What is the definition of demand in business


Demand represents the entirety of the products that are in demand in a specific market at a specific point in time or over a specific period of time. Or: the need and needs of a specific consumer group for specific products or branded goods, expressed in terms of the desire to buy this product or branded article.

Demand describes the sales that can be achieved for a product on a market within a period. Demand is made up of the two components needs and purchasing power. As demand, needs only become effective in the market as long as the purchasing power is available to satisfy them.

Together with supply and price, demand represents the constitutive characteristics of a market. Demand and price are directly related. For most goods or services, it is assumed that the higher the price, the lower the demand. In addition, the total demand is determined by the disposable income of the consumers.

(1) Amount of goods desired for purchase or amount purchased;
(2) Allocation of different demand quantities to prices in the business plans of the demanders according to the price-sales function;
(3) The way in which one or more inquirers react according to a point on a given demand curve. A distinction must also be made between: quantitative (x = f (p)) and value (monetary) demand (N = p • x), i.e. the product of price p and the amount x demanded at this price. The demand for goods causes a demand for production factors, the so-called derived demand.

Demand are monetarily articulated, i.e. i.e., needs expressed in money. The individual economic subject determines the level and structure of the overall economic demand on the market through its individual demand for goods or services.

In the marketing area: needs and desires of a group of buyers for certain products or branded articles, expressed in the desire and the possibility to buy this product or branded article.

The demand for a particular good depends on
1. the price of the goods in demand,
2. the price of all other goods,
3. the income of the individual,
4. the individual needs structure and future expectations,
5. dem - assets and
6. The credit options.

The relationship between the quantity demanded and the price of a good is shown with the help of the demand curve. Normally, the higher the price, the lower the demand for a good. The extent of this relationship between price and the amount of demand is the price elasticity of demand. This indicates the percentage by which the demand for a good changes if the price of this good rises or falls by one percent. If the price elasticity is 1, the quantity demanded falls relatively more sharply than the price rises. The relationship between the demanded quantity of a good and the price of another good is expressed by the cross-price elasticity. Changes in income usually influence demand in such a way that as income increases, so does demand for certain products. This relationship is expressed and quantified with the income elasticity of demand; Wealth and credit options influence demand according to income. Knowing the elasticity of demand in relation to income is of particular importance for industry analysis: e.g. B. How will the demand for sparkling wine develop if wages increase by 15% over the next two years?

In the health industry:
This is only partially the case in the healthcare sector. For example, after the introduction of the practice fee, there was a slight decrease in visits to the doctor, but this effect soon put into perspective. It is assumed that the demand for health services will steadily increase due to the demographic development. The regulating element of the price hardly comes into play because the customer, i.e. the patient being treated, is normally - at least in the area of ​​statutory health insurance - not confronted with the price of the service received due to the system of benefits in kind, and therefore the price performance also has no effect on the demand for health services.

While need is a psychological quantity, need and demand are economic quantities. The demand is aimed at the market and, unlike the need, includes not only the intention to procure a good, but also behavior resulting from this intention, for example in the form of a search for information. Thus, the demand represents a behavior that is relevant to the market.

In quantitative terms, the need is greater than the demand, since the overall existing need only partially appears as demand on the market because the prerequisites, e.g. the determination or the necessary purchasing power, are missing.

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