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Marketing as a subject was revolutionised between the 1950s and 1980s through a variety of different theories and practices incorporating higher levels of scientific theory than at former times. These practices formed a successful transactional approach to marketing through accredited concepts such as the ‘Marketing Mix’ and also ‘Marketing Management’ in which I will discuss in further detail throughout the text. In addition, I will also discuss how and why the marketing discipline changed from the 1980s onwards alongside key challenges for marketers now and into the immediate future.
What is Marketing?
“Marketing is the social process by which individuals and organisations obtain what they need and want through creating and exchanging value with others” (Kotler and Armstrong 2010) this definition is based upon supplying satisfaction to consumer demand emphasising the value to the customer. In my own words, marketing is a business discipline managing customer satisfaction as a prime focus through communicating and exchanging goods or services consisting of value for customers. This could be performed in a transactional method as a strategy concentrating upon single point of sales; in comparison to a relationship marketing manner that places immense importance on consumer retention and interaction. (SearchCRM, 2018)
The transactional approach was introduced in the early 1950s, by Borden (1954), consisting of 12 different variables collectively called the ‘Marketing Mix’. However, the model was soon reconstructed by McCarthy (1960) and shortened to four variables being ‘price, product, promotion and placement’, to make a marketing strategy (Grönroos, 1994a, 1994b). The mixture of these variables all reflect off another and combine for one objective – making a sale. Factors such as promotional incentives are more common in the marketing mix rather than relationship building as the purpose of a transactional paradigm concentrates on achieving volume of sales in a shorter period of time. [Int. J. Electronic Customer Relationship Management, Vol. 4, No. 2, 2010]
Additionally, the 1950s also overlooked marketing take a further shift from being a previous functionalist school of thought, transition into a more managerial type. Such a transition promoted problem-solving and decision-making, as more questions were asked in regard to how marketing should function in comparison to explaining how marketing functioned. (Egan, J, 100 Years of Marketing).
Many social and economic factors were conceived that favored the success of the marketing mix paradigm. Firstly, greater economic strength existed globally for example in 1925 the United States and United Kingdom GDP was calculated at $730,545 and $231,806; shifting significantly to $1,455,916 and $347,850. The outcome of the economic strength affects the enhancements of consumers lifestyles characterizing social identity and emerging lifestyles.
Furthermore, other social factors consisted of an evolution in greater levels of rural to urban migration, infrastructure development that facilitated distribution. These two factors increased consumption levels and expanded markets beyond the previous regional limitation (Eric H Shaw and D.G Brian Jone, Marketing Theory 2005). Similarly, the opportunity to advertise to vast audiences was introduced by means of televisions, expenditure in advertising soared alongside the launch of ITV in the UK in 1955. Marketing was trusted as the method to ensure consumption kept up with output with immense levels of demand through the factors mentioned (Egan, J, 100 Years of Marketing). As a result of these socio-economic factors transactional marketing paradigm was adopted globally through the increased levels of consumption leading to such marketing being educated within schools. (Dixon and Blois, 1983; Kent, 1986).
During this period of time, computer technology advanced massively aiding, the key theory known as conjoint analysis, which was developed by Professor Paul Green (Green and Rao, 1971). Many broad concepts were now considered within marketing for example social and behavioral patterns, qualitative analysis and environmental constraints. Conjoint analysis enabled marketers to function a wider range of examinations for example consumer preferences and reactions to new or altered products. This theory allowed for marketers to gain a better understanding and more effective decisions of the marketing mix as better information is available.
Kotler (1972) was the leading marketing author at the time and believed marketing management has to adjust the company’s marketing decision variables in a way wherein company objectives were maximised considering expected behaviour of non-controllable demand variables. Two key theories were established being: macromarketing and strategic planning school. (Egan, J, 100 Years of Marketing).
Firstly, the role of macromarketing is to assess how marketing may have an impact on society and how society may also have an impact on marketing. On the contrary strategic planning school set about their ideology to explore existing correlations concerning environmental change and change within the organization. Further concepts came to light such as ‘demarketing’ known as a type of marketing planned to alter behaviour as well as ‘network marketing’ (Egan, J, 100 Years of Marketing). In 1977 the American Marketing Association and the Marketing Science Institute concluded that academic marketing could not progress marketing management much further (Mentzer and Schumann, 2006). Numerous criticisms were formed, and the transactional paradigm was put under scrutiny. For example, it was stated difficulties existed applying the transactional marketing outside its original context. Furthermore, as a result of a healthy economy, consumer spending masked the flaws of the concepts at the current time. Likewise, transactional marketing was revealed to be a theory for times of growth and not stagnation, as when competition and number of businesses increases, markets are matured with a fixed number of consumers and overload of products. (Egan, J, 100 Years of Marketing).
