Marketing Exchange Relationships, Transactions, and Their Media

By Franklin S. Houston | Go to book overview

example of food store initiation is the case of Seattle, Washington, where Associated Grocers are ready to offer electronic processing of "debit food stamps" to its member stores ( "Food Stamp System May Go On-Line" 1991).

The cost and benefits of electronic food stamps are spread across all participants. The users of food stamps would find the checkout faster and possibly less embarrassing. Processing food stamps also could become a less time consuming and frustrating process ( "Food Stamp System May Go On-Line" 1991). It is argued that electronic processing particularly would help recipients who do not have bank accounts ( Wood and Smith 1991). These alternatives to paper-based systems may enable agencies to restructure their operations in ways that can reduce their costs. With food stamps, electronic processing should reduce costs to the government and reduce forgery and black market activities ( "Food Stamp System May Go On-Line" 1991).

The initial cost of providing the electronic system in the Reading, Pennsylvania, program was nine times higher than the traditional program ( Craig-Van Collie 1990). However, it is anticipated there are large economies of scale in the process and that costs will fall rapidly as the program grows ( Wood and Smith 1991). Part of the difficulty is determining which organization will provide the necessary hardware and software that will generate these economies of scale. It is likely that either the federal government will become active, perhaps through the Federal Reserve, or contract with one or more third parties to operate the process. Possible third-party operators are the financial institutions that already have sophisticated electronic funds transfer networks. Regardless of how the service is provided, EBT systems may lead to lower costs for agencies by allowing them to restructure their operations in ways that increase efficiency.

If the electronic food stamp proves to be successful, the result will be to "increase the likelihood that EBT can become an accepted method of delivery for a portion of the U.S. Government's benefit payments" ( Wood and Smith 1991). However, the process is slow to develop and may never be a success ( "Paperless Food Stamps at an Impasse" 1990).


SUMMARY

In this chapter we have explored the importance of means of payment in marketing. We have seen that the choice of means of payment is a function of the relative market power of the buyers and sellers and of the cost-benefit trade-off for each. There is a spectrum of means of payment from cash to electronic transfers. Over time we have seen the spectrum expand as technology has expanded. At the same time, this expansion has not led to the demise of other means of payment. Cash is still in great demand as a means of payment and money orders still compete with checks in some in stances.

It becomes apparent on examination that the payment system is but another distribution system. Means-of-payment change form as they move through the system and economic profits are earned by the participants providing the means-of-payment services. Checks, credit cards and money orders are part of an industry that has evolved to provide the demand for differing payment mechanisms. Even cash requires service in the form of transportation and storage. The industry built around the payment mechanism undergoes change as demographics and technology change and as competitors attempt to "get their

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Marketing Exchange Relationships, Transactions, and Their Media
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Introduction ix
  • Note xiii
  • 1: The Marketing Taxonomy 1
  • Notes 10
  • 2: Comments on Extending the Domain of the Marketing Discipline 11
  • Conclusions 27
  • 3: Reciprocity within a Community 35
  • Concluding Comments 43
  • 4: Exchange as a Vital and Fundamental Consumer Behavior Phenomenon 45
  • Conclusion 54
  • Notes 54
  • Notes 57
  • 5: Refinements in the Model of Internal/External Market Exchange 59
  • Note 76
  • 6: Time, Potency, and Exchange: Making the Most of the Time Resource 77
  • Summary 98
  • 7: The Spatial Dimension 99
  • Summary 113
  • AFTERWORD 115
  • 8: The Evaluation Process and Its Impact on Decision Making in Exchange Relationships 117
  • Note 139
  • 9: How Exchange for Resale Differs from Exchange for Consumption 141
  • Conclusion 151
  • 10: Inequitable or Incomplete Social Marketing: The Case of Higher Education 153
  • Concluding Observations 162
  • Supplemental Reading 163
  • 11: Externalities of Exchange: Foundations for Future Study 167
  • Note 186
  • 12: Exchange: Ethical and Legal Foundations 189
  • Conclusion 210
  • Note 210
  • 13: An Examination of Exchange Media from an Historical Perspective 213
  • Note 224
  • 14: Some Ingestible and Other Types of Consumable Currencies 225
  • Conclusion 235
  • Notes 236
  • 15: The Changing Role of Legal Tender: An Historical Perspective 239
  • Conclusion 244
  • Notes 245
  • 16: Means of Payment in Marketing 247
  • Summary 264
  • Notes 265
  • Bibliography 267
  • Index 303
  • About the Contributors 315
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