Marketing should be a partnership, a pledge between buyer and seller to fulfill the individual and collective needs of society in a way that adds value to both sides. Both customers and corporations have the responsibility in this covenant to defend ethical treatment of the earth, to safeguard against practices that could cause injury to workers or consumers, and to demand diversity in product choice (and price) as opposed to allowing monopolies to have manipulative power.
This partnership is founded on several assumptions:
1. Marketing incorporates all that an organization or corporation does and is.
2. Corporations are entities that work as one, and therefore should be treated as persons, both in court and in ethical accountability. Because of this, all workers who are not in agreement with company actions have the responsibility to remove themselves from the whole of that corporation to avoid being personally responsible for the collective proceedings. This also gives executives an extremely important role, as they are making decisions about how to interact and participate in society on behalf of their entire firm.
3. As a direct representation of all people in the United States, our government has the responsibility to share in this pledge of positive and ethical relationships between business and consumer. Passing laws to standardize protection against monopolies, environmental damage or safety for workers and consumers is the job and the role of our government, just as it is the job of individuals in society. This is part of the give-and-take of our corporate and economic landscape.
4. If the future of the business world continues to be one of global domination by the most powerful and wealthy, there is a problem with this model of partnership between corporations and consumers. This problem deals with the issue of power. My hypothesis on the relationship between marketing and society is based on the assumption that there is shared or equal power on both sides of the marketing process. In the case of international politics (and in some domestic politics) that is not the case. Without shared power, a co-creator relationship is impossible. Therefore, for marketing to be ethical and achieve a positive sum value in its relationship with society, business activities would need to have the aid of international human rights observation in all practices where power is imbalanced or oppression is in place. With careful decisions, organizations can change these situations for the better through enlightened marketing, however, they must be held accountable at all times in order not to succumb to the temptation to take advantage of an already oppressive situation.
This theory of partnership based around the goals of environmental protection, safety and diversity of product choice, engages several schools of marketing as outlined by Sheth, Gardner and Garrett in Marketing Theory: Evolution and Evaluation (1988). Enlightened consumers who work against corporate irresponsibility need to be acknowledged as part of the activist school of marketing (p. 127). Evaluating marketing’s role in society brings us into the macromarketing school (138). As we hope for evolution toward the better in partnership with business and consumer, we employ the systems school of thought (p.162). And the belief that corporations and customers should be in relationship to one another comes from the social exchange school (p. 173). Each of these are noneconomic, yet are both interactive and noninteractive ways of thinking.
If Philip Kotler is correct in seeing knowledge and training as the solution for poor economic performance, marketing surely has the potential to be a force for education, learning, and the eventual evolution of our society to a better future (1991, Dolan, ed., Strategic Marketing Management , p.476). However, the source of this “knowledge” we rely on must be scrutinized to evaluate where it comes from. Not all knowledge is wisdom. With wisdom as our goal, and shared responsibility as our reality, conscious consumer and ethical marketers can be a force for great things in society and in the world.
In conclusion, I am left with more questions than answers. Is the corporate world capable of such a transformation that they would depend on wisdom rather than profits as a benchmark of success? Is any individual in our society capable of doing that in a sustained way? Even with the best of intentions in the non-profit as well as the for-profit world, unbalanced power relationships often cause our organizations to do more harm than good. Though we can formulate an ideal picture of what marketing can be and what enlightened economics could contribute to the world, much of that picture is an illusion that may be impossible to realize simply because of human nature.
For the time being, I hold on to an anarchistic hope that each of us as responsible consumers and executives can and should make a difference toward this end in our own ways. Those consumers who don’t see themselves as activists need to be encouraged to vote with their dollars. Those corporate bodies that hold no responsibility to society should be challenged by court and by campaigns that demand justice and educate about their wrongdoings. In the metaphysical world that has only recently entered our collective consciousness; every action produces a ripple that can have wide reaching effects. With enough synergy of intention, it may be possible to do the impossible, to come together as a society that takes care of its needs through the marketing of egalitarian, creative, sustainable production and service.
