History of marketing
Encyclopedia
This article discusses the history of marketing as a recognized discipline, along with concomitant changes in marketing theory and practice. (Marketing comprises all activities involved in the transfer of goods from the producer or seller to the consumer or buyer, including advertising, shipping, storing, and selling.)
The study of the history of marketing as an academic field emerged . Controversies and disputes abound in the field. The publication in 1976 of the book The History of Marketing Thought, by Robert Bartels marks a turning-point in marketing thought. Since then, academics specializing in marketing decided to imitate economics
, distinguishing theory and practice. Two different fields of study emerged:
marketing history, focusing on the history of marketing practice
This division parallels the distinction between the history of economic thought
and economic history
.
Practitioners of the history of marketing thought note that both practitioners and academics know relatively little about the field. But history has significance for academics because it helps to define the baselines upon which they can recognize change and evolve marketing theory.
On the other hand, proponents of marketing history argue that one cannot fully compare the marketing field with economics and hence suggest the impracticality of divorcing theory and practice. First, marketing scholars seldom engage in the practice of marketing as much as economists engage in the development and execution of public policies. Second, business
people innovate in the marketing field, and the history of marketing will remain incomplete if one dissociates academia from practitioners.
The following sections discuss both approaches to the history of marketing, closing with a debate about the standard chronology of marketing, a widely-known hypothesis about the history of marketing, but one that historians in the marketing field have challenged.
though some argue that scholars in the ancient and medieval ages had already studied marketing ideas.
categorised the development of marketing theory decade by decade from the beginning of the 20th century thus:
With the growth in importance of marketing departments and their associated marketing manager
s, the field has become ripe for the propagation of management fad
s which do not always lend themselves to periodization.
as a separate field of expertise. Changes in the patterns and intensity of economic activity, as well as the rise of economics
as a science, particularly in the 19th century, paved the way for studies of marketing.
The growth in size and scope of national and international economies in the course of the Industrial revolution
led eventually to a transcendence of ad hoc retailing
and advertising
innovations and eventually to systematization. Marketing emerged as a separate technical field only in the late 19th century. The OED traces the abstract usage of the word only as far back as 1884.
Marketing has grown to new heights.
or to social accountability.
'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:
, especially since the mid-twentieth century, has given the marketeer new channels of communication as well as enhanced means of aggregating and analyzing marketing data. Specializations have emerged (especially sales
versus marketing and advertising
versus retailing
) and re-combined (business development
) over the years.
to the mid 1950s, and some argue it still exists in some industries. Business
concerned itself primarily with production, manufacturing, and efficiency issues. Say's Law
encapsulated this viewpoint, stating: "Supply creates its own demand". To put it another way, "if somebody makes a product, somebody else will want to buy it". This orientation rose to prominence in an environment which had a shortage of manufactured goods relative to demand, so goods sold easily.
Implications of this orientation include:
Some examples:
one sees examples of production-orientation marketing in individual companies rather than in whole industries because of increased competition. One might argue that some elements of the production orientation appear in the electronics industry where firms manufacture large quantities of low-cost, low-price goods when they know that a market exists. As a possible supplementary factor, one can usually replace an electronic product much more cheaply than fixing it.
Sales in relationship marketing should encompass the following: open communication, employee empowerment, customers and the planning process, and teamwork. First, communication is essential in figuring out what the customers need and determining how the firm can satisfy those needs. With open communication, both sides can express what they are trying to do and can work out a way to make it work together. Second, employee empowerment is important so that the employees are able to satisfy customer needs. Without empowerment, they may be limited in their solutions and cannot creatively satisfy needs. Third, customers must be involved in the planning process. Customer input is invaluable, as the customer is the one who will be using the product. If the customer is not satisfied from the beginning, there is no way to gain approval after the product is incorporated. Lastly, relationship marketing must emphasize teamwork. Several people who can help solve customer problems should work together and use their talents to best serve the customers.
While relationship marketing is largely held as the most recent stage of marketing, there is speculation that we are now entering into a new era of marketing called the social/mobile marketing era where companies are connected to customers 24/7.
that should satisfy the customers and promote the well-being of society. The producer should not produce products deemed hazardous to society.
