Module Title: Developing Entrepreneurship and Employability

skills II

LO1: Understanding Marketing

1.1 Introduction
Marketing is defined as social and managerial process by which individuals and organizations
obtain what they need and want through creating and exchanging value with others. And
Marketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives
in the target market. These tools are classified into four broad groups that are called the four Ps
of marketing: product, price, place, and promotion. The 4Ps make up a typical marketing mix -
Price, Product, Promotion and Place. However, nowadays, the marketing mix increasingly
includes several other Ps like Packaging, Positioning, People and even Politics as vital mix
elements.
Marketing is the process of planning and executing the conception, pricing, promotion and
distribution of ideas, goods and services to create exchanges that satisfy individual and
organizational objectives.

Marketing management is also defined as the art and science of choosing target markets and
getting, keeping, and growing customers through creating, delivering, and communicating
superior customer value.

1.2 Identifying Marketing Philosophies

Marketing is not only much broader than selling; it is not a specialized activity at all. It
encompasses the entire business. It is the whole business seen from the point of view of its final
result, that is, from the customer’s point of view. Concern and responsibility for marketing must,
therefore, permeate all areas of the enterprise. Marketing maturity does not happen at a time. It
tends to be a gradual developmental process. M
Marketing philosophy: Meaning, and Types

Marketing philosophy is one of the simplest ideas in marketing, and at the same time, it is also
one of the most important marketing philosophies. At its very core are the customer and his or
her satisfaction. And states that the organization should strive to satisfy its customers' wants and
needs while meeting the organization's goals as well as society’s interest at different relative
weights. As we know "the customer is a king". Marketing management wants to design strategies
that will engage target customers and build profitable relationships with them. But what
philosophy should guide these marketing strategies? What weight should be given to the interests
of customers, the organization, and society?

Types of marketing philosophies

Marketing philosophies or concepts evolve over time in line with changes in the relative weights
between the organization’s interests, customers, and society. There are five alternative
concepts/philosophies under which organizations design and carry out their marketing strategies.
The marketing concept/philosophy is the strategy that firms implement to satisfy customers'
needs, increase sales, maximize profit, and beat the competition. Here are five of its evolutions:
1) Production concept
2) Product concept
3) Selling concept
4) Marketing concept
5) Societal marketing concept
Each of these philosophies was dominant in its time. However, that does not mean a philosophy
dies with the end of the era of domination. They are still in use today.

1. The Production Concept

The production concept holds that consumers will favor products that are available and highly
affordable or cheap. Therefore, management should focus on improving production and
distribution efficiency. This concept is one of the oldest orientations that guide sellers.

This production concept is found to be applicable if two situations prevail.

1) When the demand for a product exceeds supply. This is seen in markets that are highly
price-sensitive and budget-conscious. Under such situations, consumers will basically be
interested in owning the product, not the quality or features of it. Thus, producers will be
interested in increasing their outputs.

2) If the production costs are very high, that discourages consumers from buying the
product. Here, the company puts all of its efforts into building production volume and
improving technology to bring down costs.
2. The Product Concept

The product concept holds that consumers will favor products that offer the most in quality,
performance, and innovative features. The main emphasis here is on the product. Therefore, it is
understood that in the product concept, the management fails to identify what business it is in,
which leads to the marketing myopia – i.e., short-sightedness on the role of marketing.

3. The Selling Concept

Many companies follow the selling concept, which holds that consumers will not buy enough of
the firm’s products unless it undertakes a large-scale selling and promotion efforts. The Concept
proposes that customers, be individual or organizations will not buy enough of the organization‘s
products unless they are persuaded to do so through selling efforts. Such aggressive selling,
however, carries high risks. It focuses on creating sales transactions rather than on building long-
term, profitable customer relationships. The aim often is to sell what the company makes rather
than to make what the market wants.

