derived demand

(noun)

when demand for a factor of production or intermediate good occurs as a result of the demand for another intermediate or final good

Related Terms

Examples of derived demand in the following topics:

  • Business Marketing

    • Business markets have a derived demand.
    • This means that a demand in business markets exists only because of another demand somewhere in the consumer market.
    • For example, the demand for restaurant furniture is based on the consumer demand for more restaurants.

  • Organizational Objectives

    • Derived demand: The more sensitive buyers are to the price of the end benefit, the more sensitive they will be to the prices of those products that contribute to that benefit.

  • Business Products

    • The demands for manufactured industrial goods are usually derived from the demands for ultimate consumer goods.

  • Demand-Based Pricing

    • Demand-based pricing is any pricing method that uses consumer demand - based on perceived value - as the central element.
    • Demand-based pricing, also known as customer-based pricing, is any pricing method that uses consumer demand - based on perceived value - as the central element.
    • By definition, long term prices based on value-based pricing are always higher or equal to the prices derived from cost-based pricing.
    • Price skimming is sometimes referred to as riding down the demand curve.
    • Demonstrate the meaning of and the different types of demand-based pricing

  • The Demand Curve

    • This is referred to as the demand curve.
    • The demand curve for all consumers together follows from the demand curve of every individual consumer: the individual demands at each price are added together.
    • The constant "b" is the slope of the demand curve and shows how the price of the good affects the quantity demanded.
    • The graph of the demand curve uses the inverse demand function in which price is expressed as a function of quantity.
    • The shift of a demand curve takes place when there is a change in any non-price determinant of demand, resulting in a new demand curve.

  • The Influence of Supply and Demand on Price

    • If there is a strong demand for gas, but there is less gasoline, then the price goes up.
    • If there is a strong demand for gas, but there is less gasoline, then the price goes up.
    • Supply and demand is an economic model of price determination in a market.
    • Since determinants of supply and demand other than the price of the good in question are not explicitly represented in the supply-demand diagram, changes in the values of these variables are represented by moving the supply and demand curves (often described as "shifts" in the curves).
    • Apply the basic laws of supply and demand to different economic  scenarios

  • Elasticity of Demand

    • Elasticity of demand is a measure used in economics to show the responsiveness of the quantity demanded of an item to a change in its price.
    • Price elasticity of demand (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price.
    • More precisely, it gives the percentage change in quantity demanded in response to a one percent change in price (holding constant all the other determinants of demand, such as income).
    • A number of factors can thus affect the elasticity of demand for a good:
    • Identify the key factors that determine the elasticity of demand for a good

  • Business Analysis

    • The first step in the business analysis process is to examine the projected demand for the product.
    • Ultimately, profitability and the estimated break-even point can be derived.

  • Idea Generation

    • The word serendipity derives from "serendip," which means "Sri Lanka" in Persian.
    • In other words, this type of innovation occurs when existing product lines cannot satisfy current needs or current demand.
    • Thus, purposeful development occurs when there is a need that requires satisfaction, as opposed to when demand creation is required for a new product for which there is no initial desire in the marketplace.

  • Stimulating Demand

    • For brands to successfully stimulate consumer demand, they must understand consumer needs and motives.
    • Companies are now increasingly focusing on how to stimulate consumer demand and compete for customer loyalty.
    • For there to be a demand for products and services, there must be consumer need and motivation.
    • To stimulate demand, brands must first understand the needs and motives of consumers.
    • Discuss the psychological factors that drive consumer demand, and how they play into marketing segmentation