Societal marketing developed into sustainable marketing.
The study of the history of marketing as an academic field emerged . Controversies and disputes abound in the field. The publication in 1976 of the book The History of Marketing Thought, by Robert Bartels marks a turning-point in marketing thought. Since then, academics specializing in marketing decided to imitate economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, distinguishing theory and practice. Two different fields of study emerged:
- the
This division parallels the distinction between the history of economic thought
History of economic thought
The history of economic thought deals with different thinkers and theories in the subject that became political economy and economics from the ancient world to the present day...
and economic history
Economic history
Economic history is the study of economies or economic phenomena in the past. Analysis in economic history is undertaken using a combination of historical methods, statistical methods and by applying economic theory to historical situations and institutions...
.
Practitioners of the history of marketing thought note that both practitioners and academics know relatively little about the field. But history has significance for academics because it helps to define the baselines upon which they can recognize change and evolve marketing theory.
On the other hand, proponents of marketing history argue that one cannot fully compare the marketing field with economics and hence suggest the impracticality of divorcing theory and practice. First, marketing scholars seldom engage in the practice of marketing as much as economists engage in the development and execution of public policies. Second, business
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...
people innovate in the marketing field, and the history of marketing will remain incomplete if one dissociates academia from practitioners.
The following sections discuss both approaches to the history of marketing, closing with a debate about the standard chronology of marketing, a widely-known hypothesis about the history of marketing, but one that historians in the marketing field have challenged.
History of marketing thought
The history of marketing thought deals with the evolution of theories in the field of marketing, from the ancient world . Marketing historians agree that the discipline branched out of at the turn of the twentieth century,though some argue that scholars in the ancient and medieval ages had already studied marketing ideas.
Periodization
Robert Bartels in The History of Marketing Thought'categorised the development of marketing theory decade by decade from the beginning of the 20th century thus:
- 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 managerialismManagerialismManagerialism is the belief that organisations have more similarities than differences, and thus the performance of all organisations can be optimised by the application of generic management skills and theory. To a practitioner of managerialism, there is little difference in the skills required...
, social development and quantitative approaches - 1960s: differentiation on bases such as managerialism, holismHolismHolism is the idea that all the properties of a given system cannot be determined or explained by its component parts alone...
, environmentalismEnvironmentalismEnvironmentalism is a broad philosophy, ideology and social movement regarding concerns for environmental conservation and improvement of the health of the environment, particularly as the measure for this health seeks to incorporate the concerns of non-human elements...
, systemSystems theorySystems theory is the transdisciplinary study of systems in general, with the goal of elucidating principles that can be applied to all types of systems at all nesting levels in all fields of research...
s, and internationalismInternationalism (politics)Internationalism is a political movement which advocates a greater economic and political cooperation among nations for the theoretical benefit of all... - 1970s: socialisation; the adaptation of marketing to social change
With the growth in importance of marketing departments and their associated marketing manager
Marketing management
Marketing management is a business discipline which is focused on the practical application of marketing techniques and the management of a firm's marketing resources and activities...
s, the field has become ripe for the propagation of management fad
Management fad
The term management fad is used to characterize a change in philosophy or operations that sweeps through businesses and institutions. Some fads may become established aspects of business, sustaining themselves over several years...
s which do not always lend themselves to periodization.
Birth of marketing ideas
In pre-modern economies, the predominance of small enterprises militated against the recognition of marketingMarketing
Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
as a separate field of expertise. Changes in the patterns and intensity of economic activity, as well as the rise of economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
as a science, particularly in the 19th century, paved the way for studies of marketing.
The growth in size and scope of national and international economies in the course of the Industrial revolution
Industrial Revolution
The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, transportation, and technology had a profound effect on the social, economic and cultural conditions of the times...
led eventually to a transcendence of ad hoc retailing
Retailing
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
and advertising
Advertising
Advertising is a form of communication used to persuade an audience to take some action with respect to products, ideas, or services. Most commonly, the desired result is to drive consumer behavior with respect to a commercial offering, although political and ideological advertising is also common...
innovations and eventually to systematization. Marketing emerged as a separate technical field only in the late 19th century. The OED traces the abstract usage of the word only as far back as 1884.
