The Marketing Firm

The Marketing Firm

Economic Psychology of Corporate Behaviour

Kevin J. Vella and Gordon Foxall

This book provides an expert analysis of the theory of the marketing firm by drawing upon operant psychology, economic theory and marketing to argue that all firms exist in order to market. The authors explore the nature of bilateral interdependence and suggest a framework to analyse the collaborative and competitive mutually reinforcing relationships within which the firm acts.

Chapter 5: Corporate Behaviour: The Supply of Wrapped Impulse Ice-Cream

Kevin J. Vella and Gordon Foxall

Subjects: business and management, marketing, research methods in business and management, economics and finance, economic psychology, industrial organisation, institutional economics, research methods, research methods in business and management

Extract

ANTECEDENT STIMULI Relationships as Routes to Market: 1979–98 The UK impulse ice-cream market has a history of regulatory intervention. Three investigations similar to the one published in 2000 were reported by the Competition Commission, namely in 1979 (investigating 1976), in 1994 (investigating 1993) and the most recent, the third, in 1998 (investigating 1997).1 Figures 5.1 and 5.2 show the industry channel landscape from manufacturers to retailers in 1998 (and before) and 1999 (and after) respectively. Manufacturers engaged in a complex web of exchange-only, mutualityonly and mutuality-plus-exchange relationships (Figure 5.3), emitting behaviour resulting in utilitarian (sales volumes, revenues, profits, cash flow, marketing, distribution and operational costs) and informational (brand popularity, rates of brand sales, share of distribution market, retail penetration, market share, profitability, idle/excess capacity) benefits and costs. At the distribution tier, manufacturers used either of two intermediary services: pure logistics services which involved delivery from central storage to the retailer or wholesale services where distributors and/or wholesalers provided a range of value-added services including finding new customers. Access to the retail channel and, therefore, to final consumers was either direct (mutuality-plus-exchange relationships) circumventing wholesale services and delivering through integrated or outsourced logistical systems, or indirect (mutuality relationships) through either services. Historically, some manufacturers used exclusive distribution agreements, placing obstacles to rivals en route to retail outlets. At the retail level, manufacturers barred access to retail outlets through outlet exclusivity and to space within that outlet through full or partial freezer exclusivity. These three main strategies were supported by...

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