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PART ONE
Introduction
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SWEN3033-01.QXD 8/29/02 3:01 PM Page 8
SECTION I: ‘MARKETING’S
CONTRIBUTIONS TO SOCIETY’
Introduction
We originally chose to study the field of marketingbecause we found it to be one of the most stimulat-ing, complex, and intellectually challenging of aca-demic areas in a university setting. In curiouscontrast to its general reputation as a ‘soft’ area, wefound that this field welcomes insights from manydisciplines, including economics, psychology,history, mathematics, sociology, law, politicalscience, communications, anthropology, and the cre-ative arts. Its scholarship combines elements of objec-tivity and subjectivity, demands both quantitative andqualitative insights, requires persistence yet rewardscreative leaps, and allows freedom of imaginationand nuance yet grounds its efforts in real actions withmeasured consequences. Further, marketing can bestudied from a number of intriguing perspectives.
As the academic field of marketing nears its 100thbirthday, its focus is squarely on firms, markets, andhousehold consumers. Relatively few persons, evenin the mainstream of the field, have recently beenable to examine marketing’s contributions to society.However, this subject is worthy of considerationfrom the broad college of thinkers in the field. It isworthy of exposure to thoughtful practitioners, to
students in MBA and undergraduate programs, and toemerging scholars in doctoral programs (andprobably why the Marketing Science Institute namedit a key topic for the special Millennium Issue of theJournal of Marketing). Thus our purpose here is toprovide a different look at marketing, one thatengages thoughtful deliberation on the larger systemand its contributions. Taken together, the issues in thisdomain help us to better see both the nature ofmarketing and the remarkable potentials of our field.
Background: A Century of Progress
It may be merely trite to point out that the world ischanging and that marketing is an active participantin this process. It is not trite, however, to inquire intothe nature of such change – to delve more deeply intothe history, substance and controversies concerningmarketing’s roles in society. It is stimulating, more-over, to pursue the implications for all of this for ourpresent and our future. For example, let us brieflyconsider that the formal academic field of marketingbegan just about 100 years ago, at the turn of the lastcentury, with the first offerings of courses on ‘marketdistribution’ (Bartels, 1988). Substantively, thesecourses reflected the realities of their time and place(e.g., courses in the Midwest tended to stress the dis-tribution system for agricultural and other products;those on the East Coast covered distribution andmerchandising). Theoretically, interest was on
1
Marketing’s Relationship to Society*
W I L L I A M L . W I L K I E and E L I Z A B E T H S . M O O R E
*Note to readers: In a recent survey, two-thirds of Marketing Ph.D. students reported that they had a personal interest inmarketing and society, but fewer than one in ten had ever had a course in it, and they did not feel proficient. This chaptershould go a long way to remedying this situation. In Section I we present an abridged version of “Marketing’s Contributionsto Society” (Wilkie and Moore, 1999), to provide you with a new perspective on our field. Then, in Section II, we discussthe research in this area and present guides for learning more.
SWEN3033-01.QXD 8/29/02 3:01 PM Page 9
pursuing benefits flowing from distributive activitiesthat had been missed by economic thinkers concen-trating on land, labor and capital. However, it is clearin the literature of that time that issues of marketing’sperformance on behalf of society were a seriousconcern for this fledgling field.
Of course, the ‘society’ at hand was much lessdeveloped, and consumer lifestyles were verydifferent. For example, the typical US housewifecarried 9,000 gallons of water into the house eachyear, and she then had to boil the water before usingit because only 25% of homes had running water(and only 3% had electricity). Cooking, baking andfood preservation required some 42 hours per week.Central heating would not arrive until the 1920s, somany households heated only the kitchen for thewinter, using fuel hauled in daily by familymembers. On the health front, infant mortality wascommon – about one in every ten births – lifeexpectancy was only 47 years.1 Now let us contrastthis with today’s US society: life expectancy is near-ing 80 years, gross domestic product is some 400times greater, and time spent gathering and preparingfood has dropped to less than 10 hours per week.Typical homes are filled with comforts and conve-niences based on electricity and water, and autos,airplanes, television and the Internet have stretchedour personal borders far beyond the distance wecould reach within a day’s walk or ride on horseback.
This recognition of historical changes serves tomake the academic challenge in the study of market-ing and society a bit more daunting than we might atfirst imagine. We know beyond doubt that US societyhas changed greatly, and that the aggregate market-ing system also has changed; but what about the rela-tionship between the two? What about ‘marketing’srelationship to society?’ Has that also changed, or isit in some larger sense immutable? Either answerwill, of course, be interesting. If ‘immutable’ iscorrect, merely clarifying this answer will itself bean heroic achievement. And if ‘has changed’ is ouranswer, what exactly are our present and future goalsfor the relationship of marketing to society, and who(or what) is taking us toward meeting them?Altogether, this poses a worthy challenge for market-ing academics!
The Importance of Perspective
To understand a topic well it is helpful to walkaround it mentally, adopting different perspectiveson it. Viewing a topic from a single perspective high-lights certain characteristics, but can hide otheraspects that may also be important. For example,four perceptual barriers related to this topic involvetime, system limits, culture, and personal experience.The brief lifestyle comparison noted above raised theissue of the slow diffusion of marketing’s contribu-tions over time by contrasting extremes across thetwentieth century. When viewed in this way, contri-butions that the aggregate marketing system has
delivered to society are apparent: it is clear thatAmericans today are living very differently – andmostly in better ways – than did their ancestors acentury ago. With respect to system limits, not onlyis the marketing system vast, but its operationsconverge and coordinate with the operations of otheraggregate systems within a society’s larger economicsystem. (In a Venn diagram, then, we might conceiveof aggregate systems in marketing, finance, techno-logy, production, etc. as partially overlapping largecircles, reflecting areas where activities are in com-mon and those where activities lie only in that field.)
With respect to culture, marketing is a social insti-tution that is highly adaptive to its cultural and politi-cal context. Thus we can easily go around the worldto locate societies with very different marketingsystems. In some global locations we will find rudi-mentary marketing systems offering none of theconveniences we currently enjoy. Elsewhere, as inparts of Brazil, we would find people just discover-ing installment credit, and using it to obtain the firsthome conveniences they have ever enjoyed. In partsof China we would find incredible levels of invest-ment – one out of every five construction cranes inthe world are reportedly at work just in Shanghai – tobring modern elevators, air conditioners, and otherconveniences to the citizenry. Thus our coverage ofaggregate marketing systems is culture-bound: weneed to take care to distinguish which lessons aregeneralizable and which are not. Finally, in regard topersonal experience, many marketing contributionsare ‘behind the scenes,’ unseen by those of us notdirectly involved. It is thus important that we remainmentally open to the discovery of new possibilitiesabout marketing and its relationship to society.
The Aggregate Marketing System
Studies have shown that the less familiar one is withour field, the more likely a person is to equatemarketing with advertising or selling: as one learnsmore, the view broadens, and one begins to appreci-ate the richness of the field of marketing (Kasper,1993). We now turn to a concept we will term the‘aggregate marketing system.’ We begin with anillustration of one small part of the system, to seewhat it does. If marketing thinkers are to appreciatethe range of contributions our field makes, it is goodto remind ourselves about the scope and details of thework that it takes on.
The System at Work
Our illustration begins with an American householdat breakfast. Here the outputs of a small numberof marketing channels are brought together for thepurpose of consumption.
‘Breakfast at Tiffany’s’ [Note: The idea for thisillustration is based on Vaile, Grether and Cox’s
INTRODUCTION10
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MARKETING’S RELATIONSHIP TO SOCIETY 11
(1952) classic textbook on marketing, though ourdescription is different and updated. We here joinTiffany Jones and her family in New York, asTiffany reaches for her breakfast pastry and blowssoftly across her cup of coffee…]
A Cup of Coffee Although a commonplace-enoughevent, a breakfast represents an interesting confluenceof forces from the aggregate marketing system. Let usfirst consider Tiffany’s coffee, and how it got to thismorning’s meal. Tiffany has chosen a leading brandthat delivers a consistent color, scent, and taste that isfavored by its many customers. How exactly does thisbrand’s marketing system achieve this? The coffeeTiffany has prepared is, in fact, a combination ofbeans grown in different countries, then brought tothe US and blended into a specified mixture to deliverthis brand’s unique qualities. Due to different growingseasons and bean characteristics, the source nationsfor the coffee change as the year progresses: coffee isgrown in some fifty nations around the world.
As shown in Figure 1.1, Panel A, we assume thatsome beans in this cup came from a Colombian hill-side, hand-picked (to ensure ripeness) in thegrower’s field. The process was highly structured:from basket, to tractor, to truck, the beans weretransported to the coffee grower’s de-pulping mill,where the inner beans were separated from theircherries. Still wet and protected by a parchment-likecellulose shell, the beans were spread on a sun-filledpatio to dry for several days. They were then milled(removing the parchment sheath to produce a greenbean), then graded against set national coffee stan-dards. Samples of the beans were sent to buyers andthe government coffee board to check the gradingprocess. The beans were then put into 60 kilo(132 pound) burlap or polyester bags bearing thegrower’s name and quality level, and warehoused atthe grower’s facility. Brokers and large buyers werecontacted by the grower to arrange for sale and deliv-ery. In the case of Tiffany’s brand, this process con-tinued a long-term business relationship with thisgrower, based on trust in the quality of the beans, hiscapability to deliver needed quantities at agreed-upontimes, and willingness to stand behind agreements.This seller has similar views about buyers, and willonly deal with certain buyers. Thus the actual agree-ment on these beans was sealed with a handshake.
Continuing with Panel A, the beans were loaded ontrucks and driven from the mountains to the port city(ocean humidity levels could damage the beans hadthey been warehoused there). Here they were loadeddirectly into 20-ton ‘piggyback’ containers designedto transport seamlessly amongst ships, trains andtrucks. After four or five days at sea, the beans arrivedat the port of New Orleans, were again tested for qual-ity, and given over to a warehouse service. Thisservice handled customs’ clearance, then unloadedthe bags into trucks driven to the coffee firm’s ‘silo’facility. Here loads of different beans are stored, thenblended together into 20-ton hopper trucks and sent to
the firm’s New Orleans roasting plant (alternatively,they might have been sent to the firm’s Midwest orSouthwest roasting plants in 80-ton hopper cars).Here the final coffee is carefully prepared, tested forquality, and packaged into the familiar red cans orbricks. As indicated in Panel A, from this point theroute depends on the purchaser: it may be shipped inlarge volume to one of the firm’s seven regional dis-tribution centers, thence to be sold to wholesalers,then to retail outlets, or – in the case of very largenational accounts – trucked directly from the plant in40,000-pound loads. As Tiffany had bought hercoffee from the neighborhood IGA store, it had takenthe longer route. Even so, the vacuum-pack contain-ers had kept it quite fresh, and lent pleasure to her cupthis morning. Thus we see how one marketing systemhas operated to provide a branded cup of coffee to anAmerican family on a typical morning.
A Breakfast Pastry While coffee provides us withuseful insights, it is a relatively simple product. Wecan move to a further level of complexity withanother item in Tiffany’s meal: a new breakfast pas-try produced by a major food marketer to competein the fast-growing ‘premium’ breakfast segment.Its marketing system is shown in Panel B ofFigure 1.1 (for ease of communication we haveshown only portions of this system to complementpoints of the coffee channel: neither system is por-trayed in its true complexity). Note at the left thatthe pre-production marketing system here is muchmore involved than the linear system for coffee, asthere are 15 ingredients in each unit of this pastry.Though not shown in the panel, each ingredient hasits own system, similar to coffee’s, for collectionand transport to its processors. The pastry brand issimilar to the coffee brand in requiring a very highlevel of uniformity in the brand units sold to con-sumers. Thus we find exacting product specifica-tions for each ingredient at the left side of Panel B.
