Competitive Markets and Finance
The origins of finance can be traced back to the earliest days of reported mercantilism during the 15th century. However, there exist early mercantile trade records that pre-date the code of Hammurabi (1755-1750 BC). If we associate aspects of finance with trade and payment, perhaps an argument can be made for some of the commerce between early humans
trading and bartering for food, tools etc. The
evolution of trade and bartering laid the
foundation for concepts such as debt and
currencies. Currency had the advantages that
it could store value and be accepted by parties.
Today, currency fulfills several economic,
social, investment, and governmental functions.
With the spread of commerce and
consumerism, marketing functions such as
pricing and distribution channels relied on
acceptable currency and financial strategies to
mitigate and stimulate competition, while facilitating society’s economic growth. A historical example could be seen with Sir Walter Raleigh exchange with Queen Elizabet I regarding the exploitation of granted land patents (1584). Raleigh was able to use different types of financing, currencies, and market pricing strategies to maximize his profits without alienating any of the local markets, thus creating a competitive market for society and pleasing the Queen.
Many of the early developments in commerce and trade laid the groundwork for the continued emergence of academic finance and marketing disciplines. Some of the earliest business schools utilizing these disciplines can be traced back to the early1880s. However, it would not be until 1904 that marketing would enter multiple schools' curricula. Interrupted by two world wars, it would take another thirty years for marketing to see an explosion of interest as an academic discipline. By the mid-twentieth century there was a precipitous increase in the interest of marketing as a discipline and strategic corporate tool for growth. The 1950's and 1960's brought about a new level of consumerism and the industrialization of products together with the growth in consumer services. The need to respond to the early competition of this time frame stimulated much of how marketing functions today. From the 1970’s the late 1990s, there was an explosion of business and marketing books, seminars, and research articles along with the growth in business schools. Today there are over 500 Business Schools in the US alone, and marketplace innovations have grown due to advances in both marketing and finance.
Out of necessity economies were starting to experiment with the use of finance in marketing operations. The famous Profitability Impact on Marketing Strategy of the 1970’s to 1980s took on a new and more important perspective in the early part of the 21st century. From 2000 to 2020, the emergence of a fourth wave of Silicon Valley and other US technological hot-spots challenged Finance and Marketing to coordinate as disciplines to achieve both company’s and investor’s objectives in rapidly developing global markets.
The challenges of the Twenty-First Century will not remotely resemble the Twentieth Century's advances any more than the 1800s resembles the 1900s. The new global
market realities of the twenty-first century show the
need to increased access to
capital to implement successful marketing
programs. Competitive (Porter) and
Comparative (Ricardo)advantages will drive
the emerge of new market leaders using new
sources of capital and financial instruments.
Managing the new sources of good and
services will require increased dialog
and collaborative decision making between
marketing and financial management to better time the launch and growth of new products and services, as well as sustaining existing products through their life cycle.
