MARKETING

MARKETING is the multifaceted, systematic approach to selling goods, adopted by every business and not for-profit agency and group with a message. It attempts to optimize an organization's ability to make a profit, whether monetary (profits or donations) or electoral.

Marketing encompasses advertising, promotions, product design, positioning, and product development. Marketing tools include elements such as focus groups, gap analysis, concept testing, product testing, perceptual maps, demographics, psychographics (lifestyles), and choice modeling. It is powerfully aided by market research, a science that has become increasingly complex and sophisticated over the past century or more.

Market research embraces qualitative and quantitative methods. Environmental analysis gives companies key information about economic conditions, consumer demographics, consumer lifestyles, industry trends, distribution channels, new technology, employee relations and supply, foreign markets, corporate image, political and regulatory changes, and key players in the business. Sophisticated data collection and analysis investigate market segmentation and target selection, product and advertising positioning, product design, pricing, mass media advertising, direct marketing, promotion, distribution channels, and sales force allocation.

Market research rarely has a direct impact on income, but provides the essential data to prove or disprove client preconceptions, resolve disagreements, expose threats, quantify a population, and qualify an opportunity. The ways that research is used for strategic decision making determines its relationship to profit and market advance. Marketing has existed in every age and culture. In the United States, marketing reached its high level of sophistication as a result of the mass market.

Three overlapping stages have marked the history of our republic. Until roughly the 1880s, the economy was characterized by market fragmentation. Geographical limitations were reinforced by the absence of a transportation and communications infrastructure that spanned the continent. There were hundreds of local markets and very few national brand names. Profit was determined by low sales volume and high prices.

Mass Marketing

Spurred by a communications revolution and the completion of a national railroad network that by 1900 consisted of more miles of track than the rest of the world combined, a national mass market emerged. Technological innovation mushroomed, and a small number of firms realized economies of scale previously undreamed of. Giant corporations (or a small cluster of corporations) dominated single industries. Companies were able to produce goods in high volume at low prices. By 1900, firms followed the logic of mass production as they sought to create a "democracy of desire" by universalizing the availability of products.

Mass production required the development of mass marketing as well as modern management, a process spurred by analysis of the depression of the 1870s, when unsold inventory was blamed in part for the depth of the crisis, and the depression of the 1890s, when the chaos of market competition spurred efforts to make the market more predictable and controllable.

As the mass market emerged, manufacturers and retailers developed a range of instruments to shape and mold the market. National brand names like the Singer Sewing Machine from the 1860s, Coca-Cola from the 1890s, Wrigley's Chewing Gum after 1907, and Maxwell House coffee around the same time heralded the "golden age of brand names." Advertising also came into its own during the early decades of the twentieth century. The first advertising agency was established in 1869 as N. W. Ayer and Son. John Wanamaker placed the first full-page advertisement in a newspaper in 1879. Advertising media were powerfully supplemented by the use of subway cars, electric trolleys, trams, billboards, and the explosion in magazine sales. Further developments came after the 1890s with flashing electric signs, and in 1912 "talking signs" that allowed copy to move swiftly along boards from right to left first appeared on Broadway in New York City. By 1910, photo technology and color lithography revolutionized the capacity to reproduce images of all kinds.

Forward integration into wholesaling also aided mass marketing, beginning in the 1870s and 1880s with meat packers like Gustavus Swift. Franchise agreements with retailers were one key to the success of companies such as Coca-Cola. Another feature in the success of mass marketing was the creation and implementation of sales programs made possible by the spread of modern management structures and the division of corporate functions. In 1911, with the appointment of its first director of commercial research, the Curtis Publishing Company instituted the systematic analysis of carefully collected data. Hart, Shafner, and Marx became the largest manufacturer of men's suits in America by the 1910s through research that suggested producing suits for fourteen different male body types and psychographic appeals in its advertising. During and after the 1920s, as the social sciences matured, sweeping improvements in statistical methodology, behavioral science, and quantitative analysis made market research more important and accurate. Through these means—as well as coherent production and marketing plans—a mass market was created by World War II. However, consumerism as understood in the beginning of the twenty-first century did not triumph until after 1950.

Market Segmentation

The final stage of the twentieth-century market in America has been characterized as "market segmentation." Fully developed in the 1970s and 1980s, firms sought competitive advantage through the use of demographics and psychographics to more accurately pinpoint and persuade consumers of their products. Price was determined not so much by how cheaply something could be sold, but more by the special value a particular market placed upon the goods, independent of production costs.