4. The Marketing Concept

The marketing concept holds that achieving organizational goals depends on knowing the needs
and wants of target markets and delivering the desired satisfactions better than competitors do.
Here marketing management takes a “customer first” approach. Under the marketing concept,
customer focus and value are the routes to achieve sales and profits. Instead of a product-
centered make-and-sell philosophy, the marketing concept is a customer-centered sense-and-
respond philosophy. The job is not to find the right customers for your product but to find the
right products for your customers.
To sum up this topic, the marketing concept is based on four main pillars:
a) Market focus -The marketing concept suggests that a company should focus its attention on
marketing rather than production and selling.
b) Customer orientation – Focusing on a particular market does not guarantee a company’s
success in the marketplace. What is needed for success is customer orientation, i.e.,
carefully defining customer needs from customers’ points of view.

c) Coordinated marketing - The marketing concept is a total enterprise concept. To be

successful, all marketing functions must be coordinated among themselves, and second,
marketing itself must be well-coordinated with other departments.
d) Profitability – The end of the marketing concept is to make profits through customer
satisfaction. This suggests that profit is to be made by satisfying customers’ needs.

5. The Societal Marketing Concept

Here the Societal Marketing Concept puts human welfare on top before profits and satisfying the
wants. This concept calls upon marketers to balance three considerations in setting their
marketing policies: company profits, consumer want satisfaction and public interest.

Societal Marketing Concept example: - While large companies sometimes launch programs or
products that benefit society, it is hard to find a company that is fully committed socially. Tesla
promises a big push for green energy with electric cars and solar roof panels/tiles.

1.3 Utilizing marketing information system

Marketing information system

The marketing information system refers to the use of technology for the arrangement of the
relevant data related to the market, sales, promotion, price, competition and allocation of goods
and service. This information is acquired after a proper analysis and understanding of the
marketing environment to ensure effective decision making in the organization. To reach at
marketing decision, it uses different components such as: internal company information,
marketing research and marketing intelligence as a source of getting inputs for decision making
A marketing information system is a continuing and interacting structure of people, equipment
and procedures to gather, sort, analyze, evaluate, and distribute pertinent, timely and accurate
information for use by marketing decision makers to improve their marketing planning,
implementation, and control.

There are three primary types of marketing information marketers use to gain insights that will
contribute to wise marketing choices: internal data, competitive intelligence, and Marketing
research.

Sources of Marketing Information System

The information needed by marketing managers comes from three main sources:
1. Internal company information – Internal information is information generated from within the
business, covering areas such as operations, maintenance, personnel, and finance. E.g. sales, orders,
customer profiles, stocks, customer service reports, etc.
2. Marketing intelligence – This can be information gathered from many sources, including
suppliers, customers, and distributors. Marketing intelligence is a term which includes all the
everyday information about developments in the market that helps a business prepare and
adjust its marketing plans. It
3. Market research – Marketing research is a process that identifies and defines marketing
opportunities and problems, monitors and evaluates marketing actions and performances, and
communicates the findings and implications to the management.

Marketing research is also the systematic design, collection, analysis, and reporting of data
relevant to a specific marketing situation facing an organization. Companies use marketing
research in a wide variety of situations. For example, marketing research gives marketers
insights into customer motivations, purchase behavior, and satisfaction.
Figure 1: Marketing Research Process Chart

The components of marketing information system in the figure 1 above shows that information
sources are fed into an analytical process that guides decision-making and provides feedback
which can then suggest modifications to the original course of action. Marketing research and
marketing intelligence are the best-known function of the information process.

Market intelligence is concerned with wider issues that affect the company, as well as
monitoring a particular market. Monitoring of the marketing environmental factors is the
responsibility of the intelligence system. Its role is to provide information that precedes action,
and also to forewarn management of any tendencies that might significantly alter the market.

A marketing information system (MIS) is a management information system designed to support

marketing decision making. It brings together many different kinds of data, people, equipment
and procedures to help an organization make better decisions. It enables managers to share
information and work together virtually.

Why Conduct Market Research?

Marketing research is conducted to:
 develop product, price, promotion, place/distribution, and people plans
 identify problems in their marketplace and discover new opportunities
 Learn about competitors and how they are marketing their products.
 find out what consumers think about their product category
 gauge the performance of existing products

How to conduct market research

Talk to potential competitors to find out:
 Their products or services (for example quality and design)
 2 What prices they charge
 What exactly they sell
 How their product/services differ from yours
 Where they get their inputs?
 Where they sell?
  How they promote their product/service
 Any special approaches to customer care
 How you can compete
All research studies can be categorized under the following three types, which are referred to as
research designs:

Exploratory Research: It is defined as collecting information in an unstructured and informal

manner. It is often used when little is known about the problem. Analyzing secondary data in a
library or over the Internet is one of the most common ways of conducting exploratory research.
Exploratory research is/are
 Used to better define a problem or scout opportunities.
 Commonly used In-depth interviews and discussions groups.

