History of marketing School

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The study of the history of marketing, as a discipline, is meaningful because it helps to define the baselines upon which change can be recognized and understand how the discipline evolves in response to those changes. The practice of marketing has been known for millennia, but the term "marketing" used to describe commercial activities buying and selling a products or services came into popular use in the late nineteenth century. The study of the history of marketing as an academic field emerged in the early twentieth century.

Marketers tend to distinguish between the history of marketing practice and the history of marketing thought:

Although the history of marketing thought and the history of marketing practice are distinct fields of study, they intersect at different junctures. Marketing practitioners engage in innovative practices that capture the attention of marketing scholars while marketing academics develop new research methods that are adopted by practitioners. Thus developments in marketing theory inform marketing practice and vice versa. The history of marketing will remain incomplete if one disassociates academia from practitioners.

The publication, in 1960, of Robert Keith's article, "The Marketing Revolution", was a pioneering work in the study of the history of marketing practice. And, in 1976, the publication of Robert Bartel's book, The History of Marketing Thought, marked a turning-point in the understanding of how marketing theory evolved since it first emerged as a separate discipline around the turn of last century.

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Marketing history: an overview

According to etymologists, the term 'marketing' first appeared in dictionaries in the sixteenth century where it referred to the process of buying and selling at a market. The contemporary definition of 'marketing' as a process of moving goods from producer to consumer with an emphasis on sales and advertising first appeared in dictionaries in 1897. The term, marketing, is a derivation of the Latin word, mercatus meaning market or merchant.

Historians of marketing have undertaken considerable investigation into the emergence of marketing, yet there is little agreement about when marketing first began. Some researchers argue that marketing practices can be found in antiquity while others suggest that marketing, in its modern form, emerged in conjunction with the rise of consumer culture in seventeenth and eighteenth century Europe while yet other researchers suggest that modern marketing was only fully realised in the decades following the industrial revolution in Britain from where it subsequently spread to Europe and North America. Hollander and others have suggested that the different dates for the emergence of marketing can be explained by problems surrounding the way that marketing has been defined - whether reference to 'modern marketing' as a planned, programmed repertoire of professional practice including activities such as segmentation, product differentiation, positioning and marketing communications versus 'marketing' as a simple form distribution and exchange.

Marketing in antiquity

A number of studies have found evidence of branding, packaging and labelling in antiquity. David Wengrow has argued that branding became necessary following the urban revolution in ancient Mesopotamia in the 4th century BCE, when large-scale economies started mass-producing commodities such as alcoholic drinks, cosmetics and textiles. These ancient societies imposed strict forms of quality control over commodities, and also needed to convey value to the consumer through branding. Producers began by attaching simple stone seals to products which over time were transformed into clay seals bearing impressed images, often associated with the producer's personal identity thus giving the product a personality. Diana Twede has argued that the "consumer packaging functions of protection, utility and communication have been necessary whenever packages were the object of transactions" (p.107). She has shown that amphoras used in Mediterannean trade between 1500 and 500 BCE exhibited a wide variety of shapes and markings, which provided information for transactions. Systematic use of stamped labels dates from around the fourth century BCE. In a largely pre-literate society, the shape of the amphora and its pictorial markings conveyed information about the contents, region of origin and even the identity of the producer which were understood to convey information about product quality. Moore and Reid have argued that the distinctive shapes and markings in ancient containers should be termed proto-brands.

Marketing in the Middle Ages

In England and Europe during the Middle Ages, market towns sprang up. Some analysts have suggested that the term, 'marketing' may have first been used in the context of market towns where producers used the term to describe the process of carting and selling their produce and wares in market town. Blintiff has investigated the early Medieval networks of market towns and suggests that by the 12th century there was an upsurge in the number of market towns and the emergence of merchant circuits as traders bulked up surpluses from smaller regional, different day markets and resold them at the larger centralised market towns.

