From Barter to complex marketing | Commercial Applications - Class 6 PDF Download

Before the industrial revolution, single individual produces-farmers, artisans, family based cottage or small enterprises – dominated the exchange process. They produced goods for nearby customers and secured orders for making ornaments, furniture etc. further, producers and their customers were generally known to each other because they were all living in the same village or town. Therefore, selling was not a problem for producers. The situation began to change fast as industrial revolution broke out in the last quarter of the eighteenth century. The invention of steam engine, electricity, telephone etc propelled further development of human society. Newly built factories came up and they produced goods at cheaper costs in larger quantities. Factory production resulted in the emergence of towns and cities. People who lived in the villages hitherto migrated to towns and their way of living underwent dramatic transformation. They started buying factory made products. Companies and business enterprises came in all shapes and sizes in the last quarter of the nineteenth century. For instance, most of the multinational companies (MNCs) of today were born during the beginning of the 20th century. In India, many companies were founded during the second and third quarters of the twentieth century. For example, Birla group of companies came to exist during 1937-38 and they entered in many businesses after 1947-48. The TATA‟s ventured into three major industries – Tata electric companies, Tata Steel companies an Indian Institute of Science – at the beginning of the last century. 

Companies were organized as single proprietorships, partnerships, family owned companies and large corporations. They were either owned privately or publicly and were operated for making profits or providing service to the public. At the same time, companies also began to feel that the administration of all phases of a business operation was beyond the capabilities of a few individuals in the company. Therefore, authority was delegated to others and separate departments were created for different functions of a business operation. The sales department, for example, looked after sales and market expansion. Companies also shifted a portion of their marketing functions to middlemen – retailers, wholesellers, agents and brokers came to existence. The marketing activities conducted by the producers‟ sales department grew in importance as competition increased in the market and the task of sales department became increasingly complex. Marketing research, planning of advertising campaign, personnel selling, sales promotion etc became inevitable functions of the sales and marketing division of a company. Companies also obtained specialized services from agencies for advertisement planning or marketing research. In this way, marketing research agencies, advertising agencies and media agencies came to exist. Today, marketing is a complex activity. The single most reason that can be attributed for this complexity is rapid advancements in science and technology. The revolution in telecommunication and computer technology has changed the whole facet of the market exchange process. In order to generate and maintain demand, companies employ novel and sophisticated communication techniques to reach the target customers. In certain sectors, for example in the service sector, there is no face-to-face interaction between the service today‟s complex marketing system has come a long way-right from the time of a simple barter of goods through the stage of a money economy to today‟s complex marketing. Throughout all these stages, exchanges have been taking place. 

Historically, when man came into existence, his needs and wants were limited to food, clothing and shelter. Later, his inquisitive nature taught him to experiment with new things that could comfort and facilitate his life. He, therefore, learnt many new things including cultivation of crops, making wheels for transport, making wooden articles, earthenware etc. which made his life comfortable. In the early days, people used to live in villages an the village economy was made up of isolated self-sufficing economic units. The villagers were generally cultivating crops and tending domestic animals. There were artisans such as carpenters, weavers, potters and other service providers such as washer men, cobblers, barbers etc., and they produced goods and services not only for their own consumption but also for exchanging with others what they could not produce. For example, artisans could exchange their products with the cultivators for paddy, wheat or for animals like cows, horses etc.         

The barter system of exchange is the most inconvenient method because it insists that there must be a double coincidence of wants and needs between the parties involved in the transaction. Later, when money came to act as a common medium, the exchange process became very easy and convenient. The Greeks were the first to use metal coins as money. With the spread of civilization and trade relations between nation by land and sea, many countries started using silver, gold, copper etc., as money. However, the development of paper money is considered as an important milestone in the history of the exchange process because the paper money removed all the difficulties of barter exchange and facilitated flourishing of trade and industry. The internet medium has created digital relationships between customers and sellers. Online shopping is gaining momentum now a days. Shopping complexes, supermarket chains, franchise retail chain outlets are emerging as important institutions in the marketing exchange process. The model of the modern complex marketing system outlines that many institutions participate and facilitate a firm‟s marketing function. For example, institutions such as advertising agencies, marketing research firms, retailing channels, banking and insurance companies, transport organization and other innumerable service providers all play vital roles in the marketing efforts of a firm. In fact, today‟s marketing manager has to coordinate serial jobs before putting his company‟s products in the target market place. 