Descriptive Research: Descriptive research designs refer to a set of methods and procedures
that describes marketing variables. Descriptive studies portray these variables by answering who,
what, why, and how questions. These types of research studies may describe such things as
consumers ‘attitudes, intentions, and behaviors, or the number of competitors and their strategies.
Although most descriptive studies are surveys in which respondents are asked questions,
sometimes descriptive studies are observation studies that observe and record consumers
‘behavior in such a way as to answer the problem.
Descriptive research:
 Is used to assess a situation in the marketplace (i.e., potential for a specific product or
consumer attitudes)
 Methods include personal interviews and surveys.

Causal Research: Causal Research explores the effect of one thing on another and more
specifically, the effect of one variable on another. The research is used to measure what impact a
specific change will have on existing norms and allows market researchers to predict
hypothetical scenarios upon which a company can base its business plan. For example, if a
clothing company currently sells blue denim jeans, causal research can measure the impact of the
company changing the product design to the color white. Following the research, company
bosses will be able to decide whether changing the color of the jeans to white would be
profitable. To summarize, causal research is a way of seeing how actions now will affect a
business in the future.
Causal research:
 Is used for testing cause and effect relationships.
 Typically through estimation

Process of Market Research

The followings are marketing research process.

1. Identify the Research Purpose - The research purpose comprises a shared understanding
between the manager and the researcher.
Points included in research purpose are:
a) Problems or opportunities to be studied
 Which problems or opportunities are anticipated?
 What is the scope of the problems and the possible reasons?
b) Decision alternatives to be evaluated
 What are the alternatives being studied?
 What are the criteria for choosing among the alternatives?
 What is the timing or importance of the decision?
c) Users of the research results
 Who are the decision makers/users?
 Are there any covert purposes?

2. Establish Research Objectives - The research objective is a statement, in as precise

terminology as possible, of what information is needed. The research objective should be
framed so that obtaining the information will ensure that the research purpose is satisfied. If
you do not know what you are looking for, you won‘t find it‖. Research objectives are
related to and determined by the problem definition. In establishing research objectives, the
researcher must answer the following questions:
 What specific information should the project provide?
 If more than one type of information will be developed from the study, which is the
most important? What are the priorities?
  When specifying research objectives, development of hypotheses, might be very
helpful.
 When achieved, objectives provide the necessary information to solve the problem.

3. Sampling Plan - Marketing researchers usually draw conclusions about large groups of
consumers by studying a small sample of the total consumer population. A sample is a
segment of the population selected for marketing research to represent the population as a
whole. Ideally, the sample should be representative so that the researcher can make accurate
estimates of the thoughts and behaviors of the larger population.
Designing the sample requires three decisions. First, who is to be studied (what sampling
unit)? Second, how many people should be included (what sample size)? Large samples give
more reliable results than small samples. However, larger samples usually cost more, and it is
not necessary to sample the entire target market or even a large portion to get reliable results
Finally, how should the people in the sample be chosen (what sampling procedure)?

There are two types of samples. Probability and non-probability samples: in probability
sample each population member has a known chance of being included in the sample, and
researchers can calculate confidence limits for sampling error. But when probability sampling
costs too much or takes too much time, marketing researchers often take nonprobability samples
even though their sampling error cannot be measured. These varied ways of drawing samples
have different costs and time limitations as well as different accuracy and statistical properties.
Which method is best depends on the needs of the marketing research project.

4. Probability Sample - Simple random sample every member of the population has a known
and equal chance of selection.
 Stratified random sample - The population is divided into mutually exclusive groups
(such as age groups), used if the study population is heterogonous
 Simple random samples are drawn from each group by chance
 Cluster (area) sample the population is divided into mutually exclusive groups (such as
blocks), and the researcher draws a sample of the groups to interview.

