreforelites.com\/en\/category\/marketing\/"},"img":{"alt_text":"The Concept Business market","src":"https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2022\/04\/pexels-photo-730564.jpeg?fit=1200%2C900&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2022\/04\/pexels-photo-730564.jpeg?fit=1200%2C900&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2022\/04\/pexels-photo-730564.jpeg?fit=1200%2C900&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2022\/04\/pexels-photo-730564.jpeg?fit=1200%2C900&ssl=1&resize=700%2C400 2x, https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2022\/04\/pexels-photo-730564.jpeg?fit=1200%2C900&ssl=1&resize=1050%2C600 3x"},"classes":[]},{"id":1095,"url":"https:\/\/support.centreforelites.com\/en\/marketing-and-demand-management\/","url_meta":{"origin":1075,"position":2},"title":"MARKETING AND DEMAND MANAGEMENT","author":"centreforelites","date":"April 10, 2022","format":false,"excerpt":"Introduction \u00a0Marketing management can be defined as the analysis, planning, implementation, and control of programmes designed to create, build, and maintain beneficial exchanges with target buyers for the purpose of achieving organisational objectives. The common impression people often have of the marketing manager is to stimulate demand for the company's\u2026","rel":"","context":"In &quot;Marketing&quot;","block_context":{"text":"Marketing","link":"https:\/\/support.centreforelites.com\/en\/category\/marketing\/"},"img":{"alt_text":"MARKETING AND DEMAND MANAGEMENT","src":"https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2022\/04\/MARKETING-AND-DEMAND-MANAGEMENT.jpg?fit=1200%2C675&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2022\/04\/MARKETING-AND-DEMAND-MANAGEMENT.jpg?fit=1200%2C675&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2022\/04\/MARKETING-AND-DEMAND-MANAGEMENT.jpg?fit=1200%2C675&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2022\/04\/MARKETING-AND-DEMAND-MANAGEMENT.jpg?fit=1200%2C675&ssl=1&resize=700%2C400 2x, https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2022\/04\/MARKETING-AND-DEMAND-MANAGEMENT.jpg?fit=1200%2C675&ssl=1&resize=1050%2C600 3x"},"classes":[]},{"id":1296,"url":"https:\/\/support.centreforelites.com\/en\/business-marketing-demand-the-4-main-factors\/","url_meta":{"origin":1075,"position":3},"title":"Business Marketing Demand. The 4 Main Factors","author":"centreforelites","date":"April 14, 2023","format":false,"excerpt":"The factors\u00a0affecting Marketing Demand or the market for business products are: (i) the number of potential business users; (i ) their purchasing power; (iii) buying motives, and (iv) buyer habits. Let us now discuss these factors in turn. NUMBER AND TYPES OF BUSINESS USERS\u00a0 Number of Buyers.\u00a0 The\u00a0business market\u00a0contains relatively\u2026","rel":"","context":"In &quot;Business Ideas&quot;","block_context":{"text":"Business Ideas","link":"https:\/\/support.centreforelites.com\/en\/category\/business-ideas\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1072,"url":"https:\/\/support.centreforelites.com\/en\/the-factors-affecting-business-marketing-demand\/","url_meta":{"origin":1075,"position":4},"title":"The Factors affecting Business Marketing Demand","author":"centreforelites","date":"April 10, 2022","format":false,"excerpt":"\u00a0The Factors affecting Business Marketing for business products are: (i) the number of potential business users; (i ) their purchasing power; (iii) buying motives, and\u00a0(iv) buyer habits. Let us now discuss these factors in turn. NUMBER AND TYPES OF BUSINESS USERS\u00a0 Number of Buyers.\u00a0 The business market contains relatively few\u2026","rel":"","context":"In &quot;Marketing&quot;","block_context":{"text":"Marketing","link":"https:\/\/support.centreforelites.com\/en\/category\/marketing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1044,"url":"https:\/\/support.centreforelites.com\/en\/external-factors-affecting-pricing-decisions\/","url_meta":{"origin":1075,"position":5},"title":"EXTERNAL FACTORS AFFECTING PRICING DECISIONS","author":"centreforelites","date":"April 21, 2022","format":false,"excerpt":"Apart from factors within a company, external factors affecting pricing decisions in a firm also include the nature of the\u00a0market\u00a0and demand, competition, and other environmental elements.","rel":"","context":"In &quot;Fundamentals of Marketing&quot;","block_context":{"text":"Fundamentals of Marketing","link":"https:\/\/support.centreforelites.com\/en\/category\/fundamentals-of-marketing\/"},"img":{"alt_text":"EXTERNAL FACTORS AFFECTING PRICING DECISIONS","src":"https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2023\/04\/EXTERNAL-FACTORS-AFFECTING-PRICING-DECISIONS-scaled.webp?fit=1200%2C750&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2023\/04\/EXTERNAL-FACTORS-AFFECTING-PRICING-DECISIONS-scaled.webp?fit=1200%2C750&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2023\/04\/EXTERNAL-FACTORS-AFFECTING-PRICING-DECISIONS-scaled.webp?fit=1200%2C750&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2023\/04\/EXTERNAL-FACTORS-AFFECTING-PRICING-DECISIONS-scaled.webp?fit=1200%2C750&ssl=1&resize=700%2C400 2x, https:\/\/i0.wp.com\/support.centreforelites.com\/wp-content\/uploads\/2023\/04\/EXTERNAL-FACTORS-AFFECTING-PRICING-DECISIONS-scaled.webp?fit=1200%2C750&ssl=1&resize=1050%2C600 3x"},"classes":[]}],"jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/support.centreforelites.com\/en\/wp-json\/wp\/v2\/posts\/1075","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/support.centreforelites.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/support.centreforelites.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/support.centreforelites.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/support.centreforelites.com\/en\/wp-json\/wp\/v2\/comments?post=1075"}],"version-history":[{"count":1,"href":"https:\/\/support.centreforelites.com\/en\/wp-json\/wp\/v2\/posts\/1075\/revisions"}],"predecessor-version":[{"id":2210,"href":"https:\/\/support.centreforelites.com\/en\/wp-json\/wp\/v2\/posts\/1075\/revisions\/2210"}],"wp:attachment":[{"href":"https:\/\/support.centreforelites.com\/en\/wp-json\/wp\/v2\/media?parent=1075"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/support.centreforelites.com\/en\/wp-json\/wp\/v2\/categories?post=1075"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/support.centreforelites.com\/en\/wp-json\/wp\/v2\/tags?post=1075"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}