Heavy-duty Rayovac flashlights are sold throughout the United States. The bulbs used in the flashlights, however, are manufactured by Philips, and the quantity of bulbs Philips sells is related to how many flashlights Rayovac manufactures. This is an example ofSingle choice
A
a tying arrangement.
B
reciprocity.
C
built demand.
D
relationship marketing.
E
derived demand.

Question

Heavy-duty Rayovac flashlights are sold throughout the United States. The bulbs used in the flashlights, however, are manufactured by Philips, and the quantity of bulbs Philips sells is related to how many flashlights Rayovac manufactures. This is an example ofSingle choice

A

a tying arrangement.

B

reciprocity.

C

built demand.

D

relationship marketing.

E

derived demand.

BlackTom AI · Accepted Answer

The scenario describes a chain where the demand for Philips bulbs (an input) is driven by the demand for Rayovac flashlights (the final product). This is a classic case of derived demand, where the need for a component or input arises because buyers purchase another product that uses it.

Option 1: a tying arrangement. This refers to a business practice where the purchase of one product is tied to the purchase of another, often through contractual obligations or product bundles. The scenario does not describe any tying or bundling; it merely shows upstream demand linked to downstream demand, so this is not the correct explanation.

Option 2: reciprocity. In marketing, reciprocity typically involves mutual exchange or favors between buyers and sellers, such as distributors returning favors or preferential terms. The example focuses on demand relationships between products, not reciprocal exchanges, so this is not appropriate here.

Option 3: built demand. This term is not standard in marketing theory. If interpreted as demand created within a market, it would still fail to capture the specific cause—demand for bulbs is driven by demand for flashlights, not by some intrinsic demand for bulbs alone. Therefore, this option is misleading.

Option 4: relationship marketing. While relationship marketing emphasizes long-term customer relationships, it does not describe the economic linkage between inputs and outputs demonstrated here. It misses the core idea of demand being derived from another product’s demand.

Option 5: derived demand. This is the correct framing: the bulbs’ demand is derived from the demand for Rayovac flashlights. Since Rayovac manufactures the final product that uses Philips bulbs, changes in flashlight demand translate into corresponding changes in bulb demand, illustrating derived demand.

Heavy-duty Rayovac flashlights are sold throughout the United States. The bulbs used in the flashlights, however, are manufactured by Philips, and the quantity of bulbs Philips sells is related to how many flashlights Rayovac manufactures. This is an example ofSingle choice

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