Marketing takes place when people decide to satisfy needs and wants through exchange. Exchange is the act of acquiring a desired item from someone by offering something in return.
Exchange is one of four ways in which people can obtain a desired object. For example, hungry people can find food in the following ways. They can locate their own food by hunting, fishing, or fruit gathering (self-production). They can rob or seize food from someone else (coercion). They can beg for food (begging). Finally, they can tender some resource such as money, another good, or a service for the food (exchange).
Of these four ways of satisfying needs, exchange has much in its favor. People do not have to prey on others or depend on gifts. Nor do they have to attaint the skills needed to produce every necessity for themselves. They can concentrate on producing the things they make best and trade them for items produced by others. A society whose members produce what they are good at producing, ends up with much more total output under any other alternative.
Specialization in production, however, does not always lead to a society that uses exchange as the major principle for distributing goods. Some societies work on the principle of reciprocity. Each producer supplies goods or services to others who need them and in turn goes to others for whatever is needed. The modern family works on this principle, with each member freely providing services to the other members without formal exchange arrangements. Other societies use the principle of redistribution. Producers turn over part or all of their output to a leader or a central depot. The output is then redistributed to persons according to needs, status, or power.
But in most societies, producers sell their goods to others in exchange for money. Exchange is the core concept of the discipline of marketing. For a voluntary exchange to take place, five conditions must be satisfied: 1.) There are at least two parties. 2.) Each party has something that may be of value to the other party. 3.) Each party is capable of communication and delivery. 4.) Each party is free to accept or reject the other party's offer. 5.) Each party believes it is appropriate or desirable to deal with the other party.
These five conditions set up a possibility for exchange. Whether exchange truly takes place depends upon the parties' coming to an settlement on the terms. If they agree, we conclude that the act of exchange leaves all of them better off (or at least not worse off) because each was free to reject or accept the offer. In this sense, exchange is a value-creating process. Just as production creates value, so exchange creates value by enlarging the consumption possibilities facing an individual.
Exchange is a sophisticated human activity without a counterpart in the animal kingdom. Ant colonies and gorilla societies show some decision of labor, but little evidence of formal exchange.
Adam Smith observed that "nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog. Nobody ever saw an animal by its gestures and natural cries signify to another, this is money that is yours; I am willing to give this for that." But man, according to Adam Smith, has a natural "propensity to barter, truck, and exchange one thing for another." Anthropologists have cast uncertainty over whether exchange is a natural human inclination or a learned disposition, but exchange seems in any case to be a uniquely human activity.
Exchange is one of four ways in which people can obtain a desired object. For example, hungry people can find food in the following ways. They can locate their own food by hunting, fishing, or fruit gathering (self-production). They can rob or seize food from someone else (coercion). They can beg for food (begging). Finally, they can tender some resource such as money, another good, or a service for the food (exchange).
Of these four ways of satisfying needs, exchange has much in its favor. People do not have to prey on others or depend on gifts. Nor do they have to attaint the skills needed to produce every necessity for themselves. They can concentrate on producing the things they make best and trade them for items produced by others. A society whose members produce what they are good at producing, ends up with much more total output under any other alternative.
Specialization in production, however, does not always lead to a society that uses exchange as the major principle for distributing goods. Some societies work on the principle of reciprocity. Each producer supplies goods or services to others who need them and in turn goes to others for whatever is needed. The modern family works on this principle, with each member freely providing services to the other members without formal exchange arrangements. Other societies use the principle of redistribution. Producers turn over part or all of their output to a leader or a central depot. The output is then redistributed to persons according to needs, status, or power.
But in most societies, producers sell their goods to others in exchange for money. Exchange is the core concept of the discipline of marketing. For a voluntary exchange to take place, five conditions must be satisfied: 1.) There are at least two parties. 2.) Each party has something that may be of value to the other party. 3.) Each party is capable of communication and delivery. 4.) Each party is free to accept or reject the other party's offer. 5.) Each party believes it is appropriate or desirable to deal with the other party.
These five conditions set up a possibility for exchange. Whether exchange truly takes place depends upon the parties' coming to an settlement on the terms. If they agree, we conclude that the act of exchange leaves all of them better off (or at least not worse off) because each was free to reject or accept the offer. In this sense, exchange is a value-creating process. Just as production creates value, so exchange creates value by enlarging the consumption possibilities facing an individual.
Exchange is a sophisticated human activity without a counterpart in the animal kingdom. Ant colonies and gorilla societies show some decision of labor, but little evidence of formal exchange.
Adam Smith observed that "nobody ever saw a dog make a fair and deliberate exchange of one bone for another with another dog. Nobody ever saw an animal by its gestures and natural cries signify to another, this is money that is yours; I am willing to give this for that." But man, according to Adam Smith, has a natural "propensity to barter, truck, and exchange one thing for another." Anthropologists have cast uncertainty over whether exchange is a natural human inclination or a learned disposition, but exchange seems in any case to be a uniquely human activity.
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