MARKETING THEORY AND PRACTICES.

March 24, 2017

MARKETING THEORY AND PRACTICES.

1.1

Introduction

The global popularity of marketing as a subject for study might suggest that those

studying and teaching the subject know what it is that they are studying and how

this study should be undertaken. But as we shall see in this chapter and others

in this book, this has often not been the case. Marketing as a subject has proved

almost impossible to pin down, and there is little consensus about what it means

to study marketing. Most organisations now employ marketers. Marketing roles

were traditionally found in commercial firms, but increasingly all kinds of organisa

tions feel the need to employ marketers or to commission services from marketing

consultants.

The popularity and pervasiveness of marketing is, however, a relatively recent phe

nomenon. Academics have only studied marketing as a discipline in its own right for

just over a century, and during its short history the study of marketing has been influ

enced by many different academic movements, fads and priorities. This variability

can be viewed as a positive state of affairs, because it means that the subject is always

open to new ideas and new trends. On the other hand, it has the potential to under

mine the value of marketing knowledge because there is no general consensus on

what the study of marketing should be for, how these studies should be conducted,

or what the outcomes should be. Before we can begin to study marketing, we need

to understand something about this history and the debates and controversies that

have shaped the field.

In this chapter, we shall review the origins of marketing thought, examining when

the term ‘marketing’ was first used, its subsequent development, and provide an

overview of the development of marketing thought and practice. Marketing, clearly,

is probably as old as human civilisation itself (see Jones and Shaw, 2002; Minowa and

Witkowski, 2009; Moore and Reid, 2008; Shaw and Jones, 2005). For our purposes,

we will restrict our attention to the emergence of marketing as an academic discipline

and business practice early in the twentieth century.

What confronts most students and academics alike when they begin to study the

development of marketing is the overwhelmingly American emphasis of much of

the literature. The key textbooks, for instance, often contain examples of American

corporate activities, sometimes tweaked for other markets, sometimes not. In writing

this introduction we will obviously be tied to some extent to the history of American

marketing. Many of the earliest college courses were developed there, most of the

Introducing the History

of Marketing Theory

and Practice

Marketing: A Critical Textbook

principal thinkers in marketing throughout the twentieth century worked there, and

as such it is natural that we talk about these people, institutions and their theoretical

contributions.

But, in an effort to ensure that the material presented resonates with more than

just an American audience, and to provide more balance to the history of marketing

than is generally seen in introduction and advanced texts alike, we provide numerous

examples of non-US marketing theory and practice.

As will be shown, not all countries adopted key marketing practices at the same

time as they were discussed by US marketing scholars. Some countries like the UK,

for example, turned to formal marketing education relatively late, even if the UK did

have a number of companies and entrepreneurs who were naturally marketing ori

ented fairly early, such as the confectionery manufacturer Cadbury’s (Corley, 1987;

Fitzgerald, 1989). Other countries, such as Spain, underwent their own ‘marketing

revolution’ (Keith, 1960) even later. So, in short, we would ask that you remember

that the theory and practice discussed in this and the following chapter are the result

of very specific political, social, technological, and economic environments in the

economies discussed. We would encourage you NOT to think ‘of marketing as a

homogenous, almost universally applicable concept, transcending cultures as well as

contexts’ (Cannon, 1980: 140).

1.2

The Early Development of Marketing Thought

In his important history of marketing, Bartels (1988) proposes that the term ‘marketing’

was first used ‘as a noun’, that is, as a label for a particular practice, sometime

‘between 1906 and 1911’ (Bartels, 1988: 3). Nonetheless, Bartels’ historical account

has been challenged by scholars who assert that there were people writing about the

subject before 1906 (Brussière, 2000). In appraising the Publications of the American

Economic Association, Brussière found that the term marketing was actually used

in 1897. Tamilia (2009), on the other hand, suggests that it was used even earlier

than this in the

Quarterly Journal of Economics

These examples are clearly taken from the academic literature. But it was not just

academics writing about the subject. For example, Shaw (1995) notes that in

Miss

Parloa’s New Cookbook and Marketing Guide

which was published around 1880,

‘marketing’ related to buying and selling activities. This was not the only book using

the term at this time or previously. Shaw says that if we look at dictionaries prior to

the Bartels statement the intellectual history of the term ‘marketing’ can be extended

much further, all the way back to 1561 (Shaw, 1995: 16).

