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Nov 8th, 2015
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Question description


Why is the concept of derived demand so important for companies selling products and services to other organizations? What is an example where an industrial company has benefited from changes in end-consumer demand?


Derived demand increasing or decreasing consumer demand for a specific product. Demand or lack of demand for specific products can either create or reduce demand for product related to the specific product. For businesses, derived demand creates a right to left flowing chain, which starts with consumer demand. Derived demand value chains and the ripple effect underscore the importance of business to business relationships.

The automobile industry is affected by the end-consumer demand. It is the second biggest, a company gets almost fifty percent of its revenues from automotive companies that deals with steel. Steel is the backbone of the United States; it plays a huge part of the economy and give people job.


Lohrey, J. (2015). An Example of Derived Demand | Chron.com. Retrieved from http://smallbusiness.chron.com/example-derived-demand-80611.html

O'Hara, M. (2014, December 18). Important End Consumers Of Steel - Market Realist. Retrieved from http://marketrealist.com/2014/12/overview-key-end-consumers-steel/


Hello Class,

The concept of derived demand is so important for companies because companies has a chance to get their products and services recognized through big named companies. Also, derived demand for companies selling products and services to other companies allows each company to gain revenue off a particular companies so that consumers will have a high demand for their products and services. Sometimes, when companies sell their products and services to other companies, they make a good enough percentage or value of the products and services that are sold. For example, in the toy business or toy manufacturing industry, companies are always making new toys such as action figures and dolls. These kinds of toys are always being manufactured and sold to either small businesses or big named businesses such as Toys R US, Big Lots, Sam's Club, Disney Store, Ollie's, Wal-Mart and Target etc. These few companies I named have a success in some ways selling and purchasing toys from different toy manufacturing companies that are better with designing and creating toys that keeps children wanting more each year. There are some toys that no longer exist because of the end-consumer demand. For example, some action figures seems to evolve more and more over time. Marvel, DC Comics, Ninja Turtles, Barbie, Cabbage Patch kids, America doll, Monster High, Frozen Disney characters, and Legos will never seem to get old because children of all generation love these toys for their unique designs, features and building, accessories that comes with each toy. I believe that Toy industry will always benefit from changes in the end consumer demand because children will always find new and better toys to enjoy.

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School: UT Austin

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