The marketing mix or the 4P’s of Marketing is a business tool used

in marketing and by marketing professionals. These are : Product,

Price, Place and Promotion. These 4 parameters that the marketing
manager can control, subject to the internal and external constraints of
the marketing environment. The goal is to make decisions that center
the 4Ps on the customers in the target market in order to create
perceived value and generate a positive response.
Product – refers to tangible, physical products as well as services. Some
examples of the product decisions to be made are: brand name,
functionality, styling, quality, safety, packaging, repairs and support,
warranty and accessories and services.
Price – some examples of pricing decisions, are: pricing strategy,
suggested retail price, volume discounts and wholesale pricing, cash
and early payment discounts, seasonal pricing, bundling, price
flexibility and price discrimination .
Place – is about getting the products to the customers. Examples
distribution decisions include: distribution channels, market coverage,
specific channel members, inventory management, warehousing,
distribution centers, order processing, transportation and reverse
logistics.
Promotion – represents the various aspects of marketing
communication about the product with the goal of generating positive
customer response. Marketing communication decisions include:
Promotion strategy, advertising, personal selling and sales force and
sales promotion

The Law of supply and demand is a theory explaining the interaction

between the supply of a resource and the demand for that resource.
The law of supply and demand defines the effect that the availability of
a particular product and the desire (or demand) for that product has
on price. Generally, if there is a low supply and a high demand, the
price will be high. In contrast, the greater the supply and the lower the
demand, the lower the price will be.

In economics, supply and demand is an economic model of price

determination in a market. It concludes that in a competitive market,
the unit price for a particular good will vary until it settles at a point
where the quantity demanded by consumers (at current price) will
equal the quantity supplied by producers (at current price), resulting in
an economic equilibrium for price and quantity.

The four basic laws of supply and demand are:

1. If demand increases and supply remains unchanged, a

shortage occurs, leading to a higher price.
 2. If demand decreases and supply remains unchanged, a surplus
occurs, leading to a lower price.
3. If demand remains unchanged and supply increases, a surplus
occurs, leading to a lower price.
4. If demand remains unchanged and supply decreases, a
shortage occurs, leading to a higher price.

Global strategy as defined in business terms is an organization's

strategic guide to globalization. A sound global strategy should address
these questions: what must be (versus what is) the extent of market
presence in the world's major markets? How to build the necessary
global presence? What must be AND (versus what is) the optimal
locations around the world for the various value chain activities? How
to run global presence into global competitive advantage?

A global strategy may be appropriate in industries where firms are

faced with strong pressures for cost reduction but with weak pressures
for local responsiveness. Therefore, it allows these firms to sell a
standardized product worldwide. However, fixed
costs (capital equipment) are substantial. Nevertheless, these firms are
able to take advantage of scale economies and experience curve
effects, because it is able to mass-produce a standard product which
can be exported (providing that demand is greater than the costs
involved).

Global strategies require firms to tightly coordinate their product and

pricing strategies across international markets and locations, and
therefore firms that pursue a global strategy are typically highly
centralized.

The simple meaning of economies of scale is doing things more

efficiently with increasing size or speed of operation. Economies of
scale often originate with fixed capital, which is lowered per unit of
production as design capacity increases. In wholesale and retail
distribution, increasing the speed of operations, such as order
fulfillment, lowers the cost of both fixed and working capital. Other
common sources of economies of scale are purchasing (bulk buying of
materials through long-term contracts), managerial (increasing the
specialization of managers), financial (obtaining lower-interest charges
when borrowing from banks and having access to a greater range of
financial instruments), marketing (spreading the cost of advertising
over a greater range of output in media markets), and technological
(taking advantage of returns to scale in the production function). Each
of these factors reduces the long run average costs (LRAC) of
production by shifting the short-run average total cost (SRATC)
curve down and to the right.
Economies of scale is a practical concept that may explain real world
phenomena such as patterns of international trade or the number of
firms in a market. The exploitation of economies of scale helps explain
why companies grow large in some industries. It is also a justification
for free trade policies, since some economies of scale may require a
larger market than is possible within a particular country—for example,
it would not be efficient for Liechtenstein to have its own car maker, if
they only sold to their local market. A lone car maker may be
profitable, but even more so if they exported cars to global markets in
addition to selling to the local market. Economies of scale also play a
role in a "natural monopoly."
The management thinker and translator of the Toyota Production
System for service, Professor John Seddon, argues that attempting to
create economies by increasing scale is powered by myth in the service
sector. Instead, he believes that economies will come from improving
the flow of a service, from first receipt of a customer’s demand to the
eventual satisfaction of that demand. In trying to manage and reduce
unit costs, firms often raise total costs by creating failure demand.
Seddon claims that arguments for economy of scale are a mix of a) the
plausibly obvious and b) a little hard data, brought together to produce
two broad assertions, for which there is little hard factual evide