Marketing has grown to new heights.
Traditional schools
Traditional authorities on marketing concentrated on products and on the sale and purchase of goods and services. They paid little attention to areas like after-sales service, and devoted even less attention to social responsibilitySocial responsibility
Social responsibility is an ethical ideology or theory that an entity, be it an organization or individual, has an obligation to act to benefit society at large. Social responsibility is a duty every individual or organization has to perform so as to maintain a balance between the economy and the...
or to social accountability.
Modern schools
Marketing historians like Eric Shaw and Barton A. Weitz point to the publication of Wroe AldersonWroe Alderson
Wroe Alderson is widely recognized as the most important marketing theorist of the twentieth century and the “father of modern marketing”.-Background:...
'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
Micromarketing
Micromarketing"Micromarketing" was first referred to in the UK marketing press in November 1988 in respect of the application of geodemographics to consumer marketing....
management
Management
Management in all business and organizational activities is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively...
paradigm
Paradigm
The word paradigm has been used in science to describe distinct concepts. It comes from Greek "παράδειγμα" , "pattern, example, sample" from the verb "παραδείκνυμι" , "exhibit, represent, expose" and that from "παρά" , "beside, beyond" + "δείκνυμι" , "to show, to point out".The original Greek...
. 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
Jagdish Sheth
Jagdish N. Sheth is the Charles H. Kellstadt Professor of Marketing at the Goizueta Business School of Emory University. He is an internationally recognized business consultant whose client list includes AT&T, BellSouth, Ford, GE, Motorola, Square D, Whirlpool and Sprint...
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 Manageerial school), features theories emerging from behavioral science
- the Social exchange school, which focuses on exchange as the fundamental concept of marketing
Marketing history
Much of traditional marketing practice prior to the twentieth century remained hidebound by rules-of-thumb and lack of information. Information technologyInformation technology
Information technology is the acquisition, processing, storage and dissemination of vocal, pictorial, textual and numerical information by a microelectronics-based combination of computing and telecommunications...
, especially since the mid-twentieth century, has given the marketeer new channels of communication as well as enhanced means of aggregating and analyzing marketing data. Specializations have emerged (especially sales
Sales
A sale is the act of selling a product or service in return for money or other compensation. It is an act of completion of a commercial activity....
versus marketing and advertising
Advertising
Advertising is a form of communication used to persuade an audience to take some action with respect to products, ideas, or services. Most commonly, the desired result is to drive consumer behavior with respect to a commercial offering, although political and ideological advertising is also common...
versus retailing
Retailing
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
) and re-combined (business development
Business development
A subset of the field of commerce, business development comprises a number of techniques and responsibilities which aim at:1. Researching new types of business/products/services with an emphasis on identifying gaps in the mitigation of needs of potential clients .2. Attracting new customers3...
) over the years.
Timeline of innovation
- 1450: Gutenberg's metal movable type, leading eventually to mass-production of flyerFlyer (pamphlet)__notoc__A flyer or flier, also called a circular, handbill or leaflet, is a form of paper advertisement intended for wide distribution and typically posted or distributed in public place....
s and brochureBrochureA brochure is a type of leaflet. Brochures are most commonly found at places that tourists frequently visit, such as museums, major shops, and tourist information. Brochure racks or stands may suggest visits to amusement parks and other points of interest...
s - 1730s: emergence of magazines (a future vector of niche marketing)
- 1836: first paid advertising in a newspaperNewspaperA newspaper is a scheduled publication containing news of current events, informative articles, diverse features and advertising. It usually is printed on relatively inexpensive, low-grade paper such as newsprint. By 2007, there were 6580 daily newspapers in the world selling 395 million copies a...
(in France) - 1839: posterPosterA poster is any piece of printed paper designed to be attached to a wall or vertical surface. Typically posters include both textual and graphic elements, although a poster may be either wholly graphical or wholly text. Posters are designed to be both eye-catching and informative. Posters may be...
s on private property banned in London - 1864: earliest recorded use of the telegraph for mass unsolicited spamSpam (electronic)Spam is the use of electronic messaging systems to send unsolicited bulk messages indiscriminately...
