{"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\/ru\/4-characteristics-of-business-market-demand-2\/","title":{"rendered":"4 CHARACTERISTICS OF BUSINESS MARKET DEMAND"},"content":{"rendered":"<p class=\"wp-block-paragraph\">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_88 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-6ab11dd72ad8c\" 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-6ab11dd72ad8c\"  aria-label=\"\u0422\u0443\u043c\u0431\u043b\u0435\u0440\" \/><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\/ru\/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\/ru\/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\/ru\/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\/ru\/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=\"wp-block-paragraph\">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=\"wp-block-paragraph\">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=\"wp-block-paragraph\">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=\"wp-block-paragraph\">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=\"wp-block-paragraph\">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=\"wp-block-paragraph\">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=\"wp-block-paragraph\">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=\"wp-block-paragraph\">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=\"wp-block-paragraph\">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=\"wp-block-paragraph\">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\/ru\/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=\"wp-block-paragraph\">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=\"wp-block-paragraph\">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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