Part 1: The Evolution of Marketing

I recently gave a lecture for the contact week of the new blended Post-graduate Diploma in Management Studies specialising in Marketing. I have written the lecture up below. This is Part 1, Part 2 is here.

So this was a 20 minute lecture, which turned into a 30 minute lecture about the evolution of marketing. To condense 500+ years into a 30-minute lecture requires some simplification and the loss of some nuances, but nevertheless, I have tried to highlight key points in marketing's evolution. It is also a very euro-centric and US-centric article, the future may bring a South African version.

Although marketing (the word) had been around for a while (Potentially as early as the 16th century), Marketing thought, dominated by US academics and publishers, only started to become formalised in the early 20th century. One of the fundamental reasons this could be so is the industrial revolution.

The industrial revolution happened between 1760–1860 and was largely driven by Britain. It was an incredible time in the evolution of business as there were technological breakthroughs abound. The mechanisation of manufacturing, coupled with the drastically improved transport, allowed for the division of labour and for the first time producers and consumers are drastically divorced from each other. This is the spark that necessitates marketing thought.

Up until the 20th century, the major innovations in distribution of both product and communication are the railway and print (including magazines, newspapers, posters and billboards). The predominant theory of buyer behaviour is from economic theory, that of marginal utility calculations by a rational buyer and price as determined by supply and demand. This thought seems to endure, without better alternatives, seemingly until the 1950s-1960s. Branding thought at this time (Late 19th century) has also started to be developed, predominantly by pharmaceutical companies, trying to sell concotions to the public. Later 2 of these concoctions became Coca-Cola and Pepsi. The success of these branding activities showed that the consumer violates the rational model prevalent at the time.

Then the 20th century comes around and cars start to be mass produced, which have profound influences on peoples personal mobility. But this period from the start of the 1900s until the 1950s is filled with 2 world wars and the great depression. Innovation during this time seems to be shut down, or rather, refocused on war technologies. But one major change is the commercialisation of the radio and commercial flying takes off (Alert! Pun). The radio is a quantum leap for marketers, who for the first time have a way to speak to consumers in their homes. Commercial flying is a significant leap for distribution, travel time between countries is reduced from weeks to hours. Another important development of this time was the refrigerator, an incredible invention which not only changed consumers purchasing, but also the distribution system (The cold chain).

Then the 50s come along and bring about the rise of the Ad Men, primarily as a result of the widespread adoption of the TV in people’s homes, as well as telephones. Distribution saw a major innovation in shipping, Containers were born. Shopping Malls became a default format. TVs helped marketers and advertisers dominate in the period from 50s-80s, but then both TV channels and media channels started to proliferate, but first, Consumer Behaviour is born.

Prior to the 1950s, marketing’s progress was largely pushed by innovations in distribution and communication channels. But then in the mid 1960s, two articles are published; Kotler (1965) publishes “Behavioural Models for Analysing Buyers” and Sheth (1967) publishes “A review of buyer behaviour”. Sheth’s article has a revealing quote:

“The post-war emphasis on non-price competitive weapons such as product, promotion and service has tended, on the one hand, to bring out the divorce between marketing and the economic theory of the firm, and on the other hand, has forced the marketing manager to understand more fully the role played by the buyer in the marketplace.”

Consumer behaviour was grounded in the more established disciplines of economics, psychology and sociology. Kotler created the buyers’ process model: Inputs — Channel — Process — Output by combining the processing from economics, Learning from Pavlov, Motivation from Freud and Social psychology from Veblen. That original paper is here.

In the 80's, PC’s kick-off 3 decades of exciting innovations in computing and media channels for marketers;

· PC’s explode in the 80’s and bring, among other things, desktop publishing.

· The internet goes mainstream in the early 90’s

· Feature phones in the early 90’s

· Search Advertising and Email Advertising happens

· Social Media explodes

· Smartphone is popularised in the mid-2000’s

· Applications are popularised

Summary

So marketing is concerned with Consumer value…Understanding Markets (Competitors value and Future Consumer), Understanding and selecting the Customer (STP & CB) and creating and delivering the value (Marketing mix)

So in themes:

Pre-1900 — Production and Sales,

1900–1950 is a weird time (2 world wars, Great depression) so marketing is improved mostly through distribution and radio.

1950–1980 Domination of the ad man, Improved efficiency of global distribution

1980 -2014 Proliferation of Media, Maturity of Branding.

So what does the future hold?

  • Better understanding of Consumer Behaviour and Value through ever-improving behavioural and neuroscience and better understanding of the digital consumer.
  • Mass adoption of new distribution channels — Drones and 3D printing
  • Mass adoption of new media channels — New interfaces (wearables like watches and the now defunct Glass) and New Media (Virtual Reality)

What else?