Marketing

marketing, in economics, that part of the process of production and exchange that is concerned with the flow of goods and services from producer to consumer. In popular usage it is defined as the distribution and sale of goods, distribution being understood in a broader sense than the technical economic one. Marketing includes the activities of all those engaged in the transfer of goods from producer to consumer—not only those who buy and sell directly, wholesale and retail, but also those who develop, warehouse, transport, insure, finance, or promote the product, or otherwise have a hand in the process of transfer. In a modern capitalist economy, where nearly all production is intended for a market, such activities are just as important as the manufacture of the goods. It is estimated in the United States that approximately 50% of the retail price paid for a commodity is made up of the cost of marketing.

Evolution of Modern Marketing

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 The general store superseded the public market in England and was an institution of the American country town.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.

Modern Marketing

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.

Bibliography

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).

The Columbia Encyclopedia, 6th ed. Copyright© 2014, The Columbia University Press.

Selected full-text books and articles on this topic

Retailing Triumphs and Blunders: Victims of Competition in the New Age of Marketing Management
Ronald D. Michman; Alan J. Greco.
Quorum Books, 1995
Relationship Marketing: Successful Strategies for the Age of the Customer
Regis McKenna.
Perseus Publishing, 1991
Kellogg on Marketing
Dawn Iacobucci.
John Wiley & Sons, 2001
Total Quality Marketing: The Key to Regaining Market Shares
Allan C. Reddy.
Quorum Books, 1994
Marketing Strategies for the Mature Market
George P. Moschis.
Quorum Books, 1994
Strategic Marketing: An Introduction
Tony Proctor.
Routledge, 2000
Response: The Complete Guide to Profitable Direct Marketing
Lois K. Geller.
Oxford University Press, 2002
The Birth of Internet Marketing Communications
Dan Steinbock.
Quorum Books, 2000
Marketing and Entrepreneurship: Research Ideas and Opportunities
Gerald E. Hills.
Quorum Books, 1994
Marketing Channel Management: An Instructor's Manual
Russell W. McCalley.
Praeger, 1996
Counterturbulence Marketing: A Proactive Strategy for Volatile Economic Times
A. Coskun Samli.
Quorum Books, 1993
Marketing to the Mind: Right Brain Strategies for Advertising and Marketing
Richard C. Maddock; Richard L. Fulton.
Quorum Books, 1996
Motigraphics: The Analysis and Measurement of Human Motivations in Marketing
Richard C. Maddock.
Quorum Books, 2000
Marketing Exchange Relationships, Transactions, and Their Media
Franklin S. Houston.
Quorum Books, 1994
Getting It Right the Second Time: How American Ingenuity Transformed Forty-Nine Marketing Failures into Some of Our Most Successful Products
Michael Gershman.
Addison-Wesley, 1990
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