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62 Journal of Marketing, April, 1969 portant question becomes: what alternatives are there to controlled experiments for the testing of hypothesis in ascertaining meaningful theory? If the answer is negative, then it would be difficult to hold that general theory is possible because marketing knowledge could not be subjected to the rigors of the scientific method. Fortunately, in addition to experimentation with controls, there are two other means for testing hypotheses. The first involves the reexamination of all the evidence used in formulating the hypothesis to insure that it can explain each observation. A second approach is to use the hypothesis under consideration for the purpose of foretelling new observations which can be subsequently accepted or rejected with the passage of time. Recognizing that there are alternatives to experimentation and that marketing data can be subjected to reexamination or prognostication, then it logically follows that a general theory for the di.scipline can be formulated through use of a scientific method. As one observer notes: To be sure, certain variations in applying it [scientific method] to the social sciences are necessary. But this is equally true of various parts of the natural sciences. These variations are mo.st needed in testing hypothesis. Even in the natural sciences we frequently cannot use two of the three kinds of testing; we cannot use forecasting in the study of earthquakes or geology in general; we cannot use controlled experiments in these fields or astronomy. But these deficiencies do not pre- vent us from regarding geology or astronomy, seismology or meteorology as sciences. Nor should similar deficiencies, especially difficulty in forecasting and the impossibility of controlled experimentation, prevent us from applying the scientific method to the social sciences.* Because the nature of marketing phenomena approximates an organismic system made up primarily of human actors, it is felt that future formulation of general theory must rely heavily on an anti-positivistic base. More .specific theories, however, particularly those pertaining to decision making in a developed economic environment, will undoubtedly find positivistic methodology helpful. Conclusion An organismic viewpoint highlights the social nature of marketing phenomena. It also stresses the fact that the organic component of marketing systems is action normatively regulated by the institutional relationships in a particular social order. Because of this, any general statement regarding the patterns peculiar to marketing action must depend considerably on knowledge generated through research that emphasizes introspection and an understanding of marketing performance in its social context. Anti-positivism as an epistemological base is destined to make significant contributions to the development of a general theory. Carroll Quigley, The Evolution of Civilizations (New York: The Macmillan Company, 1961), p. 10. Exploring the Commodity Approach in Developing Marketing Theory PETER R. MOUNT Increasing attention is being given to the development of theory in marketing. Theorists have used functional, managerial, and institutional approaches with relatively little emphasis on the commodity approach during the past decade. In this article, the author explores the role commodities might play in formulating hypotheses which could lead to better theory in marketing. ARKETING, a function of organized behavior systems embodies a wide range of activities, institutions, and commodities.! -phe field of marketing can be perceived as the total system of interacting activities which result in the planning, pricing, promotion, and distribution of want-satisfying M Reavis Cox, Wroe Alderson, and Stanley J. Shapiro, Theory in Marketing (Homewood, 111.: Richard D. Irwin, Inc., 1964), p. 94. products and services to consumers.- Since it is such a complex system, it is difficult, though necessary, to divorce the approaches to marketing in order to derive a theoretical basis for explaining marketing phenomena. This paper attempts to evaluate the possible role of the commodity approach in the development of theory in marketing. 2 William J. Stanton, Fundamentals of Marketing (New York: McGraw-Hill Book Company, 1964), p. 5. Marketing Notes and 63 Communications Marketing theory, as considered in this article, is a statement of irrefutable truth that is logically consistent and based on experimental validation.' Such a statement can be utilized to explain the outcome of various marketing services as the basis for further understanding the marketing process and for predicting behavior patterns. The institutional approach is one area for theory development. It consists of the .study of marketing institutions which are instrumental in the movement of goods from conglomerate heterogeneity through the production, di.stribution, and merchandising functions to the systematic heterogeneity of the final consumer assortment.^ After their establishment, however, institutions tend to persist, often remaining stagnant in a dynamic environment. Thus, they do not inspire creative innovations in a dynamic sense. The functional approach to marketing is the most widely used in the development of theory; however, there is not complete accord among theorists as to what the functions should be, how they are defined, or how they can be used to explain consistent market behavior."' In addition, the variety of functions performed by individual firms makes this type of analysis difficult to utilize in developing marketing theory. The Commodity Approach to Marketing One fruitful area for theorists to explore is the commodity approach for the development of marketing theory. This approach had its inception in the early 1930s at the University of Wisconsin where Ralph Breyer advanced the notion of commodities as a means to explain the marketing process.'' Breyer's early marketing textbook utilized the study of commodities to explain supply and demand, product characteristics, channels of distribution, agencies, functions, pricing, distribution costs, trade practices, and associations. Thus, most of the recognized aspects of marketing were related to the study of commodities." Like other marketing terms, the word commodity has undergone an evolution in meaning. Originally, a commodity was considered either a producer good or a consumer good. The difference between the two was that the producer good was sold to •* Same reference as footnote 1, pp. 8-9. * Wroe Alderson, "The Analytical Framework for Marketing," Delbert J. Duncan, editor. Proceedings: Conference of Marketing Teachers from Far Westem States (Berkeley, Cal.: University of California Press, 1958), pp. 15-28. ••'F. M. Nicosia, "Marketing and Mr. Alderson's Functionalism," Journal of Business, Vol. 35 (October, 1962), p. 411. «Robert Bartels, The Development of Marketing Thought (Homewood, 111.: Richard D. Irwin, Inc., 1962), p. 174. 