Braudel and Reynold have made a systematic study of these European market towns between the thirteenth and fifteenth century. Their investigation shows that in regional districts markets were held once or twice a week while daily markets were common in larger cities. Gradually over time, permanent shops that opened daily began to supplant the periodic markets and peddlers filled in the gaps in distribution. The physical market was characterised by transactional exchange and the economy was characterised by local trading. Braudel reports that, in 1600, goods travelled relatively short distances - grain 5-10 miles; cattle 40-70 miles; wool and wollen cloth 20-40 miles. However, following the European age of discovery, goods were imported from afar - calico cloth from India, porcelain, silk and tea from China, spices from India and South-East Asia and tobacco, sugar, rum and coffee from the New World.

As trade between countries or regions grew, companies required information on which to base business decisions. Individuals and companies carried out formal and informal research on trade conditions. In 1380, Johann Fugger travelled from Augsburg to Graben in order to gather information on the international textile industry. He exchanged detailed letters on trade conditions in relevant areas. While such activities might now be recognised marketing research, at that time they were known as 'commercial research' or 'commercial intelligence' and not seen as part of a repertoire of activities that make up marketing practice.

Marketing in seventeenth and eighteenth century Europe

Scholars have identified specific instances of marketing practices in England and Europe in the seventeenth and eighteenth centuries. During the 1700s, as England began to exploit trading opportunities with South-East Asia, industrial houses demanded more detailed information, on how to base their marketing decisions. At this time, the English trader and prolific author, Daniel Defoe prepared a number of publications providing information on the state of trade in England, Scotland and India - information used subsequently used to make business decisions.

In a major review of consumer society, McKendrick, Brewer and Plumb found extensive evidence of eighteenth century English entrepeneurs using 'modern' marketing techniques, including product differentiation, sales promotion and loss leader pricing. English industrialists, Josiah Wedgewood and Matthew Boulton are often potrayed as pioneers of modern mass marketing methods. Wedgewood was known to have used marketing techniques such as direct mail, travelling salesmen and catalogues in the eighteenth century. Wedgewood also carried out serious investigations into the fixed and variable costs of production and recognised that increased production would lead to lower unit costs. He also inferred that selling at lower prices would lead to higher demand and recognised the value of achieving scale economies in production. By cutting costs and lowering prices, Wedgewood was able to generate higher overall profits. Similarly, one of Wedgewood's contemporaries, Matthew Boulton, pioneered early mass production techniques and product differentiation at his Soho Manufactory in the 1760s. He also practiced planned obsolesence and understood the importance of 'celebrity marketing' - that is supplying the nobility often at prices below cost and of obtaining royal patronage, for the sake of the publicity generated.

Evidence of early marketing practices has also been noted across Europe. A study of the German book trade found examples of both product differentiation and market segmentation in the 1820s. Other works have documented the use of persuasive advertising practices in eighteenth century Italy, England and France as early as the 1600s.

Marketing outside Europe

The rise of consumer culture and marketing in England, the United States and Europe has been extensively studied, but less is known about developments elsewhere. Nevertheless, recent research suggests that China exhibited a rich history of early marketing practices; including branding, packaging, advertising and retail signage. From as early as 200 BCE, Chinese packaging and branding was used to signal family, place names and product quality, and the use of government imposed product branding was used between 600 and 900 AD. Eckhart and Bengtsson have argued that during the Song Dynasty (960-1127), Chinese society developed toward a consumerist culture, where a high level of consumption was attainable for a wide variety of ordinary consumers rather than just the elite (p. 212). The rise of a consumer culture led to the commercial investment in carefully managed company image, retail signage, symbolic brands, trademark protection and the brand concepts of baoji, hao, lei, gongpin, piazi and pinpai, one which roughly equate with Western concepts of family status, quality grading, and upholding traditional Chinese values (p. 219). Eckhardt and Bengtsson's analysis suggests that brands emerged in China as a result of the social needs and tensions implicit in consumer culture, in which brands provide social status and stratification. Thus, the evolution of brands in China stands in sharp contrast to the West where manufacturers pushed brands onto the market in order to differentiate, increase market share and ultimately profits (pp 218-219).