Let us consider a brief discussion on how the above said institutions make up the complex marketing system.

1. Advertising Agencies : No product is sold without advertising backup. Advertising is increasingly becoming the job of specialists-copy writing, art-directing, cinematography, film shooting, editing, sound effect, animation, media planning, scheduling etc. Hence, marketing firms use the services of advertising agencies. They fully participate in all aspects of the firm‟s product-planning, product research, test marketing and advertising campaign planning. 
2. Marketing Research Firms: Modern business is very complex. Managers require data for decision making on marking issues or to plan a marketing program. Like the advertising agencies, marketing research agencies also provide specialized services to marketing firms. Medium and small sized firms utilize the services of marketing research agencies. Large sized firms, like Hindustan Lever, own their research divisions. There are many marketing research agencies in India. Some of the leading ones are given below: 
   • Operations Research Group (ORG). it was set up in 1960 at Baroda as an inhouse research agency and it is the oldest market research agency in India. ORG‟s retail audit covers 75 consumer products. It has three major divisions-marketing research, public system and social research system-to deal with different research areas.
   • Marketing and Research Group (MARG), kolkatta. 
   • Marketing Research Centre and Advisory Services (MRAS).
   • Indian market Research Bureau (IMRB). Keeping abreast with the changing environment and they serve up to the expectations of client companies. In a changed environment, marketing research has become a part of the marketing function of many companies and marketing research agencies play the role of consultant to many companies in India. The marketing manager of a firm has to decide his marketing program according to the consultant‟s advice.
3. Retailing : As a result of growing competition, every firm is trying for greater visibility for its products in the market place as well as premier shelf space at the showrooms or point-ofpurchase (POP). So, retail management is also becoming a complex task to a marketing manager because retailers are all engaged in marketing their shelf-space. To avoid over dependence on retailers, some producers in the consumer goods market have set up their own retail outlets. Another significant trend in recent years is that many marketing service agencies have come up in the areas of financial services, marketing of consumer products etc. for example, adishwar marketing, a Bangalore based marketing agency, markets more than 100 consumer products under its own brand „Worldstar‟. 
4. Freight Transportation: Moving the products to the consumption point has made marketing a complex system. The marketing manager has to cope with several issues. Generally, freight transportation in India is dependent on roads and railways. In designing the distribution network of a firm, a marketing manager has to understand the commercial transport environment to minimise the cost of transporting the cargo. 
5. Direct Marketing: The development of direct marketing is another important feature of modern marketing. Many companies, particularly MNCs, use mail, telephone, fax, e-mail (internet) to communicate with their target market directly. Tele shopping, on-line shopping and digital ATM services are all part of the direct marketing system. Marketers solicit a direct response from target customers through telephone or internet (on-line shopping). Thus, telecommunication tools are used for direct marketing. 
6. Public Relations consultancy: Independent public relations consultancy firms have come up in recent times. They offer package for corporate communications. There is an „International Public Relations Association‟ headquartered in London. In India, for example, Ritam Communicatio, (Kolkata), a private PR consulting agency, offers a total package of solutions for corporate communications. Ritam‟s clients are beverage giant Pepsi, Air India and many other consumer goods manufacturers. 
7. Event Management firms: Like any other organization, event management firms are coming up in India. They offer their clients services for organizing corporate events. A marketing manager must be aware of event management as a tool of corporate publicity. Event management is not like advertising. Catherin Pivotal, a Bhubaneswar based event management firm, differentiates between advertising and event management. In advertising, we do not know what the customers feel about the publicity package and the product at large. But, in event management there is a greater scope for immediate feedback. Generally, a marketing firm organizes corporate event to build up a corporate image and public goodwill. When a marketing manager does not have expertise in organizing a corporate events. We now understand that marketing is essentially concerned with exchange and trade. Exchange has existed ever since mankind came into existence. The early process of exchange resulted in the setting up of village markets. Later, markets emerged in cities and towns to facilitate trading as a result of industrialization. The advancement in science and technology, in later days, has manipulated the whole process of exchange and made it a complex system to manage.