- 1867: earliest recorded billboardBillboardBillboard is a weekly American magazine devoted to the music industry, and is one of the oldest trade magazines in the world. It maintains several internationally recognized music charts that track the most popular songs and albums in various categories on a weekly basis...
rentals - 1880s: early examples of trademarkTrademarkA trademark, trade mark, or trade-mark is a distinctive sign or indicator used by an individual, business organization, or other legal entity to identify that the products or services to consumers with which the trademark appears originate from a unique source, and to distinguish its products or...
s as brandBrandThe American Marketing Association defines a brand as a "Name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers."...
ing - 1905: the University of Pennsylvania offered a course in "The Marketing of Products"
- 1908: Harvard Business SchoolHarvard Business SchoolHarvard Business School is the graduate business school of Harvard University in Boston, Massachusetts, United States and is widely recognized as one of the top business schools in the world. The school offers the world's largest full-time MBA program, doctoral programs, and many executive...
opens - 1922: radio advertising commences
- 1940s: electronic computers developed
- 1941: first recorded use of television advertising
- 1950s: systematization of telemarketingTelemarketingTelemarketing is a method of direct marketing in which a salesperson solicits prospective customers to buy products or services, either over the phone or through a subsequent face to face or Web conferencing appointment scheduled during the call.Telemarketing can also include recorded sales pitches...
- 1970s: E-commerce invented
- 1980s: development of database marketingDatabase marketingDatabase marketing is a form of direct marketing using databases of customers or potential customers to generate personalized communications in order to promote a product or service for marketing purposes...
as precursor to CRMCustomer relationship managementCustomer relationship management is a widely implemented strategy for managing a company’s interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also those for marketing,... - 1980s: emergence of relationship marketingRelationship marketingRelationship marketing was first defined as a form of marketing developed from direct response marketing campaigns which emphasizes customer retention and satisfaction, rather than a dominant focus on sales transactions....
- 1980s: emergence of computer-oriented spamSpam (electronic)Spam is the use of electronic messaging systems to send unsolicited bulk messages indiscriminately...
- 1984: introduction of guerrilla marketingGuerrilla marketingGuerrilla warfare is about waging small intermittent attacks on different territories of the opponent with the aim of harassing and demoralising the opponent and eventually securing permanent footholds....
- 1985: desktop publishingDesktop publishingDesktop publishing is the creation of documents using page layout software on a personal computer.The term has been used for publishing at all levels, from small-circulation documents such as local newsletters to books, magazines and newspapers...
democratizes the production of print-advertising - 1991: IMCIntegrated Marketing CommunicationsIntegrated Marketing Communications is defined as customer centric, data driven method of communicating with the customer. IMC is the coordination and integration of all marketing communication tools, avenues, functions and sources within a company into a seamless program that maximizes the impact...
gains academic status - 1990s CRM and IMC (in various guises and names) gain dominance in promotions and marketing planning,
- 1995-2001: the Dot-com bubbleDot-com bubbleThe dot-com bubble was a speculative bubble covering roughly 1995–2000 during which stock markets in industrialized nations saw their equity value rise rapidly from growth in the more...
temporarily re-defines the future of marketing - 1996: identification of viral marketingViral marketingViral marketing, viral advertising, or marketing buzz are buzzwords referring to marketing techniques that use pre-existing social networks to produce increases in brand awareness or to achieve other marketing objectives through self-replicating viral processes, analogous to the spread of viruses...
- 2000s: Integrated marketing gains acceptance and in 2002 its first dedicated academic research centre,
Periodization
One marketing standard chronology(Bartels, 1974;Dawson, 1969;Keith, 1960; Kotler and Keller, 2006)subdivides marketing history as follows:- Production orientation era
- Product orientation era
- Sales orientation era
- Market orientation era
- Customer orientation
- Relationship orientation
- Social/mobile marketing orientation
Production orientation
A production orientation dominated business thought from the beginning of capitalismCapitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
to the mid 1950s, and some argue it still exists in some industries. Business
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...
concerned itself primarily with production, manufacturing, and efficiency issues. Say's Law
Say's law
Say's law, or the law of market, is an economic principle of classical economics named after the French businessman and economist Jean-Baptiste Say , who stated that "products are paid for with products" and "a glut can take place only when there are too many means of production applied to one kind...
encapsulated this viewpoint, stating: "Supply creates its own demand". To put it another way, "if somebody makes a product, somebody else will want to buy it". This orientation rose to prominence in an environment which had a shortage of manufactured goods relative to demand, so goods sold easily.
