HISTORICAL DEVELOPMENT OF MARKETING
Marketing has come a long ways in its modern form; it is a twentieth century phenomenon. The history of marketing extends back in time to the most primitive societies, for it can be argued that some activities that are today regarded as small fractions of marketing date back to centuries before the birth of Christ. For convenience sake the evolutionary process of modern marketing can be divided into four periods.
The Pre – Industrial Era
Since the focus of selling which in a part of marketing is exchange, trade and selling may be said to have simultaneous origins. In the days when man engaged in subsistence occupations such as hunting and farming solely to feed himself and his immediate family, neither trade nor marketing was necessary. However, as man’s needs became more diverse, he could no longer produce all that he needed this resulted to specialisation, and man specialised in producing what he could, and then exchanged those which he did not need with what others produce but which they also did not need, thus, exchange was born. Goods and services were exchanged for other goods or services as there was no money initially to serve as a medium of exchange this was trade by barter.
Therefore, the first noticeable traces of marketing manifested under the barter system of exchange. It is interesting to note that today’s counters trade is, to some extent, a flamboyant grab for yesterdays barter system.
The Industrial Era
By the second half of the nineteenth century, the industrial evolution had spread to the United States of America. Two inevitable consequences of the revolutionisation of production were mass production of a wide variety of goods and 1750 AD – 1900 AD the emergence of a merchant class which shouldered the Cyrus H. McCormick, founder, international Harvester company had by 1850 invested in market research, market analysis, the concept of market standing, pricing policies, the services salesman, parts and services supply to the customer, and instalment credits. Peter F. Drucker was responsible of distributing and selling the output of the industries. The department store, an European innovation was born. American merchants later borrowed this innovation.
In spite of all these, marketing, or more correctly selling, was still rudimentary in comparison to its present day status.
Marketing, did not receive much emphasis as the major concern was how to achieve mass production at reduced costs. Selling, however, received increased attention. Nevertheless, the marketing seed that was sown in the pre-industrial era had germinated and was beginning to grow. All these continued into the early part of the twentieth century.
The Mass Communication Era
This period covers 1900 -I 1950 for want of a better name, this period will be called the’ Era of mass communication for two reasons, first, not only did the number of newspapers reach an impressive figure during this period but also the radio, television and the telephone were invented. Secondly, marketers during this period, especially at the letter part, relied heavily on mass communication as a means of selling. It must be added that this was also a period of increased mass production.
The first ten years of this period witnessed the inauguration of marketing course first at the University of Pennsylvania, USA in 1905 and at the University of Wisconsin also in USA in 1910. By 1950, many business schools offered a variety of marketing courses.
The importance of the period 1900-1950 in terms of developments in marketing lies not merely in the intensification of, and improvements on, earlier marketing practices and the emergence of marketing research and electronic mass media advertising but mainly in the appearance of marketing courses in the curricula of institutions of higher learning. This development assured the definition, development, formalisation and articulation of a body of marketing knowledge and literature. This became more refined in subsequent years.
The Modern Marketing Era
This period (1950 to present day), growing competition among firms and the consequent difficulty of finding markets for the variety of competing products stimulated conceited interest in marketing both as an academic discipline and as a profession. This growing interest yielded positive results in terms of growth in marketing literature and in terms of marketing practice being increasingly based on strong theoretical foundations. These and other developments in marketing during this period occurred. These are Consumer – Oriented Marketing, Societal Orientation, Non – Business Marketing, Consumer Behaviour and increased professionalisation.
The Nature and Scope of Marketing
At one time it appeared that marketing was a subset of economic activities. Marketing was limited to distribution activities whether such activities were performed by the manufacturer or by the middlemen. Marketing was viewed as a value added function supporting the primary functions of production. According to Sheth and Garrett (1986), the nature and scope of marketing is not as clearly defined. This is because, marketing horizon have been broadened.
