In a subsistence-level economy there is little need for exchange of goods because the division of labor is at a rudimentary level: most people produce the same or similar goods. Interregional exchange between disparate geographic areas depends on adequate means of transportation. Thus, before the development of caravan travel and navigation, the exchange of the products of one region for those of another was limited. The village market or fair, the itinerant merchant or peddler, and the shop where customers could have such goods as shoes and furniture made to order were features of marketing in rural Europe. The general store superseded the public market in England and was an institution of the American country town.
In the United States in the 19th cent. the typical marketing setup was one in which wholesalers assembled the products of various manufacturers or producers and sold them to jobbers and retailers. The independent store, operated by its owner, was the chief retail marketing agency. In the 20th cent. that system met stiff competition from chain stores, which were organized for the mass distribution of goods and enjoyed the advantages of large-scale operation. Today large chain stores dominate the field of retail trade. The concurrent advent of the motor truck and paved highway, making possible the prompt delivery of a variety of goods in large quantities, still further modified marketing arrangement, and the proliferation of the automobile has expanded the geographic area in which a consumer can make retail purchases.
At all points of the modern marketing system people have formed associations and eliminated various middlemen in order to achieve more efficient marketing. Manufacturers often maintain their own wholesale departments and deal directly with retailers. Independent stores may operate their own wholesale agencies to supply them with goods. Wholesale houses operate outlets for their wares, and farmers sell their products through their own wholesale cooperatives. Recent years have seen the development of wholesale clubs, which sell retail items to consumers who purchase memberships that give them the privilege of shopping at wholesale prices. Commodity exchanges, such as those of grain and cotton, enable businesses to buy and sell commodities for both immediate and future delivery.
Methods of merchandising have also been changed to attract customers. The one-price system, probably introduced (1841) by A. T. Stewart in New York, saves sales clerks from haggling and promotes faith in the integrity of the merchant. Advertising has created an international market for many items, especially trademarked and labeled goods. In 1999 more than $308 billion was spent on advertising in the United States alone. The number of customers, especially for durable goods, has been greatly increased by the practice of extending credit, particularly in the form of installment buying and selling. Customers also buy through mail-order catalogs (much expanded from the original catalog sales business of the late 1800s), by placing orders to specialized "home-shopping" television channels, and through on-line transactions ("e-commerce") on the Internet.
Services are marketed in much the same manner as goods and commodities. Sometimes a service, like that of a repair person or physician, is marketed through the same act that produces it. Personal services may also be brokered by employment agencies, booking agents for concert or theatrical performers, travel agents, and the like. Methods of marketing now include market research, motivational research, and other means of determining consumer acceptability of a product before the producer decides to manufacture and market it on a large scale. Market research, often conducted by means of telephone interviews with consumers, is a major industry in itself, with the top 50 U.S. marketing firms tallying revenues of $5.9 billion in 1998.
See J. Wilmshurst, The Fundamentals and Practice of Marketing (1984); E. Kaynak and R. Savitt, ed., Comparative Marketing Systems (1986); E. J. McCarthy and W. D. Perreault, Jr., Basic Marketing (10th ed. 1990); J. H. Ellsworth and M. V. Ellsworth, Marketing on the Internet (1997); L. E. Boone and D. L. Kurtz, Contemporary Marketing (9th ed. 1998).
Organization set up by a government to regulate the buying and selling of a certain commodity within a specified area. The simplest type of board is designed to carry out market research, promote sales, and furnish information; it is usually financed by a fee levied on all sales of the product concerned. Examples include the Sri Lanka Tea Board and the Ghana Cocoa Board. Other boards are empowered to regulate terms and conditions of sale, usually by establishing packing standards and quality analysis. The primary goal of most marketing boards is to stabilize prices, especially of products intended for the export market, where price fluctuations are often extreme. The boards may raise average prices through manipulation of commodity flows, with the objective of maintaining reasonably high levels of demand at all times. Marketing boards such as the Washington State Apple Commission are used for products whose perishability requires that outlets be set up in advance. Seealso cartel.
