ABSTRACT
This chapter provides the reader with an overview of the assumptions, theoretical building blocks and concepts that have shaped the economic approach. The fast-moving consumer goods industry has since played a major role in the evolution of brand management research and practice, and these ideas are reflected in the assumptions, theories, methods and managerial guidelines of the economic approach. The economic approach builds on one of the most fundamental concepts in marketing, namely the idea that the right marketing mix will generate optimal sales. The assumptions and premises of the economic approach have their origin in the ideas of exchange from microeconomic theory. The model of exchange in microeconomics is purely theoretical, which means that the assumptions and key models are the result of theorizing rather than empirical research. Transaction cost theory is closely linked to the neoclassical microeconomic logic explained earlier and defines the firm theoretically in relation to the marketplace.