On a related point, Dixon argues that ‘The

Oxford English Dictionary

traces

the

use of this term [marketing] to the sixteenth century; it certainly did not origi

nate in the United States between 1906 and 1911’ (Dixon, 2002: 738). Nor should

we think that marketing education originated in the United States. In actual fact,

the first courses were found in Germany at the turn of the twentieth century

(Jones and Monieson, 1990). Having said this, the American Marketing Associa

tion and American marketing educational system has obviously been very impor

tant in terms of the development of marketing thought. As an anchor for the rest

of the chapter therefore, consider the changing definitions of marketing in the

Box below. These definitions illustrate how marketing as we know it has taken the

shape it has.

History of Marketing Theory and Practice

Voices – The American Marketing Association and the

Changing Definitions of Marketing

Wilkie and Moore (2006) tell us that there is one important issue that we should acknowledge

in the changing definitions of marketing inasmuch as the definitions become more

managerial over time. That is, less attention is paid to the influence of marketing in and

on society and more attention is devoted to articulating the management function that

marketing performs inside an organisation.

So, from the first definition of marketing provided in 1935, through to the 1985 and

2004 modifications, the definitions change from marketing being: ‘the performance of

business activities that direct the flow of goods and services from producers to consumers

(1935). [To marketing as] the process of planning and executing the conception, pricing,

promotion, and distribution of ideas, goods and services to create exchanges that sat

isfy individual and organisational objectives (1985); [to marketing as] an organizational

function and set of processes for creating, communicating and delivering value to cus

tomers and for managing customer relationships in ways that benefit the organisation

and stakeholders’ (Wilkie and Moore, 2006: 227).

The problem with the last definition is that attention is focused on marketing as an

organisational activity – there is no mention of marketing’s role extending beyond those

activities most closely associated with the firm. Thus, by removing the societal empha

sis that earlier scholars demonstrated in their desire to improve marketplace efficiency,

distributive justice, standards of living and the distribution of products at lower prices,

later definitions in effect encourage people not to think about such improvements in

the marketing and distributive system as a whole, but simply focus on those aspects

relevant to an individual firm. It also assumes that individual firm activities will in the

aggregate be unproblematic.

As far as one of the most recent definitions is concerned, marketing activities do not

actually impact on wider society. It was the excessive managerial emphasis of this defi

nition that led to a series of heated exchanges both online and in the

Journal of Public

Policy and Marketing

. Ultimately, the American Marketing Association went quickly back

to their drawing board, bringing out a new, updated definition that responded to the criticism

by scholars, so that the latest definition reads: ‘Marketing is the activity, set of institutions,

and processes for creating, communicating, delivering, and exchanging offerings that

have value for customers, clients, partners, and society at large’ (Lib, 2007).

1.3

The First Courses in Marketing in the Early Twentieth Century

As was mentioned above, some of the first courses in marketing appear to have been

delivered in Germany. There is, unfortunately, little detailed discussion of these in

the marketing literature. Studies of early courses in marketing in USA are far better

documented. Dr E.D. Jones is often credited with offering the first course in mar

keting in 1902 at the University of Michigan (Maynard, 1941). This course was not

actually called marketing at all when it was first offered, but ‘The Distributive and

Regulative Industries of the US’ (Bartels, 1951a). The first course actually called

simply ‘Marketing’ was delivered some nine years later by Ralph Starr Butler at the

University of Wisconsin. In the intervening period, other universities had neverthe

less started providing their own courses on distribution, advertising, salesmanship

and related subjects.

Marketing: A Critical Textbook

At a general level, we can consider marketing as a form of ‘applied economics’

(Shaw and Jones, 2005). Its emergence is often attributed to the fact that despite the

variety of academics working in the various sub-disciplines of economics in the late

nineteenth and early twentieth century, there was still a great deal of concern that

economic reflections on the marketplace were not used to formulate guidance for

practising managers (Kemmerer et al., 1918).

Furthermore, the information that was available was often found in relatively

obscure academic sources that few, if any, actually managed to access and read (Ashley,

1908). These access issues were compounded by the fact that: ‘The greater part of

the economic world has not yet been surveyed descriptively and realistically’ (Ashley,

1908: 188). It was here that marketing scholars and consultants had the opportunity

to contribute to knowledge about the functioning of the economic system. They

could help practitioners understand the marketplace and help investigate consumer

needs and desires which had largely been ignored by economists (Mason, 1998).

In the very beginning, early marketing academics focused their attention on

‘describing, explaining, and justifying prevailing marketing practices and institutions,

particularly newer ones’ (Bartels, 1988). Early scholarship was partly written with the

intent of modifying ‘misconceptions held among the public, such as the belief that

the wholesaler was parasitic and would disappear from the distributive system, [the]

fear of [the] annihilation of small stores by chain organisations, and dismay at the

plight of consumers before the ruthless practices of vendors’ (Bartels, 1988: 29).

