Demand is an economic principle that refers to a consumer's desire to purchase goods and services, coupled with their willingness to pay a specific price for them. Generally, this relationship is inverse; as the price of a product falls, the quantity demanded by consumers rises, and as the price increases, the quantity demanded falls. This concept is fundamental to how businesses set prices and how markets function, as it helps determine the value of goods and the volume that changes hands.
While a product's price is a primary driver, several other factors can shift the entire demand curve. These elements cause consumers to buy more or less of a good even when its price remains unchanged, reflecting shifts in circumstances and market conditions.
Demand is often categorized by its relationship to other products. Joint demand occurs when two goods are used together, like printers and ink. Derived demand is when the desire for one product stems from another, such as the need for steel in car manufacturing.
Competitive demand applies to products with close substitutes, like butter and margarine. Composite demand describes a single product with multiple uses, where demand for one use impacts its availability for others. These types help businesses understand market dynamics.
While often used interchangeably, in a business context, 'demand' and 'request' have distinct meanings and applications.
Demand patterns vary significantly from one market to another, influenced by the nature of the goods and specific economic conditions. While market demand focuses on a single product, aggregate demand considers the total demand across an entire economy. These differences lead to unique consumer behaviors in various sectors.
Demand is a key driver of a product's price in the market. When demand for a good increases while supply remains constant, prices tend to rise as more consumers compete for it. Conversely, if demand falls, prices typically decrease as suppliers try to attract fewer buyers. This dynamic helps markets find an equilibrium price.
How does a shift in the demand curve differ from movement along it?
Movement along the curve is caused solely by a change in the product's price. A shift of the entire curve, however, is caused by non-price factors like changes in consumer income or preferences, indicating a change in overall demand at every price point.
What is demand elasticity?
Demand elasticity measures how much the quantity demanded of a good responds to a change in its price. Inelastic demand means quantity changes little with price, while elastic demand means it changes significantly. This concept is crucial for strategic pricing decisions.
How can businesses practically measure market demand?
Businesses measure demand through methods like consumer surveys, market experiments with different price points, and analyzing historical sales data. Statistical analysis and regression models are also used to forecast future demand based on various economic indicators and market trends.
Sales prospecting software automates the process of finding, contacting, and tracking potential customers to help sales teams build their pipeline.
Learn about ballpark, including estimating with ballpark figures, understanding ballpark estimates in sales, & ballpark estimates vs. precise quotes.
Return on Marketing Investment (ROMI) measures the revenue generated by a marketing campaign relative to the cost of that campaign.
A Sales Director leads a sales team, develops strategies, and is responsible for meeting a company's revenue targets.
Email engagement measures how your audience interacts with your emails. It includes key actions like opens, clicks, replies, and forwards.
Learn about browser compatibility, including understanding the importance, common challenges, best practices, & tools for testing.
CPM, or Cost Per Mille, is a key advertising metric. It's the cost an advertiser pays for one thousand views or impressions of a single ad.
A weighted pipeline forecasts sales revenue by assigning a closing probability to each deal based on its stage in the sales funnel.
Buying intent is the collection of online cues and behaviors that signal a prospect is actively researching and moving toward a purchase decision.
Direct-to-Consumer (DTC) is a business model where companies sell products directly to customers, bypassing traditional retail middlemen.
The customer lifecycle is the journey a person takes from first becoming aware of your brand to becoming a loyal, repeat customer.
Key Performance Indicators (KPIs) are measurable values that demonstrate how effectively a company is achieving its key business objectives.
Lead enrichment tools are platforms that automatically add missing data to your leads, like contact info, firmographics, and buying signals.
Territory management is the process of segmenting customers into groups by geography or other factors to optimize sales efforts and resources.
Learn about B2B2C, including benefits of B2B2C model, key strategies for B2B2C success, & B2B2C vs. B2C vs. B2B: understanding the differences.
XML (Extensible Markup Language) is a markup language for encoding documents in a format that is both human-readable and machine-readable.
White labeling is when a company puts its own branding on a product or service that was actually produced by a different company.
Cost Per Click (CPC) is a digital advertising model where an advertiser pays a fee each time one of their ads gets clicked by a user.
Account management is the post-sales practice of building and nurturing long-term relationships with a company's most valuable clients.
