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Effects of the Internet of Bagozzi's exchange paradigm

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Introduction

In what ways has the development of the Internet created challenges to Bagozzi's views of exchange? "Bagozzi's exchange paradigm has emerged as a framework for conceptualising marketing behaviour." (Bagozzi, 1975: pp. 32). This theory identifies the parties involved in any transaction, and the intangible and tangible entities are exchanged. By identifying the actors/parties, this theory acts as a valuable managerial tool, by helping to think what is being exchanged, and with whom. This theory has helped to see beyond the tangible products being exchanged, but to consider the intangible aspects of the transaction and all entities. The weakness of this being that it is difficult to identify all intangible entities within the transaction. The theory also states the exchange is reciprocal and mutually beneficial (Bagozzi, 1975: pp. 32), i.e. that the entities being exchanged are perceived to be of equal value. Furthermore, Bagozzi (1974) observed that complex exchanges could include both overt and covert coordination. Bagozzi identified three different types of exchange: restricted, generalised and complex. "Restricted exchange refers to two party reciprocal relationships", where both parties give and receive from the other party, (Bagozzi, 1975: pp. ...read more.

Middle

Personalisation allows a firm to identify individual consumer needs and inform them of products that will satisfy them. Historically this would be the role of a salesperson to a customer in a restricted exchange (Bagozzi, 1975: pp. 32). Bagozzi's theory applied well to the face-to-face transactions of the 70's, however exchanges over the Internet are very different from the in-store transactions that Bagozzi's theory of exchange applied to, and offer many challenges. Transactions over the Internet have more parties than traditional exchanges, as in order to access the Internet a user must use an Internet service provider. The Internet service provider gives access to the Internet, however it also logs the websites that the user has viewed. So here this could be seen as a "middle man", who receives information on the websites visited as well as a premium, and in return allows access to the Internet. This is part of all Internet exchanges, and so it needs to be identified as a party, as the information that they receive is used to target products and services. Figure 1: Note: Adapted and altered from Bagozzi: Marketing as Exchange (1975) ...read more.

Conclusion

For small exchanges or exchanges were the parties and entities within are clear, I feel Bagozzi's theory is still very important, but I feel it is not easily applied to the diverse range of exchanges brought about by the internet. The Internet was an unforeseen phenomenon that has influenced the exchange (Bagozzi, 1975: pp. 39). The theory still fits the exchange process, as it hasn't changed dramatically, however there are third parties that must be identified, such as the ISP, delivery firms, and other parties that receive information. Delivery is part of the exchange process, however this is part of the service offered by the merchant. If these were identified, it would be possible to differentiate the types of exchange as being restricted, generalised or complex. If this were done, then Figure 1 would be identified as a restricted exchange (Bagozzi, 1975: pp. 32). Within the exchange there is overt and covert coordination (Bagozzi, 1974: pp. 77-81), and think that majority of the third parties that collect information about the consumer's website habits is collected covertly, however it is still part of the process. For example, the ISP's collection of viewed websites is used for marketing purposes. Although it is not a party to the exchange, it should be recognised as a third party. ...read more.

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