History of marketing

Overview

The study of the history of marketing, as a discipline, is important because it helps to define the baselines upon which change can be recognised and understand how the discipline evolves in response to those changes. The practice of marketing has been known for millennia, but the term "marketing" used to describe commercial activities assisting the buying and selling of products or services came into popular use in the late nineteenth century. The study of the history of marketing as an academic field emerged in the early twentieth century. Marketers tend to distinguish between the history of marketing practice and the history of marketing thought:

the history of marketing practice refers to an investigation into the ways that marketing has been practiced; and how those practices have evolved over time as they respond to changing socio-economic conditions the history of marketing thought refers to an examination of the ways that marketing has been studied and taught Although the history of marketing thought and the history of marketing practice are distinct fields of study, they intersect at different junctures. Robert J. Keith's article "The Marketing Revolution", published in 1960, was a pioneering study of the history of marketing practice. In 1976, the publication of Robert Bartel's book, The History of Marketing Thought, marked a turning-point in the understanding of how marketing theory evolved since it first emerged as a separate discipline around the turn of last century.

Etymology

According to etymologists, the term 'marketing' first appeared in dictionaries in the sixteenth century where it referred to the process of buying and selling at a market. The contemporary definition of 'marketing' as a process of moving goods from producer to consumer with an emphasis on sales and advertising first appeared in dictionaries in 1897. The term, marketing, is a derivation of the Latin word, mercatus meaning marketplace or merchant.

Marketing history: an overview

Historians of marketing tend to fall into two branches of marketing history – the history of marketing practice and the history of marketing thought. These branches are often deeply divided and have very different roots. The history of marketing practice is grounded in the management and marketing disciplines, while the history of marketing thought is grounded in economic and cultural history. This means that the two branches ask very different types of research questions, and they employ different research tools and frameworks. Historians of marketing have undertaken considerable investigation into the emergence of marketing practice, yet there is little agreement about when marketing first began. Some researchers argue that marketing practices can be found in antiquity while others suggest that marketing, in its modern form, emerged in conjunction with the rise of consumer culture in seventeenth and eighteenth century Europe while yet other researchers suggest that modern marketing was only fully realised in the decades following the Industrial Revolution in Britain from where it subsequently spread to Europe and North America. Hollander and others have suggested that the different dates for the emergence of marketing can be explained by problems surrounding the way that marketing has been defined – whether reference to 'modern marketing' as a planned, programmed repertoire of professional practice including activities such as segmentation, product differentiation, positioning and marketing communications versus 'marketing' as a simple form of distribution and exchange.

Marketing in antiquity

Studies have found evidence of advertising, branding, packaging and labelling in antiquity. Umbricius Scauras, for example, was a manufacturer of fish sauce (also known as garum) in Pompeii, circa 35 B.C. Mosaic patterns in the atrium of his house were decorated with images of amphora bearing his personal brand and quality claims. The mosaic comprises four different amphora, one at each corner of the atrium, and bearing labels as follows:

1. G(ari) F(los) SCO[m]/ SCAURI/ EX OFFI[ci]/NA SCAU/RI Translated as "The flower of garum, made of the mackerel, a product of Scaurus, from the shop of Scaurus" 2. LIQU[minis]/ FLOS Translated as: "The flower of Liquamen" 3. G[ari] F[los] SCOM[bri]/ SCAURI Translated as: "The flower of garum, made of the mackerel, a product of Scaurus" 4. LIQUAMEN/ OPTIMUM/ EX OFFICI[n]/A SCAURI Translated as: "The best liquamen, from the shop of Scaurus" Scauras' fish sauce had a high reputation, not only in the Pompeii region; a garum container bearing his name has been found at Fos-sur-mer in southern France. Curtis has described this mosaic as "an advertisement... and a rare, unequivocal example of a motif inspired by a patron, rather than by the artist." In Pompeii and nearby Herculaneum, archaeological evidence also points to evidence of branding and labelling in relatively common use. Wine jars, for example, were stamped with names, such as "Lassius" and "L. Eumachius;" probably references to the name of the producer. Carbonised loaves of bread, found at Herculaneum, indicate that some bakers stamped their bread with the producer's name. David Wengrow has argued that branding became necessary following the urban revolution in ancient Mesopotamia in the 4th century BCE, when large-scale economies started mass-producing commodities such as alcoholic drinks, cosmetics and textiles. These ancient societies imposed strict forms of quality control over commodities, and also needed to convey value to the consumer through branding. Producers began by attaching simple stone seals to products which over time were transformed into clay seals bearing impressed images, often associated with the producer's personal identity thus giving the product a personality. Diana Twede has argued that the "consumer packaging functions of protection, utility and communication have been necessary whenever packages were the object of transactions" (p. 107). She has shown that amphoras used in Mediterranean trade between 1500 and 500 BCE exhibited a wide variety of shapes and markings, which provided information for transactions. Systematic use of stamped labels dates from around the fourth century BCE. In a largely pre-literate society, the shape of the amphora and its pictorial markings conveyed information about the contents, region of origin and even the identity of the producer which were understood to convey information about product quality. Not all historians agree that these markings can be compared with modern brands or labels. Moore and Reid, for example, have argued that the distinctive shapes and markings in ancient containers should be termed proto-brands rather than modern brands.

Marketing in the Middle Ages

In England and continental Europe, market towns sprang up during the Middle Ages. Some analysts have suggested that the term 'marketing' may have first been used in the context of market towns, where it may have been used by producers to describe the process of carting and selling their produce and wares in market towns. Blintiff has investigated some early medieval networks of market towns, and suggests that by the 12th century there was an upsurge in the number of market towns, and an emergence of "merchant circuits" as traders bulked up surpluses from smaller regional, different day markets and resold them at the larger centralised market towns. Braudel and Reynold have made a systematic study of these European market towns between the thirteenth and fifteenth century. Their investigation shows that in regional districts markets were held once or twice a week, while daily markets were more common in the larger cities and towns. Over time, permanent shops began to open daily and gradually supplanted the periodic markets. Peddlers filled in the distribution gaps by travelling door-to-door to sell produce and wares. The physical market was characterised by transactional exchange, bartering systems were commonplace and the economy was characterised by local trading. Braudel reports that, in 1600, goods travelled relatively short distances – grain 5–10 miles; cattle 40–70 miles; wool and wollen cloth 20–40 miles. However, following the European age of discovery, goods were imported from afar – calico cloth from India, porcelain, silk and tea from China, spices from India and South-East Asia and tobacco, sugar, rum and coffee from the New World.

Although the rise of consumer culture and marketing in Britain and Europe have been studied extensively, less is known about developments elsewhere. Nevertheless, recent research suggests that China exhibited a rich history of early marketing practices; including branding, packaging, advertising and retail signage. From as early as 200 BCE, Chinese packaging and branding was used to signal family, place names and product quality, and the use of government imposed product branding was used between 600 and 900 AD. Eckhart and Bengtsson have argued that during the Song dynasty (960–1127), Chinese society developed a consumerist culture, where a high level of consumption was attainable for a wide variety of ordinary consumers rather than just the elite (p. 212). The rise of a consumer culture led to the commercial investment in carefully managed company image, retail signage, symbolic brands, trademark protection and the brand concepts of baoji, hao, lei, gongpin, piazi and pinpai, which roughly equate with Western concepts of family status, quality grading, and upholding traditional Chinese values (p. 219). Eckhardt and Bengtsson's analysis suggests that brands emerged in China as a result of the social needs and tensions implicit in consumer culture, in which brands provide social status and stratification. Thus, the evolution of brands in China stands in sharp contrast to the West where manufacturers pushed brands onto the market in order to differentiate, increase market share and ultimately profits (pp 218–219).