Marketing in the nineteenth and twentieth centuries

Until the nineteenth century, Western economies were characterised by small regional suppliers who sold goods on a local or regional basis. However, as transportation systems improved from the mid nineteenth century, the economy became more unified allowing companies to distribute standardised, branded goods a national level. This gave rise to a much broader mass marketing mindset. Manufacturers tended to insist on strict standardisation in order to achieve scale economies with a view to keeping production costs down and also to achieving market penetrationin the early stages of a product's life cycle. The Model T Ford was an example of a product being manufactured at a price that was affordable for the burgeoning middle classes.

In the early twentieth century, as market size increased, it became more commonplace for manufacturers to produce a variety of models pitched at different quality points designed to meet the needs of various demographic and lifestyle market segments, giving rise to the widespread practice of market segmentation and product differentation. Between 1902 -1910 George B Waldron, working at Mahin's advertising agency, used tax registers, city directories and census data to show advertisers the proportion of education versus illiterate consumers and the earning capacity of different occupations in what is believed to be the first demographic segmentation of a population. Within little more than a decade, Paul Cherington had developed the 'ABCD' household typology - the first socio-demographic segmentation tool.

As industry grew, the demand for skilled business professionals also grew. To meet this demand, universities began offering courses in commerce, economics and marketing. Marketing, as a discipline, was first taught in universties in the very early twentieth century. However, researchers only became interested in investigating the history of marketing in the mid twentieth century. From the outset, researchers tended to identify two strands of historical research; the history of marketing practice and the history of marketing thought which was fundamentally concerned with the rise of marketing education and dissecting the way that marketing was taught and studied. Early historical studies were primarily descriptive.

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History of marketing practice

The practice of marketing may have been carried out for millenia, but the modern concept of marketing as a professional practice appears to have emerged the post industrial corporate world. In addition to the studies of specific cultures or time periods, discussed in the preceding section, some historians of marketing have sought to write more general histories of marketing's evolution. To do this, historians often turn to a method known as periodisation. Periodisation refers to the process or study of categorizing the past into discrete, quantified named units for the purpose of analysis or study.

A key question that has preoccupied researchers is whether specific orientations or mindsets that inform key periods of marketing's evolution can be identified. Marketers disagree about the the precise periods that outline marketing practice and describe the way that marketing pratice has evolved over time.

Orientations or philosophies that inform marketing practice

In the marketing literature, continuing debate surrounds the orientations or philosophies that might have informed marketing practice at different periods of time. An orientation may be defind as "the type of activity or subject that an organization seems most interested in and gives most attention to." In relation to marketing orientations, the term has been defined as a "philosophy of business management." or "a corporate state of mind" or as an "organisation[al] culture"

Hollander et al have identified fourteen different stage theories or short periodisations as well as a total of nineteen long periodisations that have been carried out since 1957. Of these, the contributions of Robert Keith (1960) Ronald Fullerton (1988) are the most frequently cited.

Keith's periodisation

In 1960, Robert Keith, the then Vice President of Pillsbury, set the stage for decades of controversy when he published an article entitled the "Marketing Revolution" in which he set out the way that the Pillsbury Company had shifted from a focus on production in the 1860s through to a consumer focus in the 1950s. He traced three distinct eras in Pillsbury's evolution:

In addition, Keith hypothesised that a marketing control era was was about to emerge. Although Keith's article explicitly documented Pillsbury's evolution, the article appears to suggest that this evolutionary path (production->sales->marketing) is normal and that most large organisations move through each of the orientations.

