Business Marketing - Business & Consumer Markets - The Link

The Link

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. Lets take a few examples :

• The government of India wishes to purchase equipment for a nuclear power plant in Jaitapur, which a business market demand. The underlying consumer demand that has triggered this particular business market demand is that people of India are now consuming more electricity - they have bought more washing machines, microwaves, computers, and re-chargeable electronic devices.
• The demand for restaurant furniture is based on the consumer demand for more restaurants.

Thus business markets do not exist in isolation. Cities or countries with growing consumption are generally growing business markets too.

A single consumer market demand can give rise to hundreds of business market demands. The demand for cars in India creates demands for steel, tires, forgings, castings, and plastic components which in turn create demands for mining, rubber, forging machines, casting sand and polymers. Each of these growing demands has further triggered more demands. Thus as the spending power of citizens increase, the country generally sees an upward wave in its economy.