Monday, October 29, 2007
Monday, October 22, 2007
Memo to the ICIM BOD
Memo To: The ICIM Board of Directors
Re: Being a Market Driven Organization
In the course of my graduate studies, I am learning about the importance of being “market-driven” and I believe this term can be valuable to ICIM. I will give you a description of what it means to be a market-driven organization that will allow all of us to be on the same page as we work for success. This concept is not something to add to our Policies and Procedures document. Instead it involves a holistic goal: our “dominant beliefs, values, and behaviors emphasizing superior customer value and the continual quest for new sources of advantage” (Day, The Market Driven Organization, 1999, p. 6).
Before I begin, it is important to define what the business of ICIM entails. Our customers are our physician members and conference attendees, true co-creators of our product. We sell integrative medical education, an operant resource which our doctors then translate into excellent patient care. We educate, we try to give resources that protect our members from harassment and prosecution, and we work to be a community of support and friendship. Our marketplace is the spectrum of medical education and fraternity that is available, and the changing political conditions in which we operate.
To be market-driven means to have exterior focus on the wider marketplace and includes knowing who we serve and how. It demands that we have coherence within our organization, that our whole structure works together as one, bound by a common culture and able to share information freely and quickly with one another. Being market-driven also means that we must be flexible, quickly changing as the marketplace situation changes. This definition is outlined in The Market Driven Organization: Understanding, Attracting, and Keeping Valuable Customers by George S. Day (1999, pp. 12-13).
A large component that helps us to work together in this way is the capacity to find information that we need. Members of ICIM, employees, people serving on the board, potential exhibitors and patients, and physicians looking for integrative alternatives to their medical education need to be able to find the information quickly and easily. It has been my goal to make our website that place of shared information. Through our website, future leaders of ICIM will be able to know past decisions, and current leaders are able to work more effectively with easy access to documents and meeting minutes. Day describes the importance of this access to knowledge as “synergistic information distribution,” and I believe it is an essential part of working together toward a market-driven mindset (The Market Driven Organization, 1999, p. 104).
One thing that is sorely missing in ICIM is the availability of statistic understandings of the true effectiveness of what we are doing. We need to streamline our activities and energy primarily into the projects that do us the most good, thereby maximizing profitability and creative growth (Day, The Market Driven Organization, 1999, pp. 112-122). Here is a list of some of the knowledge that I think we need in order to get focused on effectiveness:
• How many of the people who call and E-mail ICIM looking for an integrative doctor actually make an appointment to see the doctor we recommend?
• How many doctors are there in each region who are interested in integrative medicine, but who are not affiliated with any educational group? What venues attract those physicians and bring them together where we could communicate with them?
• How many of our members are regular meeting attendees and why? How can we encourage conference attendance among our other members?
• Why do people really join ICIM? What are they looking for?
• What are the most common reasons for a member not to renew?
• How many people on our data base are seriously potential members or conference attendees? How many don’t care?
• How do our membership and exhibitor prices and service compare to our competition?
In a market-driven organization we must learn to take calculated risks, and let possible failure be an acceptable cost at times (Day, The Market Driven Organization, 1999, p. 93). As the economy and political situation swings, the only way we can stay competitive and relevant is by constant learning and creativity. Sometimes our ideas will not work, but the ones that do will make all the difference in helping us stand out. We can’t let ourselves become complacent and continue business as usual without questioning our assumptions and the changing needs of our members and the larger societal spectrum (p. 94).
As we strive toward our goal of being a sincerely caring community of colleagues and friends, we are already taking steps to achieve a market-driven status. Building community means hearing the stories of the challenges in the lives of integrative doctors. As we care for our members’ needs, we will observe the role ICIM plays in their lives and practices. As we share and identify our own challenges as integrative doctors, we will constantly search for how ICIM can provide solutions to those problems (Day, The Market Driven Organization, 1999, p. 89). Being a savvy business involves acting on the information we gather, making good decisions based on the marketplace, and striving to be the best choice there is in the field of integrative medical education.
