Terms

Demand

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.

Factors Influencing Demand

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.

  • Income: Changes in consumers' disposable income directly affect their purchasing power.
  • Preferences: Shifts in consumer tastes, trends, or the perceived quality of a product.
  • Substitutes: The availability and pricing of alternative products that satisfy the same need.
  • Complements: The price and availability of goods that are often used together with the product.
  • Expectations: Consumer beliefs about future price changes or product availability.

Types of Demand

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.

Demand vs. Request

While often used interchangeably, in a business context, 'demand' and 'request' have distinct meanings and applications.

  • Demand: This refers to a consumer's desire for a product backed by the willingness and ability to pay for it. It is a measurable economic concept crucial for enterprises to forecast sales, set prices, and manage inventory. While powerful for market analysis, it can be complex to estimate accurately.
  • Request: This is a simpler expression of want, without the inherent financial commitment. For companies, it's useful for gathering customer feedback, feature ideas, or handling internal service needs. It provides direct qualitative insights but doesn't reflect broader market purchasing power or price sensitivity.

Demand in Different Markets

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.

  • Normal Goods: Demand for these items typically rises as consumer income increases.
  • Luxury Goods: Demand can paradoxically increase with price, driven by status and exclusivity.
  • Necessities: Demand remains relatively stable regardless of price or income fluctuations.
  • Substitutable Goods: Demand is highly sensitive to the price and availability of competing products.

Impact of Demand on Pricing

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.

Frequently Asked Questions about Demand

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.

Other terms

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Channel Partner

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Event Marketing

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Event Marketing

GPCTBA/C&I

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GPCTBA/C&I

Account-Based Marketing Software

Account-Based Marketing (ABM) software helps teams coordinate personalized marketing and sales efforts to land high-value customer accounts.

Account-Based Marketing Software

Triggers

Triggers are predefined conditions that, when met, automatically launch a workflow or action, ensuring timely and relevant outreach.

Triggers

GDPR Compliance

GDPR compliance means following the EU's strict data protection laws to ensure the secure and lawful handling of personal data.

GDPR Compliance

Demand Generation

Demand generation is the process of creating awareness and interest in your products to build a pipeline of qualified leads for your sales team.

Demand Generation

Marketo

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Marketo

Consultative Selling

Consultative selling is an approach where salespeople act as expert advisors, diagnosing customer needs to provide the most suitable solutions.

Consultative Selling

Ramp Up Time

Ramp-up time is the period a new hire takes to get fully up to speed and become a productive member of your go-to-market team.

Ramp Up Time

Custom API integration

A custom API integration is a bespoke connection between software, enabling them to communicate and share data to meet unique business requirements.

Custom API integration

Sales Kickoff

A sales kickoff (SKO) is an annual event for a sales team to celebrate wins, align on goals, and get motivated for the upcoming year.

Sales Kickoff

Lead Qualification

Lead qualification is the process of determining which prospects are most likely to become paying customers based on predefined criteria.

Lead Qualification

Account Mapping

Account mapping is comparing your customer list with a partner's to find common prospects and unlock new sales opportunities.

Account Mapping

RESTful API

A RESTful API is a web service interface that uses HTTP requests to access and use data, adhering to the constraints of REST architecture.

RESTful API

B2B Sales

Learn about B2B sales, including key strategies for B2B success, types of B2B sales models, & B2B vs. B2C sales: understanding the differences.

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Process Builder

Process Builder is a Salesforce automation tool that lets you create 'if/then' business processes with a user-friendly visual interface.

Process Builder

Annual Recurring Revenue (ARR)

Annual Recurring Revenue (ARR) is the predictable income a company expects to receive from its customers over a one-year period.

Annual Recurring Revenue (ARR)

Voice Broadcasting

Voice broadcasting is an automated system that delivers a pre-recorded voice message to a large list of phone numbers simultaneously.

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X-Sell

X-Sell, or cross-selling, is a sales strategy of selling additional, related products or services to an existing customer base.

X-Sell

Representational State Transfer Application Programming Interface

A Representational State Transfer (REST) API is a web service that uses a simple, stateless architecture for systems to communicate online.

Representational State Transfer Application Programming Interface

Sales Territory

A sales territory is a specific group of customers or a geographic area that a salesperson or sales team is responsible for managing.

Sales Territory

Applicant Tracking System

An Applicant Tracking System (ATS) is a software application that manages your entire hiring and recruitment process from a single dashboard.

Applicant Tracking System

Customer Data Platform (CDP)

A Customer Data Platform (CDP) centralizes customer data from all sources to create a complete, unified profile for each individual customer.

Customer Data Platform (CDP)

Headless CMS

A headless CMS is a back-end content repository that delivers content via API to any front-end, decoupling the content from its presentation layer.

Headless CMS

Ideal Customer Profile

An Ideal Customer Profile (ICP) is a detailed description of the perfect, hypothetical company that would get the most value from your product.

Ideal Customer Profile

User Interface

A User Interface (UI) is the point where humans and computers interact. It encompasses all visual elements like screens, icons, and buttons.