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Activities that direct the flow of goods and services from producers to consumers. In advanced industrial economies, marketing considerations play a major role in determining corporate policy. Once primarily concerned with increasing sales through advertising and other promotional techniques, corporate marketing departments now focus on credit policies (see credit), product development, customer support, distribution, and corporate communications. Marketers may look for outlets through which to sell the company's products, including retail stores, direct-mail marketing, and wholesaling. They may make psychological and demographic studies of a potential market, experiment with various marketing strategies, and conduct informal interviews with target audiences. Marketing is used both to increase sales of an existing product and to introduce new products. Seealso merchandising.
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In popular usage, "marketing" is the promotion of products, especially advertising and branding. However, in professional usage the term has a wider meaning of the practice and science of trading. The American Marketing Association (AMA) states, "Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.
Marketing practice tends to be seen as a creative industry, which includes advertising, distribution and selling. It is also concerned with anticipating the customers' future needs and wants, which are often discovered through market research.
The scientific study of marketing is a wide and heavily interconnected subject with extensive academic publications. Marketing methods are also informed by many of the social sciences, particularly psychology, sociology, and economics. Anthropology is also a small, but growing influence. Market research underpins these activities. Through advertising, it is also related to many of the creative arts. The marketing literature is also infamous for re-inventing itself and its vocabulary according to the times and the culture.
In the early 1960s, Professor Neil Borden at Harvard Business School identified a number of company performance actions that can influence the consumer decision to purchase goods or services. Borden suggested that all those actions of the company represented a “Marketing Mix”. Professor E. Jerome McCarthy, also at the Harvard Business School in the early 1960s, suggested that the Marketing Mix contained 4 elements: product, price, place and promotion.
The four Ps model is most useful when marketing low value consumer products. Industrial products, services, high value consumer products require adjustments to this model. Services marketing must account for the unique nature of services.
Industrial or B2B marketing must account for the long term contractual agreements that are typical in supply chain transactions. Relationship marketing attempts to do this by looking at marketing from a long term relationship perspective rather than individual transactions.
As a counter to this, Morgan, in Riding the Waves of Change (Jossey-Bass, 1988), suggests that one of the greatest limitations of the 4 Ps approach "is that it unconsciously emphasizes the inside–out view (looking from the company outwards), whereas the essence of marketing should be the outside–in approach". Nevertheless, the 4 Ps offer a memorable and workable guide to the major categories of marketing activity, as well as a framework within which these can be used.
A brand has also been defined as an identifiable entity that makes a specific promise of value.
Branding means creating reference of certain products in consumers mind.
Co-branding involves marketing activity involving two or more products.
An example of this is coupons or a sale. People are given an incentive to buy, but it does not build customer loyalty, nor encourage repeat buys in the future. A major drawback of sales promotion is that it is easily copied by competition. It cannot be used as a sustainable source of differentiation.
In the consumer-driven approach, consumer wants are the drivers of all strategic marketing decisions. No strategy is pursued until it passes the test of consumer research. Every aspect of a market offering, including the nature of the product itself, is driven by the needs of potential consumers. The starting point is always the consumer. The rationale for this approach is that there is no point spending R&D funds developing products that people will not buy. History attests to many products that were commercial failures in spite of being technological breakthroughs.
A formal approach to this customer-focused marketing is known as SIVA (Solution, Information, Value, Access). This system is basically the four Ps renamed and reworded to provide a customer focus.
The SIVA Model provides a demand/customer centric version alternative to the well-known 4Ps supply side model (product, price, place, promotion) of marketing management.
The four elements of the SIVA model are:
This model was proposed by Chekitan Dev and Don Schultz in the Marketing Management Journal of the American Marketing Association, and presented by them in Market Leader - the journal of the Marketing Society in the UK.
The model focuses heavily on the customer and how they view the transaction.