8. Marketing

If price rises from $4.00 to$4.60, price changes by 15%. With PED = −1.4, forecast quantity change = −1.4 × 15% = −21%. If income falls 6% and YED = 1.5, forecast demand change = −9%. If promotion rises 20% and demand rises 8%, PrED = 8% ÷ 20% = 0.4.

PED and total revenue, other things equal: elastic demand means price and revenue tend to move in opposite directions; inelastic demand means they tend to move in the same direction; unit elasticity leaves revenue broadly unchanged. Revenue = price × quantity, but profit also depends on variable/fixed cost, capacity and promotional cost.

Limitations: historical/small or correlation-based data; percentage-base and measurement error; elasticity changes by segment, geography, time horizon, price/income/spend range and product life cycle; competitors, substitutes, complements, quality, distribution, brand and external shocks also change demand; response may lag; simultaneous marketing changes make attribution difficult.

Stage-gate process: identify need/objective → generate ideas → screen against strategy, customer value, ethics/law and capability → develop/test concept with target users → business analysis (demand, price, costs, cash/break-even/risk) → R&D/design/prototype and technical testing → test market/pilot and refine product/marketing mix/operations → decide scale/launch → commercialise, monitor feedback/performance and improve or withdraw.

Cross-functional alignment is essential: marketing defines need/segment/offer; operations tests quality/capacity/supply; finance tests funding/cash/return; HR secures skills/teams; legal checks safety/IP; R&D converts knowledge into designs. A technically successful prototype can still fail commercially or operationally.

Judge importance against competition/product life cycle and pace of change, customer need/price sensitivity, brand/IP, business objectives and risk appetite, finance/skills/time, operational scale/distribution and alternatives such as process improvement, marketing or acquisition. Use staged investment and stop/learn criteria rather than treating sunk cost as a reason to continue.

A time series may contain trend (long-run direction), seasonal variation (regular within-year pattern), cyclical movement (business-cycle pattern) and random variation. Four-period centred moving averages smooth quarterly seasonality to estimate trend-cycle; they do not explain its cause.

Four-period centred moving-average method: (1) add four consecutive quarterly observations and divide by 4; this moving average lies between the two middle quarters. (2) Move forward one quarter and repeat. (3) Average two adjacent four-period moving averages to centre the result on their shared middle quarter. Example: 4-MAs 120 and 128 give centred MA = (120 + 128) ÷ 2 = 124.

For an additive model: seasonal variation = actual sales − centred moving-average trend. Group variations by quarter and average each quarter across years (adjust rounding so four quarterly averages sum to zero if required). Forecast = extrapolated trend + average seasonal variation for that quarter. Example: trend 124 plus Q4 seasonal variation +18 gives forecast 142.

Use quantitative history as a baseline, then explicitly adjust/scenario-test known changes in price/promotion, products, competitors, capacity/distribution, economy/law/technology and one-off shocks. Compare forecast with actual, investigate error and update assumptions; use ranges or high/base/low cases for decisions with different downside risk.

Time-series limitations: past may not continue; few/inaccurate data and outliers; moving averages lose endpoint observations and lag turning points; different windows change smoothness; seasonal averages change; new products/markets lack history; external/competitor/marketing/capacity changes are omitted; extrapolation and false precision. Qualitative forecasts add current insight but bias and politics.

Audit/research → set prioritised objectives → choose segment/position → generate and test coordinated mix → allocate resources/owners/timing → implement across functions/channels → compare outcomes with baseline/target and assumptions → correct, learn or stop. Each element should follow from the previous evidence and remain mutually feasible.

The 'most important' element is the current constraint: reliable segment research may dominate when entering supermarkets; retailer margin/shelf/distribution may make place/resources decisive; product/price must still satisfy shoppers and promotion must create demand. Explain why one element unlocks the objective and how others depend on it.

Define measurable objective → analyse customer/market/competitor/internal evidence → choose target and defensible position/value proposition → design product-price-place-promotion as one system → test demand, margin, capacity/channel and brand consistency → resource/sequence ownership → implement → measure objective and assumptions → adapt.

Evaluate elements through interactions and the limiting constraint, not separately. Price changes volume/position/margin; promotion must match target/message/channel and capacity; product promises need delivery/people/process; place changes convenience, reach, retailer power, data and cost. Track objective outcomes and contribution, not vanity exposure alone.

Use a clear objective and lawful relevant data; validate against representative holdout/business outcomes; retain human accountability and brand/ethical rules; test incrementally; protect/limit data; offer correction/appeal; monitor drift, customer response, incremental contribution and unintended effects. IT/AI changes speed/scale, not the need for strategy.

Globalisation and economic collaboration increase cross-border customers, competitors, data/media, supply/channels and sometimes reduce tariff/regulatory barriers. International marketing can diversify/grow sales, spread product/R&D/brand costs, exploit scale or extend a product life cycle—but adds distance, culture/language, currency, legal/political, coordination and reputation risk.

Identify broadly → screen → research deeply → pilot/commit. Compare market size/growth/segments/income/elasticity and unmet need; competition/substitutes and price/margin; culture/language/taste; law/tariff/trade bloc/standards/IP; political/economic/currency risk; digital/physical channels/logistics; partner/skill availability; strategic/brand/product fit; investment, cash, timescale and expected return/risk.

A transnational/hybrid choice can standardise core purpose, quality, visual identity, technology and governance while adapting legally/culturally necessary product, pack, price, message and route. Name what stays common, what changes, why and who decides.

Choose entry by objective/speed and desired control; finance/risk tolerance/return; product service complexity/IP/quality; market size/uncertainty/distance; tariffs/law/ownership and political/currency risk; local partners/channels/skills; culture/knowledge; capacity/supply and ability to coordinate. Often stage commitment as evidence improves.

Specify market/segment and objective → value proposition/position → standardise/adapt each mix element → choose entry/partner and operating responsibilities → fund capacity/logistics/people/data/compliance → set sales, margin, share, retention and risk indicators → pilot, learn and expand/modify/exit. Entry mode and marketing mix must be feasible together.