What does "derived demand" refer to in marketing?

Derived demand in marketing refers to the concept where the demand for one product or service is dependent on the demand for another product or service. This typically occurs in industrial or manufacturing contexts, where the need for raw materials, components, or services arises from the demand for finished goods. For instance, if there is an increase in the demand for cars, this will subsequently increase the demand for tires, metal, and other components used in car manufacturing.

Understanding this concept is crucial for marketers and businesses because it helps them to anticipate changes in demand across their supply chains and to adjust their strategies accordingly. By recognizing how the demand for their offerings is interconnected with other products, companies can better align their production, inventory, and marketing efforts to meet market needs effectively.

Other options do not accurately represent derived demand. For example, demand based on market competition speaks to different influences on purchasing behavior and does not encapsulate the interdependent nature of derived demand. Similarly, the need for customer satisfaction and managing customer expectations relate more to marketing strategies focused on service quality and client relationships rather than the underlying economic activity of demand generation across products.