Exchange Transactions and Relationships

Marketing occurs when people decide to satisfy needs and wants through exchange. Exchange is the act of obtaining a desired object from someone by offering something in return. Exchange is only one of many ways people can obtain a desired object. For example, hungry people can find food by hunting, fishing or gathering fruit. They could beg for food or take food from someone else. Finally, they could offer money, another good or a service in return for food.

As a means of satisfying needs, exchange has much in its favour. People do not have to prey on others or depend on donations. Nor must they possess the skills to produce every necessity for themselves. They can concentrate on making things they are good at making and trade them for needed items made by others. Thus exchange allows a society to produce much more than it would with any alternative system.

Exchange is the core concept of marketing. For an exchange to take place, several conditions must be satisfied. Of course, at least two parties must participate and each must have something of value to offer the other. Each party must also want to deal with the other party and each must be free to accept or reject the other's offer. Finally, each party must be able to communicate and deliver.

These conditions simply make exchange possible. Whether exchange actually takes place depends on the parties coming to an agreement. If they agree, we must conclude that the act of exchange has left both of them better off or, at least,

not worse off. After all, each was free to reject or accept the offer. In this sense, exchange creates value just as production creates value. It gives people more consumption choices or possibilities.

Whereas exchange is the core concept of marketing, a transaction is marketing's unit of measurement. A transaction consists of a trading of values between two parties. In a transaction, we must be able to say that one party gives X to another party and gets Fin return. For example, you pay a retailer £300 fora television set or the hotel £90 a night for a room. This is a classic monetary transaction, but not all transactions involve money. In a barter transaction, you might trade your old refrigerator in return for a neighbour's second-hand television set.

transaction

A erode between i

parties that involves at least two things of value, agreed-upon conditions, a time of agreement and a place of agreement.

Going Back lo Barter

With todays high prices, many companies are returning to the primitive but time-honoured practice of barter - trading goods and services that they make or provide for other goods and services that they need. The European barter market is estimated to be worth up to S200 million a year and forecasts put the value at nearly $1 billion by the year 2000. On a global scale, companies barter more than $275 billion worth of goods and services a year, and the practice is growing rapidly.

Companies use barter to increase sales, unload extra goods and save cash. For example, companies are offering television programmes to broadcasters in exchange for air-time: Unilever owns the European rights to the TV game shows, Wliesl of Fortune and Jeopardy, which it barters to stations all over Europe. Others like PepsiCo traded Pcpsi-Cok and pizza parlours to the Russians for ships and Stolichnaya vodka, while Pierre Gardin served as a consultant to China in exchange for silks and cashmeres, and Turnkey Contracts and Consultancy, a Singapore company, was paid in Burmese logs for the construction of an International Business Centre in Burma's capital city, Rangoon.

As a result of this increase in barter activity, many kinds of speciality company have appeared to help other companies with their bartering. Retail-trade exchanges and trade clubs arrange barter for small retailers. Larger corporations use trade consultants and brokerage firms. Media brokerage houses provide advertising in exchange for

Marketing Highlight

products, and international barter is often handled by counter-trade organizations.

Barter has become especially important in today's global markets, where it now accounts for as much as 40 per cent of all world trade. The present world currency shortage means that more and more companies are being forced to trade for goods and services rather than cold, hard cash. International barter transactions can be very complex. For example, a trader for KGD International, a New York-based bartering company, arranged the following series of exchanges:

[The trader] supplied a load of latex rubber to a Czech company in exchange for 9,000 metres of finished carpeting. lie then traded the carpeting for hotel room credits. The rooms were traded to a Japanese company for electronic equipment, which [the trader] bartered away lor convention space. The final [exchange] came when he swapped the convention space for ad space that his company used.

SOURCES: 'TV barters for the future'. The Kumpean (25-31 March 1994); Victor Mallet, 'Barter proves best for business, Burma style', Financial Times (8 February 1994), p. 8; Quote from Cyndee Miller, 'Worldwide money crunch fuels more international barter', Marketing Nemos (2 March 1992). p. 5; also see Arthur Bragg, 'liarterinf; comes of age', Sales and Marketing Management (January 1988), pp. 61-3; Joe Mandese, 'Marketers swap old product for ad time, space', Advertising Age (14 October 1991), p. 3.

relationship marketing The process recreating, maintaining and enhancing strong, value-laden relationships with customers and other stakeholders.

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 social-action 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.

Transaction marketing is part of the larger idea of relationship marketing. Smart marketers work at building long-term relationships with valued customers, distributors, dealers and suppliers. They build strong economic and social tics by promising and consistently delivering high-quality products, good service and fair prices. Increasingly, marketing is shifting from trying to maximize the profit on 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.

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market

The sec of all actual arid potential buyers of a product or service.