Firstly, marketing is no longer considered merely as a post – manufacturing process. Modern marketing activities include, pre-production processes because it begins and ends with customer satisfaction. Modern marketing has also broadened its horizon to include all exchanges of value, not just economic exchanges. Finally, marketing has been extended to intangible and perishable services such as repair and maintenance, banking, insurance, shipping and communication.
Three questions appear to be central to the nature of marketing. First, what kind of phenomena and issues do the various marketing writers perceive to be included in the scope of marketing? Secondly, what kind of phenomena and issues should be included in the scope of marketing? Thirdly, how can marketing be defined to both systematically include all the phenomena and issues that should be included at the same time, exclude all other phenomena and issues. That is a good definition of marketing must be properly inclusive and exclusive no matter which definition of marketing one prefers, the scope of marketing is unquestionably broad. Often included are such diverse subject as consumer behaviour, pricing, purchasing, sales management, product management, marketing communications, comparative marketing, productivity of marketing systems, the role of marketing in economic development, packaging, channels of distribution, marketing research, societal issues in marketing, retailing, wholesaling, international marketing, commodity marketing and physical distribution. Though lengthy, this list of topics and issues does not exhaust the possibilities. At the same time not all marketing writers would include the topics under marketing.
According to Hunt (1976) the different commentators on marketing would disagree as to which topics should be included. This disagreement can be resolved by attempting to develop some common ground for classifying the divers topics and issues in marketing.
Marketing has become an attractive career and this trend is attested to by the growing number of professionalism marketing courses being offered in universities, polytechnics and other professional bodies like NIMARK, Certified Institute of Marketing of Nigeria, etc; and the increasing request for marketing managers in recent times by companies and other corporate organisations. The essential ingredient of marketing therefore is the exchange of ideas, goods, and services that satisfy individuals, corporate organisations and the society at large. This is the primary motive of marketing which embraces activities engaged in to satisfy economic needs and wants. Marketing may be described as a social and managerial process by which individual and groups obtain what they want through creating and exchanging products and values with others. Participants like manufacturers, retailers, and final buyers are directly involved in the exchange transactions while others like transportation companies and advertising agencies play facilitating roles and as such are regarded as facilitating institutions. Marketing encompasses far more than selling whose immediate goal is the conversion of goods to cash. Marketing fulfils the critical function of integrating the economy into the society to serve human needs.
The whole essence of marketing is the need to assess and identify consumer needs and thereafter satisfying them through an exchange process which requires that there must be two or more parties with unsatisfied needs, a desire and the ability to satisfy the need, a medium for the parties to communicate and deliver; something of value to offer and the freedom to accept or reject the offer.
Going further, every firm must take some sort of action on some or all of these issues and problem. A firm’s marketing policies and actions constitute its marketing mix. It is the actions of all firms taken collectively that make a country’s economic system work the way it does – producing goods and services and balancing the volume in which they are produced with the volume in which they are demanded. Thus, the why the marketing system works has an important bearing or the efficiency of the total economic system, on its development and growth, and the standard of living of its people.
Definitions of Marketing
According to Pride and Ferrel (1989) any definition is merely an abstract description of a broad concept. No definition perfectly describes the concept to which it refers. Marketing is practiced and studied for many different purposes and, therefore, has been defined in many ways, whether for academic research or for applied business purposes.
Olatunji (2001) argue, that there is no generally acceptable definition for marketing, rather that most authorities agreed on the following concepts as forming an integral part of marketing.
– The concept of satisfying human needs.
– The concept of exchange of goods and services. These concepts therefore, will give us the definition which states that “marketing is a human activity directed at satisfying human needs and wants through exchange process” (Philip Kotler).
However, we may explain marketing as a business function entrusted with the creation and satisfaction of customers to achieve the aims of business. Thus the process of marketing includes:
(i) Profit making by sale,
(ii) The presence of a customer,
(iii)Satisfaction of the customer by meeting his needs.
(iv)The product should confirm to the requirements of the customer. Thus marketing starts and ends with the consumer. It is the chief business function. The solving of various marketing problems needs insight, experience and analytical ability. In order to understand the correct meaning of marketing we have to understand different points of views.