The next set of activities focus on product manage-ment decisions. Excited by consumer research show-ing unmet demand for bakery quality pastry that canbe stored at home, and concerned by the success ofcompetitors’ new entries, this firm began a majornew product development project. Experts in foodscience and nutritional technologies were challengedto translate this benefit concept into an actual foodproduct. A long process ensued, as numerous attrib-utes – size, icing, taste, consistency, flavoring, shelf-life, preparation, packaging, reasonable costs forpricing, production feasibility, and so forth – had tobe brought to acceptable levels. The process includedconsumer research on reactions to prototypes, in-home use tests, and BehaviorScan controlled-storetests of pricing and promotions (including studies ofpurchase substitution patterns). The firm’s Boardof Directors now had to decide to launch the productor not. Key factors included internal rate of returnover a six-year period, capital needs (new plant vs.conversion), options for co-packing or outsourcing
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INTRODUCTION12
PAN
EL
A. C
OFF
EE
PAN
EL
B. B
RE
AK
FAS
T P
AS
TR
Y
PAN
EL
C. F
AM
ILY
BR
EA
KFA
ST
Kit
chen
Su
pp
ort
Sys
tem
Fam
ily B
reak
fast
Item
s
KEY
: (T
) – T
ran
spo
rt
Co
ffee
G
row
er
Wh
eat
Farm
er
Wh
eat
Flo
ur
Intermediate Ingredient Production System
Dai
ry
Farm
er
Man
ufa
ctu
rer’
s P
lan
t
Fru
it
Gro
wer
Co
rn
Farm
er
Exp
ort
er
Ret
aile
r’s
War
eho
use
R
etai
l Sto
re (
A1…
n)
Ret
ail S
tore
(H
1…n
)
Ret
ail S
tore
(G
1…n
)
Ret
ail S
tore
(B
1…n
)
Mas
s M
erch
and
iser
(E
1…n
)
Mas
s M
erch
and
iser
(F1
…n
)
Larg
e C
hai
n
Ret
ail S
tore
(C
1…n
)
Larg
e C
hai
n
Ret
ail S
tore
(D
1…n
)
CONSUMERS
Wh
ole
sale
r’s
War
eho
use
No
te: S
ame
Dis
trib
uti
on
C
han
nel
s as
in
Pan
el A
Gro
wer
’s
Dep
ulp
ing
Mill
M
anu
fact
ure
r’s
Ro
asti
ng
Pla
nt
Man
ufa
ctu
rer’
s R
egio
nal
D
istr
ibu
tio
n C
ente
r
Gro
wer
’s
War
eho
use
(T)
(T)
(T)
(T)
(T)
(T)
(T)
(T)
(T)
(T)
(T)
(T)
(T)
Tiff
any
- C
off
ee-
No
n-D
iary
Cre
amer
- S
uga
r-
Bre
akfa
st P
astr
y
Ro
ber
t-
Co
ffee
- E
qu
al-
Co
rn F
lake
s-
Ski
m M
ilk-
Ban
ana
Lau
ra-
Ora
ng
e Ju
ice
- M
icro
wav
eab
le
Oat
mea
l-
Ski
m M
ilk-
Dai
ly V
itam
in
Mar
k-
Ora
ng
e Ju
ice
- Fr
oze
n W
affl
es-
Bu
tter
- M
aple
Syr
up
- S
cram
ble
d E
gg
Co
oki
ng
Are
a-
Au
tom
atic
C
off
eem
aker
s-
Co
ffee
Filt
ers
- To
aste
r O
ven
- M
icro
wav
e O
ven
- C
oo
kin
g U
ten
sils
- S
tove
top
- Po
ts, P
ans
- C
abin
ets
Ho
use
war
es, E
tc.
- C
eram
ic M
ug
s-
Pla
tes,
Bo
wls
- Fl
atw
are
- Ta
ble
clo
th-
Nap
kin
s-
Tab
le a
nd
Ch
airs
- Po
rtab
le T
V-
Clo
ck
Mai
nte
nan
ce-
Ref
rig
erat
or
- Fr
eeze
r-
Dis
hw
ash
er-
Dis
h D
eter
gen
t-
Sp
on
ge,
Dis
h To
wel
- Tr
ash
Co
mp
acto
r-
Dis
po
salCo
nsu
mer
Ho
use
ho
lds
- Pr
od
uct
Acq
uis
itio
n-
Pro
du
ct P
rep
arat
ion
-
Pro
du
ct C
on
sum
pti
on
- Pr
od
uct
Mai
nte
nan
ce-
Pro
du
ct D
isp
osi
tio
n
Ser
vice
- E
lect
rici
ty-
Pip
ed W
ater
- W
ater
Pu
rifi
er-
Lig
hti
ng
- Te
lep
ho
ne
- T
V C
able
Milk
Pr
ote
ins
Fru
it
Flak
es
Sw
eete
ner
s
SWEN3033-01.QXD 8/29/02 3:01 PM Page 12
MARKETING’S RELATIONSHIP TO SOCIETY 13
PAN
EL
D. S
ELE
CT
ED
MA
RK
ET
ING
SY
ST
EM
AC
TIV
ITIE
S (
pre
sen
t in
th
e co
ffee
an
d b
reak
fast
pas
try
exam
ple
s)
PAN
EL
E. D
EP
ICT
ING
TH
E E
NT
IRE
AG
GR
EGA
TE
MA
RK
ET
ING
SY
ST
EM
Th
e C
lassic
Fu
ncti
on
of
Dis
trib
uti
on
- Tr
ansp
ort
atio
n
(2)
- S
tora
ge
(2
)-
Fin
anci
ng
(2
)-
Ris
k-b
eari
ng
(2
)-
Ass
emb
ly
(1)
- S
ellin
g
(1)
- S
tan
dar
diz
atio
n
(2)
- M
arke
t In
form
atio
n
(1)
N.B
., D
etai
led
Lev
els
of
Act
ivit
ies
Exi
st: (
e.g
., Tr
ansp
ort
Act
ivit
ies)
- Tr
uck
to
Dep
ulp
ing
Mill
- B
ean
s to
Dry
ing
Are
a
....
......
....
- S
hip
to
New
Orl
ean
s-
Ho
pp
er T
ruck
to
Ro
asti
ng
Pla
nt
.
......
......
.-
Tru
ck t
o R
etai
l Sto
re
… a
dd
itio
nal
ste
ps
in t
ext
Sale
s a
nd
Delivery
Org
an
izati
on
s:
- S
ou
rcin
g R
aw
M
ater
ial S
up
ply
(2
)-
Qu
alit
y S
pec
ific
atio
ns
(2
)-
Purc
has
e o
f C
apit
al
E
qu
ipm
ent
(3
)-
Ou
tso
urc
ing
: Sp
ecia
list/
E
xper
t S
ervi
ces
(2
)-
Purc
has
e fo
r R
esal
e
(1)
- A
sso
rtm
ent
Bu
ildin
g
(1)
- B
ulk
Bre
akin
g
(2)
- O
rder
Pro
cess
ing
(2
)-
Neg
oti
atio
n: T
erm
s o
f S
ale
(1
)-
Tran
sfer
of
Ow
ner
ship
(2
)
Co
nsu
mers
:
- Pr
od
uct
Acq
uis
itio
n
(2)
- Pr
od
uct
Pre
par
atio
n
(3)
- Pr
od
uct
Co
nsu
mp
tio
n
(3)
- Pr
od
uct
Mai
nte
nan
ce/R
epai
r
(2)
- Pr
od
uct
Dis
po
siti
on
(2
)
Pu
rch
asin
g a
nd
Use
Org
an
izati
on
s:
- M
arke
t An
alys
is
(1)
- M
arke
t D
eman
d
A
sses
smen
t
(1)
- A
nal
ysis
of
Co
mp
etit
ive
S
trat
egie
s
(1)
- M
arke
t S
egm
enta
tio
n
(1)
- M
arke
t Fo
reca
sts
(1
)-
Perf
orm
ance
Mo
nit
ori
ng
(1
)-
Pro
gra
m E
valu
atio
n
(1)
Co
nsu
mers
:
- C
on
sum
er E
du
cati
on
(2
)-
Info
rmat
ion
Sea
rch
(2
)-
Wo
rd o
f M
ou
th
(3)
- S
tore
Vis
its
(2
)-
Post
-Pu
rch
ase
An
alys
is
(3)
Kn
ow
led
ge
Develo
pm
en
t/In
tellig
en
ce
Org
an
izati
on
s:
- Fi
nan
cial
Pro
ject
ion
s
(2)
- B
oar
d o
f D
irec
tors
Ap
pro
val
(2)
- Pr
od
uct
Des
ign
(2
)-
Pro
du
ct L
ine
Dec
isio
ns
(1
)-
Bu
dg
et S
etti
ng
(2
)-
Dis
trib
uti
on
Pla
nn
ing
(
1)-
Bra
nd
Nam
e S
elec
tio
n
(1)
- Pa
ckag
ing
(1
)-
Mar
ket T
esti
ng
(1
)-
Posi
tio
nin
g S
trat
egy
(1
)-
Pric
ing
Dec
isio
ns
(1
)-
Nat
ion
al A
dve
rtis
ing
(1
)-
Dir
ect
Mar
keti
ng
(1
)-
Co
nsu
mer
Pro
mo
tio
n
(1)
- Tr
ade
Pro
mo
tio
n
(1)
- Tr
ade
Ad
vert
isin
g
(1)
- C
om
mu
nic
atio
n t
o
S
ales
Fo
rce
(1
)
- Po
int
of
Purc
has
e
Mat
eria
ls
(1)
- Pu
blic
ity
(2
)-
War
ran
ty Te
rms
(2
)-
Cu
sto
mer
Ser
vice
(2
)-
Ret
aile
r A
sso
rtm
ent
(1
)-
Mer
chan
dis
ing
(1
)-
Ret
ail A
dve
rtis
ing
(1
)-
Inve
nto
ry M
anag
emen
t
(2)
Go
ve
rnm
en
t A
ge
ncie
s:
- S
tan
dar
d S
etti
ng
(2
)-
Exp
ort
/Imp
ort
Co
ntr
ols
(2
)-
Trad
emar
k Pr
ote
ctio
n
(2)
- Fi
nan
cin
g A
rran
gem
ents
(2)
- N
utr
itio
nal
Lab
elin
g
(2)
- In
spec
tio
ns
(3
)-
Reg
ula
rto
ry R
ule
s an
d
G
uid
elin
es
(2)
Mark
eti
ng
Pla
ns a
nd
Pro
gra
ms/G
overn
men
t A
cti
on
s
(1)
= La
rgel
y o
r en
tire
ly c
on
tro
lled
by
mar
keti
ng
man
ager
s(2
) =
Larg
ely
con
tro
lled
by
oth
ers,
bu
t in
flu
ence
d b
y o
r co
ord
inat
ed
w
ith
mar
keti
ng
man
ager
s(3
) =
Litt
le o
r n
o in
flu
ence
by
mar
keti
ng
man
ager
s(n
) =
Act
ivit
y d
oes
no
t in
volv
e m
arke
t
Nu
mer
ical
Key
:
Org
an
iza
tio
ns:
- In
tern
al M
anag
emen
t o
f Wo
rk F
orc
e
(n)
- M
anag
emen
t o
f P
lan
t &
Eq
uip
men
t
(n)
- Fi
nan
cial
Mg
mt.
, Acc
ou
nti
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SWEN3033-01.QXD 8/29/02 3:01 PM Page 13
production, and effects on the firm’s current productline. As this would be a ‘bakery quality’ item, theBoard was very concerned about the system at theleft of Panel B – that the ingredients be regularlyavailable, cost-controlled, and geared to preciserecipe quality. The Board did give the green light tothe project, and the entire marketing mix was final-ized and implemented. The distribution system (theright side of Panel B) was quite similar to that forcoffee, as was the consumer’s purchase and usesystem (which concludes with a disposition servicepurchase for trash removal). In terms of the system’sdynamics, each consumer purchase feeds back intostocking and production plans: through feedbackderived from both internal accounting and formalmarket research projects this firm will monitor andadapt its management of this product. Over time,therefore, consumers’ actual use satisfactions andrepurchases will determine its success or failure.
Further Considerations Although the illustration isgetting long, we are only a little way toward captur-ing the true scope of the aggregate marketing system(however, we’ll now dispense with details and sim-ply point to key issues). We have only covered twobreakfast items: as shown in Panel C, the four familymembers have different preferences, which theaggregate marketing system is easily able to accom-modate. Also, the breakfast depends on more thanfood, and an entire kitchen support system is avail-able to assist this consumption episode. In terms ofour broader topic it is important to recognize that allaspects of Panel C have been brought to the Joneshousehold through the aggregate marketing system,some many years ago (e.g., the plumbing and the fur-niture), and others more recently (e.g., the new dish-washer bought last week, and the coffee, pastry andfresh fruit bought yesterday). Also, each elementlisted in Panel C had its own complex marketingsystem that brought it to this point. Global sourcingwas involved in some systems: the coffeemaker fromGermany, artwork from the Far East, microwavefrom Korea, and so forth. In every case, a completesystem was planned, created, and run in order todeliver these products to households like Tiffany’s,and in most cases had to compete and win out overothers’ systems to gain Tiffany’s purchase. If wewere to analyze each system, many pages would beused: the total number of system interactions neededto create this meal is truly impressive. When we fur-ther recognize that the aggregate marketing systemroutinely provides breakfast for 100 million UShouseholds every morning – and that breakfast isonly a trivial element of its total activity – we areready to appreciate its immensity and significance.
