Exchange and Transactions

A person can obCàitl a product in one of four ways. One can Self-produce the product or service, as whOn oil e hunts, fishes, or gathers fruit. One can use force to get a prod tic t, as in :i holdup or burglary. One can lien- as happens when <i homeless person asks for food: or one can offer a product, a service, or money in exchange for something he or she desires.

I-Achante, which is the core concept of marketing, is the process of obtaining a desired product from someone by offering something in return, For exchange pu tel niai to exist, five conditions must lie satisfied:

2. I :.ael i party lia s something t h at i nigli 11 ie o l'va lue to t he other part y.

DEFINING MARKETING FOR 2t$T CENTURY CHAPTER 1 7

"We could have left well encutjh alcne. But ite! mould nardi/ is very characteristic. .-.■nn d it? "LexuS ads, and ¡13 campaign sio^sn, HTiie Passmafe Pursuit of Perfection,' express liifi ocrnpjny's marketing ph-asoptiy. only me best is good ertough tor ¡Is customers

3, Each party is capable of communication and delivery.

4, Each party is free to accept or reject [he exchange offer,

5, Lach party beliefs iL is appropriate or desirable to deal with the oilier party

Whether exchange actually takes place depends on whether the two parlies can agree (in terms that Will leave them both better oft' for at least not worse off) than befüre, Exchange is a value-creating process because ii 1101111 ally leaves both parties better off.

Two parlies are engaged in exchange if they are negotiating—trying to arrive at mutually agreeable terms. When an agreement is reached, we say that a transaction lakes place, A transaction is a trade of values between twfc or more parties; A gfves X to Band receives V in return- Smith sells Jones a Television set and femes pays S-JOfl to Smith, This is a classic rnon-etary transaction: but transactions do iiol require inrmey as one of the traded values, A ban er Transaction involves trading goods or services for other goods of services, as when lawyer Pones miles a will for physician Smith tn return for a medical CKaminatioit

A transaction involves several dimensions: at least two things of value, agreed-upon conditions. a time of agree mem. and a placc of agreement A legal system supports and enforces compliance tin the part of the transactors. Without a law of contracts, people would approach transactions with some distrust, and everyone would lose,

A transaction differs front a transfer. In ¿1 transfer. A gives X to [1 hut does not receive anything tangible in return. Gifts, subsidies, and charitable con tri tuitions are all transfers. Transfer behavior can also he understood through ibc concept of exchange. Typically, the transferer expects to receive something in exchange for bis or her gift—for example, gratitude or seeing changed behavior in the recipient, Professional Cuiid-raisers provide benefits to donors. sueii as thank-you notes, donor magazines, and imitations to events. Marketers have broadened the concept of marketing 10 include the study of transfer behavior as well its transaction behavior.

In the most generic sense, marketers seek 10 elicit a behavioral response front another party. A business firm wants a purchase, a political candidate wants a vote, a church wanls in active nietnbefc, and a social-action group wanLs the passionate adoption Of some cause. Marketing consists of actions undertaken to elicit desired responses from a target audience.

To make successful exchanges, marketers analyze what each party expects front the transaction. Simple exchange situations can be mapped by showingthe two actors and the wanls and offerings flowing between them. Suppose John Deere, a worldwide leader in agricultural equipment, researches the benefits that a typical large-scale farm enterprise wants when it buys tractors, combines, planters, and sprayers. These benefits include high-quality equipment, a fair price, on-iinie delivery, good financing terms, and good parts and service. The items on this want lisi are not equally important and may vary front part t

:.NUiRSTAMDiNG MABKETING MANAGEMENT

buyer to buyer, One ofjohfa I Hen re's iasks is to discover the n-ilatjve importance of these different wants tO the buyer.

John Deere also has a want list.Itwarns a good price for the equipment, on-time payment, and good word of mouth- If there is a sufficient match ur overlap in the want lists. a I iasis for a transaction exists, John Deere's task is to formulate an offer drat motivates the farm enterprise to buy John Deere equipment. The farm enterprise might in (urn make a counteroffer. This process of negotiation leads to mutually acceptable terms or a decision not to transact.

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