References
The Market Driven Organization: Understanding, Attracting, and Keeping Valuable Customers,
Re: Being a Market Driven Organization
In the course of my graduate studies, I am learning about the importance of being “market-driven” and I believe this term can be valuable to ICIM. I will give you a description of what it means to be a market-driven organization that will allow all of us to be on the same page as we work for success. This concept is not something to add to our Policies and Procedures document. Instead it involves a holistic goal: our “dominant beliefs, values, and behaviors emphasizing superior customer value and the continual quest for new sources of advantage” (Day, The Market Driven Organization, 1999, p. 6).
Before I begin, it is important to define what the business of ICIM entails. Our customers are our physician members and conference attendees, true co-creators of our product. We sell integrative medical education, an operant resource which our doctors then translate into excellent patient care. We educate, we try to give resources that protect our members from harassment and prosecution, and we work to be a community of support and friendship. Our marketplace is the spectrum of medical education and fraternity that is available, and the changing political conditions in which we operate.
To be market-driven means to have exterior focus on the wider marketplace and includes knowing who we serve and how. It demands that we have coherence within our organization, that our whole structure works together as one, bound by a common culture and able to share information freely and quickly with one another. Being market-driven also means that we must be flexible, quickly changing as the marketplace situation changes. This definition is outlined in The Market Driven Organization: Understanding, Attracting, and Keeping Valuable Customers by George S. Day (1999, pp. 12-13).
A large component that helps us to work together in this way is the capacity to find information that we need. Members of ICIM, employees, people serving on the board, potential exhibitors and patients, and physicians looking for integrative alternatives to their medical education need to be able to find the information quickly and easily. It has been my goal to make our website that place of shared information. Through our website, future leaders of ICIM will be able to know past decisions, and current leaders are able to work more effectively with easy access to documents and meeting minutes. Day describes the importance of this access to knowledge as “synergistic information distribution,” and I believe it is an essential part of working together toward a market-driven mindset (The Market Driven Organization, 1999, p. 104).
One thing that is sorely missing in ICIM is the availability of statistic understandings of the true effectiveness of what we are doing. We need to streamline our activities and energy primarily into the projects that do us the most good, thereby maximizing profitability and creative growth (Day, The Market Driven Organization, 1999, pp. 112-122). Here is a list of some of the knowledge that I think we need in order to get focused on effectiveness:
• How many of the people who call and E-mail ICIM looking for an integrative doctor actually make an appointment to see the doctor we recommend?
• How many doctors are there in each region who are interested in integrative medicine, but who are not affiliated with any educational group? What venues attract those physicians and bring them together where we could communicate with them?
• How many of our members are regular meeting attendees and why? How can we encourage conference attendance among our other members?
• Why do people really join ICIM? What are they looking for?
• What are the most common reasons for a member not to renew?
• How many people on our data base are seriously potential members or conference attendees? How many don’t care?
• How do our membership and exhibitor prices and service compare to our competition?
In a market-driven organization we must learn to take calculated risks, and let possible failure be an acceptable cost at times (Day, The Market Driven Organization, 1999, p. 93). As the economy and political situation swings, the only way we can stay competitive and relevant is by constant learning and creativity. Sometimes our ideas will not work, but the ones that do will make all the difference in helping us stand out. We can’t let ourselves become complacent and continue business as usual without questioning our assumptions and the changing needs of our members and the larger societal spectrum (p. 94).
As we strive toward our goal of being a sincerely caring community of colleagues and friends, we are already taking steps to achieve a market-driven status. Building community means hearing the stories of the challenges in the lives of integrative doctors. As we care for our members’ needs, we will observe the role ICIM plays in their lives and practices. As we share and identify our own challenges as integrative doctors, we will constantly search for how ICIM can provide solutions to those problems (Day, The Market Driven Organization, 1999, p. 89). Being a savvy business involves acting on the information we gather, making good decisions based on the marketplace, and striving to be the best choice there is in the field of integrative medical education.