Marketing in seventeenth and eighteenth century Europe

Scholars have identified specific instances of marketing practices in England and Europe in the seventeenth and eighteenth centuries. As trade between countries or regions grew, companies required information on which to base business decisions. Individuals and companies carried out formal and informal research on trade conditions. As early as 1380, Johann Fugger travelled from Augsburg to Graben in order to gather information on the international textile industry. He exchanged detailed letters on trade conditions in relevant areas. In the early 1700s British industrial houses were demanding information, that could be used for business decisions. In the early 18th-century, Daniel Defoe, a London merchant, published information on trade and economic resources of England and Scotland. Defoe was a prolific publisher and among his many publications are titles devoted to trade including; Trade of Britain Stated, 1707; Trade of Scotland with France, 1713 and The Trade to India Critically and Calmly Considered, 1720; all books that were highly popular with merchants and business houses of the period. While such activities might now be recognised as marketing research, at that time they were known as "commercial research" or "commercial intelligence" and not seen as part of the repertoire of activities that make up contemporary marketing practice. Eighteenth century advertising showed a high level of sophistication in its execution and ability to reach mass audiences. In a major review of consumer society, McKendrick, Brewer and Plumb found extensive evidence of eighteenth century English entrepreneurs inventing modern marketing techniques, including product differentiation; sales promotion; loss leader; planned obsolescence; fashion magazines; national advertising campaigns, fancy showrooms, and concentration on elite taste-setting customers. English pottery makers Josiah Wedgewood (1730–1795) and Matthew Boulton (1728–1809) were the pioneers of modern mass marketing methods. Wedgewood introduced direct mail, travelling salesmen and catalogues in the eighteenth century. Wedgewood's marketing was highly sophisticated and recognisably 'modern' in that he planned production with the sale in mind. He carried out serious investigations into the fixed and variable costs of production and recognised that increased production would lead to lower unit costs. He also inferred that selling at lower prices would lead to higher demand and recognised the value of achieving scale economies in production. By cutting costs and lowering prices, Wedgewood was able to generate higher overall profits. Similarly, one of Wedgewood's colleagues Matthew Boulton, pioneered early mass production techniques and product differentiation at his Soho Manufactory in the 1760s. He also practiced planned obsolescence and understood the importance of 'celebrity marketing' – that is supplying the nobility, often at prices below cost and of obtaining royal patronage, for the sake of the publicity and cudos generated. Fullerton argues that the practice of market segmentation emerged well before marketers used the notion formally. Certain strands of evidence suggest that simple examples of market segmentation were evident prior to the 1880s. The business historian, Richard S. Tedlow, argues that any attempt to segment markets prior to 1880 was highly fragmented since the economy was characterised by small, regional suppliers who mostly sold goods on a local or regional basis. When retail shops began to appear from the 15th century, retailers needed to separate the "riff raff" from wealthier customers. Outside the major metropolitan cities, few stores could afford to serve one type of clientele exclusively. However, gradually retail shops introduced innovations that would allow them to separate wealthier customers from the lower classes and peasants. One technique was to have a window opening out onto the street from which customers could be served. This allowed the sale of goods to the common people, without encouraging them to come inside. Another solution, that came into vogue from the late sixteenth century was to invite favoured customers into a back-room of the store, where goods were permanently on display. Yet another technique that emerged around the same time was to hold a showcase of goods in the shopkeeper's private home for the benefit of wealthier clients. Samuel Pepys, for example, writing in 1660, describes being invited to the home of a retailer to view a wooden jack. Evidence of early marketing segmentation has also been noted across Europe. A study of the German book trade found examples of both product differentiation and market segmentation in the 1820s.