The Scope and Size of the System
The foregoing illustration is a useful basis forsummarizing system scope: Panel D of Figure 1.1
provides a partial listing of system activities thatallowed this breakfast to occur. Several points emerge:
1. There are a surprisingly large number of entries:the aggregate marketing system undertakes awide range of activities in order to provide for asimple breakfast meal.
2. There are participants besides marketers in theaggregate marketing system. Organizationalcustomers and ultimate consumers are keyplayers (buying is crucial at every stage), andgovernments provide services intended to facili-tate system operations (shown at the right, thesecross all stages).
3. As indicated by the keyed entries in Panel D,marketing managers control (#1) only some ofthe activities of the aggregate marketing system.Other necessary activities are carried out bypersons who do not consider themselves to bemarketers. In most of these cases, marketingmanagers do serve as influences within organi-zations (#2) on these actions, while in somecases (#3) necessary system activities may becarried out with little or no direct influence frommarketers (note that this is particularly apparentin the consumer realm). This property of thesystem calls for a perspective on marketing thatreaches beyond a sole focus on a manager’scontrollable decisions. (Note: numbers assignedto each activity are generalized: readers maywish to consider whether they would agree.)
4. The three classes of participants all engage inactivities apart from the aggregate marketingsystem: the system is very broad, but not entirelydense. Some parts of virtually every organizationwork on tasks only indirectly related to the mar-keting activities listed, and carry these out inde-pendently (shown as ‘n’ in the bottom right ofPanel D). We would not define these as market-ing system activities. Nor would we includeactivities of government agencies or consumersthat are directed entirely toward other sectors ofsociety and life. Thus our visual conception ofthe aggregate marketing system resembles across-section of fine swiss cheese or steel mesh –similar to Panels A and B, with numerous link-ages between organizations as we move across tothe consumer sector, but with holes inside eachorganization to represent parts where the work isarguably outside of the marketing system.
5. Finally, Panel D significantly understatessystem activity: most listings have manydetailed steps (e.g., advertising, promotion,merchandising, etc.), or transportation steps, asin bottom left column.
Panel E of Figure 1.1 next depicts an approach toassessing the scope of the US aggregate marketingsystem. Horizontally, note that it extends fromextraction of raw materials/crops at the left, throughmany levels of value creation, to end consumption
INTRODUCTION14
SWEN3033-01.QXD 8/29/02 3:01 PM Page 14
and disposition in far-off locales at the right (again,the earlier Venn diagram analogy should clarify ourconception that some of these activities are properlyseen as also belonging to other intersecting aggregatesystems). Vertically, we first add all competing coffeeand pastry systems, then add all other food systems,then add all other goods and services. In concept, thisprocess will include all organizations that engage inmarketing system activities of the types shown inPanel D, all levels of government activities thatimpact on this system, and all forms of consumerparticipation by all societal members. Our nextillustration provides estimates of the magnitudesinvolved.
‘From Here to Eternity’ The aggregate marketingsystem is huge and growing rapidly.2 As we movepast the year 2000, in the US alone we find some275 million final consumers arrayed in 100 millionhouseholds, all on the consumption side of thesystem. They spend 5 trillion dollars each year, ortwo-thirds of the nation’s Gross Domestic Product.To place this spending in perspective, if we were totry to count it at the rate of one dollar per second, itwould take us over 150,000 years, or much longerthan the history of civilization. While the aggregatemarketing system in the US may not stretch quite to‘eternity,’ it certainly does stretch a very long way.
Further, we should recall that yearly data aremerely compiled for convenience, and can easilyunderstate true impacts. For example, as in Tiffany’skitchen, households accumulate many consumerdurables that continue to provide benefits to themfor years. As opposed to annual sales, then, considerthat some 200 million motor vehicles are currentlyregistered for road use in the US: all of these havebeen provided through the marketing system (andmany are used to carry out its functions on a dailybasis). In terms of the work of marketing, a signifi-cant portion of Americans are employed entirely orin part assisting the system to perform its functions.While exact figures are elusive due to categorizationproblems, it appears that over 30 million Americanswork directly within the aggregate marketingsystem, with salespersons accounting for the largestportion. There are almost 20 million businesses act-ing as buyers: 3 million of these are retailers thatresell to consumers, with another one-half millionwholesaling firms (interestingly, because of multi-ple steps in the wholesale channel, total sales ofwholesalers are larger than those of retailers).Advertising spending is huge and growing, nowsome $200 billion per year: other areas of recentgrowth include services (now over half of all con-sumer spending) and direct marketing, which hasdoubled in recent years.
Even though these numbers are huge, still wehave understated the true scope of the aggregatemarketing system in our society. Professional prac-tices (attorneys, accountants, architects) were not
included in these counts, but must engage inaccepted forms of marketing to build and maintaintheir clientele. Numerous persons in not-for-profitorganizations, also not included in our formalnumbers, employ marketing actions both in garner-ing resources and carrying out their missions.Government workers at local, state and federallevels regularly negotiate contracts, buy goods andservices, and monitor marketing performance.Further, because marketing is an intrinsic functionin those 20 million business firms noted above, aportion of the responsibilities of many positions –from Chief Executive Officer to quality inspectorsto shipping and fulfillment clerks – are involvedwith carrying out the firm’s marketing activities.Finally, the US aggregate marketing system in noway stands alone in the world: by not includingother nations’ numbers we have understated bymany times the actual impact of marketing aroundthe globe (as an aside, this analysis also helps us toappreciate the enormity of the challenges faced bycommand systems, which cannot hope to replicatethe millions of allocation decisions being madewithin a market system each day).
Characteristics of the AggregateMarketing System
Figure 1.2 completes our background on the systemwith a summary of its key properties. Propositions I,III, and IV have been discussed at length, but theothers deserve brief comment. Proposition II gives asystem perspective that we have long viewed to bepowerful: the concept of continuous flows in variousmodalities, including physical, persuasive, informa-tional and monetary. Flows occur in both directions(e.g., money flows backwards in the system in pay-ment for goods; information and influence flowforward from advertising and sales efforts, but alsobackward with marketing research). Some aresimultaneous, but many are not: the investment flowforward (in plant, labor, production, and promotionin advance of sales) represents levels of risk-takingand confidence in marketing activity.3 Meanwhile,Proposition V reflects that in a market-based system,consumers’ response to marketers’ offerings willdrive supply allocations and prices. Depending on asociety’s decisions on public vs. private ownership,the aggregate marketing system plays a greater orlesser role in allocating national resources.4 The UShas given substantial freedoms to its aggregatemarketing system; apart from certain restrictions, aperson may choose to produce almost any good orservice he or she desires, in any form and name,offer it for sale at places, prices and terms of his orher choosing, and may advertise it or not, using vir-tually any appeal seen to be effective. While restric-tions do exist in each of these areas, these areprimarily to protect the rights of competing marketersor consumers.
MARKETING’S RELATIONSHIP TO SOCIETY 15
SWEN3033-01.QXD 8/29/02 3:01 PM Page 15
INTRODUCTION16
Proposition VI reflects that our aggregatemarketing system does more than physically delivergoods and services: it also works to bring a dynamismto society that encourages continual growth andprogress (Vaile, Grether & Cox, 1952). Marketersknow that observed demand is not really fixed: con-sumers can be highly responsive to different market-ing programs. Thus competition is the main drivingforce, leading marketers to search for areas of com-parative advantage that will lead to greater financialsuccess.5 New competitors are attracted to areas ofopportunity. Over time prices can be adjusted down-ward through competition and/or production efficien-cies. New buyers join in buying the favored offerings,and some markets grow while others wither away.Not all marketing system programs are successful: theeffort to support dynamism can lead to excesses, fail-ures, and sometimes unforeseen consequences.Proposition VII reflects this underlying tension byreflecting the need for controls. A market systemneeds a legal infrastructure for property rights, per-formance of contracts, freedom of choice, and so
forth. The role of government as society’s representa-tive is thus central, though this can be contravened ifpoliticians allow cynical self-seeking interests tocircumvent either competition or desirable restraints.Thus government achieving a proper balance to bestserve a society’s goals becomes a key issue for aggre-gate marketing systems.6
Propositions VIII and IX, meanwhile, refer backto the bonding forces that constitute the heart of themarketing effort. The existing infrastructure requirescoordination in space, time, and ‘fit,’ as offeringsrequire the intermarriage of components within acontext of high efficiency. We indeed have beenimpressed by the serious concerns given to processquality control within this system. Further, we havebeen reminded that at its roots this is a humaninstitution in which both experience and trust playmajor roles, a point that has also recently emerged inrelationship marketing thought. Even economistshave recognized the role of trust within the system,as Kenneth Arrow, Nobel Laureate in Economicsexplained, ‘…virtually every commercial transaction
TThhee AAggggrreeggaattee MMaarrkkeettiinngg SSyysstteemm::
II.. IInnccoorrppoorraatteess nnuummeerroouuss aaccttiivviittiieess, including the classic distribution functions, marketers’plans and programs, and actions by consumers and government.
IIII.. IIss ccoommpprriisseedd ooff ppllaannnneedd aanndd ccoonnttiinnuuoouuss fflloowwss among participants, including flows of goodsand materials, service deliveries, dollar payments, and flows of information and influence.
IIIIII.. IIss eexxtteennssiivvee,, iinn sseevveerraall rreessppeeccttss,,
A. Extending all the way from the collection of raw materials, through multiple intermediateprocesses, to use and disposition at each individual household.
B. Combining materials/goods from around the globe into market offerings.C. With multiple sets of marketers, acting as competitors, performing activities in parallel.D. In its geometric exchange activity, with multiple producers selling to multiple
purchasers, and multiple buyers purchasing from multiple sellers.
IIVV.. IIss ssttrruuccttuurraallllyy ssoopphhiissttiiccaatteedd, relying upon a massive physical and communications infra-structure that regularly and routinely creates and delivers goods and services across thesociety.
VV.. IIss aa kkeeyy bbaassiiss ffoorr rreessoouurrccee aallllooccaattiioonn iinn aa mmaarrkkeett eeccoonnoommyy, as consumer responses tomarket offerings determine which goods and services are and are not created in the future.
VVII.. IIss ggoovveerrnneedd bbyy ffoorrcceess ffoorr eeffffiicciieennccyy, most notably self-interest, competition, and characteris-tics of market demand.
VVIIII.. IIss ccoonnssttrraaiinneedd bbyy ssoocciiaall ffoorrcceess, including laws, government regulations, cultural norms, andethical codes of business and consumer conduct.
VVIIIIII.. RReelliieess uuppoonn ccoooorrddiinnaatteedd pprroocceesssseess, with producers and resellers seeking interdependentpurchases to fit pre-specified standards, with the later expectation of purchasing byconsumers.
IIXX.. OOppeerraatteess tthhrroouugghh hhuummaann iinntteerraaccttiioonnss,, eexxppeerriieennccee aanndd ttrruusstt, as participants develop andmaintain marketplace relationships as a basis for conducting their system activities.
XX.. IIss aann ooppeenn ssyysstteemm,, ggeeaarreedd ttoowwaarrdd ggrroowwtthh aanndd iinnnnoovvaattiioonn, as participants seek to solve prob-lems and pursue opportunities, investing with faith in the future operations of the market.
Figure 1.2 Propositions on the Aggregate Marketing System
SWEN3033-01.QXD 8/29/02 3:01 PM Page 16
MARKETING’S RELATIONSHIP TO SOCIETY 17
has within itself an element of trust … much of theeconomic backwardness in the world can beexplained by the lack of mutual confidence’ (Arrow,1972). In asking why all societies do not becomeequally wealthy and successful, recent work byHunt (1997) and others (e.g., Etzioni, 1988) pointsto differences in societal institutions that promotetrust and personal moral codes as a key differentia-tor. Finally, Proposition X notes this ‘open system’stresses achievement, growth, and progress. Theseare the elements of the US aggregate marketingsystem that helped to bring the century of progressnoted at the start of our discussion.7
We now turn to the system’s contributions. Ourdiscussion here is presented in three sections:(1) benefits to economic well-being, (2) benefits tobuyers, and (3) several broader perspectives on bene-fits.8 While most entries are not new to marketingthinkers, we are hopeful that in combination theywill prove useful in stimulating further thoughtabout our field and its value to society.