There are two any angles, from which we can discuss the meaning of marketing.
i. The product oriented view, and
ii. The customer oriented view.
The product oriented view: The product-oriented view is a traditional concept of marketing. This view is based on the assumption that the product no matter what it be, will be acceptable ‘by the consumer. For that reason, the producer is only concerned with the production of the product, without taking into account the choice or behaviour of the consumer. A few definitions that supports this view are as follows:
i. “Marketing comprises both buying and selling activities” (Pyle).
ii. “Marketing consists of those efforts which affects transfers in the ownership of goods and services and provide for their physical distribution”. (Clark and Clark) iii. “Marketing is the performance of business activities that direct the flow of goods and services from producer to consumer or user”. (American Marketing association).
In his book ‘Wealth of Nations Adam Smith held that “consumption is the sole end and purpose of all production and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer”, under “mercantile system the interest of the consumer was virtually sacrificed to that of the producer. They considered production and not consumption as the ultimate end and object of industry and commerce. It was a stage when the role of marketing was ignored with the down of Industrial Revolution major changes took place. There was a shift from agriculture to industry the living standards of the people rose with the development of transport and communications. However, no serious efforts were made to satisfy the wants of the consumers. It was because the demand? usually outstripped the production capacity. The above definitions of marketing are product oriented because they lay more emphasis on the product rather than on the consumers. According to the authors marketing process comes to an end as soon as the product reaches to the hands of the consumers. Frankly speaking marketing is wider than this.
The customer oriented view: The customer oriented view of marketing is related to the needs of the buyer. Products presented to the market are only those products that can satisfy the wants and tastes of the consumers. To please the consumer, after sales services are needed. Here are some of the well known customer oriented definitions of marketing,
i. “Marketing is the business process by which products are matched with markets and through which transfers of ownership are effected” (Cundiff and Still).
ii. ” Marketing is the delivery of a standard of living”. (Paul Mazur).
iii. ” Marketing is a total system of interacting business activities designed to plan, price, promote and distribute want satisfying products and services to present and potential customer “. (William J. Stanton)
These definitions suggest that marketing is concerned with the movement of goods and services from the plant to the consumer. Marketing activities are directly concerned with the demand stimulating and demand fulfilling efforts of the enterprise.
With the changing of times and growing intricacies, definitions of marketing also under went modifications.
Leslie Rodger made slight changes and put it as: “Marketing is the primary management function which, organizes and directs the aggregate business activities involved in converting customer purchasing power into effective demand for a specific product or service and in moving the product or service to the final consumer or user so as to achieve the company set profit or other objectives”.
An analysis of the customer oriented definitions of marketing clearly brings the following points,
Marketing is a system – a system of business activities,
Marketing is designed to plan, price, promote and distribute.
Object of action – want satisfying goods and services the beneficiaries of which are the present and potential consumers or industrial users.
A managerial function – marketing is one of the most powerful managerial functions.
It takes into account the necessity of consumer orientation and emphasizes innovations at the production stage.
Marketing is not only one activity; rather it is an interaction of many activities.
Marketing is incomplete without the satisfaction of consumer’s wants completely. Consumer’s satisfaction is the prime function of marketing.
Finally, William J. Stanton’s definition comprise all the above mentioned merits” marketing is a total system of interacting business activities designed to plan, price, promote and distribute want satisfying products and services to present and potential customers’.
Distinction between marketing and selling
Very often these two terms – ‘ marketing’ -and ‘ selling’ are used in the same sense but actually they differ in their meaning.
Marketing occupies the first place in all business activities. According to modern marketing concept, marketing starts with the product – idea and ends with customer satisfaction. The main idea behind the concept is customer satisfaction.
Selling is normally concerned with the transfer of goods and service to the consumers or prospective consumer for the exchange of money. It is one of the important functions of marketing, selling includes all activities regarding passing of finished good to buyers.
