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Marketing Theory Notes
Marketing Theory Notes
- 1840 to 1870: where the relationship between an advertising agency and advertiser (the
client) involved repeated transactions with a low level of interdependence. In 1870s, the
agency started an open contract and added specialized skills, which increased
interdependency – relationships became bilateral with very high commitment between the
buyer and the seller.
From a critical point of view, Wanamaker and Sheldon play important roles in terms of the
development of relationship marketing. Wanamaker has implemented the concept of RM in
his retailing emporium, which was established in 1861. For example, he was against caveat
emptor (a situation where the seller has more information than the buyer about goods
purchasing and the seller tries to hide defects in goods/services to customers). Also, he
emphasized on reciprocity and the promotion of goodwill with customers, stressing on the
mutual benefits. In addition, he stated that customers would be influenced by factors such
as convenience in shopping in-store as well as by other factors such as the store displays
and interior design. Moreover, he stressed on internal marketing by training salesmen,
providing recreation, adopting the customers’ view by letter writing and complaint
monitoring.
Also Sheldon (Tadajewski, 2011) had developed certain points to be stressed upon in
relationship marketing, which are:
5. Rotary club: According to Sheldon, “service above self- he profits most who serves
best.” He was a man of Christian faith, after all. His ethical practices sprang from his
faith in religion.
Sheldon died in mission at the age of 67, however his ideas influence the lives of others
(Tadajewski, 2011).
Beyond Wanamaker and Sheldon, there is wider marketing discourse as listed below:
1. Mutually satisfying relationship: Moriarty (1923) highlighted saying that “The great
function of retail advertising in direct relation to customer is not to gain new customers,
but to hold onto existing customers…. It is evident that the regular customer is the
store’s real gain and this alone should make evident that the real function of advertising
is to develop regular customers and retain them.”
2. Reciprocity: Bagozzi (1995) put reciprocity as the core of marketing relationships. Also,
a reasonable amount of reciprocity tends to put business concerns on a comfortable,
friendly basis, and to encourage close acquaintance and mutual interest in one another’s
business. It results in securing the services of your business friends who have your
business interests in mind and try to extend your sales or help in any other reasonable
way.
When relationship marketing is viewed through the contemporary perspective, the brand,
Harry Potter, is a really good example that permits multiple ways of engagement with the
customers, including books, movies, merchandise, computer games, etc. As Fournier (1998)
mentioned, “A brand… is simply a collection of perceptions held in the mind of the
customers.” He further developed 3 types of brand relationships:
1. Traditional relationship pattern seeks to use brands to provide a person with the
sense of belonging and stability.
From Fournier’s point of view, the consumers buy brands not just because they like them or
work well, but because the consumers are involved in relationships with a collection of
brands because of the meanings they add to their lives.
Even though relationship marketing stresses the point of reciprocity, do we, as consumers,
really get the benefits from this relationship? As O’Malley and Prothero put it, “I think the
corporations might like to convince people so that they have a relationship… They would
like you to feel like they care about you.” Here are alternative perspectives to see
relationship marketing.
First of all, polygamy is the idea that relationship marketing is not just a two-way
relationship as business-customer or business-business relationship, but involving multiple
parties. However, these parties are not broadly similar ones between spouses, as we would
expect within a polygamous marriage. They differ significantly in nature and closeness
depending on the legal relationships and contracts, and the relative power of the respective
partners.
Second, the use of financial incentives as rewards for the participants in a RM scheme
changes the nature of the relationship. It more closely resembles prostitution than marriage
as paying a participant for their compliance in the relationship. Overtime, the customers
who receive the bribes might just turn to the highest bribes available as that is the only
satisfaction they receive from the exchange.
Third, stalking, which refers to database and direct marketing, which uses the knowledge
of demographic, psychographic characteristics of consumers to target a marketing
campaign at those individuals regardless of their willingness or interests. This relationship
involves aggressors and victims: the needs of an aggressor are met at the expense of the
victims. These cases fall outside the definition of a mutually beneficial exchange relationship,
which underpins the understanding of RM.
