American Economic Association

Marketing Behavior and Executive Action: A Functionalist Approach to Marketing Theory by

Wroe Alderson
Review by: Daniel Feinberg
The American Economic Review, Vol. 47, No. 6 (Dec., 1957), pp. 1058-1060
Published by: American Economic Association
Stable URL: http://www.jstor.org/stable/1810080 .
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1058 THE AMERICANECONOMICREVIEXV
material of the kind presented in this book. Teachers of economics might do
well to make more use of this kind of material.
The book concludes with some 30 pages of appendixes, includino reprints
of statistical tables useful in connection with the text.
In a market economy there is, perhaps, no higher praise to be offered to the
authors of a commercial textbook than to adopt it for classroom use. I intend
to try this one myself.
STANLEY REITER
Purdue University
Marketing Behavior and Executive Action-A Functionalist Approach to
Marketing Theory. By WROE ALDERSON. (Homewood, Ill.; Richard D.
Irwin. 1957. Pp. viii, 487. $6.50.)
Once in a while an author produces a book which is one of those happy
marriages of information and insight. This is such a book. Alderson's keen
observation and analysis of contemporary marketing theory and practice
stamps this book as an outstanding performance. In fact, its very vitality
makes it hard to confine the volume's ideas within the compass of a brief
review, and consequently the present discussion may convey only a fragmen-
tary notion of the book's worth.
Most salient is the freshness of the approach. It is an eclectic one in the
best sense. Alderson combines psychology, economics, sociology, marketing,
etc., both illustratively and substantively. He gives this approach a new label
-Functionalism-not precisely distinguished, but why cavil? Distinguishing
his approachfrom the more traditional commodity and institutional approaches
of marketing theory, Alderson defines his functionalism as "an aspect of a
general theory of human behavior" (p. 24). For Alderson, marketing is an
organized behavior system with patterns of power and communication, inputs
and outputs and internal and external adjustments. This is indeed almost a
sociology of marketing. These ideas are first examined in the preliminary
chapters which relate marketing to the other behavioral sciences, and represent
an attempt to establish the rationale of the functional approach. In Part II,
the heart of the book, Alderson applies the conceptions developed in the open-
ing chapters. Part II is captioned "The Theory of Market Behavior," and
it can be summarizedby using his own words (p. 99):
The functionalist approachto competition emphasizesrivalry within and
among behavior systems in the search for differentialadvantage. Negotia-
tion is a major topic in the present view, accounting for what may be
called the vertical relationships of behavior systems as compared to the
horizontal relationships constituting competition. The treatment of con-
sumer motivation takes the household as the fundamental unit and con-
siders aspects of its structure and functions which determine the course
of consumerbuying. The discussion of exchange describes the four aspects
of sorting which produce economies in matching supply and demand.
Price is discussed in terms of the uses and limitations of the marginalanal-
ysis. Some basic problems of price policy are also discussed, including
the overriding problem of maintaining an integrated price structure. The
possibilities of creative marketing in stimulating demand are considered

