Nature of B2B Demand
“The nature of the demand for industrial products or services is different compared with consumer products and poses unique challenges”. Do you agree or disagree with the statement? Support your position with reference to an example of a company chosen from one of the following industries – automotive, telecommunications, information technology (computing), fast moving consumer goods and medical equipment.
The nature of business to business marketing differs in many areas with business to consumer marketing. The different nature of business to business marketing poses unique challenges and raises issues that differ from issues arising from consumer marketing. The nature of demand, or the characteristics of demand for business products is different to the nature of consumer products. The differences can illustrated when looking at the five different demand characteristics of business markets, for business products, namely derived demand, fluctuating demand, stimulating demand, price sensitivity demand and global market perspective of demand. Examples of how these characteristics differ with consumer marketing can be drawn from the nature of demand for Becton Dickinson & Company, hereon referred to as BD.
One of the characteristics that differentiate between business-to-business market demand and business-to-consumer is derived demand of its products. The demand for business products is called derived demand because the demand for industrial products is derived from the ultimate demand for consumer products (Hutt & Speh, 2010). For BD, this is evident through the impact on BD sales through 1984. In 1984, there was a 4 per cent drop in hospital admissions in the US, according to the American Hospital Association (Cespedes & Rangan, 1993). In BD sales figures, there is a 2.5 per cent drop in sales in the healthcare segment between 1983 and 1984. BD produces needles and blood collection systems for hospitals, however, the ultimate demand for BD products
The nature of business to business marketing differs in many areas with business to consumer marketing. The different nature of business to business marketing poses unique challenges and raises issues that differ from issues arising from consumer marketing. The nature of demand, or the characteristics of demand for business products is different to the nature of consumer products. The differences can illustrated when looking at the five different demand characteristics of business markets, for business products, namely derived demand, fluctuating demand, stimulating demand, price sensitivity demand and global market perspective of demand. Examples of how these characteristics differ with consumer marketing can be drawn from the nature of demand for Becton Dickinson & Company, hereon referred to as BD.
One of the characteristics that differentiate between business-to-business market demand and business-to-consumer is derived demand of its products. The demand for business products is called derived demand because the demand for industrial products is derived from the ultimate demand for consumer products (Hutt & Speh, 2010). For BD, this is evident through the impact on BD sales through 1984. In 1984, there was a 4 per cent drop in hospital admissions in the US, according to the American Hospital Association (Cespedes & Rangan, 1993). In BD sales figures, there is a 2.5 per cent drop in sales in the healthcare segment between 1983 and 1984. BD produces needles and blood collection systems for hospitals, however, the ultimate demand for BD products
References: Cespedes, F and Rangan, K 1993, ‘Becton Dickinson & Company : VACUTAINER® Systems Division’, in Harvard Business School case 592-037, Harvard Business School, Boston. pp. 495. Hutt, M, & Speh, TW 2010, Business Marketing Management: b2b, 11th edn, Cengage Learning, South Western.