Marketing in the nineteenth and twentieth centuries

Until the nineteenth century, Western economies were characterised by small regional suppliers who sold goods on a local or regional basis. However, as transportation systems improved from the mid nineteenth century, the economy became more unified allowing companies to distribute standardised, branded goods at national level. This gave rise to a broader mass marketing mindset. Manufacturers tended to insist on strict standardisation to achieve scale economies with a view to keeping production costs down and also to achieving market penetration in the early stages of a product's life cycle. The Model T Ford was an example of a product being manufactured at a price that was affordable for the burgeoning middle classes. In the early twentieth century, as market size increased, it became more commonplace for manufacturers to produce a variety of models pitched at different quality points designed to meet the needs of various demographic and lifestyle market segments, giving rise to the widespread practice of market segmentation and product differentation. Between 1902 -1910 George B Waldron, used tax registers, city directories and census data to show advertisers the proportion of educated versus illiterate consumers and the earning capacity of different occupations in what is believed to be the first example of demographic segmentation of a population. Within little more than a decade, Paul Cherington had developed the 'ABCD' household typology - the first socio-demographic segmentation tool. By the 1930s, market researchers Ernest Dichter were carrying out qualitative research into brand purchasers realised that demographic factors alone were insufficient to explain different marketing behaviour of various user groups. This insight led to the exploration of other factors such as lifestyles, values, attitudes and beliefs in market segmentation and advertising. When Wendell R. Smith published his article, Product Differentiation and Market Segmentation as Alternative Marketing Strategies in 1956, he noted that he was simply documenting marketing practices that had been observed for some time and which he described as a "natural force". Other theorists agree that Smith was simply codifying implicit knowledge that had been used in marketing and brand management from the early twentieth century.

As industry grew, the demand for skilled business professionals also grew. To meet this demand, universities began offering courses in commerce, economics and marketing. Marketing, as a discipline, was first taught in universities in the very early twentieth century. However, researchers only became interested in investigating the history of marketing in the mid twentieth century. From the outset, researchers tended to identify two strands of historical research; the history of marketing practice and the history of marketing thought which was fundamentally concerned with the rise of marketing education and dissecting the way that marketing was taught and studied.

History of marketing practice

The practice of marketing may have been carried out for millennia, but the modern concept of marketing as a professional practice appears to have emerged the post industrial corporate world. In addition to the studies of specific cultures or time periods, discussed in the preceding section, some historians of marketing have sought to write more general histories of marketing's evolution in the modern era. A key question that has preoccupied researchers is whether it is possible to identify specific orientations or mindsets that inform key periods in marketing's evolution. Marketers disagree about the way that marketing practice has evolved over time.

Orientations and philosophies

In the marketing literature, continuing debate surrounds the orientations or philosophies that might have informed marketing practice at different periods of time. An orientation may be defined as "the type of activity or subject that an organisation seems most interested in and gives most attention to". In relation to marketing orientations, the term can be defined as a "philosophy of business management". or "a corporate state of mind" or as an "organisational culture".

Common periods

The general agreement amongst scholars as to what constitutes clearly identifiable periods and the orientation that characterised each distinct period has spawned a lengthy list of orientations. Space prevents an exhaustive description of all periods or eras. However, the salient features of the most commonly cited periods appear in the following section.

Production orientation

A production orientation is often proposed as the first of the orientations that dominated business thought. Keith dated the production era from the 1860s to the 1930s, but other theorists argue that evidence of the production orientation can still be found in some companies or industries. Specifically Kotler and Armstrong note that the production philosophy is "one of the oldest philosophies that guides sellers" and "is still useful in some situations". The production orientation is characterised by:

Focus on production, manufacturing, and efficiency Attainment of economies of scale, economies of scope, experience effects or all three Assumption that demand exceeds supply Mindset that is encapsulated by Say's law; "Supply creates its own demand" or "if somebody makes a product, somebody else will want to buy it" Limited research that is largely limited to technical-product research rather than customer research Rose to prominence in an environment which had a shortage of manufactured goods relative to demand, so goods sold easily. Minimal promotion and advertising, marketing communications limited to raising awareness of the product's existence

Selling orientation

The selling orientation is thought to have begun during the Great Depression and continued well into the 1950s although examples of this orientation can still be found today. Kotler et al. note that the selling concept "is typically practised with unsought goods". The selling orientation is characterised by:

Aggressive selling to push products, often involving door-to-door selling Accepting every possible sale or booking, regardless of its suitability for the business Strong transactional focus (ignores potential relationships)