Marketing’s Contributions to
Economic Well-being
Contributions to the Larger Economic System
Whatever the political choices, an aggregatemarketing system is integral to a society’s economicsystem. Figure 1. 3A lists ten areas in which mar-keting contributes here in the US. First, it offersemployment and incomes for the millions of personsengaged in this field, allowing them to be productiveand earn money needed for consumption. As noted,consumers’ exercising freedom of choice means thatthe preferences of society’s members are largelyreflected in the system’s goods and services; thisshould mean that aggregate satisfaction is enhancedin this sector of life. As Adam Smith pointed out inhis classic The Wealth of Nations (1776), ‘Consum-ption is the sole end and purpose of all produc-tion…’ In this regard, the aggregate marketingsystem is directly involved in delivering the standard
AA.. TTEENN CCOONNTTRRIIBBUUTTIIOONNSS TTOO TTHHEE LLAARRGGEERR EECCOONNOOMMIICC SSYYSSTTEEMM
–– EEmmppllooyymmeenntt aanndd PPeerrssoonnaall IInnccoommeess–– FFrreeeeddoomm ooff CChhooiiccee iinn CCoonnssuummppttiioonn–– DDeelliivveerryy ooff aa SSttaannddaarrdd ooff LLiivviinngg–– AAssssiissttaannccee iinn IInnffrraassttrruuccttuurree DDeevveellooppmmeenntt
(e.g., Transportation, Communications, Financial Sector)–– TTaaxx PPaayymmeennttss ffoorr PPuubblliicc PPuurrppoosseess–– MMaassss MMaarrkkeett EEffffiicciieenncciieess–– DDiiffffuussiioonn ooff IInnnnoovvaattiioonnss–– EEnnhhaanncceedd BBaallaannccee ooff TTrraaddee AAccccoouunnttss–– IInntteerrnnaattiioonnaall DDeevveellooppmmeenntt–– IInntteeggrraall ttoo EEccoonnoommiicc GGrroowwtthh aanndd PPrroossppeerriittyy
BB.. IINNSSIIGGHHTTSS OONN MMAARRKKEETTIINNGG AANNDD EECCOONNOOMMIICC DDEEVVEELLOOPPMMEENNTT
–– MMaarrkkeettiinngg EEmmppllooyymmeenntt//GGDDPP RReellaattiioonnsshhiipp–– RRoolleess DDeeppeenndd oonn SSttaaggee ooff DDeevveellooppmmeenntt::
– Traditional Subsistence: Assure Prices– Transitional: Infrastructure– Market-oriented: Financing, Credit
–– RRoolleess DDeeppeenndd oonn GGoovveerrnnmmeenntt PPoolliicciieess–– RRoolleess DDeeppeenndd oonn CCoonnssuummeerrss aanndd CCuullttuurree–– MMaarrkkeettiinngg EExxppeerrttiissee aanndd SSyysstteemmss aarree KKeeyy–– MMaarrkkeettiinngg’’ss DDeevveellooppmmeenntt FFuunnccttiioonnss::
– Organization of Networks – Spatial Connectivity– Speculation in Time – Capital Accumulation– Equalization – Entrepreneurial Entry
Figure 1.3 Marketing’s Contributions to Economic Well-being
SWEN3033-01.QXD 8/29/02 3:01 PM Page 17
of living enjoyed by society’s members. Further,private investments for the marketing system havebeen important in assisting national infrastructuredevelopment in such areas as distribution facilities,transportation, communication, medical care, andthe financial sector. Related to this, monies gatheredby governments (sales and excise taxes) are actuallygathered by operations of the marketing system.Together with income taxes paid by firms andindividuals engaged in marketing, these representsubstantial sources of the tax payments to fundpublic programs.
With respect to consumption, the system’s massmarket efficiencies have led to lower costs, lowerprices, and increased total consumption for citizens.The system’s dynamic character also fosters diffu-sion of innovations, bringing new benefits to dailylife. Internationally, the aggregate marketing systemis a crucial contributor to the nation’s balance oftrade and, in seeking new areas of opportunity, is aforce for international development. Overall, then, ina number of significant and positive ways, the aggre-gate marketing system has played an integral role inthe economic growth and prosperity of the US.
While obvious in the abstract, marketing’s contri-butions to economic well-being have not actuallybeen recognized by many businesspersons nor,indeed, by many economists. This is probablybecause they are not factors in the classic macro-economic equations (Kinnear, 1994). Here, aggre-gate supply is seen to depend on the stock of capital,labor, raw materials, and technology. Kinnear assertsthat marketing’s importance would be more clear ifefficiencies and skills in wholesaling, retailing andlogistics were included in this equation. Similarly,aggregate demand is a function of expenditures forconsumption, investment, government, and netforeign trade. However, we all know that marketingimpacts on aggregate demand: if economists’ equa-tions were to identify effects of marketing programs(on autonomous consumption and marginal pro-pensity to consume, on prospects for success of aninvestment in a new product, and on the volume ofexports and imports), the value of marketing effortsin our economic system would be more starkly obvi-ous. Further, this would stimulate interest in calibrat-ing the magnitudes of these contributions.
Marketing and Economic Development
The societal benefits that flow from the aggregatemarketing system are nowhere more apparent thanin the area of economic development. Peter Drucker,the noted business thinker, raised this issue yearsago in a stirring speech, reprinted by the Journal ofMarketing as ‘Marketing and Economic Develop-ment’ (Drucker, 1958). His view of marketing as anentrepreneurial ‘multiplier’ and organizer ofresources casts a quite different light on our field.Later work has done much to explore and refine this
view. The points in Figure 1.3B illustrate several keyinsights about marketing’s roles and contributions.9
First, the role for marketing in economic develop-ment is real. Nations with higher proportions of theirpopulations in marketing also have higher grossdomestic products: the development of the market-ing system is necessary for this to occur (e.g.,Preston, 1968; Wood and Vitell, 1986). However,the specific roles for the marketing system differ bystage of economic development. In a subsistenceeconomy, production is barely sufficient for self-needs, and is not separated in time or distance fromconsumption. The immediate priority is incentivesto increase production, with price assurance beingmost significant. In economies just becomingurbanized, the priority is to develop distributioninfrastructure (i.e., transport, storage, and sellingnetworks). In market-oriented systems, all market-ing functions are important, with investment financ-ing and consumer credit as primary tools for marketgrowth (US Department of Agriculture, 1972).
As noted in Figure 1.3B, a host government’spolicies help determine opportunities for market-ing’s contributions to the society (e.g., Thorelli,1996). However, governments typically pursue fivepossibly contradictory goals: growth, fuller employ-ment, income distribution, price control (inflation),and balance of payments – and may do so with toofew tools to handle the task (Slater, 1978). Treat-ment of the aggregate marketing system is thus partof a complex political context. As a social institu-tion, the marketing system must be embedded in thesociety’s culture. For the US in the internationalsphere, this can be problematic in some societies, asaspects of the culture are not welcoming of somefeatures of the US marketing system (Ger, 1997).Where a US-style system is desired, moreover, cer-tain consumer behaviors (e.g., handling of finances,planned saving and choice processes, defenses topersuasion) have to be learned for the system towork well. As to linkages among efficiency, con-sumer behavior, and culture in developing market-ing systems, Slater identified literacy, achievementdesires, cooperation, fatalism, mass media and inno-vativeness as key dimensions (cf. Nason & White,1981). Today’s marketing experts working in the‘transitional economies’ (i.e., those moving fromcentralized planning to market-based systems) ofEastern Europe, the former Soviet Union, and Chinaare noting that entrepreneurial risk-taking, market-ing management expertise, and the use of strongbusiness planning and control systems are crucial indetermining success (e.g., Batra, 1997). They differas to the ease of the transfer of such knowledge, butthe large number of international students educatedin business schools in recent years does give causefor optimism.
Finally, Figure 1.3B’s ‘Marketing’s DevelopmentFunctions’ reflects marketing’s roles in more basicsettings (modified from Moyer, 1965). First, marketing
INTRODUCTION18
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encourages increased production by conceiving,organizing, and operating networks for communica-tion and exchange. Speculation across time is neededto bring future production and consumption, usingentrepreneurial risk of capital and effort. Equali-zation of supply and demand occurs across distance(transport), time (storage), and quantity (price),while spacial connectivity joins diverse locales intoa larger marketplace to offer efficiencies of scaleand lower prices to consumers. Over time, these cangrow into a center for capital accumulation (invest-ment), and serve as a springboard for marketingentrepreneurs’ entry to become industrialists. Forexample, some years after its independence, nearlyhalf of the leading industrialists of Pakistan werefound to have come from the marketing sector(Papenek, 1962). Here they had learned, in AdamSmith’s words, ‘the habits … of order, economy,and attention’ that characterize success in marketdistribution (Smith, 1776).
Contributions to Buyers from
Specific Marketing Activities
We now focus on marketers’ actions that benefitbuyers. As there are millions of competing firms inour aggregate marketing system, at any time a hugenumber of these benefits are being offered in paral-lel. Across time, these benefits accumulate, throughbillions of purchase occasions, to be truly formida-ble. Our framework in Figure 1.4 will be quitefamiliar to marketing thinkers, but persons outsidethe field are likely to be surprised at the scope ofcontributions offered. We begin with the economicconcept of utility.
Marketing’s Bundle of Utilities
Economists traditionally employ utility to representvalue. As a prominent economist observed nearly80 years ago, ‘… marketing and advertising are inter-ested primarily in the creation of value’ (Moriarty,1923). Identification of marketing’s special utilities,shown in Figure 1.4A, proved helpful to economistswho argued that distributive services did add valuebeyond that derived from production.10 Of the fiveutilities listed, note that only elemental utility, whichrefers to cultivation or extraction of crops and rawmaterials, is arguably beyond marketing’s purview.The second, form utility, comes primarily from oper-ations, but marketing activities do contribute here by(1) physically supplying essential inputs to theproduction process, and (2) providing insights fromthe marketplace (e.g., market research) that helpdecide specific attributes for goods and services.Place utility is clearly in marketing’s province, repre-senting the value added by providing goods wherebuyers need them. Marketing adds time utilitythrough preplanning, inventory, and promotion
activities to ensure customers can obtain goodswhen they are needed. Finally, possession utility isoffered through marketing transactions, and allowscustomers to use goods for desired purposes.
The Eight ‘Classic Functions’ of MarketDistribution
Our appreciation of marketing’s contributions isenhanced by the ‘functional approach,’ which aroseearly in the twentieth century in reaction to main-stream economists’ lack of attention to the value ofdistribution. It became a basic approach for thestudy of marketing for over five decades, describingmarketers’ activities and their reasons for them.With the rise of the managerial approach, however,this descriptive view of marketing has now all butdisappeared (Hunt and Goolsby, 1988).
Among many frameworks, the eight functionslisted in Figure 1.4B are widely accepted (Maynard,Weidler & Beckman, 1927). Given the emphasis atthat time on agriculture and manufacturing, func-tional frameworks stressed physical supply services,beginning with (1) transportation. Closely allied,(2) storage helps to nullify timing discrepancies insupply and demand, smooths production schedulesto reduce costs, and allows the mixing of ingredientsor stock (as in our coffee bean example). Inno-vations in these areas (consider refrigeration andfreezing) have brought major improvements to oursociety over the past century. The next one of mar-keting’s classic functions, (3) financing, receiveslittle attention by marketing scholars today, but isstill a key topic in economic development settings.A firm must finance the time-gap between the startof the productive process (when machines, material,labor, marketing, etc. must be paid for) and the laterreceipt of money from sales. Such investmentfinancing may be undertaken directly by marketersor, when stakes are high, by financial institutions.Within our overall system, financing has fosteredentry by many small businesses, while consumercredit has allowed purchases of millions of homes,autos, etc., and thus has been a key factor insociety’s prosperity. Number (4), assumption of risk,reflects transactions, and arises out of uncertainty. Inmarketing channels, for example, risk comes withownership of goods for which future demand maybe less than expected (e.g., negative price changes,demand shortfalls, improved designs, deteriorationin quality, or credit problems with repayments).Risk is substantial throughout the aggregate market-ing system – a fact apparent to those who forecastdemand.
