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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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

Outbound Lead Generation

Outbound lead generation means proactively reaching out to potential customers who haven't yet expressed interest to introduce them to your brand.

Outbound Lead Generation

Sales and Marketing Analytics

Sales and marketing analytics involves measuring and analyzing performance data to maximize effectiveness and optimize return on investment (ROI).

Sales and Marketing Analytics

Customer Relationship Management Systems

A Customer Relationship Management (CRM) system is a tool that centralizes customer data to help manage interactions and nurture relationships.

Customer Relationship Management Systems

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

Retargeting Marketing

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

Retargeting Marketing

Dynamic Pricing

Dynamic pricing is a strategy where businesses set flexible prices for products or services based on current market demands and other factors.

Dynamic Pricing

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)

Technographics

Technographics is data that outlines a company’s technology stack, helping B2B teams identify prospects based on the software and hardware they use.

Technographics

User-generated Content

User-generated content (UGC) refers to any form of content, like images, videos, or text, created and shared by users on online platforms.

User-generated Content

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

Consultative Selling

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

Consultative Selling

Simple Object Access Protocol Application Programming Interface

A Simple Object Access Protocol (SOAP) API is a web service that uses XML to exchange structured information between different applications.

Simple Object Access Protocol Application Programming Interface

Awareness Buying Stage

The awareness stage is the first step in the buyer's journey, where a potential customer realizes they have a problem or an opportunity to explore.

Awareness Buying Stage

Cold Email

A cold email is an initial outreach sent to a potential customer with whom you've had no prior contact, aiming to introduce your business.

Cold Email

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 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

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

Sales Metrics

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

Sales Metrics

Account Management

Account management is the post-sales practice of building and nurturing long-term relationships with a company's most valuable clients.

Account Management

Progressive Web Apps

Progressive Web Apps (PWAs) are websites that look and feel like native mobile apps, offering features like offline access and push notifications.

Progressive Web Apps

Inside Sales

Inside sales is a remote sales process where reps sell products or services via phone, email, and other digital tools instead of in person.

Inside Sales

Product Champion

A product champion is an internal evangelist who drives a product's adoption and success by ensuring it solves real problems for their team.

Product Champion

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

Firmographics

Firmographics are descriptive attributes of organizations, used to segment companies by characteristics like industry, size, and location.

Firmographics

Sales Acceleration

Sales acceleration refers to strategies and technologies designed to speed up the sales cycle, enabling reps to close more deals, faster.

Sales Acceleration

Integration Testing

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

Integration Testing

Sales Dashboard

A sales dashboard is a visual tool that centralizes and displays key sales data, metrics, and KPIs to help teams track performance and goals.

Sales Dashboard

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

Sales Partnerships

Sales partnerships are strategic alliances where two companies co-sell products to expand their reach, generate new leads, and increase revenue.

Sales Partnerships

Buying Criteria

Buying criteria are the specific requirements and standards a customer uses to evaluate products or services before making a decision.

Buying Criteria

Warm Outreach

Warm outreach is contacting prospects with whom you have a pre-existing connection, like a mutual contact, making your message more personal and effective.

Warm Outreach

Dark Funnel

The Dark Funnel describes customer buying activities that are untrackable by companies, such as private chats and word-of-mouth referrals.

Dark Funnel

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

Smile and Dial

"Smile and dial" is a high-volume sales tactic where reps make numerous cold calls from a list, often with little to no prior research.

Smile and Dial

Email Marketing

Email marketing is a digital strategy where businesses send targeted emails to prospects and customers to build relationships and drive sales.

Email Marketing

Persona Map

A persona map visually outlines a target customer, detailing their goals, behaviors, and pain points to help your team build genuine empathy.

Persona Map

Sales Prospecting Software

Sales prospecting software automates the process of finding, contacting, and tracking potential customers to help sales teams build their pipeline.

Sales Prospecting Software

Lead Qualification Process

The lead qualification process is how you determine which prospects are most likely to become customers by evaluating them against specific criteria.

Lead Qualification Process

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 Qualified Opportunity

A Marketing Qualified Opportunity (MQO) is a lead vetted by marketing as a genuine sales opportunity, ready for direct sales follow-up.

Marketing Qualified Opportunity

Marketing Play

A marketing play is a repeatable tactic used to achieve a specific marketing goal, like generating leads or driving engagement.

Marketing Play

Marketo

Marketo is a marketing automation platform used by B2B marketers to manage lead generation, nurturing, email marketing, and analytics.

Marketo

Behavioral Analytics

Learn about behavioral analytics, including implementing behavioral analytics successfully, & key metrics in behavioral analytics.

Behavioral Analytics

Talk Track

A talk track is a script that guides sales reps during calls. It ensures they cover key points and maintain a consistent message with prospects.

Talk Track

Lead List

A lead list is a curated database of potential customers (leads) with contact information and other key data for sales and marketing outreach.

Lead List

Account-Based Sales

Account-Based Sales (ABS) is a focused B2B strategy where sales and marketing teams treat high-value accounts as individual markets of one.

Account-Based Sales

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

Precision Targeting

Precision targeting is a marketing strategy that uses data to identify and reach a highly specific audience most likely to convert.