5. Nonprobability Sample
 Convenience sample - the researcher selects the easiest population members from which
to obtain information.
  Judgment sample - the researcher uses his or her judgment to select population members
who are good prospects for accurate information.
 Quota sample - by assigning of quota the researcher finds and interviews a prescribed
number of people in each of several categories

6. Data Collection Methods - The data can be classified in the following three ways:
 Quantitative and Qualitative data: - Quantitative data are those set of information which
are quantifiable and can be expressed in some standard units like rupees, kilograms,
liters, etc. Qualitative data, on the other hand, are not quantifiable, that is, cannot be
expressed in standard units of measurement.
 Sample and Census Data: - The data can be collected either by census method or sample
method. Information collected through sample inquiry is called sample data and the one
collected through census inquiry is called census data.
 Primary and Secondary Data: - The primary data are collected by the investigator
through field survey. Such data are in raw form and must be refined before use. On the
other hand, secondary data are extracted from the existing published or unpublished
sources, (example books, research papers, newspaper, magazines internet etc.)

The primary data can be collected through the following methods: interview method,
questionnaire method and observation.

7. Data Analysis - Once data are collected, data analysis is used to give the raw data meaning.
Data analysis involves entering data into computer files, inspecting the data for errors, and
running tabulations and various statistical tests. Typically, data analysis is conducted with
the assistance of a computerized data analysis program such as SPSS. Data analysis has the
great advantage that it allows us to be as precise as possible in our interpretations of the
findings we have obtained.

8. Report writing - The last step in the marketing research process is to prepare and present
the final research report—one of the most important phases of marketing research. Its
importance cannot be overstated because it is the report, or its presentation, that properly
communicates the study results to the client.
Marketing intelligence

Market intelligence is the permanent collection, analysis, monitoring, evaluation, storage and
distribution of information on markets. It is a continuous process, which focuses on what
happens outside the enterprise and provides on-going information about the market.

Marketing research is focused, market intelligence is not. A marketing intelligence system is a

set of procedures and data sources used by marketing managers to shift information from the
environment that they can use in their decision making. This scanning of the economic and
business environment can be undertaken in a variety of ways. The sources of marketing
intelligence can be classified as internal sources vs. external sources. The internal sources to
marketing intelligence include company executives, front desk staff, service staff, purchasing
agents, and sales force. The external sources of marketing intelligence includes suppliers,
convention and tourist bureaus , travel agencies, trade publications, associations, consultants,
banks and financial institutions.

Competitive marketing intelligence is the systematic monitoring, collection, and analysis of

publicly available information about consumers, competitors, and developments in the
marketplace. The goal of competitive marketing intelligence is to improve strategic decision
making by understanding the consumer environment, assessing and tracking competitors’
actions, and providing early warnings of opportunities and threats. Marketing intelligence
techniques range from observing consumers firsthand to quizzing the company’s own
employees, benchmarking competitors’ products, online research, and monitoring social media
buzz. Good marketing intelligence can help marketers gain insights into how consumers talk
about and engage with their brands. Many companies send out teams of trained observers to mix
and mingle personally with customers as they use and talk about the company’s products.

Ways to Undertake Marketing Intelligence

Unfocused scanning: - Any information that may be useful is gathered without any specific
purpose in mind.
Semi-focused scanning: - no specific purpose. The manager is not in search of particular pieces
of information that he/she is actively searching but does narrow the range of media that is
scanned. For instance, the manager may focus more on economic and business publications,
broadcasts etc. and pay less attention to political, scientific or technological media.

Informal search: - limited and unstructured attempt to obtain information for a specific purpose.
For example, entering the business of importing frozen fish from a neighboring country may
make informal inquiries as to prices and demand levels of frozen and fresh fish.

Formal search: - this is a purposeful search for information in some systematic way. Marketing
intelligence is carried out by the manager him/herself rather than a professional researcher.
Scope of the search in this case is likely to be narrow and far less intensive (less rigorous) than
marketing research.

Competitive Analyses

Competitive analysis refers to determining the strengths and weaknesses of competitors and
designing ways to take opportunities or tackle threats posed by competitors.

Uses of Competitive Analysis

Competitive analysis is important for businesses since it has the advantages stated as follow:
 It helps management understand its competitive advantages/ disadvantages relative to
competitors.
 It generates understanding of competitors’ past, present (and most importantly) future
strategies.
 It provides an informed basis to develop strategies to achieve competitive advantage in
the future (e.g. how will competitors respond to a new product or pricing strategy?)
 It helps forecast the returns that may be made from future investments.