Keith's notion of distinct eras in the evolution of marketing practice has been widely criticised and his periodisation described as "hopelessly flawed". Specific criticisms of Keith's tripartite periodisation include that:

The article, which is entirely based on Keith's personal recollections and did not use a single reference, is best described as anecdotal. Systematic studies carried out since Keith's work have failed to replicate Keith's periodisation. Instead, other studies suggest that many companies exhibited a marketing orientation in the nineteenth century and that the business schools were teaching marketing decades before Pillsbury adopted a marketing oriented approach. Jones and Richardson also investigated historical accounts of marketing practice and found evidence for both the sales and marketing era during the so-called production era and concluded that there was no 'marketing revolution.' A detailed study of the chocolate manufacturer, Rowntree, found that this company had shifted from a production orientation through to a marketing orientation by the 1930s, without having transitioned through the so-called sales orientation. Other critiques of Keith's work have pointed out that the so-called production era fails to align with historical facts and have suggested that it is a myth. Keith's eras have become known, somewhat cynically, as the standard chronology.

Fullerton's periodisation

In 1988, Fullerton developed a more subtle and nuanced periodisation for the so-called marketing eras. Fullerton's eras were:

Other periodisations

In spite of the intense criticism levelled at Keith's eras of marketing practice, his periodisation is the most frequently cited in text-books and has become the accepted wisdom. One content analysis of 25 introductory and advanced texts found that Keith's eras were reproduced in all but four. Another study, which examined 15 of the top selling marketing texts, found that the although the incidence of repeating Keith's eras was waning, it had not been replaced by Fullerton's periodisation, nor any other more meaningful framework.

For all the controversies surrounding the so-called marketing stages or periods, Keith and others appear to have contributed a lasting legacy. A study by Grundey (2010) suggests that many contemporary text-books begin with Keith's eras and expand on it by including newer concepts such as the societal marketing concept, the relationship marketing concept and the interfunctional concept, as shown in the table below. More recently, Kotler and Keller added the holistic marketing concept to the list of eras in marketing. Marketing theorists continue to debate whether the holistic era represents a genuine new orientation or whether it is an extension of the marketing concept.

Source: Dainora Grundey, "The Marketing Philosophy and Challenges for the New Millennium", Scientific Bulletin - Economic Sciences: Marketing, Commerce and Tourism, Vol. 9, no. 15, 2010, p. 170

Production orientation

A production orientation is often proposed as the first of the so-called orientations that dominated business thought. Keith dated the production era from the 1860s to the 1930s, but other theorists argue that evidence of the production orientation can still be found in some companies or industries. Specifically Kotler and Armstrong note that the production philosophy is "one of the oldest philosophies that guides sellers... [and] is still useful in some situations."

The production orientation is characterised by:

• a focus on production, manufacturing, and efficiency
• attainment of economies of scale, economies of scope, experience effects or all three
• an assumption that demand exceeds supply
• a mindset that is encapsulated by Say's Law; "Supply creates its own demand" or "if somebody makes a product, somebody else will want to buy it"
• limited research - and largely limited to technical-product research rather than customer research
• this orientation rose to prominence in an environment which had a shortage of manufactured goods relative to demand, so goods sold easily.
• minimal promotion and advertising, marketing communications limited to raising awareness of the product's existence

Selling orientation

The selling era is thought to have begun during the Great Depression and continued well into the 1950s and can still be found today. Kotler et al note that the selling concept "is typically practised with unsought goods."

The selling orientation is characterised by:

• Aggressive selling to push products
• Accepting every possible sale or booking, regardless of its suitability for the business
• Has a strongly transactional focus (ignores potential relationships)

The marketing orientation

The marketing orientation or the marketing concept emerged in the 1950s.