Precision Targeting

Product-Led Growth

Product-Led Growth (PLG) is a business strategy where the product itself drives user acquisition, conversion, and expansion.

Product-Led Growth

Docker

Docker is a tool that packages applications and their dependencies into isolated environments called containers for easy deployment and scaling.

Docker

Social Proof

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

Social Proof

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 Intent Data

Learn about B2B intent data, including how B2B intent data enhances sales strategies, sources of B2B intent data, leveraging B2B intent data for competitiveness.

B2B Intent Data

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

Sales Coach

A sales coach is a mentor who trains and guides sales reps to enhance their skills, boost performance, and ultimately close more deals effectively.

Sales Coach

Consumer Relationship Management

Consumer Relationship Management (CRM) is a strategy for managing all of a company's relationships and interactions with its customers.

Consumer Relationship Management

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

End of Day

End of Day (EOD) refers to the close of business hours. It's a common deadline for tasks and reports to be completed before the workday ends.

End of Day

Application Performance Management

Application Performance Management (APM) monitors and manages an application's performance, availability, and the experience of its end-users.

Application Performance Management

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

Trigger Marketing

Trigger marketing uses customer actions or events to automatically send highly relevant, personalized messages at the perfect moment.

Trigger Marketing

Buying Intent

Buying intent is the collection of online cues and behaviors that signal a prospect is actively researching and moving toward a purchase decision.

Buying Intent

Site Retargeting

Site retargeting is a marketing strategy that shows ads to people who have previously visited your website but left without converting.

Site Retargeting

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

B2B Marketing Attribution

Learn about B2B marketing attribution, including challenges in B2B marketing attribution, & key metrics for effective attribution.

B2B Marketing Attribution

Competitive Intelligence (CI)

Competitive intelligence (CI) is the ethical gathering and analysis of market data to inform strategic business decisions and gain an advantage.

Competitive Intelligence (CI)

Sales Funnel

A sales funnel is a model illustrating the customer's journey from initial awareness to the final purchase, narrowing down leads at each stage.

Sales Funnel

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

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

White Label

White labeling is when a company puts its own branding on a product or service that was actually produced by a different company.

White Label

Affiliate Marketing

Affiliate marketing is a performance-based model where affiliates earn a commission for promoting another company’s products or services.

Affiliate Marketing

Account Development Representative

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

Account Development Representative

Knowledge Base

A knowledge base is a self-serve online library of information about a product, service, department, or topic.

Knowledge Base

Content Management System

A Content Management System (CMS) is software for creating, managing, and modifying website content without needing specialized technical skills.

Content Management System

Channel Partner

A channel partner is a company that works with a manufacturer or producer to market and sell their products, software, or services to customers.

Channel Partner

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)

Sales Enablement Content

Sales enablement content refers to the materials and tools that empower your sales team to engage prospects and close deals more efficiently.

Sales Enablement Content

Lead Generation Funnel

A lead generation funnel is a systematic process that guides potential customers from initial awareness of your brand to becoming qualified leads.

Lead Generation Funnel

Sales Automation

Sales automation uses software to streamline and automate repetitive, manual sales tasks, freeing up reps to focus on selling.

Sales Automation

Microservices

Microservices is an architecture where apps are built as a collection of small, independent services that communicate with each other over APIs.

Microservices

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

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

Shipping Solutions

Shipping solutions are services or software that streamline the logistics of getting products to customers, from label printing to final delivery.

Shipping Solutions

Lookalike Audiences

Lookalike audiences are groups of potential customers who share similar characteristics and behaviors with your existing, high-value customers.

Lookalike Audiences

Rollback Procedures

Rollback procedures are a set of steps to restore a system to a previous, stable version after a failed update, ensuring minimal disruption.

Rollback Procedures

Sales Calls

A sales call is a real-time conversation between a salesperson and a prospect, aiming to persuade them to purchase a product or service.

Sales Calls

Regression Testing

Regression testing ensures that new code changes don’t negatively impact existing features. It's a key step to maintain software quality after updates.

Regression Testing

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

Intent leads

Intent leads are prospects who show buying signals through their online actions, indicating they're actively looking to make a purchase.

Intent leads

Sales Objections

Sales objections are reasons or concerns raised by a potential customer as to why they are hesitant or unwilling to make a purchase.

Sales Objections

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

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

Programmatic Advertising

Programmatic advertising uses AI and real-time bidding to automate the buying and selling of digital ad space, targeting specific audiences.

Programmatic Advertising

Elevator Pitch

An elevator pitch is a short, memorable summary of what you do, designed to be delivered in the time it takes to ride an elevator.

Elevator Pitch

Enterprise

An enterprise is a large-scale organization, often a corporation, defined by its complex structure and substantial number of employees.

Enterprise

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-to-Business (B2B)

Learn about B2B, including what is it, its key elements, the benefits of B2B partnerships, the differences between B2B and B2C, and strategies for effective marketing.

Business-to-Business (B2B)

Order Management

Order management is the end-to-end process of tracking customer orders from placement to fulfillment, ensuring a seamless customer experience.

Order Management

Direct Sales

Direct sales involves selling products directly to consumers in a non-retail setting, such as at home, online, or person-to-person.

Direct Sales