Fourth, seduction: according to Deighton and Grayson (1995) "transforming the consumer's
initial resistance to a course of action into willing, even avid, compliance. The paradox of
seduction is that it induces consumers to enjoy things they did not intend to enjoy."
The above speaks of the development of relationship marketing. However, the use of
relationship marketing seems to be driven to a direction that the mutual beneficial link
between customers and sellers is disappearing; instead the sellers try to manipulate the
customers into this relationship.
What is the marketing concept? Critically assess the view that this concept emerged
in the 1950s
However, there are several problematic issues in Keith’s statements. The criticism is that
other writers during the time as Keith (1960) argued that the theoretical debates about
various “business philosophies” were not new. Many considered General Electric as the first
company to fully implement the idea of marketing concept. Moreover, there were academics
and practitioners that had implemented the marketing concept even before GE. In
addition, Tadajewski and Jones (2012) highlighted the contribution of Percival White who
was deeply influenced by scientific management during the early 20th century, and they
think White was the first (1927) to circulate a clear and complete statement of the
marketing concept. Another example is Lillian Gilberth who was a well-known proponent of
studying needs of women consumers to improve product design and superimposing the
idea of an individual woman as rational, complex, and intelligent onto a woman's
consumption practice in the late 1920’s. Last but not least, in terms of the idea of business
universe Keith claimed, it should be noticed that Keith only represented an American case
study that does not reflect the nature of business practice around the world.
All these evidences above show that the marketing concept did not actually emerge in
the 1950s and 1960s (Tadajewski and Jones, 2012). The time when marketing concept
emerged is rather earlier than what Keith claimed.
Critical Marketing
Arguably, the ideal foundation of the marketing concept is fulfilling consumer needs
(Tadajewski and Brownlie, 2008). In a perfect market economy, what the consumer wished
for would control what commodities were to be produced and in what quantity (Alvesson,
1994). But these are only assumptions and arguments, the truth is none of the above is true;
at least not entirely. Critical theorists would agree; as, in the real world, humans
increasingly pay more attention to materialism and are controlled by the world of
marketing and advertising (Tadajewski, 2010).
On the other hand, Kotler (1976) used a more broad definition of marketing; he stated that
it was “… a human activity directed at satisfying needs and wants through exchange
processes”. However, he explained that more often marketing researchers were concerned
with controlling the demand in such a way that would benefit the organization in attaining
its goals. Jonsson (1979) talks of how even social marketing gives more importance to the
interests of an organization instead of upholding the ability of a consumer to make
sovereign decisions (Alvesson, 1994).
Paul Lazarsfeld (1941) advised that human beings “behaved more and more like pawns on a
chessboard”; he gave an example asking readers to imagine about an advertisement where
a brewery showed a man throwing aside a newspaper filled with the European war stories
and drinking beer to find peace; such an advert, though it would make the consumer think
that it was a sales trick, was a dangerous sign of promotional culture (Tadajewski, 2010). In
the end, it is not only consumers who behave as pawns but also marketers become puppets
of organizations as they function in an atmosphere where an overpowering importance is
placed on accomplishing outcomes that might make them ignore the magnitude of their
actions (Tadajewski & Brownlie, 2008).
Critical Marketing
→ Critical marketing studies ‘is concerned with challenging marketing concepts, ideas and
ways of reflection that present themselves as ideologically neutral or that have assumed an
otherwise taken for granted status’ (Tadajewski, 2011: 83).
→ Marketing advocates individualism but really promotes conformity.
→ Critical marketing was first mentioned in 1981 under the Journal of Marketing, and the
group of scholars was characterized as the children of 1968.
→ The critique they offered was that the marketing system didn’t actually fulfill human
needs at all. We were always left dissatisfied by what we bought, never finding the right
product for us. In equal measure, it replaced more human and human values, with a
consumption orientation that furthered distance from the natural environment.
