The Demand for B2B Products
B2B sellers monitor consumer markets because consumer buying patterns affect their business customers' buying behavior. Specifically, B2B sellers look at several areas of demand:
- B2Bs are affected by derived demand, which is demand that springs from, or is derived from, a secondary source other than the primary buyer of the product. For example A situation where demand for a particular product or service results from the need for other goods and/or services. For example, demand for aluminum cans is derived from consumption of soft drinks or beer. Many organizations may take part in creating the consumer purchase. When consumers change their buying habits, the companies they buy from also change their buying patterns.
- Small changes or fluctuating demand by consumers trickles down to B2B markets. Slight changes in the demand by consumers can have a big effect throughout the chain of businesses that supply all the goods and services that produce it. While a change in consumer demand of 10% doesn't sound like much, for a B2B seller who supplies component parts to the company making the final product, it could mean few if any sales. This has been called the bullwhip effect. My favorite illustration is to think about Indiana Jones - when he snaps his wrist his bullwhip makes a huge arc.
- B2B sellers also keep an eye on consumer buying patterns that may create joint demand. Joint demand occurs when the demand for one product increases the demand for another product.
This video is a great explanation of derived and joint demand. Petrol is the English term for gasoline.