Implications of this orientation include:
- narrow product-line(s)
- pricingPricingPricing is the process of determining what a company will receive in exchange for its products. Pricing factors are manufacturing cost, market place, competition, market condition, and quality of product. Pricing is also a key variable in microeconomic price allocation theory. Pricing is a...
based on the costs of productionProduction, costs, and pricingThe following outline is provided as an overview of and topical guide to industrial organization:Industrial organization – describes the behavior of firms in the marketplace with regard to production, pricing, employment and other decisions...
and distributionDistribution (business)Product distribution is one of the four elements of the marketing mix. An organization or set of organizations involved in the process of making a product or service available for use or consumption by a consumer or business user.The other three parts of the marketing mix are product, pricing,... - research limited to technical product-research
- packaging designed primarily to protect product
- minimal promotionPromotion (marketing)Promotion is one of the four elements of marketing mix . It is the communication link between sellers and buyers for the purpose of influencing, informing, or persuading a potential buyer's purchasing decision....
and advertisingAdvertisingAdvertising is a form of communication used to persuade an audience to take some action with respect to products, ideas, or services. Most commonly, the desired result is to drive consumer behavior with respect to a commercial offering, although political and ideological advertising is also common...
, limited to raising awareness of the existence of the product - consumers more interested in simply obtaining the product, and less in its quality
Some examples:
- The early car industry provides the classic example of production orientation, exemplified by the story of Henry Ford’s Model TFord Model TThe Ford Model T is an automobile that was produced by Henry Ford's Ford Motor Company from September 1908 to May 1927...
. At this time production orientation, an industry-wide philosophy, applied in many industries.
one sees examples of production-orientation marketing in individual companies rather than in whole industries because of increased competition. One might argue that some elements of the production orientation appear in the electronics industry where firms manufacture large quantities of low-cost, low-price goods when they know that a market exists. As a possible supplementary factor, one can usually replace an electronic product much more cheaply than fixing it.
- Philip KotlerPhilip KotlerPhilip Kotler is the S.C. Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management at Northwestern University.-Early life:He received his master's degree at the University of Chicago...
argues that assembly-line techniques have migrated to services like government benefits offices, in which they deal with people very efficiently, but without necessarily entailing full satisfaction on the part of the customer
Relationship orientation
Starting in the 1990’s, 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.Sales in relationship marketing should encompass the following: open communication, employee empowerment, customers and the planning process, and teamwork. First, communication is essential in figuring out what the customers need and determining how the firm can satisfy those needs. With open communication, both sides can express what they are trying to do and can work out a way to make it work together. Second, employee empowerment is important so that the employees are able to satisfy customer needs. Without empowerment, they may be limited in their solutions and cannot creatively satisfy needs. Third, customers must be involved in the planning process. Customer input is invaluable, as the customer is the one who will be using the product. If the customer is not satisfied from the beginning, there is no way to gain approval after the product is incorporated. Lastly, relationship marketing must emphasize teamwork. Several people who can help solve customer problems should work together and use their talents to best serve the customers.
While relationship marketing is largely held as the most recent stage of marketing, there is speculation that we are now entering into a new era of marketing called the social/mobile marketing era where companies are connected to customers 24/7.
The societal marketing concept
Societal marketing emerged in the 1960s. The societal marketing concept deals with the needs, wants and demands of customers: how to satisfy them by producing superior valueValue (marketing)
The value of a product is the mental estimation a consumer makes of it. Formally it may be conceptualized as the relationship between the consumer's perceived benefits in relation to the perceived costs of receiving these benefits...
that should satisfy the customers and promote the well-being of society. The producer should not produce products deemed hazardous to society.
Societal marketing developed into sustainable marketing.