Demand Patterns


Demand Patterns:

Business-to-business marketers should understand numerous distinctive features related to market structure and demand of organisational buyers. These features are discussed here.

Geographical Concentration: Organisational buyers are usually located in certain geographic areas as compared to individual consumers.

Example: Most IT companies are situated in the southern states of India.

Fewer but Larger Buyers: The figure of organisational customers is very small not like individual customers who’re numerous. Organizations give purchase orders for raw materials and resources etc. that engage considerable amounts of money. There are only a few producers in auto sector however they purchase tyres that include massive amount of money. In the market these agencies face hundreds of thousands of vehicles wanting tyre replacements.

Example: Branded companies that manufacture computer are relatively few and buy processors of Intel or AMD in large numbers. There are a large number of assemblers of computers and they  buy few processors at a time.

Derived Demand: Organisational demand is derived demand due to the fact companies buy goods for instant use directly or indirectly in the manufacturing of products and services to fulfill consumers’ requirement. Consequently, the demand for products is derived from the demand for consumer goods.  Example: Branded laptop producers have demand for processors and different hardware and software program to supply domestic computer systems due to the fact there’s demand for computer systems by customers. If for any reason, customer demand for computer systems takes a nosedive, the call for processors and different components from laptop producers is likewise probably to take a drop.

Demand is Inelastic: The requirement for many industrial goods is inelastic. This means that a hike or cut in price of a product will now no longer drastically have an effect on demand for the product. Total industry demand for items that they use stays definitely unaffected with the change in price in short run, in contrast to customer demand that suggests unusual elasticity to price changes.

Example: If the price for computer hard disks decreases, their demand is unlikely to increase.

Joint Demand: In certain cases, organisational goods can be used only in combination with other items. There would be combined demand when these complementary goods as they are to be sold together.  Example: Manufacturers of petroleum require additive products like octane and boron. If these companies cannot get any one of the two products, it does not need others.

Fluctuating Demand: Compared to customer demand, industrial demand changes drastically. The demand by industrial buyers is closely related to the fiscal cycle. In case of economic crisis or reverses, organisational buyers consume the existing stock and suspend new purchases. When the economy is upbeat, institutional buyers may gather huge stock of raw material and spares, buy office apparatus and other stuff.