The Rise of Marketing and Advertising
from Blackford and Kerr, Business Enterprise in American History
In the 1920s, a new conception of marketing began to appear that influenced business strategy and led to changes in the structure of American firms. Marketing as an orientation involved conceiving of a company as an institution that sold goods as opposed to simply producing them. Marketing meant setting the firm's strategy according to realistic observations of available customers and then organizing the firm to coordinate production, distribution, sales, and service according to those observations. In the 1920s and 1930s, pioneers in the marketing approach to management learned the importance of differentiating their products from those of their competitors, of having a range of products to offer consumers, and of advertising heavily to influence customers' behavior.
During the 1920s, while marketing was emerging as a conscious business strategy, advertising matured as an important industry. The maturation of advertising in the 1920s and the creation of marketing departments and marketing strategies by major firms both promoted consumer values in American society and reflected the rise of the consumer society. In 1919 advertising costs were 8 percent of total distribution costs in industry; by 1929, the share was 14 percent. In that latter year, advertising costs reached nearly $3 billion.
The content of advertising messages shifted in the early twentieth century. Before 1910, advertisers mostly sought to inform customers about products; after 1910, the main goal was to create a desire to purchase products. By the 1920s, advertising executives recognized that theirs was a business to make consumers want products, and they deliberately sought to break down popular attitudes of self-denial and to foster the idea of instant gratification through consumption. The introduction of new techniques for printing advertisements in color opened new possibilities of suggestion and persuasion. As a result of the growth of advertising expenditures in the 1920s, not only did the magazine business prosper but business executives were better able than ever before to inject attitudes favorable to consumption--even for products for which there was no need. The makers of Fleischmann's yeast, for instance, claimed that the product, in addition to leavening bread, cured "intestinal fatigue" when eaten directly. And one advertisement for Listerine, which promoted fears about a disease newly discovered by copywriters, "halitosis," suggested that "unpleasant breath" was the main "obstacle to pleasant business, professional, and social relations" and urged Americans to use the mouthwash as a way of climbing the social and economic ladder.
At the same time that the advertising industry was flourishing, a few business firms launched innovative programs in "commercial research," or what later generations called marketing. A representative of the Saturday Evening Post, a widely circulated weekly magazine, was unhappy with the way advertising space was being sold, because the magazine's space salesmen had no knowledge about their customers' needs or the effectiveness of advertisements. The publisher hired Charles Coolidge Parlin to use socialscience techniques to study those questions, the first market research. In 1916 the nation's largest rubber firm, U.S. Rubber, had established a market research department, and the Swift meat-packing concern followed suit in 1917. These efforts pioneered attempts by American manufacturers to integrate systematic knowledge of markets with advertising and the design and production of goods.
In oligopolistic industries, as price competition lessened, marketing techniques and advertising messages became increasingly important ways for companies to differentiate their products and to promote sales. General Motors, for instance, led the automobile companies in instituting annual model changes that were primarily cosmetic in nature (although Sloan insisted that the company improve and differentiate its products through research and technical innovation as well). Style became increasingly important in selling goods. The development of consumer credit accompanied the evolution of marketing and advertising. Paying for goods in monthly installments rather than with a lump sum became more and more common as America's consumer-oriented society expanded. General Motors set up the General Motors Acceptance Corporation in 1919 to help people finance car purchases, and Ford Motors established a similar agency about ten years later. By 1929, installment buying accounted for 90 percent of sewing machine and washing machine purchases, about 80 percent of all sales of radios, refrigerators, and vacuum cleaners, and 60 percent of car sales in the United States.
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