Economies of Scale - the cost advantage that arises with increased

output of a product. Economies of scale arise because of the inverse
relationship between the quantity produced and per-unit fixed costs;
i.e. the greater the quantity of a good produced, the lower the per-
unit fixed cost because these costs are shared over a larger number of
goods. Economies of scale may also reduce variable costs per unit
because of operational efficiencies and synergies. Economies of scale
can be classified into two main types: Internal – arising from within the
company; and External – arising from extraneous factors such as
industry size.

Economies of scale” is a simple concept that can be demonstrated

through an example. Assume you are a small business owner and are
considering printing a marketing brochure. The printer quotes a price
of $5,000 for 500 brochures, and $10,000 for 2,500 copies. While 500
brochures will cost you $10 per brochure, 2,500 will only cost you $4
per brochure. In this case, the printer is passing on part of the cost
advantage of printing a larger number of brochures to you. This cost
advantage arises because the printer has the same initial set-up cost
regardless of whether the number of brochures printed is 500 or
2,500. Once these costs are covered, there is only a marginal extra
cost for printing each additional brochure.
Economies of scale can arise in several areas within a large enterprise.
While the benefits of this concept in areas such as production and
purchasing are obvious, economies of scale can also impact areas like
finance. For example, the largest companies often have a lower cost of
capital than small firms because they can borrow at lower interest
rates. As a result, economies of scale are often cited as a major
rationale when two companies announce a merger or takeover.

However, there is a finite upper limit to how large an organization can

grow to achieve economies of scale. After reaching a certain size, it
becomes increasingly expensive to manage a gigantic organization for
a number of reasons, including its complexity, bureaucratic nature and
operating inefficiencies. This undesirable phenomenon is referred to
as “diseconomies of scale”.

A statement that summarizes an economy’s transactions with the rest

of the world for a specified time period. The balance of payments, also
known as balance of international payments, encompasses all
transactions between a country’s residents and its nonresidents
involving goods, services and income; financial claims on and liabilities
to the rest of the world; and transfers such as gifts. The balance of
payments classifies these transactions in two accounts – the current
account and the capital account. The current account includes
transactions in goods, services, investment income and current
transfers, while the capital account mainly includes transactions in
financial instruments. An economy’s balance of payments transactions
and international investment position (IIP) together constitute its set
of international accounts.

Despite its name, the “balance of payments” data is not concerned

with actual payments made and received by an economy, but rather
with transactions. Since many international transactions included in
the balance of payments do not involve the payment of money, this
figure may differ significantly from net payments made to foreign
entities over a period of time.

Does the “balance of payments” actually balance? In theory, a current

account deficit would have to be financed by a net inflow in the capital
and financial account, while a current account surplus should
correspond to an outflow in the capital and financial account for a net
figure of zero. In actual practice, however, the fact that data are
compiled from multiple sources gives rise to some degree of
measurement error.
Balance of payments and international investment position data are
critical in formulating national and international economic policy.
Certain aspects of the balance of payments data, such as payment
imbalances and foreign direct investment, are key issues that a
nation’s economic policies seek to address.