Characteristics of the marketing orientation:

• A thorough understanding of the customer's needs, wants and behaviours should be the focal point of all marketing decisions
• Marketing efforts (sales, advertising, product management, pricing) should be integrated and in tune with the customer
• New product concepts should flow from extensive market analysis and product testing

The societal marketing concept

Societal marketing orientation or societal marketing concept was first proposed in the 1970s by Phillip Kotler in an article published in the Harvard Business Review. The societal marketing concept adopts the position that marketers have a greater social responsibility than simply satisfying customers and providing them with superior value. Instead, marketing activities should strive to benefit society's overall well-being. Marketing organisations that have embraced the societal marketing concept typically identify key stakeholder groups including: employees, customers, local communities, the wider public and government. They ensure that marketing activities do not damage the environment and are not hazardous to broader society. Societal marketing developed into sustainable marketing.

Characteristics of societal marketing:

• An attempt to balance corporate commitments to groups and individuals in its environment, including customers, other businesses, employees and investors.
• Companies must include social and ethical considerations into their marketing practices
• Consideration is given to the environment includes problems such as air, water and land pollution
• Consideration is given to consumer rights, unfair pricing and ethics in advertising

Relationship orientation

Starting in the 1990s, a new stage of marketing emerged called relationship marketing. The focus of relationship marketing is on a long-term relationship that benefits both the company and the customer. The relationship is based on trust and commitment, and both companies tend to shift their operating activities to be able to work more efficiently together. One of the most prominent reasons for relationship marketing comes from Kotler's idea that it costs about five times more to obtain a new customer than to maintain the relationship with an existing customer. A relationship marketing approach seeks to maximise the value of all the potential exchanges an organisation could have into the future.

The characteristics of relationship marketing include:

• A focus on the relationship between seller and buyer
• An investment in the lifetime of relationships (customer lifetime value) rather than single transactions
• An orientation on product benefits and/or customer value
• High customer service; high customer commitment; high customer contact
• Quality is the concern of all
• All activities are coordinated with the customer interface, including the customer's involvement in the firm's processes
• Customised offerings, where practical

Empirical support for relationship marketing as a distinct paradigm is very weak. One study suggests that relationship marketing is really a sub-component of large scale movements of the value-added process rather than a separate era or framework. Some theorists suggest that marketing is moving from a relationship marketing paradigm and towards a social media paradigm where marketers have access to a more controlled environment and are able to customise offers and communications messages.

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History of marketing thought

Dating the history of marketing thought is just as problematic as the history of markting practice. Marketing historians cannot agree on how to date the beginnings of marketing thought. Eric Shaw, for instance, suggests that a period of pre-academic marketing thought can be identified prior to 1900. Other historians, on the other hand, suggest that the theory of marketing only emerged in the 20th century. Nevertheless, the birth of marketing as a discipline is usually designated to the academic year, 1904-1905, when a "marketing course" appeared at the University of Pennsylvania.

Several scholars have attempted to describe chronologically the evolution of marketing thought and to connect it with broader intellectual and academic trends. Bartels (1965) sketched an account of marketing's formative periods, and Shah and Gardner (1982) briefly considered the development of the six dominant schools in contemporary marketing. However, these initial attempts have been described as descriptive. (Savitt, 1980).

One of the first theorists to consider the stages in the development of marketing thought was Robert Bartels, who in the The History of Marketing Thought. Using a periodisation approach, he categorised the development of marketing theory decade by decade from the beginning of the 20th century:

• 1900s: discovery of basic concepts and their exploration
• 1910s: conceptualisation, classification and definition of terms
• 1920s: integration on the basis of principles
• 1930s: development of specialisation and variation in theory
• 1940s: reappraisal in the light of new demands and a more scientific approach
• 1950s: reconceptualisation in the light of managerialism, social development and quantitative approaches
• 1960s: differentiation on bases such as managerialism, holism, environmentalism, systems, and internationalism
• 1970s: socialisation; the adaptation of marketing to social change

Other marketing historians have eschewed the periodisation approach, and instead considered whether the distinct schools within marketing reflect different facets of common theory and whether a more unifying intellectual structure has emerged. These tend to identify distinct schools of thought.

