Marketing kU

Marketing kU

Going Back lo Barter

products, and international barter is

often handled by counter­trade With todays high prices, many

Highlight

organizations.

companies are returning to the

1.1 Barter has become especially

primitive but time­honoured prac­ important in today's global mar­ tice of barter ­ trading goods and

kets, where it now accounts for as services that they make or provide

much as 40 per cent of all world for other goods and services that

trade. The present world currency they need. The European barter

shortage means that more and market is estimated to be worth up

more companies are being forced to S200 million a year and fore­

to trade for goods and services casts put the value at nearly $1 bil­

rather than cold, hard cash. lion by the year 2000. On a global

International barter transactions scale, companies barter more than $275 billion

can be very complex. For example, a trader for worth of goods and services a year, and the prac­

KGD International, a New York­based bartering tice is growing rapidly.

company, arranged the following series of Companies use barter to increase sales,

exchanges:

unload extra goods and save cash. For example, companies are offering television programmes to

[The trader] supplied a load of latex rubber to broadcasters in exchange for air­time: Unilever

a Czech company in exchange for 9,000 owns the European rights to the TV game shows,

metres of finished carpeting. lie then traded Wliesl of Fortune and Jeopardy, which it barters

the carpeting for hotel room credits. The to stations all over Europe. Others like PepsiCo

rooms were traded to a Japanese company traded Pcpsi­Cok and pizza parlours to the

for electronic equipment, which [the trader] Russians for ships and Stolichnaya vodka, while

bartered away lor convention space. The Pierre Gardin served as a consultant to China in

final [exchange] came when he swapped the exchange for silks and cashmeres, and Turnkey

convention space for ad space that his Contracts and Consultancy, a Singapore com­

company used.

pany, was paid in Burmese logs for the construc­ tion of an International Business Centre in Burma's capital city, Rangoon.

SOURCES: 'TV barters for the future'. The Kumpean (25­31

As a result of this increase in barter activity,

March 1994); Victor Mallet, 'Barter proves best for business,

many kinds of speciality company have appeared to

Burma style', Financial Times (8 February 1994), p. 8;

help other companies with their bartering. Retail­

Quote from Cyndee Miller, 'Worldwide money crunch fuels

trade exchanges and trade clubs arrange barter

more international barter', Marketing Nemos (2 March 1992).

for small retailers. Larger corporations use trade p. 5; also see Arthur Bragg, 'liarterinf; comes of age', Sales

and Marketing Management (January 1988), pp. 61­3; Joe

consultants and brokerage firms. Media broker­

Mandese, 'Marketers swap old product for ad time, space',

age houses provide advertising in exchange for

Advertising Age (14 October 1991), p. 3.

14 • Chapter 1 Marketing in a Changing World

A barter transaction can also involve services as well as goods: for example, when

a lawyer writes a will for a doctor in return for a medical examination (sec Marketing Highlight 1.1). A transaction involves at least two things of value, conditions that are agreed upon, a time of agreement and a place of agreement.

In the broadest sense, the market tries to bring about a response to some offer. The response may tie more than simply 'buying' or 'trading' goods and services. A political candidate, for instance, wants a response called 'votes', a church wants 'membership', and a social­action group wants "idea acceptance'.

Marketing consists of actions taken to obtain a desired response from a target audience towards some product, service, idea or other object.

relationship marketing Transaction marketing is part of the larger idea of relationship marketing. The process recreating,

Smart marketers work at building long­term relationships with valued customers, maintaining and

distributors, dealers and suppliers. They build strong economic and social tics by enhancing strong, value­

promising and consistently delivering high­quality products, good service and fair laden relationships with

prices. Increasingly, marketing is shifting from trying to maximize the profit on customers and other

stakeholders. each individual transaction to maximizing mutually beneficial relationships with

consumers and other parties. In fact, ultimately, a company wants to build a unique company asset called ^.marketing network, A marketing network consists of the company and all of its supporting stakeholders: customers, employees, suppliers, distributors, retailers, ad agencies, and others with whom it has built mutually profitable business relationships. Increasingly, competition is not between companies but rather between whole networks, with the prize going to

the company that has built the best network. The operating principle is simple: build a good network of relationships with key stakeholders, and profits will follow/' Chapter 11 will explore relationship marketing and its role in creating and maintaining customer satisfaction.