(5) Assembly refers to the broader buying process –seeking out sources of supply and deciding on goodsand services to be purchased. Buying is pervasiveacross the aggregate marketing system, leading tosuccessive changes in ownership that end in finalconsumer purchases. The other side of a purchase is
MARKETING’S RELATIONSHIP TO SOCIETY 19
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INTRODUCTION20
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another’s sale. Though much maligned, (6) sellingharnesses the forces of competition to improve thevalue of offerings, and brings about the exchangesthat allow the system to operate. (7) Standard settingis often unseen and quite underestimated. Once setby a society, standards serve as buying guides in avast range of business and consumer categories: inessence they provide assurance for critical ‘credence’attributes such as safety, strength, or other elementsof an offering that may be difficult to determine viainspection, and they aid in price and value compari-sons as well. Marketers are important users of stan-dards in our society, and also participate in theircreation (in contrast to general perceptions, the vastmajority of standardization is a voluntary activity inthe US, rather than being imposed by government).Finally, the gathering and use of (8) market infor-mation is quite familiar. Inputs can come fromsources – experts, government, customers, the salesforce, library – beyond formal market researchprojects. As a key activity in marketing today, thisfunction increasingly stimulates improvements inthe benefits we will now discuss.
Benefits From Product andService Offerings
A marketing exchange relies on both transactingparties expecting to be better off. As sellers benefitfrom payments for purchases, it is not surprising tosee marketers’ focus on purchase processes.However, it is important to recall that benefitsreceived by customers accrue from use or consump-tion. As indicated in Figure 1.4C, this has an interest-ing implication; each single use occasion creates anopportunity for another benefit delivery from thesystem. Further, as products and services are ‘bene-fit bundles,’ users are deriving multiple benefits(Green, Wind, & Jain, 1972). For example, tooth-paste attributes such as decay prevention, whitening,tartar control, and good taste can be combined tocreate multiple sources of value in a single use occa-sion. Extensive product variation further allowscloser fits with users’ preferences. In our system,frequent new offerings and improvements to currentofferings are also pursued. Further, we shouldrecognize that much of the care taken by marketersin design, creation, and delivery of offerings remainsunseen (and is thus underappreciated by the generalpublic). This care aids a brand’s competitive successby providing an intended, identical service or useexperience expected by loyal customers. Last, ourmarketing system generally stands behind itsofferings, with buyers often protected by guarantees.
To check our impression of this system stress onquality, we checked ratings in some 200 product andservice classes. Ratings were given in 1996–97 inConsumer Reports, published by Consumers Union,an independent testing organization that acceptsno advertising or other funds from the marketingcommunity. Our tabulation of scores showed that, of
3028 ratings, only 51 items (1.7%) were rated as‘Poor’ in quality. Including ‘Fair’ as a passing grade,98% of marketers’ offerings received satisfactoryratings: 88% received ratings of good, very good, orexcellent.11 Clearly the system is delivering qualityofferings to its public.
Benefits of Branding/Trademarks
Unique identification is not only significant tomarketers (Aaker, 1991), but also benefits buyers infour ways.12 As shown in Figure 1.4C, uniquesource names assist:
(1) organizing future behaviors (if problems areencountered, the source can be re-contacted: ifsatisfied, favorable attitudes can direct futuredecisions);
(2) efficiency in locating favored sellers (whileappearing innocuous, summed across pro-ducts, time, and competing demands, this effi-ciency is actually quite significant in total);
(3) rapid, confident choices in self-service settings(the average time for a single choice in a USsupermarket aisle is only a few seconds); and
(4) deriving symbolic benefits from purchase,ownership, or use. Symbolic benefits can bepublic (driving a high-status car) or private(enjoying a finely crafted product). While attimes a target for criticism, symbolic benefits’mechanisms are varied and subtle, involvingsustaining personal identity as well as commu-nicating about oneself (Belk, 1988, 1989;Cohen, 1989; Levy, 1959).
Benefits From Market Distribution
As noted in the first entry of this section ofFigure 1.4C, the key benefits in this area werecaptured in our discussion of marketing’s eightclassic functions. As it is performed largely out ofthe sight of non-participants, however, the perfor-mance of distribution can be underappreciated. It isuseful to recall that the marketing system performsthese functions repetitively and routinely, millions oftimes daily, each time offering benefits to receivers.Beyond this, wholesale and retail activities offerthe additional benefits noted in the remaining listingsof Figure 1.4C. The first five of these are well-recognized and need no amplification. The final fourentries, however, do deserve separate discussion.
One powerful aspect of the US marketing systemis facilitating the transaction process, thus savingconsumers’ time and effort while maximizing pur-chase opportunities. Consider, for example, thebenefits of extended store hours, convenient loca-tions, free parking, stocked shelves, posted prices,displays, fast and smooth checkouts, advertisingprice specials, salespersons’ pleasant and efficientcompletion of transactions, and so forth (consumersfrom some other cultures express surprise, anddelight, upon discovering this of the US retailing
MARKETING’S RELATIONSHIP TO SOCIETY 21
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system). Further, processes for extending consumercredit allow some expensive purchases to occur thatotherwise would be delayed, while bank credit cardshave greatly eased transaction processes for buyersand sellers alike (the fact that stores will pay signifi-cant fees, about 3%, for bank card charges is a goodindicator of how much the system desires to facili-tate purchase transactions). When a durable goodpurchase is made, moreover, consumers enter a usephase that can last for many years. During this timethe marketing system offers a postpurchase supportstructure with benefits such as delivery, installation,repair services, and liberal return policies. Our finalentry is quite different, but has done much toimprove the lives of everyone in our society, in thatour channels of distribution serve as the entry point(gatekeeper) for new products and services. Recep-tivity by wholesalers and retailers to offerings pro-viding better value or new benefits has made thisdynamic work for society’s gain (similarly, govern-ment actions to reduce competitive barriers to entryallow innovations and price competition to work tothe benefit of society’s consumers and competitors).
Benefits From Salespersons andRepresentatives
Sales representatives facilitate flows within theaggregate marketing system. While advertisingreceives more public attention, marketers frequentlyrate personal selling as more important for businesssuccess. In one study, executives rated selling as fivetimes more important than advertising for industrialgoods, and almost twice as important for consumerdurable goods; for consumer nondurables, the twowere rated about equally important (Udell, 1972).An estimated 20 million sales representatives are atwork daily in the system – 9 million in business-to-business selling, and 11 million others dealingdirectly with consumers. Roles vary widely, as dolevels of performance. Figure 1.4C lists some con-tributions offered in business-to-business sales,where the salesperson is a professional representa-tive dealing with generally well-informed buyers, aswell as with current users who may need to haveproblems resolved. To start, salespersons may becalled on to consult on large programs (e.g., plantconstruction, advertising campaigns), often as partof account teams that include specialists. During thisprocess a representative may help crystallize theclient’s needs, educate the client about alternatives,introduce new entries, and customize the offeringwhen feasible. He or she then works to facilitate theentire transaction, payment, and product delivery orproject completion. During this process, which canextend for years, the sales representative providesaccess to technical support and offers personal serviceto ensure customer satisfaction and a continuingrelationship. Our final entry – feedback from thefield – reflects salespersons reports back to the firmon opportunities to enhance its offerings.
Benefits From Advertising and Promotion
Each year an incredible amount of money is spent onadvertising and sales promotion: advertising is a majorindustry in its own right, accounting for about 3% ofUS Gross Domestic Product. Due to its high visibility,advertising is probably the most criticized facet of theaggregate marketing system, though it in fact providesimportant benefits. In their classic study, Advertisingin America, Bauer and Greyser (1968; see alsoPollay & Mittal, 1993) asked consumers about thisinstitution. Their findings fit four of the five entries inFigure 1.4C. First, appreciation for the informationadvertising provides on products and prices wasexpressed by a majority of consumers.13 Few con-sumers noted our second benefit: clearly, however,advertising can enhance consumer decisions throughlower search costs (product proliferation, however,does raise search costs). The consumers did mentionenlarging market demand, noting special appreciationfor advertising’s contribution to lowering prices. Lessobvious are three related benefits here: reducing distri-bution costs, aiding entry by new competitors, andfostering acceptance of new innovations by a society.The consumer sample also recognized the final entriesin Figure 1.4C, applauding advertising’s role in subsi-dizing media, as well as expressing pleasure withadvertising’s own creative offerings.
Summary: Marketing’s KeyBenefits to Buyers
As our detailed listings risk ‘losing sight of theforest for the trees,’ Figure 1.4D abstracts what wesee as 14 of the key benefits consumers derive frommarketing activities. First is marketing’s role indriving the production of offerings most desired inthe marketplace. In many organizations marketersact as internal advocates representing the customerin decisions on what to produce, then other elementsof the aggregate marketing system advance the crea-tion of those offerings by carrying out their func-tions (e.g., assembly, transport) at all intermediatestages leading to final production. The marketingsystem then manages the delivery of products andservices to consumers. It also expends funds to pro-vide for market learning via sales representatives,advertising, brochures, specialized brokers, etc. Thepersuasive aspect of these vehicles serves to stimu-late market demand: this creates sales, and may leadto lowered costs and prices. Through competition,the system offers a wide array of choices. Thisallows consumers to judge how best to satisfy theirneeds to obtain desired quality (in this regard, it isinteresting to realize that every available goodand service is being purchased by some fellowconsumers). The system’s variety allows some mar-keters to offer close- or even customized-fits with auser’s needs. The system is also designed to facili-tate purchases, easing acquisitions of benefits forbuyers. Numerous elements of time-saving are
INTRODUCTION22
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offered in both products and purchasing: theseincrease societal members’ efficiency, leaving timefor other activity. Also, the marketing system offersa postpurchase support structure to enable continu-ing benefits over time.
Our marketing system continually brings newentries for customers to consider, and activelyworks on behalf of product innovations andimprovements, some of which will enhance asociety’s quality of life over the long run. Further,it enables buyers to engage in larger total consum-ption than they would otherwise be able, throughcredit, price specials, discount versions of goods,and/or bundled attributes. Most sellers seek long-term repeat purchases from patrons, so customersatisfaction is a real goal of the system. Last, butnot least, our marketing system often offers pleasant
environments within which consumers can act,a distinct benefit in itself (as those experiencedwith some monopolists or government agenciescan attest).
Two Broader Views of Benefits
Contributions From Improvementsin Marketing Processes
In our analyses to this point it has become clear thatthe system’s current level of performance is basedon its emphasis on a continual search for improve-ment. Thus our interest is not only in kinds of bene-fits, but also increased levels of benefits emanatingdaily, as indicated in the following:
MARKETING’S RELATIONSHIP TO SOCIETY 23
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Transportation– e.g., Real-time Monitoring
Materials Handling
– e.g., Containerization
Distribution
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Promotion Programs
– e.g., Loyalty Clubs
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– e.g., Brand Equity
Market Segmentation
– e.g., MassCustomization
Database Marketing
– e.g., PersonalizedOfferings
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– e.g., Expert Systems
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– e.g., EnvironmentalImpacts
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– e.g., Value/Bonus Packs
Services Marketing
– e.g., ConsumerSatisfaction
– Achievement– Success– Growth– Action– Discovery
– Creativity– Humor– Invention– Influence– Service
– Beauty– Morality– Interpersonal
Relationships– Understanding– Trust
– Accomplishment– Beauty– Safety– Health– Nurturance– Joy– Gift-giving
– Bonding– Belonging– Excitement– Prestige– Pleasure– Self-enhancement– Escape
– Socializing– Learning– Authority– Control– Status– Play– Leisure
Figure 1.5 Some Broader Views of Benefits
SWEN3033-01.QXD 8/29/02 3:01 PM Page 23
‘Back to the Future’ The constant press forimprovements characterizes the world of marketing.Many efforts don’t work out; some yield minoradvances; and a few lead to norms of the future.Figure 1.5A displays a few illustrative cases ofrecent breakthroughs. For example, trucking firmsnow combine on-board computers and satellitetracking systems for real-time monitoring of theircargo. One firm uses this system to coordinateroutes and communicate with all 10,000 trucks in itsfleet, adapting instantly to weather or traffic delays.The result is better delivery service with lower costsfor the firm. Similarly, containerization has addedefficiency in shipping and handling: our coffeebeans, for example, shifted easily from ocean toground transport and were less susceptible todamage, spoilage, and theft. As distribution channelshave embraced relationship marketing, order pro-cessing systems have saved time and costs. Forexample, two firms may use electronic data inter-change, in which inventories (e.g., a drugstore’sentire stock in a line) are automatically replenishedas sales movement data are transmitted to the whole-saler: humans are limited to oversight of the system.Also, improvements in communications, transport,and technology have allowed marketers increasinglyto move worldwide to obtain materials at muchlower costs. While global sourcing has generatedlegitimate criticisms, it has also provided consumerswith quality goods at lower prices, and has added tothe aggregate marketing systems of other societiesas well. In retailing, checkout scanners have broughtabout a revolution: computerized pricing allowedstores to lower labor costs, better manage inventory,and promote goods more effectively through infor-mation on what works best with each store’scustomers. For food manufacturers, this techno-logy speeds adjustments to developments in themarketplace, allowing increased responsiveness toconsumers.
