The history of modern marketing and distribution systems
Marketing & Distribution
Marketing & Distribution Origins 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 Companies need to shift focus from „optimizing“ to „creating“ markets by: investing in customer loyalty developing techniques of mass marketing developing wider distribution networks
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 1880-1920: Great Britain 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
Marketing & Distribution 1880-1920: U.S.A 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
Marketing & Distribution 1880-1920: Continental Europe 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)
Marketing & Distribution 1880-1920: Japan 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
Marketing & Distribution 1920-1940: „The Maturing of the Mass Market“ 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
Marketing & Distribution 1920-1940: U.S.A. 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
Marketing & Distribution 1920-1940: Great Britain 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
Marketing & Distribution 1920-1940: Japan 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
Marketing & Distribution 1920-1940: Continental Europe 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
Marketing & Distribution after 1940: „Reconstruction, Growth & Boom“ 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.)
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.
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