the history of modern marketing and distribution systems
TRANSCRIPT
Marketing & Distribution
The History
of Modern
Marketing
and
Distribution
Marketing & Distribution
Modern marketing and distribution systems are a result of:
rise of living standards new spending
habits
technology advances wide variety of
products
inter-firm competition substitute goods
transportation advances national markets
investing in customer loyalty
developing techniques of mass
marketing
developing wider distribution
networks
Origins
Companies need to shift focus from „optimizing“ to „creating“ markets by:
Marketing & Distribution Three distinct time periods
I. „The Emergence of the Mass Market“ (1880 - 1920)
II. „The Maturing of the Mass Market“ (1920 - 1940)
III. „Reconstruction, Economic Growth and Consumer Boom“ ( after
1940 )
Marketing & Distribution „The Emergence of the Mass Market“ (1880-1920 )
marks the beginnings of modern marketing & distribution
Characteristics:
• large-scale companies & national markets
• high volumes, low margins, large profits
• department stores, mail-order companies
Strategies:
• diversification and expansion of consumption
• change of life habits & consumption patterns
• shift from price & production to product, advertising & branding
Marketing & Distribution
Conditions:
• growth of urban population
• increase in real wages
Marketing:
• focus on quality, product identity and branding to secure customers
loyalty
• advertising in urban areas & through mass newspapers
Distribution:
• long-distance deliveries
• development from fixed shops & multiples to national retailers: Marks
& Spencer, Sainsbury, W.H.Smith
• department stores in cities: Harrod‘s, Selfridge‘s
1880-1920: Great Britain
Marketing & Distribution
Conditions:
• extensive railway system national markets
• increase in urban population
• high living standards
Marketing:
• focus on mass adversiting campaigns: Coca-Cola, Royal Baking Powder,
Sapolio soap
• shift from product-orientation to customer-orientation: values, status,
prestige, desirable lifestyles
Distribution:
• general stores in small towns and rural areas
• chain stores, department stores and mail-order companies in cities
• big manufacturers operated own wholesaling networks: P&G, Colgate,
Gillette, Heinz
1880-1920: U.S.A
Marketing & Distribution
Conditions:
• population more scattered in rural areas
• focus on other industries than consumer goods (Germany, France)
• differences in living standards between regions (Italy)
no national markets & less advanced mass consumption
Marketing:
• few transformations in branding, packaging, advertising
Distribution:
• department stores in cities: Wertheim (Germany), Au Bon Marche, Le
Printemps, Galleries Lafayette (France)
• regional mail-order companies (Italy & Germany)
1880-1920: Continental Europe
Marketing & Distribution
Conditions:
• high level of urbanization
• expanding demand for goods (BUT not like G.B. or U.S.A.)
Marketing:
• first attempts to use advertising and brand identity for traditional
products: rice, soy sauce, sake
Distribution:
• extensive network of general stores, later specialist stores and
department stores in urban areas
1880-1920: Japan
Marketing & Distribution
Characteristics:
• USA – leading world economy
• higher segmentation of markets
Strategies:
• expanding marketing operations
• value-based pricing
• psychological understanding of consumers through marketing
research
• techniques to forge a consumer culture based on choice, lifestyle,
prestige rather than price & basic wants
• emotive, associational advertising
1920-1940: „The Maturing of the Mass Market“
Marketing & Distribution
Conditions:
• USA – leading world economy
• booming consumer demand
• large-scale companies
Marketing:
• marketing becomes a key business function within the company
• advertising focuses on emotional wishes rather than basic wants, uses
radio, TV
• advertising & market research agencies use statistical testing &
demographics to understand consumers
Distribution:
• department stores in cities
• chains like A&P, Woolworth, J.C. Penney expand
1920-1940: U.S.A.
Marketing & Distribution
Conditions:
• far behind the USA in terms of living standards
• consumption patterns change
Marketing:
• focus on statistics to plan output & distribution
• focus on sales efforts and intensive advertising
Distribution:
• concentration of retailing outlets & supermarkets like Tesco,
Sainsbury advantages in bulk purchase, price & image
1920-1940: Great Britain
Marketing & Distribution
Conditions:
• concentration of the population in urban areas
Marketing:
• need for new approach in marketing beginning of the „modern
marketing era“ in Japan
Distribution:
• arrival of station terminal shops that competed with small
retailers for the urban middle class
• producers establish own wholesale & retailing networks
1920-1940: Japan
Marketing & Distribution
Conditions:
• different development pace of countries
• focus remains on technology & production (Germany)
• increase in consumption (France)
Marketing:
• foreign brands enter Germany (Rama, Coca-Cola)
• imitation of marketing techniques from U.S. (Holland, Italy, France)
• advertising intensifies, using slogans & illustrations, psychology of
consumer
• sophisticated advertising campaigns: Pirelli, Ollivetti, Cirio
Distribution:
• department stores start operating on national scale
1920-1940: Continental Europe
Marketing & Distribution
Characteristics:
• USA – international lead in marketing techniques
• huge gap between US and Europe/Japan (war costs, reconstruction)
• post war boom narrows the gap, European & U.S. life standards
become similar
Strategies:
• shift from statistics-based to psychological analysis of human
desires – „motivational research“
• TV becomes an important medium for advertising
• supermarket chains like Auchan, Metro, Edeka become dominant
suppliers (Germany, France)
• new low-cost chains & discount stores threaten traditional
multiples
• shopping mall – center of life outside home (U.S.)
after 1940: „Reconstruction, Growth & Boom“
Marketing & Distribution
Thank you for your attention!
Reference:
Fitzgerald, R.: „Chapter 17 – Marketing and Distribution“, in Zeitlin, J. & Jones, G. (eds.): „The Oxford Handbook of Business History”, Oxford University Press, New York, 2009.