To effectively understand the rapidly expanding industrial economy of the US,

these practically minded researchers refused to spend their time theorising in their

ivory towers, preferring instead to study the practice of marketing, charting the pas

sage of goods through the distribution system (Weld, 1941). What

interesting is the

reference made by Bartels above to the justification of marketing activities, on both

the basis of its efficiency and in terms of the utilities created.

1.4

Marketing, Efficiency and Utility Creation

When we talk about justifying marketing, what we mean is that scholars wanted to

demonstrate that marketing did perform a useful and valuable role in distributing

goods and services to where they were needed, at appropriate price points and in

so doing, enhancing the quality of life experienced by consumers. They wanted to

justify the value of marketing in this way for the reason that many people living in

the early twentieth century were concerned about the rising cost of distribution.

People could appreciate that there were a variety of intermediary steps involved in

distributing goods from the manufacturer to the wholesalers and onto the retailer

and they quite rightly asked the question: Were these middlemen adding value

or just cost? Were middlemen adding value to their offerings by getting the right

product to the right place at the correct time, thereby adding time and place utili

ties? Was advertising useful to the consumer, aiding them in making more effective

decisions? Or were each of these factors just adding another layer of cost which the

consumer had to subsidise? These issues were especially important as prices had

been continually rising from 1896, accelerating still higher during the First World

War (Usui, 2008) .

These issues, especially the disjuncture between the prices paid by middlemen to

farmers, and the ultimate price the consumer paid, were subsumed under the label

History of Marketing Theory and Practice

‘the marketing problem’ (Jones and Monieson, 1994) and the ‘distribution cost

debate’ (Wilkie and Moore, 1999). Such concerns have not exactly disappeared

today; although these debates about the cost of distribution were first aired in 1900

or thereabouts, with ‘farmers questioning why they received only a low percentage

of the consumer’s food dollar; today, buyers (and farmers) ask why cereal brands are

priced so high relative to ingredient costs’ (Wilkie and Moore, 1999: 215). While

such criticism of the efficiency of the marketing system continues, theoretically

this topic raised an important question about marketing – were there any elements

in distribution channels, for example, that were not adding some form of utility

(Benton, 1987)?

Arch Shaw (1912), a publisher and sometime marketing academic, believed the

criticism of middlemen was largely unwarranted. Middlemen, Shaw claimed, pro

vided highly valuable services in that they stored goods, assuming an element of risk

in doing so, because if conditions in the marketplace suddenly changed, they might

be left with a stock of goods they could no longer sell. Bearing this in mind, Shaw

suggested that middlemen performed a valuable service and consequently should be

properly compensated. Fleshing this point out, Wilkie and Moore summarise the

utilities added by marketing activities in the following way (try thinking about these in

terms of the 4 P’s of product, place, price and promotion):

... Marketing adds] form utility ... by (1) physically supplying essential inputs to the

production process and (2) providing insights from the marketplace (e.g., market

research) that help decide specific attributes for goods and services. Place utility is

clearly marketing’s province, representing the value added by providing goods where

buyers need them. Marketing adds time utility through preplanning, inventory, and

promotion activities to ensure customers can obtain goods when needed. Finally,

possession utility is offered through marketing transactions and enables customers to

use goods for desired purposes. (Wilkie and Moore, 1999: 209)

So, if we were to frame our discussion so far in terms of concepts from the philoso

phy of science which take the form of a ‘reflection on the nature and practices of

[marketing] science’ (Jones, 2007: 1243), we can say that early marketing scholarship

was thoroughly grounded in empiricism. Empiricism is a theory of knowledge that

refers to the idea that if we want to justify knowledge, then it must have some basis in

experience. In other words, early marketing scholars went out into the marketplace

to examine market institutions such as retailing environments or farming product

exchanges to formulate descriptions of how these institutions functioned. From an

empiricist, we would expect to hear comments like those uttered by Louis Weld on

the need for the interconnection of economic theory with marketplace reality: ‘I am

not denouncing theoretical economics by any means...[but] valuable contributions

can be made to the theory of market price by getting out into the markets with a mar

ket reporter than by cogitation in a closet’ (Weld in Kemmerer et al., 1918: 267).

With this turn toward a more ‘applied economics’ focus (i.e. trying to use eco

nomic theory to improve marketing practice or using the knowledge gained from

studying the market to critically examine economic theory such as the view of the

utility maximising consumer), academics and ‘marketing counsellors’ began directing

their attention towards the actual functioning of the marketing system. And it is

around this time – the early twentieth century – that the first philosophy of science

debates in marketing appeared.

