Evolution of Modern Marketing

Marketing, in economics, is that part of the process of production and exchange that is concerned with the flow of goods and services from producer to consumer. In popular usage it is defined as the distribution and sale of goods, distribution being understood in a broader sense than the technical economic one. Marketing includes the activities of all those engaged in the transfer of goods from producer to consumer – not only those who buy and sell directly, wholesale and retail, but also those who develop, warehouse, transport, insure, finance, or promote the product, or otherwise have a hand in the process of transfer. In a modern capitalist economy, where nearly all production is intended for a market, such activities are just as important as the manufacture of the goods. It is estimated in the United States that approximately 50 % of the retail price paid for a commodity is made up of the cost of marketing.

In a subsistence-level economy there is little need for exchange of goodsbecause the division of labor is at a rudimentary level: most people.

produce the same or similar goods. Interregional exchange between disparate geographic areas depends on adequate means of transportation. Thus, before the development of caravan travel and navigation, the exchange of the products of one region for those of another was limited. The village market or fair, the itinerant merchant or peddler, and the shop where customers could have such goods as shoes and furniture made to order were features of marketing in rural Europe. The general store superseded the public market in England and was an institution of the American country town.

In the United States in the 19th century the typical marketing setup was one in which wholesalers assembled the products of various manufacturers or producers and sold them to jobbers and retailers. The independent store, operated by its owner, was the chief retail marketing agency. In the 20th century that system met stiff competition from chain stores, which were organized for the mass distribution of goods and enjoyed the advantages of large-scale operation. Today large chain stores dominate the field of retail trade. The concurrent advent of the motor truck and paved highway, making possible the prompt delivery of a variety of goods in large quantities, still further modified marketing arrangement, and the proliferation of the automobile has expanded the geographic area in which a consumer can make retail purchases.

At all points of the modern marketing system people have formed associations and eliminated various middlemen in order to achieve more efficient marketing.

 Manufacturers often maintain their own wholesale departments and deal directly with retailers. Independent stores may operate their own wholesale agencies to supply them with goods. Wholesale houses operate outlets for their wares, and farmers sell their products through their own wholesale cooperatives. Recent years have seen the development of wholesale clubs, which sell retail items to consumers who purchase memberships that give them the privilege of shopping at wholesale prices. Commodity exchanges, such as those of grain and cotton, enable businesses to buy and sell commodities for both immediate and future delivery.

Methods of merchandising have also been changed to attract customers.

The one-price system, probably introduced (in 1841) by A. T. Stewart in New York, saves sales clerks from haggling and promotes faith in the integrity of the merchant. Advertising has created an international market for many items, especially trademarked and labeled goods. In 1999 more than $ 308 billion was spent on advertising in the United States alone. The number of customers, especially for durable goods, has been greatly increased by the practice of extending credit, particularly in the form of installment buying and selling. Customers also buy through mail-order catalogs (much expanded from the original catalog sales business of the late 1800s), by placing orders to specialized "home-shopping" television channels, and through on-line transactions ("e-commerce") on the Internet.

There are many possible ways to satisfy the needs of target customers.

A product can have many different features and quality levels. Service levels can be adjusted. The package can be of various sizes, colors, or materials.

The brand name and warranty can be changed. Various advertising media – newspapers, magazines, radio, television, billboards – may be used. A company's own sales force or other sales specialists can be used.

Different prices can be charged. Price discount can be given, and so on. Marketing should begin with potential customer needs – not with the production process. Marketing should try to anticipate these needs. And then marketing, rather than production, should determine what goods and services are to be developed – including decisions about product design and packaging; prices or fees; credit and collection policies; use of middlemen; transporting and storing poHcies; advertising and sales policies; and, after the sale, installation, warranty, and perhaps even disposal policies.

This does not mean that marketing should try to take over production, accounting, and financial activities. Rather, it means that marketing – by interpreting customers' needs – should provide direction for these activities and try to coordinate them. After all, the purpose of a business or nonprofit organization is to satisfy customer or client needs. It is not to supply goods and services that are convenient to produce and might sell or be accepted free.