Richard Bagozzi’s pioneering work on the Exchange Theory in the 1970s created a framework for marketers to better understand how they can influence behavior. While traditional marketing revolves around a simpler concept of reciprocity in which a product or service is exchanged for money Social Marketing depends on a more complex understanding of exchange. Social marketing complexity is due to the fact that the benefits offered by the marketer have not necessarily been understood, or in some cases do not directly apply to the target audience so much as to society. In some cases, the behavior sought by the marketer might run completely counter to the target audience's prevailing norms.

For that reason exchange theory is central to social marketing. A target audience’s perception of the benefits they will receive through the adoption of a certain behavior is the key motivation that marketers must tap into.

Therefore a highly developed understanding of which benefits are most important to the audience is crucial to a campaign’s success. Research is framed around the audience’s values and informs the marketer what types of incentives must be offered as a result of the new behavior being promoted.

Exchange theory focuses on the audience. The application of exchange theory allows social marketers to understand the consumer mindset and design a behavior (product) and message (promotion) that appeal to the audience’s pre-existing values. More directly, exchange theory provides insight into the audience’s perception of the price of the existing behavior weighed against the cost of altering that behavior (or in some cases maintaining behavior).

Sources:
Andreason, Alan R. (2000). Intersector Transfer of Marketing Knowledge, Handbook of Marketing and Society, Sage Publications, Washington, DC
Smith, William A. (2000). Social Marketing: An Evolving Definition, American Journal of Health Behavior, Washington, DC

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