Networks in marketing

Networks are crucial parts of any action taken in a marketplace. Peter Drucker even described the future economy as one of a society of networks. Companies embedded in such networks stand to gain a lot. There are a number of different network models, which have distinct relevance to customers, and marketing initiatives. A network in marketing can be formed either strategically (e.g. Business networking) or completely randomly (e.g. Referral economy). Marketing channels and business networks have been referred to, by Achrol & Kotler as:“Interdependent systems of organizations and relations that are involved in carrying out all of the production and marketing activities involved in creating and delivering value in the form of products and services to intermediate and final customers.”Achrol & Kotler stated that networks are not accepting of traditional mechanisms, such as authority and control. Suggesting that organizational hierarchy, power and contracts are now exchanged for instruments of relational control. Businesses such as Ford, Procter & Gamble and General Electric have evolved in much the same. It wasn’t all to long ago that they were organized as classic hierarchies. Displaying central control, unified purpose, and complex management structure of many tiers.Business and marketing networks differ in the amount of connectivity between agents. Some markets, which are more fragmented, have less connectivity between agents than others. On top of this, the level of complexity differs between various networks, some may seem ordered and rather linear, whereas other random and chaotic. As a network develops, agents or entities form relationships with others, which increases the efficiency of operations. Although, this inevitably adds complexity to otherwise simple networks, and makes them more prone to chaos.