In product development, ‘match or better’ meansa search for value parity on most key attributes, andadvantage on the others. For example, in the early1980s Ford Motor Company had just lost $3 billionwhen it created ‘Team Taurus,’ a group of marketers,designers, engineers, and plant personnel chargedwith developing a new car to rescue the firm. Theteam relied on consumer research, choosing 700features for the new car from this source. In addi-tion, the team bought models of popular competingcars, and then tore them apart to analyze their bestfeatures (over 400 were ‘borrowed’ in this process).The net result of Team Taurus’s efforts? One of themost popular cars ever produced, and a turnaroundfor Ford, whose market share rose from 16% to 29%(Wilkie, 1994). The general lesson? Marketers knowthat demand is highly responsive to advantages con-sumers perceive a product to have (or lack), and canbe quite responsive to price as well (Day &Wansink, 1994). At this point we need not detail the
remaining items in Figure 1.5A, as marketingreaders can easily appreciate the potentials of each.As noted above, pressures for improvements in thesystem are relentless: the positive benefits of thisforce should be clearly appreciated.
Contributions to Quality of Life
In this final section on contributions we’ll shift awayfrom the economic calculus that reports on thesystem as if it were a relentless machine spewing outstreams of utiles. Instead we examine – briefly – theaggregate marketing system as a human institution,composed of people living their lives on a variety offronts. Our effort here is illustrative, intended toraise this topic as worthy of further attention bymarketing scholars. We first examine benefits in thework of marketing (where aggregate effects couldbe very large).
Social/Psychological Benefits to System
Participants In the first set of entries inFigure 1.5B we have listed several social and psycho-logical benefits we believe are offered to personswho work in marketing. For example, drawing onthe system’s stress on competition, achievement ishighly rewarded in this field. This is one reason forsteep increases in marketing incomes in the earlyyears of one’s career (in contrast to accounting orengineering, where salaries begin at higher levels,but increase much more slowly). Because of themarketing system’s openness to change, opportuni-ties abound for feelings of personal growth andindividual autonomy. Whether pursuing clearerunderstanding of the consumer marketplace, creat-ing a new ad campaign, managing a retail store,closing an important sale, or planning a new productlaunch, marketing offers challenges to creativity andingenuity, as well as opportunities to influenceothers. Marketers in many areas can offer service toothers, and those in the arts can foster aestheticvalues within society. Many marketing positionsrequire teamwork toward a common goal, whichcan provide valued group affiliations. It is commonfor sellers to develop friendly relationships withtheir clients as a consequence of ongoing exchangeactivities. In our breakfast illustration, for example,the large transaction between the coffee buyer andmajor grower was sealed with a handshake. Tomarketing scholars, many of whom who have cometo this field from other disciplines, these attributesare well-understood. Further, with the globalizationof markets these opportunities are expanding.
Social/Psychological Benefits to Individual
Consumers Since the study of consumer behaviorentered marketing’s mainstream during the 1950sand 1960s, consumers’ goals and motivations havebeen much studied. Most research has been instru-mental (e.g., what can we learn about consumers sothat we can sell more effectively to them?), but some
INTRODUCTION24
SWEN3033-01.QXD 8/29/02 3:01 PM Page 24
reveals interest in deeper human issues. Examplesinclude two older books by well-known marketingconsultants – Daniel Yankelovich (1981), whorevealed concerns about society’s direction at thetime, and Arnold Mitchell (1983), who designed theVALS system by using Maslow’s humanistic needtheory. More recently, the interpretivist orientation(e.g., Sherry, 1991) has honed our appreciation ofgoods’ meanings in consumers’ lives. A carefullycultivated lawn and flower garden can give a home-owner a sense of accomplishment, while a parentmay derive special satisfaction from selecting food,clothing, or furniture for a safe, healthy home. Gift-giving can involve significant emotional and sym-bolic dimensions. Movies, sporting events, ortheatrical productions can lead to feelings of belong-ing, prestige, escape, or excitement. Consumeractivities allow learning, socializing and self-enhancement: the benefits are emotional, subjectiveand experiential (Holbrook & Hirschman, 1982).Spending money can bring feelings of achievement,status, control, and even play. Shopping is anenjoyable activity for many. Although intangi-ble and difficult to express, treatment of themarketing system’s contributions to consumerswould be incomplete without these meaningfulconsequences.
As a final point in this section, and as willbe amplified in our closing section’s coverage ofcurrent research on marketing and society, we needto stress that the aggregate marketing system iscomprised of more participants than only businessmarketers. Private marketing is the mainstay of thesystem in the US, but government, the entire con-sumer sector, and many individuals in the not-for-profit sector are also participants. The system’sissues extend to societal concerns and, in turn, areinfluenced by them as well.
Criticisms and Problems of the
Aggregate Marketing System
Our focus in this article has been on accomplish-ments, but balance calls on us to also acknowledgethat the aggregate marketing system has long beencontroversial in some respects. Figure 1.6 summarizesmany of the most prominent criticisms, contro-versies and problems that have been raised. Spacelimitations preclude an extended analysis: this isavailable elsewhere (Moore & Wilkie, 2002). Webegin with critiques of system values. These areusually made by persons speaking from vantagepoints outside the system, raising philosophicalpoints about its nature. These criticisms tend to saylittle directly about the practice of marketing, thefocus is on broader issues such as the ‘consumerculture’ and our economic system that sustains it.Political theory is the root of some of these critiques,but not all of them. These are not simplistic arguments,
and we do not wish to do them an injustice in sucha brief summary. Readers will find writings byGalbraith (1958) of interest, as well as the Pollay(1986,1987)/Holbrook (1987) advertising debateand recent collections by Goodwin, Ackerman andKiron (1997) and Schor and Holt (2000).
Classic social and economic debates are next inFigure 1.6. These have a long history, though theyhave evolved over time. For example, the distribu-tion cost debate of the early 1900s had farmersquestioning why they received only a low percent-age of the consumer’s food dollar: today buyers(and farmers) ask why cereal brands are priced sohigh relative to ingredient costs. Much attention hasalso been directed to advertising, as reflected in fourout of eight debates. These debates likely persistbecause:
(1) strong proponents on each side won’t concede; (2) generalizations are at times based on particular
episodes;(3) decisive empirical evidence has not been avail-
able, due to severe measurement difficulties;and
(4) the underlying issues actually are complex.
The second column reflects views of the con-sumer movement. These tend not to be antagonisticto the aggregate marketing system itself (recall thehigh ratings Consumer Reports gives system offer-ings), but are aimed at having the system serve con-sumers’ interests rather than only those ofmarketers. Thus President John F. Kennedy’s 1962proclamation of the ‘Consumer Bill of Rights’ wasseen as crucial in placing the power of governmentsquarely on the side of consumers in the four basicways listed (that is, it affirmed that US societywould pass laws, restricting marketers if necessary,to ensure consumers received their rights). Duringthe past century there were three eras (Mayer, 1989)of high public receptivity to consumer movementissues. Consumer issues have shifted over time, asearlier concerns have been largely attained (e.g.,food processing safety). A root belief sustainingthe consumer movement, however, is that majoreconomic imperfections persist within the system –especially reflecting pricing and value received perdollar: these are listed in the next entries of thissection (Maynes, 1997). Some debates continue, inpart, because consumers themselves disagree.Again, our treatment here cannot do justice to thearguments’ sophistication: excellent books areavailable, including Aaker & Day (1982), Mayer(1989), Maynes et al. (1988), and Brobeck (1997).
The third column of Figure 1.6 highlights difficultissues that arise naturally in marketing and whichmust be addressed.14 Handling of these issues bysome marketers may spark legitimate criticisms,while others may merit commendation for theirefforts to be responsible. Problems may also arise
MARKETING’S RELATIONSHIP TO SOCIETY 25
SWEN3033-01.QXD 8/29/02 3:01 PM Page 25
INTRODUCTION26
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SWEN3033-01.QXD 8/29/02 3:01 PM Page 26
MARKETING’S RELATIONSHIP TO SOCIETY 27
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SWEN3033-01.QXD 8/29/02 3:01 PM Page 27
when trying to balance the goals of differentstakeholders. Illustrative issues are organized inthree topics. First, limits for persuasive influencearise in both advertising and selling: a firm mustfocus on both policy and daily control levels toaddress these. Second, specific problems arise fromcertain products, or from markets that pose societalexternalities if only short-term sales and profits arepursued: we expect increasing conflict here if soci-eties’ controls of marketer actions are challenged byfurther globalization. The third topic raises the needfor consistently responsible actions by all membersof an organization. Efforts here include design ofsystems to assist customers with problems, andformalizing the presence of influential ‘voices’ forall stakeholders, including employees, consumers,and the broader society. The right-hand column ofFigure 1.6 then shifts to deliberate problem behav-ior, as in our final illustration:
‘Ruthless People’ On rare occasions a participantin the aggregate marketing system chooses to actin ways that injure others. This occurs in all systemsectors, as indicated in the following reports(Wilkie 1994):
Marketing Sector ‘Creating a consumer want’has cynical meaning among a certain stratum ofmarketers, who first alter a consumer’s product, andthen point out the problem to gain a sale. Gas stationson interstate highways, for example, have been caughtplunging ice picks into tires and placing chemicalsinto batteries to cause adverse reactions. ‘Termiteinspectors’ have been caught placing the bugs inhouses, and then informing frightened residents of animminent home collapse unless repaired immediately.Some traveling ‘tree surgeons’ thrive by pointing outimagined diseases in large trees over a house, andthen removing the trees at high prices. The classiccase of this fear selling, however, was used by theHolland Furnace Company, which employed 5000persons in its 500 US offices. Its sellers were to intro-duce themselves as ‘safety inspectors,’ go down to thefurnace and dismantle it, and then condemn it as ‘sohazardous that I must refuse to put it back together –I can’t let myself be an accessory to murder!’ Onesenator called the selling ‘merciless.’ One elderlywoman was sold nine new Holland furnaces in sixyears, costing over $18,000 at the time.
Consumer Sector We have pointed out that onehallmark of the marketing system is its emphasis onproviding satisfaction after the sale, including liberalreturn policies. Some consumers abuse this service,as this quote shows:
Mark is a soccer player who needs new shoes frequently.He has developed a system to get them from a local storethat takes back defective shoes. Once or twice a year,Mark removes the sole, slices off a cleat, or places a ripin the tongue, each in a way that is hard to detect. Hethen brings the shoes to the store to exchange … at last
count he’d received eight new pairs this way. Mark issure to go to a different clerk on each visit, and … proba-bly won’t get caught.’
Government Sector Government abuses are harderto identify because of few legal cases and difficultyin observation. Errors of omission (failure to actwhen warranted) may be more common than errorsof commission, given the incentive structure of abureaucratic system. For example, New York City’shealth department discovered that a dispute betweentwo laboratory managers had led to delays of up toone year in reading cancer test results for womenusing city clinics. Of 3000 delayed Pap smear read-ings, 500 abnormalities called for immediate follow-up, 93 more appeared malignant, and 11 wereclearly malignant. On discovery, the commissionerdenounced his department for ‘betrayal of the publictrust,’ as he demoted four people; evidently nonecould be fired.