The two terms ‘marketing’ and ‘selling’ can be distinguished on the following grounds:
Scope: The scope of marketing is much wider than that of selling. Marketing includes all activities starting with the idea of a product to satisfy the needs of the customers and ending with the satisfaction of customer even after the product is sold thus, it involves planning, producing selling and serving the customers. On the other hand selling refers to functions activities undertaken to secure the sale or distribution of the quality and design of the products, already manufactured by the firm among customers, it involves efforts to sell what has already been produced without taking the trouble of adapting production to consumers needs and preferences.
Object of profit earning: the object of marketing is to earn profits through satisfaction of customers while on the other hand, selling concentrates on sales volume and makes efforts to earn profits by selling more quantity of the products. Thus profitability of a marketing oriented firm depends very much on the quality of products as required by customers and their satisfaction while the profitability of a selling oriented firm is concerned with the sale volume.
Relation: Marketing is related to customer satisfaction and therefore includes pre – production and post sale activities, selling is concerned only with the physical transfer of goods from one person to another and includes activities relating to transfer of goods.
Orientation: Marketing is consumer oriented and more attention is paid on consumers needs, selling is basically production oriented and concentrates more on production and distribution of goods.
Solution of problems: Problems of marketing are the main concern of the producers or businessmen while selling problems are solved by other channels of distribution like retailer’, wholesaler, etc.
Planning: planning in marketing is long – run oriented, in terms of new products, tomorrow’s markets, and future growth. In selling planning is short – run oriented in terms of today’s products and markets.
Functions of marketing
The functional, approach of marketing consists of a number of activities called marketing functions.’ A marketing function is ” an act or operation or service by which product and the final consumer are linked together”. Sometimes it may not be possible to divide the whole marketing process into a few functions. At present no proper classification of marketing functions exist. However^ we can group these various functions of marketing into three major headings.
i. Merchandising functions
ii. Physical distribution functions
iii. Facilitating functions.
The process of the passing of goods into the customer’s hands is called the function of exchange. This process can be divided into buying and assembling, and selling:
a. Buying and Assembling: Buying is the first step in the process of marketing. A manufacturer has to buy raw materials for production. A wholesaler has to buy goods to sell them to the retailer. A retailer has to buy goods to be sold to the consumer. Buying involves transfer of ownership of goods. Assembling means creation and maintenance of the stock of goods, purchased from different sources. This is generally done by middlemen. This buying and assembling are two distinct processes. Both process involve related element such as quality, Price, date of delivery and other terms and conditions. All these require specialize knowledge on the part of the buyers.
b. Selling: Selling is important from the point of view of the seller as well as the consumer, the profit making object of a business concern is achieved only through the sale of goods. It is not only transfer of ownership but it has the purpose of identifying prospective customers, stimulating demand and providing information and service to buyers for this the marketer must combine such activities like personal selling, advertising, sales promotion, packaging and customer service. Great skill is needed in coordinating the different selling activities,
ii. Physical distribution functions:
This function relation to the process of transporting the goods from the place of the seller to the place of the buyer and includes two main functions.
a. Transportation and
b. Storage and warehousing.
a. Transportation: Marketing system requires an economical and effective transportation system. A good system of transportation increases the value of goods by the creation of place utility. The opening of new markets has been possible by the rapid development of transportation and communication. It has resulted in the extension of markets, regular supply, lower price and improved services to the consumers.
b. Storage and Warehousing: In the present complex economic system products are generally produced before market demand, storage becomes very important. Storage involves holding and preserving of goods between the time of their production and the time of their consumption. Manufacturers, wholesalers, and retailers, all hold inventories and manage them. Marketers hold products in storage for seasonal factor, economic and improvement of the quality and value.
iii. Facilitating Functions:
These functions make the marketing process easy and include financing, risk – bearing, standardisation, pricing, advertising, soles promotion and market information, etc.
a. ‘Financing: It is very difficult to carry on marketing activities smoothly without the availability of adequate and cheap finance. Commercial banks, cooperative, credit societies, and government Agencies arrange for short term finance, medium term finance, and long term finances. Trade credit is also one of the important sources of finance. Trade credit tends to be expensive when interest is charged on overdue balances. In recent time installment credit has become very popular. The system has given more to the development of mass market.
