In this chapter you will understand how and why marketing specialists develop to make channel systems more effective. Understand the universal functions of marketing. Understand why some firms use direct channel systems while others rely on intermediaries and indirect systems. Understand how to develop co-operative relationships - and avoid conflict - in channel systems,. | Chapter 11: Place and Development of Channel Systems Exchange and Marketing In very basic economic systems, each seller must meet directly with each buyer in order to exchange something of value. As needs increase, the number of exchanges can soon become unmanageable for one person. 11-2 Ten exchanges are required when a central market is not used Pots Baskets Hats Knives Hoes Exhibit 11-2 (A) Summary Overview It is important for students to realize that marketing does in fact “make something.” It’s just that our “something” is often intangible or at least not as visible (like a distribution system) to the customer as the product on the shelf. In mature economies, “something” includes product information, research, need-based changes, convenience, and a host other value-added activities often taken for granted. But more fundamentally, marketing is the vehicle by which all economies evolve Key Concepts of Macro-Marketing Systems Development Pure Subsistence Economy. Under this system, every family produces all they need. No exchanges occur and no macro-marketing system exists. Markets. When families begin to produce more than they need of some things and develop new needs or wants for things they do not produce, the concept of a market evolves. Initially, the family simply trades, or barters, some of their excess items for the excess items offered by another family. Later, a central market develops where the families go to barter more conveniently. Middlemen. Central markets still take time. Among the first macro-marketing system elements to emerge is the middleman - a person who specializes in trade rather than production. Because of the expertise of this person, a “something” is added to the exchange process. More formally, by bringing buyers and sellers (or traders) together more efficiently, middlemen (intermediaries) contribute time and place utility. Monetary System. Very quickly now, people realize the need to standardize trade. Bartering takes a lot of time | Chapter 11: Place and Development of Channel Systems Exchange and Marketing In very basic economic systems, each seller must meet directly with each buyer in order to exchange something of value. As needs increase, the number of exchanges can soon become unmanageable for one person. 11-2 Ten exchanges are required when a central market is not used Pots Baskets Hats Knives Hoes Exhibit 11-2 (A) Summary Overview It is important for students to realize that marketing does in fact “make something.” It’s just that our “something” is often intangible or at least not as visible (like a distribution system) to the customer as the product on the shelf. In mature economies, “something” includes product information, research, need-based changes, convenience, and a host other value-added activities often taken for granted. But more fundamentally, marketing is the vehicle by which all economies evolve Key Concepts of Macro-Marketing Systems Development Pure Subsistence Economy. Under this system,
