SUPPLY AND DEMAND Supply and demand are two important concepts in economy.

They are
related each other, because when one increases, the other decreases. They are related too with
quantity o f products and with equilibrium in price. We are going to study some aspects of these
topics.

Demand: it refers to the desire, ability, and disposition o f consumers to buy any product.

Supply: it is related to the ability and disposition of producers to offer products for sale.

In words of Janeen R. Adil, “Supply is the amount of goods and services there are to buy. Demand
is how many people want to buy those goods and services” (2006, p. 4).

WHAT DO YOU TAKE INTO ACCOUNT TO DETERMINE THE DEMAND?

1. Tastes or preferences Consumers may demand for an item one year and ignore it the next.

2. Number of consumers A large quantity of buyers carries to an increase in demand; a small

quantity of buyers carries to a decrease (Franny Chan website).

3. Income When income rises, the quantity demanded will rise too. When income falls, the
demand of that product will fall too (Franny Chan website).

4. Consumer expectations Purchasers are interested in satisfying their consumption regarding

quality as the most important factor. Likewise, the lead price has an effect on the potential
increase of the consumer´s final decision.

5. Price of related goods There are two kinds of related goods that can affect the demand:
substitutes (for example, butter and margarine) and complementary (toys and batteries).
WHAT FACTORS DETERMINE SUPPLY?

1. Price of goods The more expensive it will increase the amount that companies are willing to
offer, the same way, the cheaper the product is, the lower the quantity supplied.

2. Production costs It depends on:

Cost of production factors

Technology

3. Business objectives It’s not the same to produce for a market with higher expectations than
produce for a market with lower ones. As greater the expectations are, the greater will be the
offer from the companies.

-Laws of supply and demand

According to David Besanko and Ronald R. Braeutigam, (2010, p. 37 ), the next are the laws of
supply and demand:

1. Increase in demand + unchanged supply curve = higher equilibrium price and large equilibrium
quantity

2. Decrease in supply + unchanged demand curve = higher equilibrium price and smaller
equilibrium quantity

3. Decrease in demand + unchanged supply curve = lower equilibrium price and smaller
equilibrium quantity

4. Increase in supply + unchanged demand curve = lower equilibrium price and large equilibrium
quantity

Supply and demand are two essential aspects in the market. Because the market is dynamic,
marketing specialists use a variety o f tools in order to achieve the goals o f the company through
combination or mixture (mix). These tools are known as the “Marketing Mix”, which refers to the
kinds of marketing variables

Remember: Marketing Mix sets out the marketing variables that your business needs to
understand and control in order to achieve your overall business objectives.
However, according to Larry Steven Londre (2007, pp. 5-9 ), the marketing mix has many variations
and is formed by the 9PS (increasing marketing of 4ps by McCarthy). The next figure shows the
nine Ps fo marketing mix:
The four Ps of marketing mix
To conclude about the marketing mix, 9ps are an extension of the 4ps, so we will continue to be
based on the 4ps.

BENCHMARKING

Benchmarking is the procedure o f determining who the best one is. It is an amount o f the quality
o f company’s products, policies, programs, tactics, etc., and their contrast with standard
measurements, or similar amounts of others. It is, also, the continuous systematic process for
evaluating the companies that are recognized as best-in-class, for the following purposes: •
Establishing priorities, target, goals • Developing product and process objectives • Meeting or
surprising industry best practices Objectives of benchmarking • To define where and what
improvements are requested • To investigate how other organizations reach their high
performance levels • To use this information to improve the measurement o f the results.

Process of benchmarking

The process the benchmarking begin with the planning in which the investigation is used, then the
company move on to another phase, which is the analysis, this permit to realize he comparation
between different companies according some variables; more later he company get in in the
phase the integration, in which there is develop aims that are incorporate in benchmarked process
and finally the company to apply the phase of action in what are applied action plans,necessary to
achieve the objetives decided in the step before.

Competition and its main aspects In benchmarking, it is necessary to take into account the next
aspects
Adil, J. (2006 ). Supply and demand. Retrieved on May 20 2013, from
http://books.google.com.co/books?id=8SxgIqc4BlcC&printsec=frontcover&
dq=Janeen+r+adil&hl=es&sa=X&ei=ed6jUZ-jFY3m8gTMrYG4CQ&ved=0CEEQ 6AewAw

Besanko, D., and Braeutigam, R. (2010 ). Microeconomics. Reetrieved on May 8 2013, from
http://books.google.com.co/books?id=978PKop7Cp8C
&pg=PA37&dq=Laws+of+supply+and+demand&hl=es&sa=X&ei=OY2KUeX7B
6PO0gH04oCQBw&ved=0CE4Q6AEwBg#v=onepage&q=Laws%20of%20supply%20and%20demand
&f=false

Chan, F. (s/ f ). Determinants o f demand. Fullerton College: Franny Chan website. Retrieved on
May 18 2013, from http://staffwww.fullcoll.edu/ fchan/Micro/1determinants_of_demand.htm

Londre, L. (2007 ). Several concepts. Retrieved on May 9 2013, from

http://www.londremarketing.com/documents/LondreMarketingConsultingNinePs.pdf