A review of empirical studies of aggregate marketing costs and productivity in the United States
This article reviews empirical studies of aggregate marketing cost and aggregate marketing productivity in the United States. A methodological comparison is made of five cost studies for 1929 and seven productivity studies covering a period from 1869 to 1968. The cost studies do not clarify—one way or the other—if marketing costs too much or too little. The productivity studies, on the other hand, despite a variety of methodologies, reveal a rising secular trend over the past century. Thus, it may be concluded that irrespective of changes in cost, marketing is becoming more productive.
Labor Saving Devices in Marketing
It will be noted that in case A, that marketing takes So per cent of the consumer's dollar, in case B, 60 per cent, and in case C, even though the cost was cut in half, 331 per cent. We should remember that even in case B, where marketing costs have increased, that the consumers are benefited as the price of the article is reduced. The consumer is interested in the total cost and if this can be reduced by large scale production he is better off even if marketing costs are increased. The fact that marketing have decreased but that the decrease has been less than the decrease in production costs, so that marketing takes a larger proportion of the consumers' dollar. To use a familiar illustration, let us assume that at a time when we operated under a local handicraft or small-factory economy, that it cost 80¢ to make an article and 20¢ to sell it. Marketing thus took 20 per cent of the consumer's dollar. It may be that with the development of a national economy with large scale production, that the cost of marketing has remained stationary in amount but increased relatively (case A); that the cost of marketing has increased (case B); or that the cost of marketing has decreased (case C). The effect of the reduction in cost of production and the three possible changes in the cost of marketing may be illustrated as follows: T E CH N OLOGI CA L improvements have reduced the cost of production, as measured in output per worker, and have increased the standard of living. The rate of improvement has been rapid since 1880 and was especially rapid from 1922 to 1928. Several estimates have been made of the increased output per worker in production-manufacturing, farming, and mining. Perhaps those of Ezekial' are as good as any. According to, these from 1870 to 1900 the output per worker increased S6 per cent in manufacturing, 69 per cent in agriculture, and 178 per cent in mining. From 1900 to 1930 the output per worker increased 63 per cent in manufacturing, 41 per cent in agriculture, and 47 per cent in mining. It is not believed that the level of consumption has increased so much. Production is only part of our economy and it may be that the other part-marketing-has made no similar progress. The general opinion is that there has been no such increase in the efficiency of workers engaged in marketing-wholesaling, retailing, transportation, warehousing, assembling of farm products, and selling by manufacturers and mine operators. The common opinion seems to be that labor saving machinery has not and, perhaps, can not be applied to reduce costs in marketing to the same extent that it has in production. Some think that marketing costs have remained stationary, others that they have increased, and others that they
Computer Simulation Modeling
Computer simulation as a research methodology is presented as the intersection of modeling, simulation, and computer analysis. Five component parts of simulation models are identified: input variables, output variables, assumptions, algorithms, and parameters. Computer simulation (CSM) has two primary uses for those interested in the study of organizations or who work within them: theory development and policy planning. The advantages and disadvantages of CSM for each of these purposes are examined and recent examples for each are explored.