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WHERE DOES INTERNATIONAL MARKETING COME FROM?

Naushadul H. Mullick

Introduction

According to the American Marketing Association (AMA):

International marketing is the multinational process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

Put simply, we can say that it is an application of marketing carried out by companies across national boundaries. It starts with identifying the market and targeting the same by studying the culture as well as the market conditions, devising a product mix and taking strategic decisions based on the market conditions to compete successfully in international markets. Many authors all over the world see international marketing as an extension to exporting, where the elements of the marketing mix (4Ps in products: product, price, place and promotion; and 7Ps in services: product, price, place, promotion, people, processes and physical evidence) are finely tuned or changed based on the cultural differences of consumers as well as segments. It also takes a standardized approach to world markets and focuses more on the similarities among various consumers and segments and derives benefit related to product and technology as well as capacity.

International marketing, therefore, has a great role in the economic development of countries as well as the profitability of individual companies. It helps companies to enhance their markets as well as enhance the quality and utility of the product by investing more in Research & Development, and utilizing their core competency by building world-class capacities. It is also a strategic tool in the economic development of developed and developing economies. In the emerging economies development is not only related to the 7Ps in the national markets but also results in the spill-over of wider activities during the creation of products as well as stimulating diversified exports (Lazer, 1971).

Understanding the history of marketing

Marketing had its academic beginning in the early twentieth century with a macro-perspective, with a concern for society, and a need to make marketing more productive and less wasteful.

In the 1960s marketing management upstaged this macro-view and took a narrower perspective as a set of managerial tools which services the needs of organizations. In the 1960s a new marketing term had to be coined, i.e. ‘macro-marketing’, so that scholars could distinguish between the micro- and macro-views of marketing. According to Bartels (1962), prior to 1900, marketing practice was thought to be made up of separate and independent business activities such as advertising, physical distribution, wholesaling, retailing, pricing and so forth. Bartels argued that marketing emerged as an academic discipline only when the various components of marketing were unified holistically. His conclusion is debatable, but it forced marketing historians to disprove that position. The term ‘marketing’ was first used by Stevens (1887) in the Quarterly Journal of Economics. The first book ever written which contained the term ‘marketing’ in its title was by Burkett and Hamilton (1906).

A three-stage model of marketing thought development has been used to describe this trend. The nineteenth century is characterized as the production era where production is seen as the most important aspect. Companies market as much as they produce. The next stage is the sales era where the focus is to increase sales volume by all means, which is then followed by the ‘magical nirvana stage’ of the marketing era. This third stage began after the Second World War, and is still seen as dominant. For almost half a century, this three-stage model of the evolution of marketing thought was presented as a truth, not only in the USA but in other countries such as France (Meuleau, 1988). Jones and Richardson (2007) observed that many still believe in this model, and it is still being quoted in the current marketing textbooks despite contrary research evidence.

Early development of marketing thought

In the early 1900s, Marketing became a subject of academic interest in US universities. Marketing as a softer version of applied economics emerged as a part of trade and commerce as our capitalist system grew in importance in Western Europe. Over time, psychology has played a key role in the foundation of marketing and mainstream marketing studies now focus mainly on the psychology of consumers. Marketing, both as a practice and also as an intellectual body of thought, however, has a long history in the making of an economic society.

The history of the development of marketing thought extends over millennia, and the ideas about marketing are fragmented and can be found in various books which emphasize philosophy, world history and economic thought. The roots of marketing thought are derived from the thinking of Greek philosophers, such as Aristotle and Plato. The scholars of the twelfth and thirteenth centuries refined Aristotelian economic philosophy, which gave rise to a more modern view of the role of buying and selling, the meaning of money as well as the role of merchants for society's well-being. In addition, the revision of the ‘just price’ laws, the value of money as a commodity, and the law of nature and of God, among others, had an impact outside marketing, especially on economics. Such thinking, in fact, led to the commercial revolution which gave rise to a merchant class (i.e. wholesalers, bankers, etc.) and the international trade which lasted till the industrial revolution. Modern marketing is also influenced by classical economics à la Adam Smith, mercantilism, industrial capitalism and neoclassical economics, among others.

The history of marketing thought and practice is connected with the rise of the merchant class and the growing importance of business and commerce during the middle ages (Gras, 1939). The spread of market-based capitalistic ideas began long before the 4Ps (product, price, place and promotion). The historic relationship between marketing and society is a complex macro-social process. Man has long been engaged in trading to earn a living and also to satisfy his economic needs. Commerce has been in existence from time immemorial in various forms. A man's survival therefore depends on two processes: taking or trading.

