Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

1. Marketing’s Role in the
   Global Economy

Text © The McGraw−Hill

Companies, 2002

Marketing’s Role in the Global Economy 17

For example, if the population of our imaginary village increases from 5 to 10 fam-

ilies, 45 transactions are needed without an intermediary. Using an intermediary

requires only one transaction for each family.

We’ve introduced the concept of a central market, the role of a money system

for exchange, and the development of middlemen specialists by discussing a simple

example in the context of a primitive society. But, you should realize that these

same ideas are just as relevant in a modern society. Today, the intermediaries have

permanent trading facilities and are known as wholesalersand retailers.In fact, the

advantages of working with intermediaries multiply with increases in the number of

producers and consumers, their distance from or difficulties in communicating with

each other, and the number and variety of competing products. That is why there

are so many wholesalers and retailers in modern economies.

On the other hand, technology is allowing some customers and some producers

to meet for exchange in a central market that is located in “cyberspace”—that is,

on the Internet—rather than in a mutually convenient geographic location. Com-

puter systems developed by a new form of market specialist allow sellers and buyers

to communicate and engage in exchange even if they are thousands of miles apart.

In fact, the Internet makes it possible for sellers to hold auctions in which thousands

of potential buyers from different parts of the world bid against each other to deter-

mine the price that will ultimately be paid for a good or service. Obviously, this is

a very different type of central market, but it is important to see that it is simply a

variation of the same basic idea. From a macro-marketing perspective, the main pur-

pose of markets and market intermediaries is to make exchange easier and allow

greater time for production, consumption, and other activities—including leisure.^10

Intermediaries develop and offer

specialized services that facilitate

exchange between producers

and customers.

Central market and

intermediaries may

develop in cyberspace

Internet

Internet Exercise eBay features a number of online auctions in which differ-

ent sellers auction off computers, consumer electronics, and other products

to buyers. Visit the eBay website (www.ebay.com) and review an open auction

for a consumer electronics product. What are the advantages and disadvan-

tages of this market for sellers? For buyers?