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Derived and fluctuating demand

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TOPIC 1: Derived and Fluctuating Demand

The characteristic of B2B markets that is most opposite of B2C markets is the concept of derived and fluctuating demand. These concepts explain why when consumer purchasing goes down, the effect on the economy is multiplied by all the transactions that occur throughout the channels. A slowdown in consumer spending is not good for the economy.Here are some examples of derived demand.

A good way to illustrate derived demand is to study the LeBron effect, the economic boost the basketball superstar LeBron James brought to his hometown of Cleveland, Ohio.

Can you think of another situation similar to the LeBron effect in which derived demand was created by something that happened in the external environment, something that caused other companies to sell their products to other businesses to meet new demand?

Another example, after 9/11, many people were concerned for their safety or their ability to survive during an attack. This prompted companies to market safety kits for home and auto. Most of these kits were compilations of existing products, but the derived demand for bandages, flashlights, etc. increased.

Reference no: EM132355817

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