The barriers to transactions described in the transaction cost theory stand in oppo-
sition to the assumption that consumers act rationally because transaction cost
theory proposes that in any exchange or prior to any transaction consumers are
limited by bounded rationality. This means that transaction cost theory acknowl-
edges that consumers are not able to have a complete overview of options and they
are hence not able to make a perfect rationally based consumption decision,
because they are not cognitively able to grasp all information about all available
brand alternatives. Since consumers are constrained by limited cognitive capabil-
ities which confine their ability to make rational consumption choices, it is crucial
that the marketer facilitates transactions by providing the consumer with the right
information about the product and about the product utility benefits, and ensures
that the product itself is available at all relevant points of contact with the
consumer. Insights into these barriers to transactions have spurred the devel-
opment of the next supporting theme: the concept of marketing mix. It was origi-
nally developed as a means for transaction marketing and provided the operational
planning and execution tools that can facilitate transaction exchanges between
brand and consumer and help consumers make the right rationally based
consumption decisions. The second supporting theme of the economic approach is
hence the marketing mix also known as the Four Ps.
Box 4.2 Transactional versus relational perspective on brand
management
The transactional perspective has a rather short-term time perspective,
because transactions are perceived to be isolated events and the primary
focus for the marketer is hence the next transaction rather than relationship
building. Price is believed to be an important parameter and consumers are
assumed to be focused on the functional, technical quality of the brand or
product they purchase. Managerial efforts for companies operating in a
transactional momentum are often directed to the rather tactical management
and improvement of the marketing mix, to target large numbers of
consumers with mass communication, and ensuring product quality, sold in
the right place, for the right price.
In a relational perspective, the time perspective is longer and the primary
focus is on building long-lasting relationships with consumers. Consumers
are in the relational perspective perceived to be less sensitive to price and
more concerned with the quality of the interaction or relation they have with
the brand. Companies operating in the relational modus operandioften
focus on the combination of database techniques and direct marketing tools
aimed at ensuring a good and stable relation with the individual consumer,
rather than the more mass communication-oriented means of communi-
cation used in the transactional perspective.
SourceHultman and Shaw (2003)36 Seven brand approaches