Veblen (1857-1929):
→ He contributed a lot to critical marketing.
→ He stated that business had transformed the world. It had made many products available
to people that did ease their lives: lower priced standardized goods were revolutionizing
society.
→ But the needs of the market was not necessarily in the best interests of the business
owner. Sabotage was the common good, so far as it is a question of material welfare, is
evidently best served by an unhampered working of the industrial system at its full capacity,
without interruption or dislocation. But it is equally evident that the owner or manager of
any given concern of this industrial system may be in a position to gain something for
himself at the cost of the rest by obstructing, retarding or dislocating this working system at
some critical point in such a way as will enable him to get the best of the bargain in his
dealings with the rest.’ (Veblen, 1919/2005: 93)
*Marketing, advertising and salesmanship was not about satisfying innate human needs.
Business manufacturers need it to subsequently help them achieve a profit.
→ ‘So inordinately productive is this familiar new order of industry that in ordinary times it
is forever in danger of running into excesses and turning out an output in excess of what the
market…will tolerate. There is a constant danger of “overproduction.” (Veblen, 1919/2005:
63)
→ The notion that the things we buy were somehow differentiated, somehow better in ways
that could not be objectively determined, was the key to the maintenance of corporate profit.
In other words, Veblen promoted the idea that marketing advocates individualism but really
promotes conformity (to fit in with a group).
→ According to Plotkin, Veblen treated advertising as an enterprise in exploit. It was a
means of cognitive coercion and confinement that drove customers away from
preoccupations with material need and efficient items of use, towards goals of invidious
distinction, emulation and conspicuous consumption.
→ As Murray and Ozanne described, capitalism, advertising and salesmanship all structure
the social world and our place within it. The colorful appeals the system creates distance
production origins of the objects we consume and the end result of our consumption habits:
more waste.
During 1930s and 1940s, there were a number of similar arguments to Veblen’s articulated
thoughts. At this point, we already had distanced from the idea that the customer is king.
Early Ideology Critiques: Frankfurt school
→ As Marcuse (1964) indicated, ‘the people recognize themselves in their commodities;
they find their soul in their automobiles, kitchen equipment. The very mechanism which
ties an individual to his society has changed, and social control is anchored in the new needs
which it has produced.’
→ According to Marcuse, we have transcending needs, that is, desires for freedom,
autonomy and self-expression that the system cannot hope to fulfill. They can trigger
discontent with the status quo. The system encourages us to look forward to rising
expectations; expectations that the system can probably never deliver.
→ However, there are also many people not able to participate in the marketing and fashion
systems. This is likely to generate unhappiness in the future (casualties of consumerism).
They are “flawed” consumers who do not have access to achieve their consumption goals.
→ The culture industries - marketing, advertising, fashion, arts, music, literature, and so
forth, all encourage us to view the world through the prism of consumption.
→ Lazarsfeld, on the other hand, talked about pawns on a chessboard much in the vein
associated with critical theory, which is about emancipation, freeing people from the ‘chain
of illusion’. He brought out the idea of being orientation and having orientation.
⇒ these scholars have a darker view of the contribution of marketing to society. They view
marketing as tying people ever more closely to the capitalist system, for example, work-
spend cycle.
⇒ they argued that there were new forms of domination that affect human relationships
with other people and the natural environment.
*The work-and-spend cycle is a phenomenon in which people in affluent nations remain
trapped in a pattern of long hours of work and increasing consumption spending that fails
to generate lasting improvements in well-being and plays a major role in ecological
degradation.
At this time, the critical/applied boundary is not so clearly defined. Critical perspectives
once combined with “applied marketing”, however the distinction was to become more
obvious as the business system failed to deliver the material satisfaction and quality of life.
The idea became clear in 1930s.
Marketing and the Cold War (WWII 1939-1945; Cold War 1945-1991)
→ During the time of Post WWII, there were massive growth in production, price declined,
product variation proliferate, standard of living rising.
