1 Firms exist in order to market. Understanding their nature thus requires an account of consumer behaviour as well as one of managerial response. Consumer and marketer behaviours are mutually reinforced and necessarily entail literal exchange. The marketing firm exists in order to reduce the transaction costs involved in finding and retaining customers. The analysis transcends the Coasean approach by portraying the complexity of the marketing firm and the marketing relationships which it facilitates. Research into relationship marketing elucidates the nature of the firm as a marketing entity, an organisation established to economise the transaction costs of creating and maintaining long-term marketing and quasi-marketing relationships. INTRODUCTION Objectives This chapter undertakes a functional analysis of marketing, conceived as the intersecting activities of customers and marketers; i.e. it explores what marketing does. In the process of doing this, it defines the nature of the marketing firm. It has four interlinked objectives: 1. To draw attention to the role of marketing in the corporation, thereby emphasising the need for consideration of consumer behaviour as the starting point for a theory of the firm. The point that all firms market may appear trivial but this frequently overlooked aspect of the behaviour of business organisations is central to their definition and analysis. Indeed, it is only through an awareness of what marketing management does – the essence of its relationship with consumer behaviour – that the nature of the marketing firm can be appreciated. To understand what the marketing firm does, the nature and scope of marketing...
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