Transcript F. Zeuthen Problems of Monopoly and Economic Warfare 1930

The Copenhagen School
Marketing theory between rigor, realism and relevance
By
Erik Kloppenborg Madsen, Ph.D
Department of Business Administration
Business and social science
University of Aarhus
Danish marketinghistory:
publications so far
• Erhvervsøkonomiens fødsel I industrialismens
ånd eksemplificeret ved marketing, Århus
Universitetsforlag, 2009
• Emerging Marketing (1860-1960) the case of
Denmark, 2010, Conference paper
• Et spejl af tiden?: Hages håndbog I
handelsvidenskab, 1894-1954, Erhvervsarkivets
Årbog, 2010.
• From price theory to marketing mix, Århus 2011
What is a School of marketing thought?
(Shaw & Jones,2005)
• A body of knowledge
• Developed by a number of scholars
• Describing one or more aspects of marketing activities
This definition produces several schools (9 mentioned)
A certain approach to a certain phenomenon ?
Competition between schools?
Schools of marketing
according to
Shaw & Jones (2005)
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Marketing functions
Marketing commodities
Marketing institutions
Marketing management
Marketing systems
Consumer behavior
Macro-marketing
Exchange
Marketing history
The Marketing management school
(Shaw & Jones, 2005)
• Selected Pioners
– Alderson 1956, 1965, Howard 1956, Kelley and Lazer 1958, McCarthy 1960, Kotler 1967
• Questions addressed
– How should managers market goods to customers
• Level or focus of analysis
– Micro: Business firm as seller/supplier + Any individual or organization as supplier
• Key concepts and theories
– Marketing mix, Customer orientation, Sementation, tageting and positioning
Max Kjær Hansen
• The builder of the empire
• The importance of advertising for the modern society: “a
technical device comparable with the steam engine”. (1937)
• Advertising (marketing) links production and consumtion in
modern economies
• The purpose of Business Economics “betriebswirtschaft”,
including marketing management, is to look closely into the
conditions of profitability of the individual firm.
Mickwitz, 1966
• “the country whose research has above all characterized and
encouraged microeconomic theory in Scandinavia. Within the
domain of competition and marketing it is not out of place to
speak of a separate Danish school, “the Copenhagen school” ,
which has brought the multi-parameter methodology into the
limelight.”
Danish/scandinavian scholars involved
Max Kjær Hansen: relevance and empirical realism
Frederik Zeuthen: Problems of monopoly and economic warfare,
1930
Ragnar Frisch: (the concept of action parameter), 1933
Hans Brems: (the distinction between consumer – and producer
criteria)
Børge Barfod: first graduate from CBS 1931, first theoretical
paper on advertising in a rigorus economic frame, 1937
Arne Rasmussen: Codified the theory of action parameters, 1955
F. Zeuthen
Problems of Monopoly and Economic Warfare
1930
“This investigation is chiefly dedicated to business
economists and other intermediaries between
economic theory and actual trade, who are poorly
served by the ordinary theories of competition
and simple monopoly, ….”
The sales function of the individual firm
q = q(D1, D2, D3)
– D1 Primary determinants (needs, buying power,
market conditions)
– D2 Secondary determinants (price, promotion,
product quality)
– D3 Tertiary determinants (trends, business
fluctuations, fashion, seasonal fluctuations)
The action parameters
(secondary determinants)
• q = q(a1, a2, ai, ..., an)
– Where
• ai are the firm’s action parameters
Summing up
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An early Danish school in Marketing Management
Strongly based on the “new” microeconomics
Differed from developments in Sweden, US, UK
Developed by at number of mainly danish researchers
Codified by Arne Rasmussen
Not well marketed outside Scandinavia
Peaked in 60s/70s
Last major contribution by Otto Ottesen
Rigor, realism, relevance
Relevance
• Marketing
Marketing Management
Management
(Afsætningsøkonomi)
Rigor
Realism
Marketing as a fragmented adhocrazy
(see. whitley 1984)
• Marketing as one ideal type characterized by:
• 1. low dependence between researchers
– Functional (results and methods used)
– Strategic (research issues and perspective)
• 2. High degree of task uncertainty
– Technical (choice of approach and method)
– Strategic (choice of problems and goals)
Marketing as a fragmented adhocrazy
• Implications for relevance
• Implications for realism
• Implications for rigor
The new economics of the 30ties
• Clapham, J.H. (1922) Of empty economic boxes
• Ed. Chamberlin, 1933: The theory of monopolistic
competition
• Joan Robinson, 1933: Economics of imperfect competition