Competitive analysis is a method of gathering data about competitors from different sources. To
study your competitors’ businesses you need to find about the following
 Who are your competitors?
 What customer needs and preferences are you competing to meet?
 Their products or services, for example quality and design
  What prices they charge
 What exactly do they sell?
 How does their product differ from yours?
 Where do they get their inputs?
 Where do they sell?
 How can you compete
 How do they promote their product/service?
 Do they have any special approaches to customer care?

Steps of Competitive Analysis

Every business owner should have a complete understanding of the competitive landscape in the
market. Competition is defined as any business that provides a similar service or product in the
same market, region or industry. A strategic business owner not only knows who its competitor
is but also understands the best way to position ahead of its competitor. The following provides a
step-by-step process in creating your competitive analysis.
1. Identify your competitors: - Determine both local and international competitors. Be sure to
define the competitive landscape broadly. Your competitor includes anything that could
draw customers away from your business.
2. Gather information about competitors: - At this stage you need to know; what markets or
market segments your competitors serve; what benefits your competitors offer; why
customers buy from them; and as much as possible about their products and/or services,
pricing, and promotion strategies.
3. Gathering Information on Competitors: - To gather information about your competitor
you can go either to your competitors’ company site or to the company's Web site (if any)
using which you can learn about; promotion strategies by visiting their business site; prices;
your competitors’ customers; vendors or suppliers, and their employees; trade shows; and
publicly available information - from Newspapers, magazines, press releases and online
publications.
4. Analyzing the Competition: - After studying the information you have gathered about each
of your competitors, ask yourself these primary questions:
 How are you going to compete with that company?
 Is there a particular segment of the market that your competitor has overlooked?
  Is there a service that customers or clients want that your competitors do not supply?
5. Make the decision: - The last step in the process is to develop a pricing model and other
decisions in relation to your competitors that represent what you are offering to the market
and the value you bring to your target buyers. There are many factors that go into designing
the appropriate pricing structure so you will need to do some research and evaluate what
price levels your market will bear, your cost basis for the development of your product, how
much you need to cover overhead and marketing costs and lastly how much profit you think
is appropriate for what you are offering.

1.4 Applying Marketing Strategy

What is Marketing Strategy?

A marketing strategy is a process that can allow an organization to concentrate its limited
resources on the greatest opportunities to increase sales and achieve a sustainable competitive
advantage. A company has many alternatives strategies (product. Pricing, promotional and
place/distribution) that helps to get advantages over its competitors.
Marketing strategy is a method of focusing an organization's energies and resources on a course
of action which can lead to increased sales and dominance of a targeted market.
A marketing strategy combines product development, promotion, distribution, pricing,
relationship management and other elements; identifies the firm's marketing goals, and explains
how they will be achieved, ideally within a stated timeframe. Marketing strategy determines the
choice of target market segments, positioning, marketing mix, and allocation of resources. It is
effective when it is an integral component of the overall firm strategy, defining how the
organization will successfully engage customers, prospects, and competitors in the market arena.

Product strategy
Product Before making a product the company should focus on what customers want and need
and then accordingly they should develop a product to meet the need of the potential customers.
Let‘s consider, the competitor‘s products offer the same benefits, same quality, and same price.
In such a scenario you should differentiate your product with the following:
 Design ,image, brand
 Technology
 Usefulness
 Convenience
 Quality
 Packaging
 Accessories
 Warranty
Pricing Strategy
A product is only worth if a customer is prepared to pay for it. Therefore, the companies focus on
various pricing strategies while pricing their products:
 Premium Pricing: - This strategy involves using high pricing where there is uniqueness
about the product or service. This approach is used where a substantial competitive
advantage exists. Such high prices are charge for luxuries such as Cruises, Luxury Hotel
rooms, Designer products.
 Penetration Pricing: - It is the strategy of entering the market with a low initial price to
capture greater market share.
 Price Skimming: - The practice of price skimming ‘involves charging a relatively high
price for a short time where a new, innovative, or much-improved product is launched
into a market. The prices are set high in order to attract least price sensitive customers to
generate high profits.
 Competitive Pricing: If your product is sold at the lowest price regarding all your
competitors, you are practicing competitive pricing. Sometimes, competitive pricing is
essential.

Promotion Strategies
Promotion is the communication of the company and its products to customers. Who are your
Target Markets?
 How will you reach your Target Markets? (What Media will you use?)
 How will you motivate them to buy? (What Message will you stress?)
 What is the cost and timetable for implementation of the marketing plan?