References
The Market Driven Organization: Understanding, Attracting, and Keeping Valuable Customers,
Comments from "Foundational Theories in Marketing" Class
Marketing is considered applied economics
From the 1960s to Today theorists have concentrated on Interactive, Non-Economic theories of marketing such as:
Organizational dynamics school (value chain components working together, wholesale vs manufacturer)
Systems school(larger, changing systems, "Synergy")
Social Exchange school (social relationships of buyer and seller, marketing is everything about a business, applicable to all transactions)
and Non-interactive, Non-economic theories such as:
Buyer behavior school (why do people act the way they do?)
Activest school (Nader-consumer protection, long term effects)
Macromarketing school (role of business in society, not just the shareholders but also the stakeholders)
From Marketing Theory: Evolution and Evaluation by Sheth, Gardner and Garrett
"Consumers will develop relationships with organizations that can provide them with an entire host of related services over and extended period"
Could a small town do this collectively?
From "Evolving to a New Dominant Logic for Marketing" from Journal of Marketing Jan 04 by Vargo and Lusch
We have to figure out how our products produce effects: operant.
When you are "faith based" that puts you on the goods side rather than the service side
When the customer base is Mennonite, faith becomes an operant product.
"Some of our best marketers are employees who know nothing about Marketing"
-Pete
Love, Energy, Culture, Climate
Maybe these changes are very slow. Slow, slow changes in culture have to lead the way.
But how can American businesses have time to create an evolved culture when free trade has eliminated job security. And why should they?
Is it all about money? Pete says it is about measurable results, one of which is money.
What are other measurable results?
Pete says profit validates a good business plan, but value is lives transformed.
"Your focus is taking care of your customers; the money will follow"
Something is wrong with this!
It reeks of the American Dream, that if we all work hard enough we'll make it in the world, and get everything we want (ie: wealth)
From the 1960s to Today theorists have concentrated on Interactive, Non-Economic theories of marketing such as:
Organizational dynamics school (value chain components working together, wholesale vs manufacturer)
Systems school(larger, changing systems, "Synergy")
Social Exchange school (social relationships of buyer and seller, marketing is everything about a business, applicable to all transactions)
and Non-interactive, Non-economic theories such as:
Buyer behavior school (why do people act the way they do?)
Activest school (Nader-consumer protection, long term effects)
Macromarketing school (role of business in society, not just the shareholders but also the stakeholders)
From Marketing Theory: Evolution and Evaluation by Sheth, Gardner and Garrett
"Consumers will develop relationships with organizations that can provide them with an entire host of related services over and extended period"
Could a small town do this collectively?
From "Evolving to a New Dominant Logic for Marketing" from Journal of Marketing Jan 04 by Vargo and Lusch
We have to figure out how our products produce effects: operant.
When you are "faith based" that puts you on the goods side rather than the service side
When the customer base is Mennonite, faith becomes an operant product.
"Some of our best marketers are employees who know nothing about Marketing"
-Pete
Love, Energy, Culture, Climate
Maybe these changes are very slow. Slow, slow changes in culture have to lead the way.
But how can American businesses have time to create an evolved culture when free trade has eliminated job security. And why should they?
Is it all about money? Pete says it is about measurable results, one of which is money.
What are other measurable results?
Pete says profit validates a good business plan, but value is lives transformed.
"Your focus is taking care of your customers; the money will follow"
Something is wrong with this!
It reeks of the American Dream, that if we all work hard enough we'll make it in the world, and get everything we want (ie: wealth)
Conversation with Peter
Wendy: 1). In "A New Dominant Logic" V&L say " As humans have become more specialized as a species, use of the market and goods to achieve higher-order benefits such as satisfaction, self-fulfillment and esteem, has increased."