Economic policies are often targeted at specific objectives that, in

turn, impact the balance of payments. For example, a country may
adopt policies specifically designed to attract foreign investment in a
particular sector. Another nation may attempt to keep its currency at
an artificially depressed level to stimulate exports and build up its
currency reserves. The impact of these policies is ultimately captured
in the balance of payments data.

Vertical Integration - When a company expands its business into areas

that are at different points on the same production path, such as when
a manufacturer owns its supplier and/or distributor. Vertical
integration can help companies reduce costs and improve efficiency by
decreasing transportation expenses and reducing turnaround time,
among other advantages. However, sometimes it is more effective for
a company to rely on the expertise and economies of scale of other
vendors rather than be vertically integrated.

Backward and forward integration are types of vertical integration. A

company that expands backward on the production path has
backward integration, while a company that expands forward on the
production path is forward integrated.

Examples of vertical integration include:

- A mortgage company that both originates and services mortgages,

meaning that it both lends money to homebuyers and collects their
monthly payments.

- A solar power company that produces photovoltaic products and also

manufacturers the cells, wafers and modules to create those products
would be considered vertically integrated.

- The merger of Live Nation and Ticketmaster created a vertically

integrated entertainment company that manages and represents
artists, produces shows and sells event tickets.
 The Five Stages of the Strategic Management Process

The strategic management process can help grow your business.

 5-Step Strategic Marketing Process

The strategic management process is more than just a set of

rules to follow. It is a philosophical approach to business. Upper
management must think strategically first, then apply that
thought to a process. The strategic management process is best
implemented when everyone within the business understands
the strategy. The five stages of the process are goal-setting,
analysis, strategy formation, strategy implementation and
strategy monitoring.

Goal-Setting
The purpose of goal-setting is to clarify the vision for your
business. This stage consists of identifying three key facets: First,
define both short- and long-term objectives. Second, identify the
process of how to accomplish your objective. Finally, customize
the process for your staff, give each person a task with which he
can succeed. Keep in mind during this process your goals to be
detailed, realistic and match the values of your vision. Typically,
the final step in this stage is to write a mission statement that
succinctly communicates your goals to both your shareholders
and your staff.

Analysis
Analysis is a key stage because the information gained in this
stage will shape the next two stages. In this stage, gather as
much information and data relevant to accomplishing your
vision. The focus of the analysis should be on understanding the
needs of the business as a sustainable entity, its strategic
direction and identifying initiatives that will help your business
grow. Examine any external or internal issues that can affect
your goals and objectives. Make sure to identify both the
strengths and weaknesses of your organization as well as any
threats and opportunities that may arise along the path.

Strategy Formulation
The first step in forming a strategy is to review the information
gleaned from completing the analysis. Determine what
resources the business currently has that can help reach the
defined goals and objectives. Identify any areas of which the
business must seek external resources. The issues facing the
company should be prioritized by their importance to your
success. Once prioritized, begin formulating the strategy.
Because business and economic situations are fluid, it is critical
in this stage to develop alternative approaches that target each
step of the plan.

Strategy Implementation
Successful strategy implementation is critical to the success of
the business venture. This is the action stage of the strategic
management process. If the overall strategy does not work with
the business' current structure, a new structure should be
installed at the beginning of this stage. Everyone within the
organization must be made clear of their responsibilities and
duties, and how that fits in with the overall goal. Additionally,
any resources or funding for the venture must be secured at this
point. Once the funding is in place and the employees are ready,
execute the plan.

Evaluation and Control

Strategy evaluation and control actions include performance
measurements, consistent review of internal and external issues
and making corrective actions when necessary. Any successful
evaluation of the strategy begins with defining the parameters
to be measured. These parameters should mirror the goals set in
Stage 1. Determine your progress by measuring the actual
results versus the plan. Monitoring internal and external issues
will also enable you to react to any substantial change in your
business environment. If you determine that the strategy is not
moving the company toward its goal, take corrective actions. If
those actions are not successful, then repeat the strategic
management process. Because internal and external issues are
constantly evolving, any data gained in this stage should be
retained to help with any future strategies.