The Chain of Derived Demand

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The Chain of Derived Demand
ogundipe abiodun tomide, Member, Management Consultant, Nigeria

In business people's mind, marketing is the identification of human needs and wants and trying to fulfill these needs in a profitable manner.
This is all marketing is about. Identifying human needs and wants and finding ways to fulfill these needs profitably.
But we always must be clear about our definitions.

What are business-to-business markets?
To answer this question, it is useful to consider the value chain that starts with a consumer demand and from which dozens of business products or services are required.
Take the example of a simple shirt we buy. They do not arrive in the shops by accident. There is a value chain of enormous complexity that begins with cotton or some other fibre that must then be woven into cloth, that in turn is machined into a garment, packed and distributed through various levels until finally we pick it from the shelf. We call this the chain of derived demand, since everything is pulled through as a result of the demand for the product. Businesses sell cotton to merchants who sell it to spinners who sell it to weavers who sell it to garment makers and so on. None of the businesses buy the products for pure indulgence. They buy them with the ultimate aim of adding value in order that they can move the products down the chain until they finally reach us, the general public.

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