7 Ralph Breyer, Commodity Marketing (New York: McGraw-Hill Book Company, Inc., 1931). an indu.strial market for u.se in the construction or assembly of another product, and the consumer good was sold for final consumption. Thus, the term commodity evolved into the second stage of connotation in which it referred to industrial and consumer goods, with the latter being subdivided into convenience, shopping, and specialty goods. The various functions :md institutions of marketing were explained in terms of these classifications. Later the term commodity came into a third stage in which it assumed the meaning of a relatively homogeneous group of products which serve the same end use in the eyes of the consumer. To an economist a commodity represents a homogeneous bundle of satisfactions with each item in the bundle having a high degree of cross elasticity of demand. This means that items in a given commodity class are readily substitutable for one another. During the third phase of commodity analysis, there have been many developments which have not been applied to marketing theory. The work of Leontief"" which utilizes commodities to construct an input-output model of the economy, the United States Department of Commerce which utilizes a commodity classification to construct the Standard Industrial Classification tables," IBM in preparing its new Business Data Systems, and many researchers in forecasting future trends on the basis of commodity analysis are all examples of current applications of the new meaning of commodity. Theorists have not utilized to full advantage this excellent opportunity for quantification and understanding of marketing phenomena by use of the commodity approach. If an individual commodity were selected for analysis, it would be probable that within the confines or boundaries of this commodity class both the institutions and functions would tend to become stabilized. Using this approach, commodities should serve as a basis for decision making instead of solely utilizing existing institutions and functions. The search for sufficient homogeneity within ''Wassily W. Leontief, Input-Output Economics (New York: Oxford University Press, 1966). " United States Technical Committee on Industrial Classification, Standard Industrial Classification Manual (Washington, D.C: Bureau of Budget, Executive Office of the President, 1957). • ABOUT THE AUTHOR. Peter R. Mount is Assistant Professor of Forest Economics at West Virginia University. Professor Mount received his PhD in Forest Science from Colorado State University where his area of specialization was the marketing of forest products. 64 the total heterogeneity as proposed by Alderson'o should serve as a building block for further explanation and prediction. Suggested Hypotheses Using the Commodity Approaches Some of the avenues of investigation which might prove fruitful to theory are: (1) All new entrants into an existing commodity classification will tend to behave (function) as those producers already established within that classification. Thu.s, it is possible to predict that a new entrant into a manufacturing field will assume the same functions, contactual actions, distribution patterns, and organizational structure. How then does one account for differential advantage? A new entrant will only break away from the pattern of existing producers of the commodity when there is evidence of potential financial gain. If the pattern is successfully broken, other producers in the commodity class will tend to follow the example and to pattern their actions after the newcomers. (2) It may be possible to derive a concept of disproportionate promotional returns from analysis of input-output tables. If expenditures for media exposure directed at all existing consumers of a given commodity (as determined from an input-output table) are not weighted on the basis of percent of the market which a given consumer group comprises, there may not be effective utilization of advertising dollars. An attempt to balance the advertising budget with the model of the commodity should result in increased sales, whereas movement away from this balance should decrease sales. How then does one explain pioneer advertising or attempts to sell within a new field? This does not contradict the statement of the current effectiveness of advertising, for Same reference as footnote 4, p. 2. Journal of Marketing, April, 1969 pioneer advertising is developmental with no immediate hope of return. (3) It might be possible, through closer analysis of input-output relationships, to derive quantitatively proper apportionment of sales efforts. If a regional input-output model is in balance with another regional or national model, the sales of the commodity should assume the same pattern between models. If a dissimilarity of sales exists between similar regions, then one sales effort is out of adjustment and a reallocation of effort is needed. Thus, the commodity approach also provides a means of documenting market opportunity by reallocation of sales efforts. As marketers continue to refine the terminology associated with the word commodity, the number of commodities will proliferate, making construction of input-output tables increasingly difficult. However, this should not be viewed as a limitation but rather as a challenge to future students. With the increasing refinement of commodity analysis, there should be even greater opportunity to test suggested hypotheses which in turn should lead to new theories. Conclusion Marketers should make greater use of the commodity as the basic building block in theory. The consumer relates his differential advantage to the individual commodity and not the institution which provides it or the function which creates it. Thus, both the institutions for the creation of time and place utility and the functions for the creation of time, form, and place utility should be subordinated to commodities which pass through all four forms of utility—form, time, place, and possession. If one can understand and quantify the relationships pertaining to a commodity as it is converted from meaningless to meaningful heterogeneitv, then this understanding can be broadened to encompass the wide field of marketing and can be fruitful in the search for theory.