Which of the following is a market characteristic of products and services purchased within an organizational context?
A. Demand for industrial products and services is derived.
B. Raw and semi-finished goods are predominantly purchased.
C. Goods and services are purchased on the basis of specifications that are technical in nature.
D. The focus is on delivery time and post-sale service.
The correct answer and explanation is :
Correct Answer: A. Demand for industrial products and services is derived.
Explanation (300 Words):
In organizational or business markets, products and services are not purchased for personal consumption but rather to aid in the production of other goods and services. A critical market characteristic of such purchases is that demand is derived, making Option A the correct answer.
Derived demand refers to the demand for industrial products and services that stems from the demand for consumer goods. For example, the demand for steel is derived from the demand for cars and construction materials. If fewer people are buying cars, then automakers will order less steel, and steel manufacturers will experience reduced demand.
This characteristic distinguishes organizational markets from consumer markets. In consumer markets, demand is direct and influenced by personal preferences, tastes, and disposable income. However, in organizational markets, the demand is indirectly influenced by end-user consumption patterns.
Let’s consider the other options:
- B. Raw and semi-finished goods are predominantly purchased: While true, this is a type of product, not a market characteristic. It relates to what is purchased, not the nature of demand.
- C. Goods and services are purchased on the basis of specifications that are technical in nature: This is a buying behavior, not a core market characteristic. It reflects the decision-making process but not why the purchase is made.
- D. The focus is on delivery time and post-sale service: This reflects purchasing priorities or criteria, again relating to how a purchase is made, not the fundamental nature of demand.
Therefore, the defining market characteristic of organizational purchases is the derived nature of demand, which plays a central role in shaping business-to-business (B2B) market dynamics, inventory planning, and production cycles.