O'Malley and Lichrou, for example, document the schools as: Functional: What activities does marketing perform? (Focus on intermediaries and value adding) Commodities: How are goods classified? (Focus on classification of goods; trade flows) Marketing Institutions: Who performs marketing functions on commodities? (Focus on retailers, wholesalers, intermediaries, distribution channels) Marketing Management: How should marketers and managers market products and services to consumers? Business firm as seller/ supplier Marketing Systems: What is a marketing system and how does it work? Channels of distribution and aggregate systems, Consumer behaviour: How and why do consumers buy? organisational buyer and consumer buyer Macro-marketing: How do marketing systems impact on society? Industries, channels, consumer movement, environmentalism Exchange: What are the forms of exchange? Who are the parties to the exchange process? Aggregations of buyers and sellers Marketing history: When did marketing practice and ideas emerge and evolve? Marketing thought and marketing practice

Modern schools

Marketing historians like Eric Shaw and Barton A. Weitz point to the publication of Wroe Alderson's book, Marketing Behavior and Executive Action (1957), as a break-point in the history of marketing thought, moving from the macro functions-institutions-commodities approach to a micromarketing management paradigm. After Alderson, marketing began to incorporate other fields of knowledge besides economics, notably behavioral science, becoming a multidisciplinary field. For some scholars, Alderson's book marks the beginning of the Marketing Management Era.

Unlike economists, marketers have difficulty in organizing the different theories in their discipline into schools of thought. However, some marketing historians like Jagdish Sheth have tried to identify the main concepts behind the work of scholars in the field, grouping their ideas into "marketing schools" such as the following:

• the Managerial school emerged during the late 1950s and became arguably the predominant and most influential school of thought in the field
• the Consumer/buyer behavior school, which dominated the academic field in the second half of the twentieth century (apart from the Managerial school), features theories emerging from behavioral science
• the Social exchange school, which focuses on exchange as the fundamental concept of marketing

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Key innovations that influenced marketing practice

• 1450: Gutenberg's metal movable type, leading eventually to mass-production of flyers and brochures
• 1600s: Paid advertising in Italy
• 1605: World's first newspaper published in Germany
• 1600s and 1700s: Posters and handbills used for promotion in England
• 1665: The Oxford Gazette first published in England (later renamed the London Gazette and still published today)
• 1700s: Widespread emergence of newspapers and magazines in England (a future vector of niche marketing)
• 1719: The Daily Post first published; early instance of a periodical dedicated to business, science and innovation
• 1836: Paid advertising in a newspaper (in France)
• 1839: Posters on private property banned in England
• 1864: Earliest recorded use of the telegraph for mass unsolicited spam
• 1867: Earliest recorded billboard rentals
• 1880s: Early examples of trademarks as branding
• 1905: The University of Pennsylvania offered a course in "The Marketing of Products"
• 1908: Harvard Business School opens - Harvard was an early influence on marketing thought
• 1920s: Radio advertising commences
• 1940s: Electronic computers developed
• 1941: First recorded use of television advertising
• 1950s: Systematization of telemarketing
• 1970s: E-commerce developed
• 1980s: Development of database marketing as precursor to CRM
• 1980s: Emergence of relationship marketing
• 1980s: Emergence of computer-oriented spam
• 1984: Introduction of guerrilla tactics
• 1985: Desktop publishing democratizes the production of print-advertising (precursor to consumer-generated media and content)
• 1991: IMC gains academic status
• Mid 1990s: Modern search engines started appearing in the mid-1990s, with Google making its debut in 1998
• 1990s CRM and IMC (in various guises and names) gain dominance in promotions and marketing planning,
• 1995-2001: The Dot-com bubble temporarily re-defines the future of marketing
• 1996: Identification of viral marketing
• 2000s: Integrated marketing gains widespread acceptance with its first dedicated academic research centre opened in 2002
• 2003 -2006: Emergence of social media. MySpace and LinkedIn emerged in 2003, Facebook in 2004 and Twitter in 2006.

Source of the article : Wikipedia