Hustle - The beginning of modern marketing
By Mike Davidge
Tuesday, January 27, 2004
Introduction
Much discussion in modern business relates to the problem of seeking increased turnover. This is not a new problem for business, it has a history of several thousand years. What is relatively new is a systematic and documented approach to the process of seeking out customers and providing them with what they want. That process broadly described as "marketing" has an in interestng history. Modern marketing was born in the period 1900–1940, more particularly during the years 1910–25 when several practical and theoretical approaches to the subject came together. Many of the elements of marketing had of course been present in commerce for hundreds, even thousands of years, but it was during this relatively short period that marketing began to cohere as a single, more or less unified discipline. The majority of this development took place in the United States, although there were notable contributions also from Britain, especially in specialist sub-disciplines such as advertising.
The impact of this development has been considerable, and marketing has become one of the most studied and talked about phenomena of our age. Not only its physical and practical processes but its theory, its relations to psychology and other disciplines, and its ethical implications have been widely discussed. At various times and in various parts of the world there has been considerable resistance to the introduction of ‘American-style’ marketing methods; advertising has been seen as a dangerous and damaging force; the international marketing and global branding practices of multinational corporations are seen by many as having serious consequences for local businesses and local cultures alike. In the last few years, rapid growth in communications technology has opened up new channels and new, seemingly limitless horizons for marketers, reopening many of the debates about marketing principles and practice that were current at the beginning of the century.
The emergence of marketing
It is long been held that marketing sprang into existence fully formed, like Minerva, in America some time in the early twentieth century. In fact, its emergence as a coherent discipline was gradual, taking several decades to complete. Its appearance was made possible in part by changing commercial, economic and social conditions, but in part too, modern marketing was indeed, as Casson said, a case of applying new techniques to much older principles.
1. Before and even during the Industrial Revolution, the demand for goods was always greater than supply, so goods literally sold themselves. Markets and producers were always small and in intimate contact with each other; in the words of an anonymous author in Scientific American in 1923, ‘When our grandfathers wore homespun clothes, raised most of the food they ate and chopped the wood for their home fires, the cost of distributing the essential commodities was practically nil.’3 It was held that most communities were self-sufficient, and even when they were not, goods were shipped only short distances and sold in markets where the buyer and seller were both intimately familiar with each other. There was, therefore, no need for marketing. Not until the early twentieth century did demand begin to slacken as population growth slowed. Goods had to be sold more carefully, and marketing came about as a result of a need by manufacturers to pay closer attention to their markets. This view is still followed, quite uncritically, in most marketing textbooks published today.4
2. In apparent contradiction to point 1, marketing developed as a response to overproduction as firms became larger and more efficient. Firms began to market their goods more actively, seeking new and wider markets, to dispose of the greater quantities of stock. The California Fruit Growers Association’s marketing campaign behind its Sunkist brand is seen as an example of this. The number of fruit growers in California meant that supply was rapidly outstripping demand. Rather than face financial ruin, the growers banded together to seek new markets, in doing so founding one of the nation’s most successful co-operatives. Firms which had tooled up for production during the First World War also faced problems. John Otterson noted in 1923 how the Winchester Repeating Arms Company had been forced to adopt new marketing methods to avoid serious contraction after the outbreak of peace in 1918.
3. Improved transport links, especially railways, gave firms access to wider markets, meaning they had more opportunities to sell different goods to different customers.5 This was a particularly important factor in America, where the large distances between producers and customers required significant transportation infrastructure to be bridged. The growth of meat packing firms such as Swift and Armour was particularly dependent on this element, and they relied on the railways as the backbone of their distribution channels, which in turn meant they could reach different markets.6
4. The rapid growth in the size of firms, plus the increasing physical distance between producers and consumers, meant that firms were losing direct contact with their customers. It was no longer possible to sell directly to customers, and marketing developed as a method of managing longer distribution channels.
Marketing in History
To get a better picture of why marketing developed as it did, let us take a brief look at the emergence of some of the elements of what we now call marketing in earlier centuries.
The idea that prior to the Industrial Revolution (if not later), developed markets did not exist because communities were self-sufficient and there was a lack of sufficient supply or demand is a common one, in economics and other business disciplines as well as marketing. Yet, as Karl Moore and David Lewis have recently shown,9 as early as ancient Sumeria and Babylon, cities had reached a size where they needed to import many commodities, and had developed long-distance trade routes where, for example, agricultural produce was traded for manufactured goods. Tyre, Sidon, Carthage and the other Phoenician city-states became powerful precisely because they were entrepôts, centres for marketing transactions by parties from all over the Middle East and Mediterranean. By the time of the early Roman Empire, true multinational private-sector firms were emerging with multi-sector operations and multi-site locations; some of these look startlingly like Chandler’s M-form firm, which was supposedly only developed in the late nineteenth century.
We have little idea of how these firms marketed, but by the time of the medieval commercial revolution 1,000 years later, we have some very good ideas indeed. Surviving records of such multi-national giants as the Medici Bank, as well as market records kept by local authorities and, finally, the first textbooks on business, tell us how marketing was done.
We see evidence of the 4P's in action, price management, promotion (branding and advertising),product development and place (distribution) management. H:owever the specific techniques used were not shared, certainly not with competitors, and not widely discussed until the twentieth century. Even today the majority of business operations (by number) adopt very few of the effective marketing guidelines.