Lead routing is the automated process of distributing incoming leads to the right sales reps based on predefined criteria.
Drupal is a free, open-source content management system (CMS) for building websites and applications. It's known for its robust flexibility.
A field sales representative, or outside sales rep, travels to meet prospects in person, selling products or services directly within their territory.
Social selling is the art of using social media to find, connect with, build relationships with, and nurture sales prospects.
Sales velocity is a key metric measuring the speed at which your company makes money. It shows how fast deals move through your sales pipeline.
Accessibility testing is a software testing method that verifies an application is usable by people with disabilities, like vision or hearing loss.
Process Builder is a Salesforce automation tool that lets you create 'if/then' business processes with a user-friendly visual interface.
A hard sell is an aggressive sales technique that uses high-pressure tactics to push a customer into making an immediate purchase decision.
Sales operations analytics is the practice of analyzing sales data to improve the efficiency and effectiveness of the entire sales process.
A sales process is a structured set of steps that a sales team follows to move a prospect from an initial lead to a closed customer.
Sales intelligence is technology that gathers and analyzes data to help salespeople find and understand prospects and existing clients.
The Challenger Sales model is a methodology where reps teach prospects, tailor their pitch, and take control of the sales conversation.
“End of Quarter” (EOQ) refers to the final weeks of a business quarter when sales teams rush to meet quotas, often leading to a flurry of deals.
Lead Velocity Rate (LVR) is the growth rate of your qualified leads, measured month-over-month. It's a key indicator of future revenue.
Cross-selling is a sales tactic of encouraging customers to purchase products or services that are related to what they're already buying.
Revenue Operations (RevOps) is a business function that aligns a company's sales, marketing, and customer service teams to drive predictable revenue.
Learn about B2B sales channels, including types of B2B sales channels, strategies for effective channel selection, & integrating technology in B2B sales.
“Always Be Closing” (ABC) is a sales mantra meaning every action a salesperson takes should be with the ultimate goal of closing the sale.
Data-driven marketing uses customer data to inform marketing decisions, optimize campaigns, and deliver personalized experiences to consumers.
Docker is a tool that packages applications and their dependencies into isolated environments called containers for easy deployment and scaling.
A firewall is a digital barrier that protects a network by monitoring and controlling traffic, blocking unauthorized access and malicious content.
Personalization in sales means tailoring outreach to a prospect's specific needs, interests, and context to make communication more relevant.
Outside sales reps sell products/services in person, traveling to meet clients and close deals face-to-face, outside of a traditional office.
Data appending is the process of adding new data fields to your existing database records to enrich and complete your information.
Sales rep training is the process of equipping your sales team with the skills, knowledge, and tools to effectively sell and hit their targets.
SEO, or Search Engine Optimization, is increasing the quantity and quality of traffic to your website through organic search results.
Integration testing is a software testing phase where individual modules are combined and tested together to verify their interaction.
Customer Data Management (CDM) is the process of collecting, organizing, and analyzing customer data to create a unified view of your audience.
Nurture is the process of building relationships with potential customers, guiding them through the sales funnel with personalized communication.
A horizontal market is one where a product or service is designed to meet a common need for a wide array of customers, regardless of their industry.
After-sales service is the support provided to customers after they've purchased a product. It includes things like warranties, training, or repairs.
Sender Policy Framework (SPF) is an email authentication method that lets you specify which mail servers can send emails on behalf of your domain.
Edge locations are globally distributed data centers that cache content close to users, reducing latency and delivering web content much faster.
Expansion revenue is the extra money a business makes from its current customers via upgrades, new products, or additional services.
Workflow automation uses rule-based logic to run a sequence of tasks that would otherwise require manual human effort to complete.
Price optimization is the process of finding the ideal price for a product or service to maximize profitability or other business objectives.
Sales territory management is the process of grouping accounts into territories and assigning them to reps to maximize sales and market coverage.
Trigger marketing uses customer actions or events to automatically send highly relevant, personalized messages at the perfect moment.
CRM analytics is the process of analyzing data from your CRM to uncover insights that help you better understand and serve your customers.
Sales enablement provides sales teams with the necessary tools, content, and information to help them sell more effectively and efficiently.
CSS, or Cascading Style Sheets, is the code that styles a website. It controls the colors, fonts, layout, and overall look of a web page.