The transactional paradigm had numerous problems regarding the theory behind it and also the practicality of it in certain situations such as in economic growth in comparison to economic stagnation. A fitting description of another flaw can be spotted here explaining how customers are not a focal point, Dixon and Blois (1983) – customer is someone ‘to whom something is done’ rather than ‘for whom something is done’ (cited in Grönroos, 1994 p.6). Lastly it is a singular process and overlooks higher levels of customer satisfaction.
The period between 1950 – 1980 can be described as a mass market followed by world wars wherein consumption levels were high in a fairly homogenous market. These levels cool down post 1980s therefore markets were fluctuating and becoming more heterogenous, consequently the transactional paradigm was no longer fitting and functional in such markets. Additionally, another contextual change was the fact that marketing management was sought to be a tactic and waste of money.
It was deemed fitting for customer relationship marketing to replace traditional transactional paradigm, as a long-term establishment is formed between customers and businesses. Reichheld gives an example of this: “At MBNA (in the credit card business in the US), a 5 per cent increase in retention grows the company’s profit by 60 per cent by the fifth year” (p. 65).
In this day and age a new era of digital marketing exists through advancements in technology, that takes marketing to a whole different level incorporating television advertisements globally, social media platforms such as Instagram as well as online resources such as YouTube. Social media has allowed celebrity endorsements such as YouTube star Zoella, to embrace products to global audiences online as marketing is far more networked. A problem could be the mass expense of marketing now as so many different methods are available which are costly.
Furthermore, online buying platforms such as Amazon and eBay provide instant feedback for their service and products that is easily accessible online. Additionally, globalization, which is the interlinking of different countries, has allowed international relations to build improving the marketing as a whole. Additionally, another problem is that consumers are more demanding and knowledgeable and will reject marketing that isn’t relevant and appropriate.
Another example of customer relationship management marketing is in the company Tesco and Nike. Here a special connection lies between the firm and customers as for example in Nike they have the opportunity for customers to buy online and in store as well as customize products to their own liking, known as ‘Nike ID’. Furthermore, Tesco have a concept of a ‘Club Card’ that build a relationship between the firm and customer as the customer receives points that can be traded for discounted goods – this brings a trusted relationship and therefore will mean the customer will return to the business achieving its targets.
In conclusion through the text it is clear to imagine that marketing has changed drastically from a transactional approach to a more customer focused and managed approach as it is more effective and fitting to a global audience who have access to a wide range of knowledgeable online platforms through the internet.
SearchCRM. (2018). What is transactional marketing? – Definition from WhatIs.com. [online] Available at: https://searchcrm.techtarget.com/definition/transactional-marketing [Accessed 9 Nov. 2018].
[Int. J. Electronic Customer Relationship Management, Vol. 4, No. 2, 2010]
Grönroos, C. (1994a) ‘From marketing mix to relationship marketing: towards a paradigm shift in marketing’, Management Decision, 32 (2), 4–20.
Grönroos, C. (1994b) ‘Quo vadis, marketing? toward a relationship marketing paradigm’, Journal of Marketing Management, 10, 347–60.
Dixon, D.F. and Blois, K.J. (1983) ‘Some limitations of the 4Ps as a paradigm for marketing’, Marketing Education Group Annual Conference, Cranfield Institute of Technology, Cranfield, UK, July
Marketing Theory 2005, Eric H Shaw and D.G Brian Jone.
Green, P.E. and Rao, V. (1971) ‘Conjoint measurement for quantifying judgmental data’, Journal of Marketing Research, 8 (August), 355–63.
Egan, J, 100 Years of Marketing, 7-15.
Mentzer, J.T. and Schumann, D.W. (2006) ‘The theoretical and practical implications of marketing scholarship’, Journal of Marketing Theory and Practice
McCarthy, E.J. (1960) Basic Marketing, Homewood, IL: Irwin.
Borden, N.H. (1954) ‘The concept of the marketing mix’, Journal of Advertising Research, 4 ( June), 2–7.
Reichheld, F.E., “Loyalty-based Management”, Harvard Business Review, Vol. 71, March-April 1993, pp. 64-73
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