What has to happen for an exchange to take place?

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Chapter 6 / Exercise 6.72

Chemistry for Engineering Students

Brown/Holme

Expert Verified

At the beginning of any marketing course or programme it is important to appreciate how exchange processes work. An exchange process is simply when an individual or an organisation decides to satisfy a need or want by offering some money or goods or services in exchange. It’s that simple, and you enter into exchange relationships all the time.

The exchange process extends into relationship marketing. With relationship marketing we purposefully look at the long-term relationship with our target audience, and aim to grow our business. By delivering value to our customers we consistently nurture the relationship with customers. Later in your studies you will come across relationship marketing and customer relationship management, which encompass the traits of a basic marketing exchange process and take it much further.

Exchange is the act of obtaining a desired object from someone by offering something in return.

(Armstrong et al 2009)

For example you go into a restaurant and order your favourite meal. You eat the food and then you pay for it with your credit card. That’s a basic exchange relationship.

You use your Android or iPhone to download an app and you pay for it using PayPal. Again you have gone through and completed an exchange
process.

You see a newspaper advertisement asking you to donate blood and you return a coupon to become a blood donor.

You watch the news on TV and listen to the views of a political candidate, and on polling day you vote for that person.

Can you think of any more examples of marketing as an exchange process? Write down three more examples in addition to those above.

Marketing managers attempt to engender a response from a marketing stimulus. This is the exchange process as it begins. Let’s remember that marketing extends further than goods or services. It could be that a government is trying to persuade its population to stop smoking, or speeding. So marketing is a series of actions and plans that are designed to recruit, retain and extend goods and services to a target audience. This is the basic exchange process in marketing.

An exchange is a marketplace where securities, commodities, derivatives and other financial instruments are traded. The core function of an exchange is to ensure fair and orderly trading and the efficient dissemination of price information for any securities trading on that exchange. Exchanges give companies, governments, and other groups a platform from which to sell securities to the investing public.

Exchanges are marketplaces for the trade of securities, commodities, derivatives, and other financial instruments.
Companies may use an exchange to raise capital.
A company must have at least $4 million in shareholder's equity to be listed on the New York Stock Exchange.
More than 80% of trading on the New York Stock Exchange is done electronically.
The New York Stock Exchange has been around since 1792.

An exchange may be a physical location where traders meet to conduct business or an electronic platform. They also may be referred to as a share exchange or "bourse," depending on the geographical location. Exchanges are located in most countries worldwide. The more prominent exchanges include the New York Stock Exchange (NYSE), the Nasdaq, the London Stock Exchange (LSE), and the Tokyo Stock Exchange (TSE).

In the most recent decade, trading has transitioned to fully electronic exchanges. Sophisticated algorithmic price matching can ensure fair trading without requiring all members to be physically present on a centralized trading floor.

Day-to-day operations are normally performed over multiple exchange networks. Though some orders may be processed in a physical location like the NYSE, the great majority of trades are completed through electronic means without regard to a physical location. This process has resulted in a substantial increase in high-frequency trading programs and the use of complex algorithms by traders on exchanges.

Each exchange has specific listing requirements for any company or group that wishes to offer securities for trading. Some exchanges are more rigid than others, but the basic requirements for stock exchanges include regular financial reports, audited earning reports, and minimum capital requirements. For example, the NYSE has a key listing requirement that stipulates a company must have a minimum of $4 million in shareholder’s equity (SE).

A stock exchange is used to raise capital for companies seeking to grow and expand their operations. The first sale of stock by a private company to the public is referred to as an initial public offering (IPO). Companies listed on the stock exchange typically have an enhanced profile. Having more visibility may attract new customers, talented employees, and suppliers who are eager to conduct business with a prominent industry leader.

Private companies often rely on venture capitalists for investment, and this usually results in the loss of operational control. For example, a seed funding firm may require that a representative from the funding firm hold a prominent position on the board. Alternatively, companies listed on a stock exchange have more control and autonomy because investors who purchase shares have limited rights.