I just don't see this happening in our society. In fact, it seems like quite the opposite trends are reality these days. I'm not sure people have ever been so disinfranchised, depressed, spiritually deprived, unfulfilled, unsatisfied and self-hating as they are now. Part of that aweful state of humanity is how consumerism has replaced so many longings for real human connection and community, for spiritual and cultural identity and self-knowledge. What people know today is if you ain't feeling so good: shop!
Considering your feeling that this new paradigm hasn't hit yet, it is possible that society could still change for the better if consumers were more co-creators about what they really need. But, that would take some educated and enlightened consumers and could totally change the face of business. What I love about the business world, is that even if this doesn't change for everyone, we have the power to change it in our own lives, by encouraging the businesses that sustain us and ignoring those who don't.
Pete: I'm not sure that even when this new paradigm "hits," society will change for the better. I think that change might well come from something else (faith? an overwhelming need of societal responsibility? Economic depression? War? Flood?). I think part of the challenge comes from accurately defining self-actualization right? It's different for each of us. I think V & L are highlighting a shift from people being satisfied because they have "stuff" to being satisfied because of what the stuff they have "means" about them. So for example.... I think shopping centers like Easton in Columbus or Levis Commons in Toledo are effectively executing V & L's suggestion that operant resources are the name of the game. Consumers can get the products they find at these shopping centers almost anywhere....Wal Mart, on-line, Good Will, etc....so it's not really products that these shopping centers are selling...it's the experience (intangible operant resource) of shopping that these centers are selling...the sensory overload and overwhelming orgy of consumerism that many folks use to satisfy themselves.
Wendy:2) I'm not sure what customers really give back to corporations besides money. Also, the idea of customers being co-creators (something I love to thing about on a small scale) seems to be unrealistic. It is a great thought, but what if companies aren't really acting on customer's needs and wants, but exploiting the natural bad habit of human greed, and need to have status through stuff. I can't believe that the fashion industry is democratic, for example. Surely they are telling us what to wear (and that Hannah "needs" new clothes every season) rather than us telling them what we want. Where is the line between companies listening to their consumers, and companies controling consumers?
This was a good discussion in class, which I feel addressed the question. I really liked Dawn's point about the responsibilities that go along with being co-creators. Again, if I think about small businesses, the co-creator idea is realistic and beautiful.
Pete: Very good.
3) Also, the idea that knowledge is power is embraced without limitations in these theories. I think they are right, but there should be some moral limit to avoid the "Big Brother" approach that you talked about. I know they are not trying to make a moral tretice about marketing, just saying what is effective. But there is still an element of corruption and potential evil (OK, read unethical-ness) here that is not aknowledged. Also, what about the new trend of employers needing to know "everything" about employees, such as their health issues, their personal situations, their tendancy toward unionization, etc. Sounds like Big Brother to me.
Pete: Fair enough. I would argue that (most) of the current marketing literature purposely fails to acknowledge the presence of power. Realistically, many companies (inside closed doors) would suggest that they would aggressively pursue the new dominant logic of marketing in a specific effort to increase power and gain "control" of their customers (although this would ironically again be treating customers as operand resources instead of operant resources). Having said this however, the schools of thought focused on interactive models of marketing specifically recognize power and even go so far as to suggest (in some) a needed balance of power between market participants...AND, if we really follow V & L, then we must make the customer a co-creator and an operant resource...thus setting ourselves up to lose power and control.
Wow....an entirely new or extended argument for my "come to marketing" sermon...can we argue that by executing the new dominate logic we are actually stepping away from the big-brother mentality of marketing (which would really fall into the buyer behavior school of thought....)? The counter argument from the buyer behavior folks is that they can't meet customer needs if they don't know everything about customers.... we would need to be sure to address this concern.
Ok - I don't know that I provided many answers....and now it's time for me to go lecture in corporate strategy...interestingly enough, today's lecture is on social responsibility....! Thanks for the great questions!