Several points remain. This is a complex areainvolving the law: it may not be clear that an act wasdeliberate or that a certain party was responsible.Also, criticisms are usually aimed at marketers, butall system participants have responsibilities, includ-ing public policymakers and consumers, and nega-tive acts do occur in each sector regularly. Third,some acts deserve to be criticized by all participants.Our system is designed for dealings to be open,honest, and well-informed. Deceptive and irresponsi-ble behaviors injure honest competitors and con-sumers. Thus it is disingenuous to simply defend theactions of fellow marketers or fellow consumersbecause system roles are shared: it is not clear why wewould want disreputable persons’ actions to defineeither the standards or image for the system overall.
Implications
Our goal has been to stop at this unique point intime, consider the larger picture of our field, thenfairly portray its structure, activities, and benefits tosociety. Our system is huge and dynamic. Its imper-fections stand as challenges for improvement; it isappropriate for participants to work to rectify them.Beyond this, the aggregate marketing system offersmuch that is impressive.
Interesting Insights From the Project
This project has been illuminating, and six ‘lessonslearned’ stand out for us (depending on backgroundand interests, other readers may have had differentobservations):
1. Tremendous potentials exist for marketingcontributions to economic development, whichcan literally change the world for citizens ofdeveloping nations. Each aggregate marketingsystem is specific to its own society and its owntime. While a society’s choices will constrain
INTRODUCTION28
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options, development also does proceed inidentifiable stages. Thus there is a potential totransfer knowledge, products, and methodsfound useful in prior stages of advanced sys-tems. Aggregate marketing systems are in fluxdaily across the globe. Will the ‘transitional’-nations trying to move from command econo-mies to free market systems be successful?Strong linkages between marketing, publicpolicy, and aggregate marketing system perfor-mance are starkly clear in these cases.
2. The central role for innovation in improving asociety’s quality of life has been underscored.The contributions from innovations and improve-ments were striking. Conceptually, this under-scores the value of dynamism in an aggregatemarketing system, as well as the key role ofcompetition in providing the system’s impetus.In turn, the societal importance of a govern-ment’s policies to foster and protect both inno-vation and competition – antitrust, patents,trademarks, etc. – became clearly apparent (butglobal differences may impede future progress).We also found the system’s twin reliance oncompetition as a driver and trust as a bondingagent to be impactful, yet somehow paradoxi-cal. Finally, it is clear that success in discover-ing, developing and managing new products is acentral issue for our field (which calls for closerties with other areas, as in more joint programsfor science and marketing).
3. The size, power, and practiced performance ofthe aggregate marketing system has emerged inthis project. Several points accompany thisrealization: (a) there is a real need to conceptu-ally appreciate the magnitudes in this system;(b) many ‘hidden aspects of marketing’ may bebeing excluded from thinking about the field;and (c) those marketing elements the publicexperiences directly, such as advertising andretail selling, are likely receiving disproportion-ate weight in people’s view of our field.
4. Not all lessons are entirely positive: future devel-opments will likely place marketers at the centerof further controversies. ‘Society,’ as referencedin the chapter’s title may be losing cohesion, andglobal marketers can be seen as assisting in thisprocess (though this may not be intentional).Consider challenges to ethical systems (e.g.,bribery), religious beliefs and customs (e.g.,interest rates), government protections for homeindustries and workers (trade barriers), and thegrowing need for adaptations in national antitrustpolicies (Federal Trade Commission (FTC)1996). Meanwhile, the Internet not only seam-lessly crosses societal boundaries, but the incred-ible efficiency of its reach offers huge potentialsfor marketing fraud. In one recent FTC (1997)case, an Internet pyramid scam promisedinvestors $60,000 per year for an initial investment
of $250: 15,000 consumers had bought in beforeit was stopped. Overall, concerns are increasingabout marketer intrusions in areas like privacy ofrecords, security of financial resources, andselling to children.
5. This chapter has concentrated on benefits andsystem potentials. However, at this point in timeit is reasonable for every marketing person toask whether our current aggregate marketingsystem actually does represent ‘the best of allworlds.’ Our emphasis here is not critical, butphilosophical. The system is very powerful, andwe are at work to help it achieve its ends. Thefact that our society has granted marketers sub-stantial freedoms, and that these serve to allo-cate much of the nation’s resources, is in fact akey statement about a societal purpose of theaggregate marketing system. However, to whatextent do marketing managers view themselves,or we marketing academics view ourselves, aspersonally holding reponsibility for improvingthe public interest, or acting as stewards of asociety’s resources? What implications, if any,do these views have for our field as presentlyconstituted?
6. Implications for marketing scholarship arebright, if differing perspectives are pursued.Adopting the perspective of the aggregatemarketing system helps one to ‘see’ the field ofmarketing in its true expanse and complexity.One wonderful aspect of the academic life is itsfreedom to speculate. This project has moregenerally highlighted for us the potentials ofhigher ‘levels of analysis’ aggregated beyond asingle firm, market, or household. Much currentresearch in marketing can be quite useful forunderstanding the aggregate marketing systemif we invoke only a slightly different frame ofreference: of particular note, the ‘Value ofMarketing’ offers special potentials as anorganizing framework for new contributions tomarketing thought. A multi-university projectwith this title was begun by Yoram Wind atWharton in the early 1990s, and led to some ofthe insights cited in this chapter. Assessing thevalue of marketing activities is congenial tomuch current research in marketing manage-ment (e.g., new product development), market-ing science (e.g., long-term value of promotionversus advertising), and consumer research(e.g., consumer information). Further, ‘value’can be assessed at either a firm level, acrossfirms, or for society generally.
Into the Future
Having begun this article by looking back over along time, we now know not to look forward veryfar! As just one example, new information technolo-gies will clearly change our world in the future,
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though exact impacts are unknown. Some firms willgain new efficiencies, others will develop new offer-ings, and all will have to adapt to new competitiverealities.
In closing, we reiterate that we feel privileged tohave had this opportunity to step back, explore, andrecognize the achievements of the aggregatemarketing system. Through this process we havegained a better understanding of the nature of ourfield, the challenges that it faces, and the contribu-tions it makes to societal welfare.
SECTION II: OVERVIEW OF RESEARCH
Conceptual Frameworks for Marketing
and Society Research
Now that we have an understanding of the largersystem of marketing and its relationships to society,what about research in this area? As we’ll discussshortly, there exists a vibrant academic infrastruc-ture and some excellent sources available for inter-ested scholars to begin, to learn more, and contributeover time. At this point, however, it is useful todevelop a clearer understanding of research issuesthat are most likely to be examined, as the vastexpanse of the aggregate marketing system givesrise to a huge number of potential topics. We brieflyexamine three interesting and distinctly differentconceptual frameworks, each of which identifiesresearch possibilities.
Bloom and Gundlach’s ‘Handbook’Framework
Paul Bloom and Gregory Gundlach have recentlyedited the extremely useful Handbook of Marketingand Society (2001), which presents 22 chapterssummarizing recent research in this area. Figure 1.7depicts the framework they developed to representcurrent knowledge in this field and to identify topicsin need of further investigation. It is important tonote that this framework is proactive in its intentionto advance work in the area. It explicitly points toareas for knowledge development, in addition toreflecting existing research activity. Several notableelements in this framework include its emphasis on‘marketing knowledge’ as a positive causal factor onthe left, and the enhancement of ‘consumer welfare’(as representative of societal welfare) as the systemgoal at the right. Note also that the framework isorganized around the three institutional actors notedin our study of the Aggregate Marketing System –marketers (here divided into ‘corporate’ for-profit and‘social’ not-for-profit), consumers, and public policy-makers (as representative of society’s interests).
The division of the 22 chapter-contents alongthe framework’s linkages then provides us with
a reasonable reflection of the issues marketingacademics have focused on in the Marketing andSociety area. We begin by observing that four links(numbers 1, 6, 9, and 11) account for over half of theHandbook chapters.
How Knowledge About Marketing Improves
Public Policy Decisions (Link 1) There are threechapters reflecting this link. They assess howmarketing knowledge can, and has, improved publicpolicy regulatory decisions on consumer protection(especially at the Federal Trade Commission (FTC)and the Food and Drug Administration (FDA)), onantitrust policies (at FTC and the US JusticeDepartment), and with regard to deceptive advertis-ing and selling techniques (FTC and the courtsystem).
Impacts of Corporate Marketing Decisions on
Competition (Link 6) These chapters focus onmainstream marketing management research topics,but here exploring their implications for potentiallegality and effects on competition as well as con-sumer decisions. The three topics explored here areadvertising’s effects on price and competition,socioeconomic consequences of franchising distri-bution, and positive and negative aspects of pricingstrategies.
Impacts of Public Policy Decisions (Links 9
and 11) Relevant chapters return attention to publicpolicy decisions and their impact on both competitionand consumers. Two of the topics here reflect atten-tion to technical aspects of product and serviceofferings: how public policymakers and marketerscan best regulate product safety as well as emergingissues and challenges in the arena of consumer pri-vacy. Four other chapters reflect the clear interest onbehalf of consumer researchers in some of these top-ics, here represented by consumer response to warn-ings, the effectiveness of nutritional labels on foods,the effectiveness of environmental product claims,and the effects of deceptive advertising regulation.
Social Marketing Initiatives (Links 3, 5, 12,
and 13) The bottom of the framework reflectsefforts to work on improving society through SocialMarketing. Here we find (Link 3) marketing toolsincreasingly being adopted by not-for-profit, agen-cies whether governmental or private, involved witheducation, health, poverty, religion, crime preven-tion, and myriad other social programs. Formally,social marketing differs from traditional marketingin aiming to directly benefit the target audience (e.g.,AIDS awareness or childhood immunization) orsociety as a whole (e.g., recycling programs, blooddonations) rather than the firm sponsoring the pro-gram (Andreasen, 1994). Again, there is not a largebase of research within the mainstream of marketingon this topic, but interesting issues are available tobe studied, and additional chapters are devoted to
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‘corporate societal marketing,’ involving allianceswith social causes (Link 5), social marketing anddevelopment (Link 12), and social marketingtheories (Link 13).
Remaining Linkages The remaining links topublic policymakers and marketers have actuallyseen little research undertaken within the academicmarketing community, though interesting issues arepresent, as explained in the Handbook. Chapters hereinclude issues of corporate response to alterations inthe legal environment (e.g., how grocery manufactur-ers changed their marketing mixes in response to thenutritional labeling law, and how companies react toantitrust enforcement) and to issues with public rela-tions or reputational overtones (e.g., corporateresponses to boycotts). Chapters are also devoted tointellectual property laws (trademarks, patents, copy-rights), marketing and economic development, andmarketing’s long-term impacts on consumer welfare.As was indicated in Section I, these topics have notbeen much studied within marketing, but are ofpotentially great impact in the global environment.
The ‘Consumer Bill of Rights’ as a ResearchFramework
While Bloom & Gundlach were attempting toconceptualize all of the Marketing and Society area,
a much simpler framework has also proven useful inorganizing the portion that is of special interestto the consumer research community. As wasdescribed in Section I, in 1962 President John F.Kennedy sent the US Congress a now famousmessage enunciating a Consumer Bill of Rights forour society. These Rights are:
1. The Right to Safety Consumers have the right tobe protected against products and services thatare hazardous to health and life.
2. The Right to Be Informed Consumers have theright to be protected against fraudulent, deceit-ful, or misleading advertising or other practices,and to be given the facts they need to make aninformed choice.
3. The Right to Choose Consumers have the rightto be assured, whenever possible, access to avariety of products and services at competitiveprices. In those industries where competition isnot workable, government regulation is substi-tuted to assure satisfactory quality and service atfair prices.
4. The Right to Be Heard Consumers have the rightto be assured that consumer interests willreceive full and sympathetic consideration inthe formulation of government policy, and fairand expeditious treatment in its administrativetribunals.
MARKETING’S RELATIONSHIP TO SOCIETY 31
KnowledgeAbout
Marketing
PublicPolicy
Decisions
CompetitionWithin
Markets
CorporateMarketingDecisions
ConsumerWelfare
EconomicGrowth and
Development
Nonprofit andSocial
MarketingDecisions
1
2
3
4
5
12
13
6
7
8
9
10
11
Figure 1.7 Bloom and Gundlach’s Framework for the Handbook of Marketing and Society Source: Bloom, Paul N. and Gundlach, Gregory T. (2001) Handbook of Marketing andSociety, Thousand Oaks, CA: Sage.