b. Standardisation: Standardisation has now been accepted as an ethical basis of marketing. A standard is a measure that is generally recognized as a modelfor comparison. Standards are determined on the basis of colour, weight, quality, and other factors of a product. It facilitates purchase and sale of goods. Goods are purchased by brand name.
c. Market information: Importance of marketing information has been recognised with the extent of markets and mass production. Decisions on marketing research has now become an independent branch of marketing.
d. Risk – Bearing: Marketing of goods involves innumerable risks due to theft, deterioration, accidents, etc. The most important factor responsible for the risk is fluctuation in prices. The other factors may be change in fashion, competition in the market, change in habits of the consumers, natural calamities etc.
Businessmen have to foresee the business risks and take adequate steps to avoid such risks by taking insurance policy, and even at that, there are risks that are to be borne by the businessmen
e. Pricing: Pricing is also an important function. Price policy of the firm directly affects the profit element and therefore, its successful functioning. In determining the price policy several factors are to be borne in mind such as, cost of the product, competitors’ prices, marketing policies, government policy etc.
Importance of Marketing
Marketing is a potential force that commands high significance for the society as a whole. The main object of production is, distribution of goods and services through marketing and to make as much profit as possible.
The chief executive cannot plan, the production manager cannot manage, the purchasing agent cannot purchase, the financial officer cannot budget and the engineer cannot design until the basis marketing determination have been made. A writer once remarked that “nothing happens in our economy until somebody sells something”. The importance of marketing can be discussed as follows.
Importance of Marketing to Society
1 Delivery of Standard of Living: The main object of marketing is to provide goods and services to the people in the society.according to their needs, and taste of reasonable price. It is to satisfy the wants of the people that new inventions are made that in why Paul Mazur has said, “marketing is the delivery of standard of living to society”. Marketing creates and increases demand of the new and existing products and thus raises the standard of living of the people.
2 Provides Employment: Reasonable percentage of the labour force in developed economies is engaged in different marketing activities such as marketing research work, wholesale and retail business, transport, communications storing and warehousing etc. In underdeveloped economies like Nigeria there is an increasing opportunities for employment in marketing related jobs.
3 Decreases Distribution Cost: Marketing aims at reducing the lost of distribution as far as possible so that the products might be within the reach of consumers. It increase the level of consumption in society.
4 Increase in National Income: Sound marketing system is associated with creation of increased demand for goods and services. An increased demand stimulates production activity in the country, which in turn increase the national income which is in the interest of the whole economy.
5 Protection against business slump: Trade cycles cause fluctuations in prices. Sometimes there is a period of depression followed by a period of boom. A period of depression and low prices is very harmful to the economy. With the decrease in demand many small businesses stop production leading to wide spread unemployment. A sound marketing system can give protection against business slump by discovering new markets, reducing cost of distribution, making it customer oriented, diversifying and improving the product, and suggesting alternative uses.
Importance of Marketing to the Firm
Marketing plays an important role for the well being of a firm. This is evident from the words of Peter F. Drucker that “marketing is the distinguishing, the unique function of the business”. The importance of marketing to a business firm may be discussed as follows:
1 Help in Business Planning and Decision-Making: Marketing is helpful not only to plan the production but it is also helpful in business planning and taking various decisions regarding the business. In today’s economy, production is planned according to the sales forecasts and not according to the production capacity of the firm. A “firm will produce what it can sell or as much quantity as it can sell and not what and how much it can produce. Thus marketing decisions affect the business decisions, all other activities such as planning, production, purchase, finance, engineering revolve around the marketing decisions.
2 Help in Increasing Profits: Every business is carried on with a view of profit making. Marketing helps in increasing the business profits by reducing the securing cost on one hand and by increasing the demand of the product through advertising and sales promotion activities.
Help in communication between firm and society:
Business collects various information regarding consumers’ behaviour. Marketing also provides information to the firm, of the competitors’ production and price policies. It helps the firm in framing its own policies and making necessary adjustments accordingly.