Marketing: A Critical Textbook

1.5

German Historical School

Those thinking about a teaching and research career in marketing in the late

nineteenth, early twentieth centuries were often taught by scholars who had been

trained in Germany and subsequently absorbed the worldview of the German Historical

School (Jones and Monieson, 1990). Academics trained in this worldview thought

that the marketplace should not operate unfettered. Rather than letting the invisible

hand of the market dictate production and economic relations, they thought that the

government should attempt to regulate the market where necessary, with scholars

providing knowledge about the problematic workings of the marketplace to govern

ment or other officials.

In terms of the philosophy of science underpinning the German Historical School,

they subscribed to an inductive, ‘positivist’ epistemology, and hoped to develop a

science of marketing (Jones, 1994; Jones and Monieson, 1990). What this means

is that they studied the marketplace, examining specific cases that showed how the

market worked (i.e. in relation to agricultural distribution etc) and then used this

information to generalise about the operation of the marketplace (going from spe

cific to general cases = induction).

By formulating and validating such generalisations, marketing scholars could then,

through their involvement with public policy, either work to improve the operation

of the market, or legislate against detrimental or inefficient practices. This latter

point indicates a further issue that was important to this group: ethics and distribu

tive justice. By distributive justice we mean ‘how a community treats its members in

terms of benefits and burdens [that are shared] according to some standard of fair

ness’ (Laczniak and Murphy, 2008: 5). The German Historical School, put simply,

viewed their work as contributing to ensuring that all participants in the market were

treated fairly, including customers and middlemen.

Unfortunately, as Jones and Shaw (2002) reveal, those associated with this school

of thought were not successful in creating the science of marketing that they wanted.

Pretty soon, issues of distributive justice and ethics faded from the mainstream of

marketing thought. From distributive justice and a concern for the ‘marketing prob

lem’, commentators across the spectrum of marketing began to devote more attention

to what was called the ‘consumer problem’ (Tadajewski and Brownlie, 2008). In the

context of the first two decades of the twentieth century, supply began to exceed

demand, so that the focus of marketers’ attention became selling products efficiently

and effectively through well thought out combinations of product, price, promotion

and distribution strategies (Zaltman and Burger, 1975). In recognition of changing

demand and supply relations, alongside increasing competition between firms (Hoyt,

1929/2000), it was also more important for businesses to effectively control the inter

actions between their salesforce and the customer. Similar views had long been held

by retailing pioneers like John Wanamaker (Appel, 1938), who like later scientific

sales managers, wanted to foster positive customer relations and develop long-term

relationships between a company and its most desirable clientele, and controlling the

sales force was one means of doing so (Graham, 2000; Strong and D’Amico, 1991).

1.6

Frederick Taylor and Scientific Sales Management

An important, but all too often neglected contribution to marketing theory and practice

was made via the work of Frederick Winslow Taylor, the father of scientific management.

History of Marketing Theory and Practice

Marketing scholars recognised in Taylor’s work a way to make marketing, retailing and

salesmanship more efficient (Cowan, 1924; Graham, 2000; La Londe and Morrison,

1967; Usui, 2008). Taylor had come to popular attention via his attempts to place

production on a scientific level. By this, we mean Taylor sought to examine the way

that particular activities were undertaken such as shovelling coal, in order to deter

mine the most effective way of doing so.

Behind this strategy of determining the ‘one best way’ of engaging in any given

activity was the issue of organisational efficiency. Connected to this, management

were expected to study their workforce, drawing up detailed guidelines for workers

that aimed to encourage them to work at their optimal level, ‘at the highest grade

of work for which his [

sic

] natural abilities fitted him’ (Taylor, 1911/1998: 1). This

standard was itself based on the standardisation of worker tasks into the key ele

ments that must be undertaken, with all superfluous activities disregarded. Taylor’s

work was heralded as encouraging a revolution in management practice, increasing

production efficiency to rates previously unheard of. The problem was, however,

that increasing production in this way required a similar increase in distribution effi

ciency. After all, there was no point producing goods at ever increasing speed, if they

could not be sold in a similarly efficient manner.

Into this breach strode a number of early marketing thinkers who sought to apply

Taylor’s insights to marketing practice, including such scholarly pioneers as Arch W.

Shaw, Paul Converse, Charles W. Hoyt, Stuart Cowan and Percival White, as well as

practitioners such as H.W. Brown of Tabor Manufacturing Company and Edward A.

