Buying behavior is a set of activities and decisions undertaken by the customers that go into the purchase of a particular good or service. The more the number of buyers for a product, the more will be demand in the market. The buying behavior of a customer may vary according to the type of demand for the product.
1. Derived Demand
Derived demand refers to the kind of demand for a good or service that arises as a result of demand for a related good or service.
Example: If you own a mobile phone store, the increased demand for mobile phones in the market may create a derived demand for allied products like earphones, chargers, connectors, etc.
- A derived demand may be either an increase in demand for an allied good due to the customers seeking out a product more and more, or it may be a lack of demand for an allied good due to a changed customer preference.
2. Fluctuating Demand
Fluctuating demand refers to the change (increase or decrease) in demand for a particular good or service in the market depending on the economic conditions or changing consumer behavior.
Example: The spread of the COVID has resulted in a sharp rise in hygiene products like handwash and sanitizer.
- Usually demand fluctuates sharply for non-essential goods and services. But during certain times the external conditions result in a change in the product category in itself i.e., COVID has resulted in shifting the products like face masks into an essential must-haves category.
Inelastic demand refers to the type of demand for a product/service that does not change much with the change in price or economic conditions.
Example: Petrol is an essential commodity for anyone with a two-wheeler.
- Usually, inelastic demand occurs for essential goods, because since the customers view the good as essential the changed conditions do not alter their buying behavior significantly.