Promotional strategy is choosing a target market and formulating the most appropriate promotion
mix to influence it. An organization’s promotional strategy can consist of:

Advertising: - It is any paid form of non-personal, one-way, mass communication about an

organization, good, service, or idea by an identified sponsor.( e.g TV, radio and newspaper etc.)

Personal selling: - This is the two-way flow of communication between a buyer and seller, often
in a face to face encounter, designed to influence a person’s or group’s purchase decision.
Public relations: - Public relation is a form of communication that seeks to change the
perceptions of customers, shareholders, suppliers, employees and other publics about a company
and its products.
Sales promotion: - This promotion type involves short term incentives of value such as
discounts, free samples, and prizes to be offered to arouse interest of customers in buying the
good/service. Businesses may use one of the above promotional mix elements to arouse the
interest of customers and make them take action by informing, persuading and reminding about
the goods and services that they provide to the market.

Place/ Distribution Strategies

A successful product or service means nothing unless the benefit of such a service can be
communicated clearly to the target market. For product-focused companies, establishing the
most appropriate distribution strategies is a major key to success, defined as maximizing sale and
profits. Unfortunately, many of these companies often fail to establish or maintain the most
effective distribution strategies. It refers to the place where the customers can buy the product
and how the product reaches out to that place. This is done through different channels like:
Retails Wholesale Internet Mail orders Direct Sales.

Customer driven market strategy

The figure 2 below shows the four major steps in designing a customer value–driven marketing
strategy. In the first two steps, the company selects the customers that it will serve.
Market segmentation: - Involves dividing a market into distinct groups of buyers who have
different needs, characteristics, or behaviors and who might require separate marketing strategies
or mixes. The company identifies different ways to segment the market and develops profiles of
the resulting market segments.

Buyers in any market differ in their wants, resources, locations, buying attitudes, and buying
practices. Through market segmentation, companies divide large, diverse markets into smaller
segments that can be reached more efficiently and effectively with products and services that
match their unique needs.
Market targeting (or targeting): - consists of evaluating each market segment’s attractiveness
and selecting one or more market segments to enter. In the final two steps, the company decides
on a value proposition—how it will create value for target customers. Target Marketing involves
breaking a market into segments and then concentrating your marketing efforts on one or a few
key segments. Target marketing can be the key to a small business‘s success. The beauty of
target marketing is that it makes the promotion, pricing and distribution of your products and/or
services easier and more cost-effective.

Differentiation: - beyond deciding which segments of the market it will target, the company
must decide on a value proposition—how it will create differentiated value for targeted segments
and what positions it wants to occupy in those segments. Segmentation involves finding out what
kinds of consumers with different needs exist.

Positioning: - After the organization has selected its target market, the next stage is to decide
how it wants to position itself within that chosen segment. A product position is the way a
product is defined by consumers on important attributes - the place the product occupies in
consumers’ minds relative to competing products. Products are made in factories, but brands
happen in the minds of consumers

Positioning
position the market
offering in the minds
of target customers
Differentiation
Segmentation create value differentiation
divide the total the market
market into
for targted offering to
smaller segments customers create superior
customer value
Targeting
select the
segment or
segments to enter
 Figure 2: Marketing Strategy

Market Mechanism (laws of demand & supply)

Market mechanism is often interpreted as a ‘free’ market system. For a layman ‘free’ means that
when you go to a market, there is no restriction – you can buy as much as you want or sell any
amount or choose to do nothing. These decisions operate in terms of demand and supply for a
good, which are collectively referred to as the market mechanism.

The law of supply and demand is a theory that explains the interaction between the sellers of a
resource and the buyers for that resource. The theory defines the relationship between the price
of a given good or product and the willingness of people to either buy or sell it. Generally, as
price increases, people are willing to supply more and demand less and vice versa when the price
falls.

On the other hand, the law of supply demonstrates the quantities that will be sold at a certain
price. But unlike the law of demand, the supply relationship shows an upward slope. This means
that the higher the price, the higher the quantity supplied. From the seller's perspective, the
opportunity cost of each additional unit that they sell tends to be higher and higher. These curves
clearly show the interaction of the two market forces (demand and supply) which restricts
consumers’ choices.

Price Supply Curve

Equilibrium Price

Equilibrium

Demand Curve

Equilibrium Quantity. Quantity

Figure 3: Supply and Demand curve