Evolution of Modern Marketing

Marketing, in economics, is that part of the process of production andexchange that is concerned with the flow of goods and services from pro ducer to consumer. In popular usage it is definedas the distribution and sale of goods, distributionbeing understood in a broader sensethan the technical economic one. Marketingincludes the activities of all those engaged inthe 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 theprocess of transfer. In a modern capitalist economy, where nearly all productionis intended for a market, such activities are just as important as themanufacture of the goods. It is estimated in the United States that approximately50 % of the retail price paid for a commodity is made up of thecost 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 peopleproduce the same or similar goods. Interregional exchange between disparategeographic areas depends on adequate means of transportation. Thus,before the development of caravan travel and navigation, the exchange ofthe products of one region for those of another was limited. The villagemarket or fair, the itinerant merchant or peddler, and the shop where customerscould have such goods as shoes and furniture made to order werefeatures of marketing in rural Europe. The general store superseded thepublic market in England and was an institution of the American countrytown.

In the United States in the 19th century the typical marketing setupwas one in which wholesalers assembled the products of various manufacturersor producers and sold them to jobbers and retailers. The independentstore, operated by its owner, was the chief retail marketing agency. Inthe 20th century that system met stiff competition from chain stores, whichwere organized for the mass distribution of goods and enjoyed the advantagesof large-scale operation. Today large chain stores dominate the fieldof retail trade. The concurrent advent of the motor truck and pavedhighway, making possible the prompt delivery of a variety of goods in largequantities, still further modified marketing arrangement, and the proliferationof the automobile has expanded the geographic area in which a consumercan make retail purchases.

At all points of the modern marketing system people have forme associationsand eliminated various middlemen in order to achieve more effici ent marketing.

Manufacturers often maintain their own wholesale departmentsand deal directly with retailers. Independent stores may operatetheir own wholesale agencies to supply them with goods. Wholesale housesoperate outlets for their wares, and farmers sell their products throughtheir own wholesale cooperatives. Recent years have seen the developmentof wholesale clubs, which sell retail items to consumers who purchase membershipsthat give them the privilege of shopping at wholesale prices. Commodityexchanges, such as those of grain and cotton, enable businesses tobuy 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 integrityof the merchant. Advertising has created an international market formany items, especially trademarked and labeled goods. In 1999 more than$ 308 billion was spent on advertising in the United States alone. The numberof customers, especially for durable goods, has been greatly increasedby the practice of extending credit, particularly in the form of installmentbuying and selling. Customers also buy through mail-order catalogs (muchexpanded from the original catalog sales business of the late 1800s), byplacing orders to specialized "home-shopping" television channels, andthrough on-line transactions ("e-commerce") on the Internet.