Consumer Relationship Management (CRM) is a strategy for managing all of a company's relationships and interactions with its customers.
Cold calling is a sales technique where reps contact potential customers who have had no prior interaction with their company or product.
Mobile optimization adapts your website to ensure visitors on smartphones and tablets have a seamless, user-friendly experience.
Learn about business process management, including benefits of implementing BPM, steps to effective BPM, common BPM mistakes to avoid, & BPM tools and software.
Predictive analytics uses historical data, statistical algorithms, and machine learning to identify the likelihood of future outcomes.
Sales training is the process of honing a salesperson's skills and knowledge to enhance their effectiveness and drive sales success.
Virtual selling is the process of selling to customers remotely using technology like video calls, rather than meeting them in person.
Sales coaching is a process where managers help reps improve their skills and performance through personalized feedback, training, and guidance.
Geo-fencing creates a virtual boundary around a real-world location. It triggers actions on a device when it enters or exits this area.
Deal flow refers to the stream of business proposals and investment opportunities that a company or investor receives.
Omnichannel marketing creates a seamless, unified customer experience by integrating a company's various communication and sales channels.
An objection is an explicit expression by a prospect that presents a barrier to moving forward in the sales process.
A Service Level Agreement (SLA) is a contract defining the level of service between a provider and a client, including metrics and penalties.
A drip campaign is a series of automated messages sent to prospects or customers over time to nurture leads and drive engagement.
Sales pipeline velocity is a metric that measures how quickly deals move through your sales funnel to generate revenue for your business.
Intent-based leads are potential customers whose online actions—like searches or content engagement—signal a clear interest in buying a solution.
A sales presentation is a formal pitch by a salesperson to a prospective customer, showcasing a product or service to secure a sale.
A soft sell is a low-pressure sales tactic that uses subtle persuasion and relationship-building to gently guide customers toward a purchase.
Lead scraping is the process of automatically extracting contact information and other relevant data about potential customers from online sources.
Marketing Operations (MOps) is the engine of a marketing team, managing the technology, processes, and people to run campaigns effectively.
Sales productivity is the measure of a sales team's efficiency, focusing on maximizing revenue generation while minimizing the resources spent.
Account Click-Through Rate (CTR) is the percentage of individuals from a target account who click on a link in an ad, email, or on a webpage.
Learn about B2B intent data, including how B2B intent data enhances sales strategies, sources of B2B intent data, leveraging B2B intent data for competitiveness.
Average Revenue per User (ARPU) is a key performance indicator that calculates the average revenue generated from each user or subscriber.
Gamification applies game mechanics like points, badges, and leaderboards to non-game activities to boost engagement and motivate users.
A sales bundle groups multiple products or services into a single offering, often at a discounted price to provide greater value to customers.
Predictive Customer Lifetime Value (pCLV) is a forecast of the total net profit a single customer is expected to generate for your business.
Social proof is a psychological phenomenon where people assume the actions of others reflect correct behavior for a given situation.
A sales cycle is the series of steps a company takes to close a new customer. It starts with prospecting and ends with a signed deal.
Pipeline coverage is a key sales metric. It's the ratio of your total open pipeline value to your sales quota for a specific period.
A freemium model offers a product's basic features for free, enticing users to upgrade to a paid version for more advanced capabilities.
Mobile app analytics involves collecting and analyzing data from mobile apps to understand user behavior and optimize the app's performance.
Hot leads are prospective customers who have shown significant interest and are ready to buy, making them a top priority for sales teams.
A performance plan is a formal document outlining an employee's goals, expectations, and metrics for success over a specific period.
Dynamic pricing is a strategy where businesses set flexible prices for products or services based on current market demands and other factors.
Day Sales Outstanding (DSO) is a financial ratio that shows the average number of days it takes for a company to receive payment for a sale.
A Data Management Platform (DMP) is a tech platform used to collect and manage data, mainly for digital marketing and advertising campaigns.
A stakeholder is any individual, group, or party that has an interest in an organization and the outcomes of its actions.
Employee engagement is the emotional commitment an employee has to their organization, motivating them to contribute to the company's success.
Cybersecurity is the practice of protecting computer systems, networks, and data from digital attacks, theft, and unauthorized access.