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 BOOK REVIEWS 1059
with respect to such processes as product innovation and advertising. The
market transaction is analyzed to show how it has been modified to in-
crease marketing efficiency. Finally, the dynamic character of modern
markets is shown to rest on competitive efforts at market organization.
(The italicized phrases indicate the subject matter of the eight chapters
comprising Part II).
It can be seen from this, that this book attempts to recast marketing
theory into a new mold. There is a profusion of novel insights into economic
and marketing problems. For example, in discussing bilateral monopoly
Alderson declares that agreements between manufacturers and distributors
might well be productive of low prices to consumers rather than high prices
as postulated by orthodox theory. In fact he states that he "has yet to see any
real cases which would support the theoretical possibility . . ." (p. 135). At
another point, in analyzing what he calls "Matching and Sorting: The Logic
of Exchange," Alderson contributes the interesting notion of technological
distance between producer and consumer. This is the idea that goods are
assorted (or matched) in accordance with market functions, each stage of the
market producing different assortments, and the whole tied together into a
smoothly functioningfsystem by the channels of marketing (pp. 215-16).
Many other illuminating ideas could be cited.
Of greater interest to economists perhaps, would be Alderson's discussion
of marginal analysis, indifferenceand substitutability (Ch. 8). The theoretical
level is neither high nor rigorous,but it must be rememberedthat this is a text-
book in an applied field. This is not intended to belittle nor excuse. Alderson's
superior gifts of analysis and perceptive insight are evident on every page. In
fact, perusal of even the brief critique of marginal analysis in the work may
yet serve as a useful reminder to those theorists who, enamored of the logic
of the graphs and equations they develop, come to believe that human beings
may actually behave in accordance with their devices. Alderson comments:
"Marginal analysis applies to elements which can somehow be reduced to a
common quantitative basis. When this cannot be done, there are key manage-
ment decisions which lie beyond the reach of the marginal approach" (p. 244).
What does all this lead to? Part III attempts to furnish the answer. In this
section, the previously developed concepts are utilized for the purpose of pro-
viding a guide to executive action in the market place. The final chapter, for
example, evaluates such matters as the marketing approach to quality con-
trol; marketinganalysis and organizationproblems; marketingand investment
planning. In the closing pages of this chapter, however, Alderson philosophizes
concerning the forces of change within our economy and our society. Here he
is less successful than in the technical areas of discussion. In detailing the
fate of our economy according to Marx, Schumpeter and Charles F. Roos
(an interesting trinity!) he is somewhat diffuse and lacking in the bite and
clarity which characterize the remainder of the book. It is possible that the
mechanics of textbook production required its inclusion, but it is obvious
that a subject of such magnitude cannot be adequately treated in a few pages
relegated to the end of the book.
Summing up, there can be no question that this book is worth many times

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1060 THE AMERICANECONOMICREVIEW
the price of admission, and as a text in marketing theory it is far superior
to practically all that have gone before.
DANIEL FEINBERG
New York City Community College
Brooklyn, N.Y.

Industrial Organization; Government and Business;

Industry Studies
The Politics of Industry. By WALTON HAMILTON. William W. Cook Founda-
tion lectures 1955. (New York: Alfred A. Knopf. 1957. Pp. xvi, 169.
$3.50.)
In recent times, as economists have become increasingly concerned with
respectability, it has come about that some of the older generation seem very
young in their surviving criticism and complaint, just as some of the younger
seem very old in their amiable conformity. Walton Hamilton is less young
in years than others. This book is based on lectures given at the University
of Michigan where he studied under Fred M. Taylor, Henry C. Adams, and
others when the century was still new. But throughout there is a fine, youthful
exuberancewhich manifests itself in repeated assaults on the more comfortable
cliche's of free enterprise and a marked conviction that the economic world
could still do with some remaking. The essays are also both lucid and learned
as befits a man who has combined a careeras lawyer, public servant, economist,
and instructor in medieval history. They are spiced with gay and wicked
humor-he has Adam Smith observing that lawyers do not meet, even on the
most innocent of occasions, without causing an increase in the price of re-
tainers-and are altogether a delight.
The author begins by attacking the notion that a sharp line divides the
sphere and functions of the private firm from that of government-a notion
that is at once so oversimplifiedas to be all but simple-minded and that rules
in at least nine-tenths of our economic and political comment. For while the
professional business orator proclaims the need for preserving the integrity of
private enterprise in face of the inroads of public authority, the private corpo-
ration has long been occupied in appropriating the authority of the national
state for its own purposes. It is Hamilton's view that this tendency is proceed-
ing at an accelerating rate and that we are by way of having a rebirth of the
"honorable" trading company which reinforces ordinary functions with a
de facto grant of public authority. The several lectures are concerned with
various ways in which this power is won-by having control of the public
regulatory process, as the railroads have, if not controlled, at least profoundly
influenced the Interstate Commerce Commission; through skillful manipula-
tion of the patent law; through international operations that, in effect,
transcend national authority; and in many other less portentous ways.
This description is the heart of the book. Through it runs a strong undertone
of criticism-the sense that these things shouldn't be. And in the last chapter
the author has a few things to say about what might be done. Since he has
already shown that the regulation of the regulators is an admirable device for

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