Trade means bringing people together to discuss, to bargain and to negotiate. The trading process can enrich, motivate and bring satisfaction to both parties because it is not a zero-sum game. However, trade does not necessarily mean being involved in marketing as Shaw (1995) clearly demonstrated. The two processes do not possess the same attributes and do not operate within the same parameters. Marketing is a more sophisticated kind of the trading process and its development dates back to the middle ages. Trade evolves into marketing under certain conditions such as the existence of a price-setting market and the recognition of the rule of the law. The process includes not just the people engaged in the exchange process but is based on a wider order of human cooperation including retailers, wholesalers, manufacturers, bankers, farmers and those involved in physical distribution. Trading is not only an interaction of two persons but is based on initiative and mutual trust as well as the pursuit of self-interest by all who cooperate in the process.

Marketing pioneers

Very few books have been written mentioning the contribution of marketing scholars (Wooliscroft et al., 2006). Like other disciplines, pioneering scholars exist in the marketing discipline. However, mainstream marketing theorists tend to dismiss their existence. Philip Kotler, who has transformed marketing education during the past 40 years with his renowned textbooks used by millions of students, could be considered an exceptional figure.

It could be argued that this has been done due to the increase in research specialization, owing to which ‘knowledge outside of a person's speciality may first be viewed as non-instrumental, then as non-essential, then as non- important, and finally as non-existent’ (Wilkie, 2005). Though marketing has not been blessed with many social thinkers and philosophers whose ideas have had an influence on human existence, we could not deny that surviving in the twenty-first century is impossible without marketing to help us satisfy our economic needs. We are still not self-sufficient as was the case for most of human existence. Marketing in itself is an essential human behaviour. Pioneers like Benjamin Horace and Henry Erdman, among others, are relatively unknown (Wilkie, 2005). Though their biographies have been published elsewhere, they are seen as an authoritative reference in the marketing domain. Other relatively unknown twentieth-century innovative thinkers such as Paul Mazur, Malcolm McNair, Reavis Cox, John Howard, William Davidson, E. Jerome McCarthy and J. George Frederick made further contributions. For example, J. George Frederick was a prolific author who had published around 30 books since 1920. He had, however, not been recognized in the discipline even though he started the practice of marketing research among multinational enterprises such as General Electric. Moreover, Frederick, as a non-academician, was among those marketing scholars of the twentieth century who were ‘thoroughly grounded in empiricism’ and had close ties with academics. Many more like him are yet to be discovered by marketing historians.

Pre-twentieth-century marketing practices were not well known because they were not well documented. This is true because marketing was embedded in the literature with economic thought, commerce and trading, the role of merchants and so on. One of the first books on business practices was Savary's Le Parfait Negociant, published in 1675, with many subsequent editions and in use over the next 100 years. Jean Baptiste Colbert, Minister of Finance under Louis XIV, was keen on increasing the sales of French-made goods abroad and making Paris the capital of fashion. France at that time was clearly outclassed as a European commercial centre (Cole, 1939). Colbert therefore commissioned Savary to write a handbook to show French businesses the art of selling abroad. Exports were very essential for France as they were needed in order to bring money into the country (precious metals) reflecting the mercantile thinking of the time. With his expertise in commercial law, Savary was able to develop a French commercial code, which is referred to as the Savary code. Other topics discussed in his book are related to wholesaling, retailing, credit and accounting. He discussed many business issues trading with various countries, about how to write and negotiate bills of exchange, how to compute weights and measures across countries (which were non-standardized), as well as legal skills to succeed in commerce. According to Savary, a merchant had to be a wholesaler and not a retailer because it was more prestigious. He therefore provided advice on the skills required to succeed in wholesaling. So, should Savary be considered as a pioneer of marketing thought?

Shaw (1995) discussed a number of pioneer English language book contributors from the sixteenth to the eighteenth century, such as Daniel Defoe and John Browne. Should we also consider these pre-twentieth-century writers in the context of marketing thought? Jeannin (1989) and Meuvret (1953) identified a large number of such practitioners who inspired business handbooks and volumes written in French, Italian and German. Should these authors also be considered as pioneers of marketing thought? Though these manuals are largely unknown in the USA, business handbooks have made certain important contributions to the thinking on the discipline as well as to the practitioners of the field.

Finally, should we include the merchant princes of the nineteenth and early twentieth century in the list of marketing pioneers? These entrepreneurial merchants were instrumental in transforming the retail landscape all over the world. They erected department stores, which as institutions can be considered as marketing contributions to the industrial revolution. It was the amalgamation of new ideas and new marketing practices which led to many technological innovations, soft and hard. Its impact on urban development, architecture, shopping habits and consumer culture has been well documented (Tamilia and Reid, 2007). Pioneer retail merchants, such as A. T. Stewart, Potter Palmer, John Wanamaker, Montgomery Ward, Marshall Field, Richard Sears, Rowland Macy, J.C. Penney, Fred Lazarus, William Filene, Sam Walton and others, merit recognition as contributors to the body of marketing thought, even though they were practitioners.

