Answer to Question #147505 in Marketing for Zayn Syed

Question #147505
How is the buying behavior in business markets impacted by different types of demand?
Identify the three types of demand (derived, Inelastic, Fluctuating), illustrate each demand with examples with product pictures, and how they affect buying behavior?
Expert's answer

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.

3.Inelastic Demand

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.

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