User Interface

Buyer Intent

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Integration Testing

Integration testing is a software testing phase where individual modules are combined and tested together to verify their interaction.

Integration Testing

User Interaction

User interaction is any action a user takes within a digital interface, like clicking a button, scrolling a page, or filling out a form.

User Interaction

Network Monitoring

Network monitoring is the continuous process of tracking a computer network's performance and health to detect and resolve issues proactively.

Network Monitoring

Net Revenue Retention (NRR)

Net Revenue Retention (NRR) is the percentage of recurring revenue kept from existing customers, including upsells, downgrades, and churn.

Net Revenue Retention (NRR)

Customer Buying Signals

Customer buying signals are the actions, behaviors, or statements a prospect makes that indicate they are moving towards a purchase decision.

Customer Buying Signals

Webhooks

Webhooks are automated messages sent by an app when a specific event occurs. They push real-time data to another app's unique URL.

Webhooks

Channel Partners

Channel partners are third-party firms that help market and sell a company's products or services, acting as an indirect sales force.

Channel Partners

Objection Handling in Sales

Objection handling in sales is the process of responding to a prospect's concerns about a product or service to move the deal forward.

Objection Handling in Sales

Lead Nurturing

Lead nurturing is the process of developing and reinforcing relationships with buyers at every stage of the sales funnel.

Lead Nurturing

No Spam

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No Spam

Rollback Procedures

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Rollback Procedures

B2B Data Platform

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B2B Data Platform

NoSQL

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NoSQL

API

An API (Application Programming Interface) is a software intermediary that allows two applications to talk to each other and exchange information.

API

Operational CRM

An Operational CRM is a system that automates and improves customer-facing business processes like sales, marketing, and customer service.

Operational CRM

Audience Targeting

Audience targeting is the process of segmenting consumers into specific groups to deliver more personalized and relevant marketing messages.

Audience Targeting

Enterprise Resource Planning

Enterprise Resource Planning (ERP) is a system of integrated software that businesses use to manage and automate their core day-to-day processes.

Enterprise Resource Planning

Chatbots

Chatbots are AI-powered programs that simulate human conversation. They interact with users via text or voice, typically for customer support.

Chatbots

Account-Based Marketing

Account-Based Marketing (ABM) is a focused B2B strategy where marketing and sales collaborate to target and convert high-value accounts.

Account-Based Marketing

Account Development Representative

An Account Development Representative (ADR) identifies and qualifies new business opportunities, creating a pipeline for account executives.

Account Development Representative

Revenue Forecasting

Revenue forecasting is the process of estimating a company's future revenue, using historical data and market trends to guide strategic planning.

Revenue Forecasting

AI Sales Script Generator

An AI sales script generator is a tool that uses artificial intelligence to create personalized sales scripts for any outreach scenario.

AI Sales Script Generator

Sales Engineer

Sales Engineers blend deep technical knowledge with sales acumen, demonstrating a product's value and solving customer problems to drive revenue.

Sales Engineer

Customer Relationship Marketing

Customer relationship marketing is a strategy for building lasting connections with customers to foster long-term loyalty and engagement.

Customer Relationship Marketing

Cold Calling

Cold calling is a sales tactic where reps contact potential customers by phone who haven't previously expressed interest in their product or service.

Cold Calling

Intent-Based Leads

Intent-based leads are potential customers whose online actions—like searches or content engagement—signal a clear interest in buying a solution.

Intent-Based Leads

Lead Enrichment

Lead enrichment adds third-party data to your raw lead lists, creating fuller prospect profiles for more effective and personalized outreach.

Lead Enrichment

Salesforce Administrator

A Salesforce Administrator is a certified professional who manages and customizes the Salesforce platform to meet a company's specific business needs.

Salesforce Administrator

Single Sign-On (SSO)

Single Sign-On (SSO) is an authentication method allowing users to access multiple applications with one set of login credentials.

Single Sign-On (SSO)

Key Accounts

Key accounts are a company's most valuable customers, vital due to their significant revenue contribution and strategic importance for growth.

Key Accounts

Target Account List

A Target Account List (TAL) is a focused list of high-value companies that a business specifically aims to convert into customers.

Target Account List

Retargeting Marketing

Retargeting marketing is a digital advertising strategy that targets users who have previously interacted with your website or brand online.

Retargeting Marketing

Social Proof

Social proof is a psychological phenomenon where people assume the actions of others reflect correct behavior for a given situation.

Social Proof

Closed Won

Closed Won is a CRM status for a sales deal that has been successfully concluded, resulting in a signed contract and a new customer.

Closed Won

Revenue Intelligence

Revenue intelligence is the process of collecting and analyzing customer data to provide insights that help sales teams make smarter decisions.

Revenue Intelligence

Marketing Mix

The marketing mix is the set of marketing tools a company uses to sell products, defined by the 4Ps: Product, Price, Place, and Promotion.