Both the lives of these merchants and the history of the stores they developed have been well documented in thousands of published books and articles. Some of these retail merchants like Sam Walton of Wal-Mart, and Marshall Field and Macy's, among others, as pioneers of retail trade before Wal-Mart may be considered as the most important historical figures of marketing because of their continued impact on our way of life. But the massive literature concerning these masterminds, or pioneers in the marketing field, has no link to the history of marketing thought.

Many retail innovations have happened in the market, such as the birth of supermarkets, the chain store and the discount store, which were brought into existence by the creative geniuses who were pioneers in the field. Robert Bartel, therefore, states that: ‘Are we practicing marketing or are we theorizing marketing practice?’ Marketing theory can filter marketing practice and it can become the subject of academic study. But there is interplay between the two perspectives and there is no reason to make a distinction between theory and practice when it comes to recognizing the pioneers of marketing thought.

Schools of marketing thought leading to international marketing

Beckman et al. (1973) were considered to be the first authors to provide taxonomy often schools of marketing thought. Despite this, Kotler (1979) argued that marketing was still not a mature discipline because it did not have schools of thought. Sheth and Garrett (1986) organized their books around ‘schools of thought’, while Sheth et al. (1988) recognized 12 schools of thought, the taxonomy suggested by Shaw and Jones (2005) suggested ten schools of thought. Irrespective of the exact number of schools of thought, much more debate on schools of thought in marketing is needed. The efforts made by Shaw and Jones (2005) represent a valuable contribution to marketing thought and theory, but their work has by no means settled the debate in marketing theory. There are still too many unanswered questions, not only about how many, but also about what the schools of thought are. A school of thought is said to have a different approach to the discipline when issues are addressed under a different paradigm (Table 10.1). This paradigm includes not only the issues to be studied, but also the methodology employed and also forms an acceptable explanation of the results (Zinn, 1987).

There are many areas of marketing that are not easy to classify in schools of thought; for example, marketing theory development, marketing research and methods, and marketing and the law. Many areas of marketing are also excluded from the list of schools of thought, such as channels of distribution, wholesaling, retailing, logistics, international marketing and comparative marketing among others. Marketing was once known as distribution with its emphasis on classifying and understanding the organizational arrangement of wholesale and retail institutions.

Knowledge about channel structure provides the means for efficient channel routes which, in itself, could reduce the waste of distribution and enhance the effectiveness of the channel. Logistics, the other half of marketing (its supply side), was also considered to be as important as the demand stimulation side of marketing discipline (Bartels, 1982; Tamilia, 2003). Since marketing and distribution are not separate but interdependent, it could also be suggested that logistics must have its own school of thought.

Conclusion

Since we have been witnessing a lot of turbulence in the world economy, there are fears about the future of international marketing. While most countries adopt the formula of deregulation, including cuts in public spending and privatization, companies have to spend more resources to satisfy the needs of customers (especially in terms of pricing and product design) who are reluctant to spend. On the other hand, it should be noted that economic units such as the Free Trade Zone of the Americas, the South Asian Free Trade Zone, the integration of Russia and most of Central Europe into the European Union, the African Common Economic Market will provide integrated markets that fuel the growth of new markets.

One of the most important factors that has facilitated economic and financial integration and rapid economic growth is the spread of information technology. With the extensive network of fibres, satellites and cellular phone links that connect us all around the globe, it has not only bonded the global market, but has also enabled multinational enterprises to use new forms of cooperation and commerce. It has even made possible leapfrogging into different patterns of development. An example would be Sri Lanka which nobody would have visualized as one day emerging as a key financial centre — the Switzerland of Asia, where large portfolios and investment services will be managed and fuel the growth of a post-industrial economy.

Another key factor that has facilitated economic and financial integration is the emergence of multinational enterprises in different sizes, which play a critical role in launching standardized products, transferring technologies and expertise, and providing sources of investment capital in many developing regions. Moreover, global integration quickens the pace of convergence in consumption patterns and in production methods driven by advertising, new technology and the spread of democratic governmental institutions.

International marketing, therefore, has become more evident all around the world. Multinational enterprises have played a major role in assimilating technologies by bringing better and better products required by consumers all over the world, satisfying them and also maintaining long-term relations with them. For new ventures that are crossing national boundaries, they are developing new strategies and devising ways to bring products which are affordable and also segmenting markets by bringing products according to the likings of different segments with different features and prices as per their requirements. In all this, research has been a key, and understanding the consumers and markets has played a big role for these companies who have built world-class brand names in all categories of products around the globe.

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