General Motors (GM) pioneered market segmentation in the 1920s, as it fought and beat Ford for the biggest market share of the booming automobile business. Henry Ford was an exemplar of mass marketing. He had pioneered the marketing of the automobile so that it could be within the reach of almost all Americans. Standardized models were produced quickly, identically, and only in black, which dropped the cost of car buying from $600 in 1905 to $290 by 1924. In nineteen years of production, his Model T sold to 15.5 million customers. By 1924, thanks largely to Ford, the number of cars produced in the United States was greater than 4 million, compared to 180,000 in 1910. Due to his methods, by 1921 Ford sold 55 percent of all new cars in America. In trying to compete with Ford, GM first tried merging with rivals to create a larger market force, but then embraced individuality. It was in the 1920s that annual modifications to automobile models were introduced. GM made not one model to suit all, but a number of different models to suit differing pocketbooks. It looked at the market not as an undifferentiated whole, but as a collection of segments with differing requirements and desires to be satisfied. GM made the ownership of automobiles both a status symbol and stylish. By 1927, Ford's market share had been cut to 25 percent, and Ford was forced to retool and try to catch up with GM.

By the 1960s, as consumer values shifted because of social change, marketers and advertisers sought ways to reach a more segmented society. Generational differences became much more important. Further changes, after 1970, meant that marketers needed to be much more sensitive to the differences between groups of Americans and their values. Serious foreign competition in American markets during the 1970s and 1980s also spurred innovation in market research, product design, and marketing generally. Television's Nielsen ratings offered one instrument, and more sophisticated polling techniques another. The ability to identify who watched what shows according to age, gender, and ethnic background led to more targeted advertising and a leap in TV advertising, from $12 billion in 1960 to $54.5 billion in 1980. By 1985, advertisers had developed eight consumer clusters for women alone, and over forty lifestyle groups.

By the 1990s, children, teens, and seniors were similarly analyzed. In 1997, it was estimated that "kid power" accounted for sales of over $200 billion per year. Age segmentation among children received particular attention, as researchers took into account neurological, social, emotional, and moral development. Testing determined the relative perception of visual and verbal information at different ages and developmental stages. Humor and gender differences were also studied to make marketing more successful. Deregulation of children's programming in the 1980s led to cartoons becoming merchandising vehicles. By 1987, about 60 percent of all toys sold in the United States were based on licensed characters from television, movies, or books.

Market research also determined the kinds of junk mail that went to each individual and how advertising would appear on the Internet or on television. During the 1980s and 1990s, more sophisticated research developed as patterns of credit card spending were analyzed, television was deregulated into cable and satellite channels, and Internet usage was identified.

Despite the end of a long post–World War II economic expansion, after 1970 consumer spending continued to grow, largely the result of consumerism; newer, easier forms of obtaining credit; and segmented marketing; which seized a generation of Americans who were born into the first generalized age of affluence in America. Consumer spending jumped from $70.8 billion in 1940 to $617 billion in 1970. The U.S. Census Bureau reported in 2001 that retail sales just for the fourth quarter accounted for $861 billion, a remarkable figure, given the slowdown in economic growth in the preceding thirty years.

The development of marketing during the twentieth century matched and aided American economic growth and was symbiotic with the triumph of consumerism. The creation of a "democracy of desire" came to characterize American society and its values. It was a distinctive quality that influenced the attitudes of the rest of the world toward the United States, as the strength of marketing smoothed its economic dominance around the planet.

BIBLIOGRAPHY

Acuff, Dan S. What Kids Buy and Why: The Psychology of Marketing to Kids. New York: Free Press, 1997.

Beacham, Walton, et al., eds. Beacham's Marketing Reference: Account Executive-Market Segmentation. 2 vols. Washington, D.C.: Research Publishing, 1986.

Burwood, Stephen. "Advertising and Consumerism." In Beacham'sEncyclopedia of Social Change: America in the Twentieth Century. Edited by Veryan B. Khan. Osprey, Fla.: Beacham Publishing, 2001.

Clancy, Kevin J., and Robert S. Shulman. The Marketing Revolution: A Radical Manifesto for Dominating the Marketplace. New York: Harper Business, 1991.

Tedlow, Richard S. New and Improved: The Story of Mass Marketing in America. Boston: Harvard Business School Press, 1996.

Zollo, Peter. Wise Up To Teens: Insights into Marketing and Advertising to Teenagers. 2d ed. Ithaca, N.Y.: New Strategist Publications, 1999.

StephenBurwood

See alsoAdvertising ; Consumerism ; Direct Mail ; Mass Production ; Marketing Research ; Radio ; Television: Programming and Influence .