Continue reading here: The Selling Concept in Marketing

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Readers' Questions

  • veera
    Which one of the key concepts of marketing refers to a transaction?
    1 year ago
  • Exchange
    • maxima galbassi
      Which of the following might be given or received in an exchange when marketing occurs?
      1 year ago
    • -Advertising -Promotions -Product Samples -Discounts -Coupons -Price Quotes -Sales Materials -Credit Terms -Product Demos -Rebates -Customer Loyalty Programs
      • alice
        Is the act of obtaining a desired object from someone by offering something in return.?
        1 year ago
      • Yes, this is an accurate definition of a trade.
        • REIMA
          What is exchange in terms of marketing?
          1 year ago
        • Exchange in marketing refers to the process of obtaining a desired product or service by offering something in return. It is used to create mutually beneficial business relationships between buyers and sellers.
          • zak
            What is business Law exchange, transaction and relationship?
            1 year ago
          • Business law covers the exchange, transaction and relationship between a business and its customers, workers, shareholders and competitors. It includes the laws governing contract formation, sale and distribution of products, labor-management relations and corporate governance. Business law also covers topics such as bankruptcy, secured transactions, licensure and intellectual property.
            • Pirkka Heikkil
              What is exchange,transactions,and markets?
              1 year ago
            • Exchange is an organized market in which stocks, bonds, commodities, options, and futures are traded. Transactions refer to the buying and selling of goods and services with the use of currency. Markets refer to the places where buyers and sellers come to trade goods and services.
              • Anne
                What are the differences between transaction and exchange in marketing?
                1 year ago
              • Transaction is the exchange of goods and services between buyer and seller in a commercial setting. Exchange is the process of obtaining something of value in return for something else of value. Transaction may be a part of the exchange process, but exchange can exist without a transaction. Transactions are usually the result of an exchange, but the two concepts are distinct and should not be confused. Transactions occur when goods and services are exchanged for money, while exchanges are the process of exchanging goods and services between two or more parties.
                • jorma
                  What is the difference between transaction and exchange in marketing?
                  1 year ago
                • Transaction refers to a single commercial activity between a buyer and a seller, while exchange implies a relationship between the two in which multiple transactions take place over time. In marketing, transaction occurs when a customer purchases a product or service, while exchange happens when a customer trades something of value (such as loyalty points) for a different product or service.
                  • suvi
                    What is the relationship between exchange and trasaction?
                    1 year ago
                  • A transaction is an exchange of something of value between two or more parties, typically involving money. Exchange is the trade of one good or service for another, or the trade of money for goods or services. Exchange is the basis of all transactions.
                    • christine
                      What is the relationship and difference between exchange and transaction?
                      1 year ago
                    • Transaction is an exchange of something of value between two parties, while exchange is the process of trading goods and services between two parties. The relationship between exchange and transaction is that a transaction is a type of exchange. The difference is that while exchange generally involves two parties exchanging goods or services, transactions typically refer to the actual exchange of money.
                      • dawit
                        What is the term Exchange tansaction and relationships?
                        1 year ago
                      • Exchange transactions and relationships refer to the process of exchanging goods, services, or money for mutual benefit. This type of transaction is often used to establish a mutual relationship between parties, typically in a business or financial setting. Examples include buying and selling goods, services, or money; signing contracts; managing investments; and executing mergers and acquisitions.
                        • melampus
                          What is the meaning of exchange transaction and relationship in marketing concept?
                          1 year ago
                        • The exchange transaction and relationship in marketing concept is an integral part of the marketing process. It involves the exchange of goods and services for money, or the equivalent value of goods or services. It is a mutually beneficial relationship between a buyer and a seller, where both parties benefit from the exchange. The exchange strengthens relationships by providing a platform to meet the needs of both parties. It also helps create brand loyalty and trust among consumers and businesses.
                          • Ilkka Uppa
                            What is the similarities of exchange and transactions in marketing?
                            1 year ago
                          • Both exchange and transactions in marketing involve the transfer of goods or services between parties. Exchange involves the transfer of goods or services between two parties in exchange for something of value. Transactions involve the exchange of money for goods or services between two or more parties. Both require mutual consent and are an important part of marketing.
                            • timba
                              What is exchange and transaction in marketing?
                              1 year ago
                            • Exchange and transaction in marketing refer to the process between two or more parties to buy and sell goods and services for value. This process begins when one party has a need that can be satisfied by another party. Each party negotiates the terms and conditions of the exchange, and when agreement is reached, a transaction is completed.
                              • ambrogio
                                What is exchange transaction and relationship?
                                1 year ago
                              • Exchange transaction is a type of transaction between two or more parties who agree to exchange something of value. This transaction could involve two or more parties exchanging goods, services, or even money. The relationship between the two or more parties involved in the exchange transaction is an agreement to exchange something for something else. This could be an agreement to provide goods or services in exchange for money, or to provide money in exchange for goods or services. The relationship is based on mutual trust, respect, and understanding between the two or more parties.
                                • JACK
                                  Is bartering a sales promotion activity?
                                  1 year ago
                                • Bartering is the exchange of goods or services between two parties without the use of money. In the context of sales promotion activities, bartering is an agreement in which two parties exchange goods or services without a monetary exchange. This type of agreement can be used to promote a particular product or service. For example, a company might offer a product or service to another company in exchange for advertising or product placement.
                                  • Jana
                                    What is exchanges transactions and relationships?
                                    1 year ago
                                  • Exchanges transactions and relationships refer to the trading activity between two or more parties usually involving the exchange of goods, services, or both. It involves a series of interactions between the two parties, in which each party contributes something of value to the other in exchange for something else of value. These interactions help to build and strengthen the relationship between the two parties.
                                    • Merja
                                      What is product and services exchange transactions and relationships?
                                      1 year ago
                                    • Product and services exchange transactions and relationships refer to the exchange of tangible goods, intangible services, or both between two or more parties. These transactions can be for cash or for trade in which the parties exchange goods and services for something else of equal value. They involve the transfer of ownership from one party to another, and may involve both parties making some kind of commitment to one another. Relationships between the parties involved in the exchange are also important and must be carefully cultivated and managed.