Filene, the famous retailer (Cowan, 1924; Filene, 1930; Hoyt, 1929/2000; La Londe

and Morrison, 1967; Scully, 1996; Usui, 2008). In effect, what these individuals

wanted to achieve was the transformation of the ‘art’ of salesmanship into a science

of selling (Strong and D’Amico, 1991). This required a shift in understanding of

salesperson characteristics. Where once it was thought that salespeople were innately

predisposed to and skilled at selling, now marketing thinkers believed salespeople

could be created through appropriate courses of training and instruction.

Hoyt, for example, in his 1913 text,

Scientific Sales Management

, outlined the

various ways in which sales management could be made more efficient, and most of

the ideas he enunciated revolved around the idea of standardisation (as did Taylor’s

system) (Hoyt, 1929/2000). In an effort to standardise sales activities, Hoyt sug

gested that ‘If we analyze the sales job we have gone a long way toward finding out

how to do it. If we break the job up into its component parts, we discover new tools

to hasten the process and increase volume’ (Hoyt, 1929/2000: 24). Firms also ration

alised their production processes, discontinuing the manufacture of unprofitable lines,

thereby enabling their salespeople to focus on the most profitable product ranges. And

in line with a sales orientation (see the Box on p. 38) ‘sales volume’ was an important

criterion against which to measure business practice. But it was not the sole objective:

‘Given the job of keeping a factory operating profitably at capacity throughout the

year, obviously sales volume is the first requirement’ (Cowan, 1924: 76; cf. Strong

and D’Amico, 1991: 232). Profit targets were also important (Usui, 2008).

In addition, sales management, it was claimed, could be made more effective if the

routes salesmen travelled across their sales territories were planned using the optimal

transportation options and if their sales ‘patter’ or talk was standardised. We should

be clear here: this is not to suggest that each and every salesman was given one sales

talk that they repeated without modifying. They were given broad outlines of what

might be a good way of presenting a given product, but each ‘individual salesman is

expected and taught to use the words which come to him naturally’ (Cowan, 1924: 84).

Marketing: A Critical Textbook

Sales talk standardisation was possible because although each customer had their

own individual personality and thus was likely to respond to the sales pitch in slightly

different ways, ‘Extensive experiences show that on the average human nature is much

the same, and that the difference between individuals is not nearly as great as the

degree of likeness’ (Cowan, 1924: 84). The function of management from this

perspective was to produce sales pitches that were likely to appeal to the mass of

consumers. In other words, and here we see the contribution of Taylor’s ideas, man

agement had to try to develop the ‘one best sales story’ for use in the field. Accord

ing to Cowan (1924: 84), doing so was ‘a result of research and experiment, and it

involves planning a basic method of sales. The salesman, therefore, must be selected

with respect to their ability to comprehend the basic method, and their ability to

utilize it in personal contact with buyers’. Moreover, management needed to con

vince otherwise largely ‘freewheeling commissioned salespeople’ that they needed

management’s help in devising their travelling schedules and sales talks (Strong and

D’Amico, 1991). One way of doing this was to suggest that salespeople might make

more money if their everyday sales activities were better structured.

Although Taylor’s work was criticised by some (Graham, 2000), it was influential

in marketing and advertising (Scully, 1996), with many of the respondents surveyed

by Paul Converse in the early 1940s acknowledging its impact on their thinking

(Converse, 1945). This said, gradually there was a movement away from a limited

focus on sales management activities (Strong and Hawes, 1990), that is, from a focus

on supply side efficiency issues, to a greater emphasis on consumer needs, wants

and desires (White, 1927). This was in part a natural shift in business practice that

reflected the fact that as markets became ever larger, and producers ever more distant

from their ultimate consumers, that some activity was required to allow manufactur

ers to maintain contact with their customer base. Marketing research consequently

gained a foothold in industry. see the Box below.

The Key Characteristics of the Production, Sales and

Marketing Eras (modified from Jones and Richardson, 2007: 18)

Production Era

(according to Keith (1960) this ran from 1870–1930)

P1.

Demand exceeds supply. There are shortages and intense hunger for goods.

P2.

There is little or no competition within product markets (between firms selling the

same goods to the same markets).

P3.

The company, not customers, is the centre of focus for a business.

P4.

Businesses produce what they can produce and focus on solving production

problems.

P5.

Businesses produce limited product lines.

P6.

Products sell themselves. Wholesalers and retailers are unsophisticated in their

selling and marketing.

P7.

Profit is a by-product of being good at production.

Sales Era

(according to Keith (1960) this ran from 1930 until 1950)

S1.

Supply exceeds demand.

S2.

There is competition within product markets.

S3.

Businesses are conscious of consumers’ wants, and some market research is done.

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