The New York Stock Exchange is perhaps the most well-known of exchanges in the U.S. Located on Wall Street in Manhattan in New York, and it saw its first trade in 1792. The floor of the NYSE sees stock transactions taking place in a continuous auction format Mondays through Fridays from 9:30 a.m.-4 p.m.

Historically, brokers employed by members of the NYSE would facilitate trades by auctioning off shares. The process started to become automated in the 1990s, and by 2007, nearly all stocks became available via an electronic market. The only exceptions are a few stocks with very high prices.

Until 2005, only owners of seats on the exchange could trade directly on the exchange. Those seats now are leased on one-year terms.

By Chron Contributor Updated September 08, 2020

A marketing exchange is what happens any time two or more people trade goods or services. In marketing theory, every exchange is supposed to produce "utility," which means the value of what you trade is less than the value of what you receive from the trade. Of course, all exchanges in the real world are much more complicated.

Marketing theorists consider exchange to be the central concept without which there would be no such thing as marketing. For an exchange to happen, both parties have to have something of value for each other. For instance, a man visiting a coffee shop might have enough money to buy a cup of coffee while the cafe has the coffee. Both parties must be able to communicate with each other, and both must want to exchange something and be able to do so.

If the customer in the coffee shop can't make himself understood, or if he decides he doesn't want a cup of coffee, or if he turns out not to have quite enough money, then there will be no exchange. If all of the needed conditions are met, there will be an exchange of money for coffee.

Utility is what motivates people to engage in a marketing exchange. In theory, both parties must receive more than what they give. For instance, the man buying the cup of coffee is more motivated to drink coffee than he is to hold on to his money, so he receives utility from the exchange. However, the coffee shop owner also receives utility from the exchange because the amount she receives for the cup of coffee is greater than what the coffee is worth, enabling her to make a profit.

The problem with utility is that it reduces the concept of marketing exchange to its barest bones: the concept of trade. Yet, as marketing agency Thunderhead Works explains, people do not buy a cup of coffee just because they are thirsty. They might visit a coffee shop to use the wi-fi, to soak up the ambiance or to meet with friends. They might choose your coffee shop over a competitor because you sell fair trade coffee. Today's customers are looking for more than a money exchange when they interact with brands.

One of the types of exchange in marketing is known as the simple or "restricted" exchange, so called because there are only two parties to the exchange. Restricted exchanges are one-on-one relationships, so both parties must receive approximately equal utility if the exchange is to be repeated. For example, if the person you buy coffee from is rude to you, you receive less utility from the exchange because you feel dissatisfied. This decreases the chances that you will buy coffee from the same person again. In a successful restricted exchange, both parties are motivated to treat each other fairly.

A generalized exchange involves at least three parties, and each party gives utility to one participant, but receives utility from a different participant. For example, if a woman calls in an order for lunch to be delivered and pays with a credit card over the phone, and the restaurant employs a delivery driver to bring the food, then the woman gives utility to the restaurant, but receives utility from the driver.

Most types of relationship marketing are complex, meaning they involve networks of participants who both give and receive in more than one relationship with each other. For example, a car manufacturer hires an advertising agency, which places an ad on a TV show, which provides entertainment to its viewers, some of whom will see the ad, then buy the car from a dealer, which buys its cars from the manufacturer. The manufacturer, ad agency, TV station, consumer and dealer are all involved in a complex network of marketing exchanges with each other, and all of them receive utility from the relationship.

Because it can sometimes be difficult to assess the fairness of complex exchanges, it is important for everyone involved in marketing to maintain ethical business practices, such as ensuring the quality of the product and avoiding deceptive marketing tactics.

Today, companies are the most successful when they stop focusing on the money exchange and start focusing on the ways they can make the exchange more meaningful to their customers. The question is not 'what is the money value of this exchange?' Rather, it is 'how can we create and market products that is genuinely useful for consumers’ lives?'

Marketing Week, a magazine for the marketing industry, gives the example of Unilever who developed an app that allowed customers to pause and play recipe videos on YouTube with a simple wave of the hand. This adds true value for customers, as it means no more touching the device with floury hands.