Marketing Mix

Lead Scrape

Lead scraping is the process of automatically extracting contact information and other relevant data about potential customers from online sources.

Lead Scrape

Mobile Compatibility

Mobile compatibility ensures your site or app works flawlessly on mobile devices, like smartphones and tablets, for a seamless user experience.

Mobile Compatibility

Business Development Representative

Learn about business development representative, including skills and qualifications for BDRs, & roles and responsibilities of a BDR.

Business Development Representative

B2C2B

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B2C2B

Revenue Operations (RevOps)

Revenue Operations (RevOps) is a business function that aligns a company's sales, marketing, and customer service teams to drive predictable revenue.

Revenue Operations (RevOps)

Content Rights Management

Content Rights Management involves controlling the use and distribution of copyrighted digital media to protect intellectual property.

Content Rights Management

Enrichment

Enrichment is the process of adding third-party data to your existing customer profiles to get a more complete picture of your leads.

Enrichment

System of Record

A System of Record (SoR) is the authoritative data source for a specific type of data. It acts as the single source of truth for an organization.

System of Record

User-generated Content

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User-generated Content

Video Selling

Video selling uses personalized video messages to engage prospects, build rapport, and guide them through the sales funnel to close more deals.

Video Selling

Marketing Automation Platform

A marketing automation platform is software that automates marketing actions. It helps manage tasks like email campaigns and lead nurturing.

Marketing Automation Platform

Lead Generation Software

Lead generation software helps businesses automate finding and capturing potential customers' contact information to build sales pipelines.

Lead Generation Software

Buying Signal

A buying signal is any action from a prospect that indicates they are interested in making a purchase, helping sales teams prioritize leads.

Buying Signal

GTM

A go-to-market (GTM) strategy is an action plan that outlines how a company will reach target customers and achieve a competitive advantage.

GTM

Customer Centricity

Customer centricity is a business approach that puts the customer at the heart of every decision, aiming to build loyalty and long-term value.

Customer Centricity

Buying Committee

A buying committee is a group of stakeholders within an organization who are jointly responsible for making major purchasing decisions.

Buying Committee

Digital Advertising

Digital advertising is the practice of delivering promotional content to users through various online and digital channels like social media or search engines.

Digital Advertising

CRM Integration

CRM integration connects your CRM software with other tools, creating a unified system for all your customer data and business processes.

CRM Integration

Programmatic Display Campaign

Programmatic display campaigns use automation to buy and sell digital ad space in real-time, targeting specific audiences across the web.

Programmatic Display Campaign

Mid-Market

Mid-market companies are businesses larger than small businesses but smaller than large enterprises, often defined by revenue or employee size.

Mid-Market

Total Addressable Market (TAM)

Total Addressable Market (TAM) represents the maximum revenue a company can earn by selling its product or service in a specific market.

Total Addressable Market (TAM)

Closed Lost

Closed Lost is a sales term for a deal that didn't go through. The prospect decided not to buy, or the sales team disqualified them.

Closed Lost

Point of Contact

A Point of Contact (POC) is the designated individual or department that serves as the main hub for information and communication on a matter.

Point of Contact

Marketing Qualified Lead (MQL)

A Marketing Qualified Lead (MQL) is a prospect who has shown interest based on marketing efforts but isn't yet ready for a sales conversation.

Marketing Qualified Lead (MQL)

Sales Operations Analytics

Sales operations analytics is the practice of analyzing sales data to improve the efficiency and effectiveness of the entire sales process.

Sales Operations Analytics

Scrum

Scrum is an agile framework that helps teams structure and manage their work through a set of values, principles, and practices.

Scrum

Canary Releases

A canary release is a deployment strategy where new software is rolled out to a small user group first, minimizing risk before a full release.

Canary Releases

Cross-Selling

Cross-selling is a sales tactic of encouraging customers to purchase products or services that are related to what they're already buying.

Cross-Selling

Sales Enablement Technology

Sales enablement technology refers to software and tools that equip sales teams with the resources they need to close more deals efficiently.

Sales Enablement Technology

Objection Handling

Objection handling is the process of responding to a prospect's concerns or hesitations about a product or service to move a deal forward.

Objection Handling

Marketing Qualified Account

A Marketing Qualified Account (MQA) is a target company that has shown significant engagement, indicating it's ready for the sales team to pursue.

Marketing Qualified Account

Intent Data

Intent data tracks a user's online behavior—like searches and site visits—to identify signals that they are ready to make a purchase.

Intent Data

Contact Discovery

Contact discovery is the process of finding accurate contact details for potential leads, including names, emails, phone numbers, and job titles.

Contact Discovery

Sales Metrics

Sales metrics are quantifiable data points that track and measure a sales team's performance against specific goals and objectives.

Sales Metrics

Employee Engagement

Employee engagement is the emotional commitment an employee has to their organization, motivating them to contribute to the company's success.

Employee Engagement

Cross-Site Scripting

Cross-Site Scripting (XSS) is a web security vulnerability that allows attackers to inject malicious scripts into trusted websites.

Cross-Site Scripting