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CHAPTER 2: AN OVERVIEW OF MARKETING: HISTORY AND THEORY - Coggle Diagram
CHAPTER 2: AN OVERVIEW OF MARKETING: HISTORY AND THEORY
Marketing
is the social and managerial process by which individuals and organizations obtain what they need and want through creating and exchanging value with others.
DEFINITIONS & EVOLUTION OF MARKETING
Early Definitions (Distribution-Focused)
AMA 1938:
→ Marketing viewed as a business function within economics.
→ Focus = moving goods efficiently (no mention of value or relationships).
“Marketing is the performance of business activities that direct the flow of goods and services from producer to consumer.”
Functional Definition (1985)
“Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals.”
→ Introduced 4Ps (Product, Price, Place, Promotion).
→ Marketing = management of exchange processes.
Value-Oriented Definitions (2004–2007)
“Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”
→ Added focus on value, relationships, and societal well-being.
Kotler & Armstrong connection:
Chapter 1 — “Marketing: Creating Customer Value and Engagement.”
Defines marketing
as engaging customers, building relationships, and creating value to capture value in return.
Introduces five core marketing concepts:
Needs, Wants, and Demands
Market Offerings
Value and Satisfaction
Exchanges and Relationships
Markets
Marketing evolved from distribution → exchange → value creation → relationship → societal impact.
Both SG and Kotler & Armstrong see value and relationships as the heart of modern marketing.
EXCHANGE: THE CORE OF MARKETING
Definition
Marketing exists because people and organizations seek to exchange something of value.
Exchange = the act of obtaining a desired object from someone by offering something in return.
Bagozzi’s (1975) Model of Exchange
Restricted Exchange:
Two parties directly trade (e.g., customer buys a phone).
Most traditional form.
Generalised Exchange:
Indirect trade involving more than two parties.
Example: Donating to charity → others benefit, not direct return.
Complex Exchange:
Network of exchanges (e.g., producer → wholesaler → retailer → consumer).
Modern markets operate this way.
Value & Satisfaction in Exchange
Exchange is successful when both sides perceive value (benefits > costs).
It builds relationships, trust, and mutual dependence.
Kotler & Armstrong connection:
Chapter 1: Defines marketing around exchange and relationships.
Describes marketing as a process of creating value to capture value back.
Introduces Customer Lifetime Value (CLV) in later chapters (Ch. 7).
Marketing = Exchange + Value + Relationship.
Exchanges can be simple or complex, but all aim for mutual benefit.
K&A apply Bagozzi’s theory practically through CRM and relationship marketing.
BUSINESS ORIENTATIONS — “THE TRIUMPH OF MARKETING?”
Definition
Business orientation = the guiding philosophy that shapes a company’s operations and marketing activities.
Five Historical Orientations
Production Concept
Motto: “We make it cheap and available.”
Limitation: Ignores consumer preferences
Example: ford model T
Focus: Efficiency, low cost, mass production
Marketing Concept
focus: Customer needs and satisfaction
Motto: “Find wants and fill them.”
Limitation: research- intensive
example: amazon
Societal Marketing Concept
focus: Long-term well-being of society
Motto: “Do well by doing good.”
Limitation: Difficult to balance ethics & profit
example: The Body Shop, Patagonia
Selling Concept
focus: Aggressive promotion
Motto: “Customers must be persuaded.”
Limitation: Short-term focus, poor loyalty
example: insurance firms
Product Concept
focus: Quality and innovation
Motto: “A good product sells itself.”
Limitation: Risk of marketing myopia
example: Apple’s early years
Purpose of Evolution
The orientation changes as society and competition evolve.
The
Marketing Concept
replaced production-based thinking by putting the
customer at the center.
The
Societal Concept
modernizes it by adding sustainability and social responsibility.
Kotler & Armstrong connection:
Chapter 1: Lists the same five orientations.
Adds that the
Societal Marketing Concept
seeks balance between company profits, customer satisfaction, and societal welfare.
→ Business focus evolved: Production → Product → Sales → Marketing → Societal.
→ Marketing orientation = customer-driven.
→ Societal orientation = ethics-driven.
HISTORY OF MARKETING THEORY (Academic View)
Wilkie & Moore’s Four Eras of Marketing Thought
Founding the Field (1900–1920)
Marketing emerged from economics. Focus on distribution and agricultural markets.
Formalisation (1920–1950)
Defined marketing functions like buying, selling, transporting, storing. Marketing =
functional management activity.
Paradigm Shift (1950–1980)
Birth of “marketing management” and
4Ps
model (McCarthy, 1960). Marketing = decision-making and planning.
Fragmentation (1980–Present)
Rise of
strategic marketing
,
globalisation
,
relationship marketing
,
services
,
digital marketing
,
CSR.
Trends
From functions → strategic management → societal integration.
Reflects increasing complexity and globalization.
Kotler & Armstrong connection:
Chapter 1: Combines these into the evolution of
marketing philosophies.
Discusses shift from selling to relationship to societal marketing.
→ Marketing thought evolved academically just as business evolved practically.
→ Current focus = strategic, ethical, and relational marketing.
MARKETING PROBLEMS AND DISCIPLINES
Four Types of Marketing Problems
|
Operational
| How to exploit existing market opportunities | Management | Targeting a new segment |
|
Analytical
| Understanding market behaviour and structure | Economics | Price elasticity, demand |
|
Normative
| What marketing
should
do ethically | Philosophy / Ethics | Fair trade, sustainability |
|
Strategic
| Long-term planning for advantage | Management & Economics | Competitive strategy |