→ In this context, business education was subject to a great deal of attention for various
reasons. But, criticism was not to be expected, nor was it welcome in the society.
→ Ford foundation encouraged the development of mainstream marketing when they
helped to establish the Indian institutes of management.
Critical theory has been incorporated into marketing via Reflexively Defiant Consumer
→ Traditionally, the critique in marketing is that it viewed consumers as information
processing machine, assuming that the provision of information ensured they will make
better choices in the marketplace.
→ The cultivation of the reflexively defiant consumer critique their ‘natural attitude toward
the existing order and, instead, question economic, political [e.g. laws], and social
structures’ (Ozanne and Murray, 1995: 516).
→ ‘…a more radical notion of the informed consumer would involve consumers forming a
different relationship to the marketplace in which they would identify unquestioned
assumption and challenge the status of existing structures as natural. Through reflection,
the consumer may choose to defy or resist traditional notions of consumption, become
more independent from acquisition or disposition systems, or define their own needs
independently from the marketplace’ (Ozanne and Murray, 1995: 522).
Critical marketing study (1960)
→ There is no growth in critical marketing between WWII and 1960s. The idea of consumer
sovereignty was witnessed in the 1960s, but it would not have been convincing from a
critical theory perspective.
→ This seems like an opportune moment to take a slightly different perspective on the
history of the discipline, using a critically oriented historical study to question one of the
founding myths of marketing that is perpetuated in pretty much all introduction to
marketing courses and mainstream marketing text books, that is, the myth of the marketing
revolution (Jones and Richardson, 2007).
The 1960s, debates around the boundaries of marketing
→ During the 1960s, there were a number of movements that sought to respond to changing
external environmental pressures that were delegitimizing marketing.
→ The reconstructionist movement sought to offer a humanist perspective where the
marketing system still was effectively managed as normal, but with slight modifications to
production and marketing methods to take account of ‘Social costs, externalities,
conservation in the use of resources, and other “macro”, environmental and humanistic
concerns’ (Spratlen, 1972: 405).
Consumer sovereignty
“Consumers decide precisely what should be produced, in what quality, in what quantities....
the entrepreneurs, the capitalists and the farmers should have their hands tied. They are
bound to comply in their operations in the orders of public buying.” (von Mises, 1949)
Early American marketing textbooks also held that profit was a means, not an end; the
purpose of marketing was not to earn a profit for the firm but to satisfy human wants. From
society’s perspective, “profit is not the object of the business, but the incentive for business
to supply human wants”, which emphasize on the “consumer minded” businessman who
“looks at his own business from the viewpoint of the consumers”. This relationship between
marketing and society is apparent from the late 1930s till after WWII.
The underlying theme associated with consumer sovereignty is that consumption drives
production activity: the argument is that all productive activity is a response to the
perceived demand for goods and services.
#Consumption is the purpose of product activity: the profit derived from the provision of
appropriate goods and services is the incentive for production.
However, Consumer sovereignty can only be employed to describe the functioning of a
market as long as the limitations are understood.
Firstly, consumers must have utmost freedom in their choice. Many of these limitations
arise from the actions of sellers in the market. Also, many of textbooks already indicate this
limitation.
Second, the ends of buyers and sellers are usually not identical: “The interest of dealers… in
any particular branch of trade or manufacturers, is always in some respects different from,
and even opposite to, that of the public.
The marketing concept identifies only one constituency that constrains a firm’s decisions.
However, there are constituencies other than stockholder, conflict may arise at each stage of
the channel, so that the decisions not to offer the desired goods and services may be made
are one or more channel stages.
Moreover, there are ethical and legal limitations to the range of goods and services offered
in the market. Licensing is one example.
Thus the unqualified statement that companies produce what consumers’ want is not a
valid description of the operation of markets. Similarly, consumer sovereignty cannot be
identified with the market concept.