Demand

DEMAND • • Demand for industrial or business is normally a derived demand for consumer goods and services The demand therefore is derived from the expectations / forecasts of the requirements from the industry or business houses The demand for industrial products are joint as well Cross elasticity of demand plays a very important role on the entire corporate strategy The demand for industrial products is more fluctuating or has high variations than the consumer products

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Bullwhip effect – is due to in-accurate demand forecasting, inaccurate batching, price fluctuations and distortion of information in supply chain network

Demand FACTORS INFLUENCING DEMAND • End consumers • • The ingredients sometimes are not liked by the ultimate user and the manufacturers need to change the product Sudden change of preference from one product to another (semi automatic to fully automatic washing machine or direct cool to frost free refrigerators. one model of car is suddenly liked by the market “A Maruti or Nano” effect) • Business conditions • • • General economic conditions taking a dip or jump The customer losing business to competition Seasonal demand sometimes hampered by changes (rains in May/June affecting sales of ACs or room coolers • Financial conditions of the customers .

an inverse relationship exists while in the case of industrial products the demand normally does not change unless the reflection of price on the finished product is very high and the demand for the ultimate product goes up • • Case of Tetra Pack However in the case of equipments and machineries the change in prices do not impact the demand .e.Demand • Price • For consumer products the demand may increase if the prices are reduced i.

INDUSTRIAL MARKETING Demand issues  Short term demand  Normally short term demand is calculated by projecting the sales based on the previous data available and the expected demand pattern of the ultimate product Though it a crude method. Spending pattern of the people 4. helps in setting the short term demand of the product   Long term demand  Whereas long term demand would involve many factors at macro level. 1. The growth of the GDP of the country 2. but with the least variables and the experience of the executives working in industry. such as. Growth of the industry itself and the related industry 3. Study of the consumer behaviour .

products getting cheaper with enhanced technology and competition). Policy of the government towards existing industry and the external factors like imports (including the duties imposed by the government and free trade agreements with the countries 8. Socio-economic pattern and the changes expected (middle class and the upper and lower middle class and the change of this pattern over time depending upon the government policies with regard to employment and other social securities) 7. Expected increase in the earnings 6.INDUSTRIAL MARKETING Demand issues 5. . Developments in the field which force customers to replace products faster (of course also depends on the price of the products .

• Keep a proper record of the past performances of 1. . The customers • • • • • • Competitors’ past performance as well as activities on developments and investments (including new entrants) Global developments on products and replacements if any Technological innovations and developments which may affect present products Close liaison with customers. suppliers and markets Regular scheduled meetings with customers Relate demand to the ultimate demand and study the impact. Own company 2.Demand • • It is therefore very necessary that the forecasting of the demand is made as scientifically as possible The seller needs to take care of the following.

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