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This statement by the President had the effect ofcreating a framework of criteria by which a‘marketing/consumer environment’ could be exami-ned in our market-based society. Our general goal isthat such a marketplace be both ‘fair’ and ‘efficient’for marketers, competitors and consumers alike. Thestatement has generally been welcomed by marketers:only the fourth element has been controversial, andthis due only to no clear limitations on the extent ofthe government’s potential intrusion into the freemarket. Meanwhile, the statement was popular withthe public and was heavily applauded by representa-tives of consumer interests, since it awards consumersan equal standing within our system, promising thattheir interests will be represented fully in public policydeliberations. It has since been used as an organizingframework for research in this area, in a major researchcompendium authored by consumer advocates(Maynes et al., 1988), and in an excellent overviewprepared for consumer researchers (Andreasen, 1991).
Wilkie and Gundlach’s Research Frameworkfor Marketing and Public Policy
In an ambitious effort to capture all of the publicpolicy-related research published in major journalsbetween 1970 and the early 1990s, William Wilkieand Gregory Gundlach developed the framework ofresearch topics depicted in Figure 1.8 (Gundlach &Wilkie, 1990). We should take care to note that, incontrast to the frameworks above, this frameworkwas designed to proceed from the research literatureitself. Through an iterative process, research articleswere examined, and then assigned to primary,secondary, and tertiary framework categories, withthe creation of new categories and reassignmentswhen necessary.
Figure 1.8 depicts a slightly adapted version ofthis framework, which contains over 100 categories.Every category has been the topic of some researchby marketing academics, but the number of grada-tions is a reasonable reflection of areas of greater orlesser stress. Here we see a strong emphasis on‘Marketing Mix’ issues in general. Promotion issuesreceive the most attention, but authors have actuallypursued each of the 4Ps to a considerable extent. Itis also apparent that ‘Consumer Protection’ has beenheavily stressed, reflecting both the prominence ofconsumer research among many marketing acade-mics, and also the fact that the FTC, FDA, and thecourts have called upon marketing academics to pro-vide expertise in operating some of the programs inthis area. In contrast, antitrust attorneys and econo-mists have only very recently begun to discern thatmarketing academia might be a source of usefulexpertise. Using this framework and the articlecounts within it, Gundlach & Wilkie (1990, 2001)have been able to provide detailed evidence aboutresearch progression across time (e.g., the totalamount of work rose throughout the 1970s, fell off
during the 1980s, then rose again during the 1990s).They were also able to document the rise and fall ofresearch interest in specific topics that occurredduring this period. Here, however, our primaryconcern is to communicate the wide array ofresearch opportunities that exist. In scanning the list-ings of Figure 1.8, moreover, notice how interestingmany of the topics are, and why they may be ofsignificance both to marketers and to the public.
Where to Go Now
A Diverse Academic Infrastructure Exists
One of the true prerequisites of a vibrant researchfield is the presence of an ‘academic infrastructure’that assists in learning about important develop-ments, provides vehicles for the publication of qual-ity research, and generally facilitates communicationand interchange among researchers with commoninterests. Commonly this consists of an associationthat offers an annual conference, a newsletter, and ajournal. Over the past 20 years the Marketing andSociety research area has created a strong infrastruc-ture, with opportunities to achieve all of these ends.However, rather than a single unified presence, thereare at least six subgroups hard at work on researchdealing with Marketing and Society issues, somewith their own journals, and all with conferences andmeans to share communications:
1. Public Policy and Marketing This group hasits own annual conference and the specializedJournal of Public Policy & Marketing, pub-lished by the American Marketing Association.Its focus is on government’s regulatory policieswith regard to marketing, and it enjoys strongties to the Marketing Science Institute, and toprofessional staffers at the FTC and FDA. Itsmembership is open to government and industrypersons as well as academics from any disci-pline, but the dominant membership group isfrom marketing academia.
2. International Consumer Policy Distance andcultures still do present some barriers. Thesepersons are at work in other nations, with onlysporadic interactions with the US groups. Theypublish two journals that focus on differentaspects of this topic: the Journal of ConsumerPolicy and the Journal of Economic Psychology.
3. Macromarketing This group has its ownannual conference and the specialized Journalof Macromarketing, published by Sage. It repre-sents the closest ties to an overall marketingsystem view as represented at the start of thischapter. It also has formalized small subgroupsfocused on economic development, quality oflife studies, and marketing history.
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4. Consumer Economics The American Councilon Consumer Interests (ACCI) is an organizationconsisting primarily of consumer economistswho study marketing issues from the perspec-tive of advancing the consumer interest. Thisgroup also holds its own annual conferenceand publishes the Journal of Consumer Affairs.Some consumer-oriented marketing academicsare members and publish in this journal.
5. Social Marketing This has been a loosely affili-ated group of researchers who are interested inassisting not-for-profit and government agen-cies in designing effective interventions. It doesnot publish a journal, but does have ties to themore practice-oriented Social MarketingQuarterly and an annual conference, ‘Inno-vations in Social Marketing.’ Opportunities forvolunteer projects are also available through theSocial Marketing Institute, now based atGeorgetown University.
6. Marketing Ethics The Society for BusinessEthics draws its membership from various busi-ness disciplines, but does not publish its ownjournal. Business Ethics Quarterly is the majoroutlet in this area. Within marketing, this ismore a community than a formal group. It hasbeen quite active in creating special sessions atthe major marketing conferences. Given diffi-cult issues in crossing cultures, the InternationalSociety of Business, Economics and Ethics(ISBEE) is also worthy of note.
Thus the current area of Marketing and Societyresearch is itself fragmented. Moreover, prospectsfor future integration are hindered by significant dif-ferences in levels of analysis, methods, and substan-tive focus. At the risk of over-simplifying, it is yetinstructive to note that among these groups we todayfind persons who wish to focus on social change andhelp those managing these efforts to be more effec-tive (social marketing), to focus on corporatemarketing managers and help them to make moreethical decisions (marketing ethics), to focus on theaggregate marketing system and its effects on eco-nomic development, quality of life, or other issues(macromarketing), or focus on helping governmentdecision makers and marketing managers to devisemore efficient and effective regulatory policies(public policy and marketing). Further, some personsare approaching problems within different culturaland political contexts (international consumerpolicy), and some with different aims and methods(consumer interest economists). During the 1990sefforts were made to integrate these groups into alarger area of focus, and over 200 marketing acade-mics joined the Marketing and Society SpecialInterest Group (SIG) of the American MarketingAssociation. However, each of the specializedconferences and journals continued to exist on theirown as well.
For publication purposes, these specializedjournals have been receptive to a variety of topicsand approaches. In addition, the mainstream market-ing journals, especially the Journal of Marketing,are quite willing to publish work on marketing andsociety (note: as with any topic, there is a need forthe article to ‘fit’ the other criteria characterizingeach journal). So there really is no shortage of infra-structure available for someone wishing to pursuework in this area.
Some Good Places to Start
This chapter’s introduction to Marketing andSociety research may have raised your interest inlearning more about it in the coming years. This isnot only possible, but is rather easy to accomplish,as the academic infrastructure is quite accessible andexcellent sources are available to offer furtherresearch overviews. Several of the best places tostart have already been mentioned. A trip to thelibrary will allow perusal of past and current issuesof the journals listed above, and will provide abetter appreciation for both the topics discussed andthe approaches taken in this research area. Of parti-cular note, the Spring 1997 issue of the Journal ofPublic Policy and Marketing contains a section ofsix useful retrospective commentaries by leadingresearchers on the development of this field duringthe period dating from about 1970.15
Also as noted earlier, The Handbook of Marketingand Society, edited by Paul Bloom and GregoryGundlach (2001), offers useful research overviewsin 22 areas, together with citations for in-depthfollow-up. For those interested in the FederalTrade Commission, Marketing and AdvertisingRegulation, edited by Patrick Murphy and WilliamWilkie (1990) provides background and commen-taries by a number of experts. Also, the websites forthe Federal Trade Commission (www.ftc.gov) andthe Food & Drug Administration (www.fda.gov) areuser-friendly, and full of interesting informationabout the operations of these agencies that regulatethe marketing community. For those wanting tolearn about how consumer advocates view theseissues, volumes edited by E. Scott Maynes (1988)and Robert Mayer (1989) provide excellent andinteresting background, as does the Encyclopedia ofthe Consumer Movement (1997), edited by StephenBrobeck, head of the Consumer Federation ofAmerica. Finally, it is helpful to attend conferences,listen to talks, and meet the people working in areasof interest to you. You will find, just as with any ofthe other research areas covered in this Handbook,that people will be pleased to see you there.
Authors’ Closing Note: Please be aware that theauthors of this chapter, together with GregoryGundlach, are presently developing a ‘Center forthe Study of Marketing and Society.’ Plans are to
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INTRODUCTION34
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MARKETING’S RELATIONSHIP TO SOCIETY 35
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initially base the center at Notre Dame, and to aimits efforts toward fostering future research in thisarea. We would like to compile an e-mail list ofpersons interested in this topic so that we can alertthem to future developments and research opportu-nities. We are especially interested in doctoralstudents who may not undertake work in the near-term, but who do have longer-term interests. If thisdescribes you, please send us an e-mail [email protected], letting us know of your possibleinterest. Thanks!
Notes
1. Comparative numbers are from a variety of sources,especially Lebergott (1993) and US News and WorldReport (1995).
2. For a classic effort to assess magnitudes of the USdistribution system alone, see Cox, Goodman andFichandler (1965). The figures reported in the followingillustration are from the Statistical Abstract of the UnitedStates (1996), tables 12, 66, 685, 691, 1003, 1252, 1253,1255, 1272, 1274, 1278, 1279, and 1280. Calculatedcomparisons are by the authors. The advertising spendingestimate is from Advertising Age (1997).
3. We are unsure where the concept of marketing flowsoriginated, but have seen it in both Vaile, Grether and Cox(1952) and Kotler (1976) (McInnes (1964), in his discus-sion of marketing systems, also discusses flows, as well assome other elements present in our propositions). Thisanalysis also highlights marketing’s contributions at thefirm level by showing marketing to be the function thatreaches out from a firm to the outside world (market-place), with flows of products, information, and promo-tion activity, and further shows marketing as using itslearning about that world (through an inward flow ofresearch) to influence decisions within the firm. Finally,the fact that marketing generates an inward flow of dollarsto sustain the firm’s continued existence earns marketingthe title of ‘lifeblood of the business.’
4. As societal boundaries become more permeable,especially through immigration and trade, the linkage ofproduction, employment of human resources, and endconsumption become more complex.
5. This has been the subject of significant recenttheoretical developments within marketing, challengingthe tradition of equilibrium economic theory (e.g.,Dickson, 1992, 1996, 1999; Hunt & Morgan 1995, 1996).
6. Unfortunately, extensive discussion of government’srole is beyond the purview of this chapter. Readers maywish to access the excellent volume by Stern and Eovaldi(1984) for discussions pointed to marketing.
7. Of course, any aggregate system will bring seriousissues as well. Here, for example, probing questions can beposed about destruction of natural resources, socialinequality in life chances, the nature of growth in afflu-ence, and others. We shall see these in our later section oncontroversies and criticisms.
8. While the aggregate system includes marketers,customers, and public policy makers, given the purpose of
this article, we here concentrate on contributions emanatingfrom the marketing sector of the system.
9. Much of our discussion to follow is based on over-views provided by Batra (1997), Moyer (1965), Nason &White (1981), Thorelli (1996), & Wood & Vitell (1986).
10. The recent emphasis on supply chain managementincorporates a systems approach to the provision of theseutilities, aimed at enhancing efficiencies. Although thismay alter marketing’s identification within a firm, theseclearly remain as activities within the aggregate marketingsystem.
11. Every quality test rating using the five-point‘Excellent–Poor’ scale given by the organization was used.Ratings by members were not included, nor were relativescales in which distributions were forced.
12. This term is being used in a broad sense, as price andvalue are relevant issues as well. Health insurance firms,for example, are pushing for ‘debranding’ (generic drugs)to obtain lower prices.
13. A number of leading marketing thinkers believe thatfirms would benefit from increased attention to providingconsumer information/education programs that would assistconsumers to make better decisions, as opposed to thesimple emphasis on persuasion/entertainment in advertising.
14. The essential point here – that social issues shapeaspects of marketing practice – is based upon Day’s (1994)framework, which we have modified to reflect our pur-poses in this section.
15. If your library doesn’t carry the Journal of PublicPolicy and Marketing, it should. It can be ordered through theAmerican Marketing Association’s website, www.ama.org.
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