Wendy: Thanks, Pete. Actually I have found this to be one of the most difficult classes we have had so far! That's a great thing, and could be why the students are so much more engaged in it.
I just don't see this happening in our society. In fact, it seems like quite the opposite trends are reality these days. I'm not sure people have ever been so disinfranchised, depressed, spiritually deprived, unfulfilled, unsatisfied and self-hating as they are now. Part of that aweful state of humanity is how consumerism has replaced so many longings for real human connection and community, for spiritual and cultural identity and self-knowledge. What people know today is if you ain't feeling so good: shop!
Considering your feeling that this new paradigm hasn't hit yet, it is possible that society could still change for the better if consumers were more co-creators about what they really need. But, that would take some educated and enlightened consumers and could totally change the face of business. What I love about the business world, is that even if this doesn't change for everyone, we have the power to change it in our own lives, by encouraging the businesses that sustain us and ignoring those who don't.
Pete: I'm not sure that even when this new paradigm "hits," society will change for the better. I think that change might well come from something else (faith? an overwhelming need of societal responsibility? Economic depression? War? Flood?). I think part of the challenge comes from accurately defining self-actualization right? It's different for each of us. I think V & L are highlighting a shift from people being satisfied because they have "stuff" to being satisfied because of what the stuff they have "means" about them. So for example.... I think shopping centers like Easton in Columbus or Levis Commons in Toledo are effectively executing V & L's suggestion that operant resources are the name of the game. Consumers can get the products they find at these shopping centers almost anywhere....Wal Mart, on-line, Good Will, etc....so it's not really products that these shopping centers are selling...it's the experience (intangible operant resource) of shopping that these centers are selling...the sensory overload and overwhelming orgy of consumerism that many folks use to satisfy themselves.
Wendy:2) I'm not sure what customers really give back to corporations besides money. Also, the idea of customers being co-creators (something I love to thing about on a small scale) seems to be unrealistic. It is a great thought, but what if companies aren't really acting on customer's needs and wants, but exploiting the natural bad habit of human greed, and need to have status through stuff. I can't believe that the fashion industry is democratic, for example. Surely they are telling us what to wear (and that Hannah "needs" new clothes every season) rather than us telling them what we want. Where is the line between companies listening to their consumers, and companies controling consumers?
This was a good discussion in class, which I feel addressed the question. I really liked Dawn's point about the responsibilities that go along with being co-creators. Again, if I think about small businesses, the co-creator idea is realistic and beautiful.
Pete: Very good.
3) Also, the idea that knowledge is power is embraced without limitations in these theories. I think they are right, but there should be some moral limit to avoid the "Big Brother" approach that you talked about. I know they are not trying to make a moral tretice about marketing, just saying what is effective. But there is still an element of corruption and potential evil (OK, read unethical-ness) here that is not aknowledged. Also, what about the new trend of employers needing to know "everything" about employees, such as their health issues, their personal situations, their tendancy toward unionization, etc. Sounds like Big Brother to me.
Pete: Fair enough. I would argue that (most) of the current marketing literature purposely fails to acknowledge the presence of power. Realistically, many companies (inside closed doors) would suggest that they would aggressively pursue the new dominant logic of marketing in a specific effort to increase power and gain "control" of their customers (although this would ironically again be treating customers as operand resources instead of operant resources). Having said this however, the schools of thought focused on interactive models of marketing specifically recognize power and even go so far as to suggest (in some) a needed balance of power between market participants...AND, if we really follow V & L, then we must make the customer a co-creator and an operant resource...thus setting ourselves up to lose power and control.
Wow....an entirely new or extended argument for my "come to marketing" sermon...can we argue that by executing the new dominate logic we are actually stepping away from the big-brother mentality of marketing (which would really fall into the buyer behavior school of thought....)? The counter argument from the buyer behavior folks is that they can't meet customer needs if they don't know everything about customers.... we would need to be sure to address this concern.
Ok - I don't know that I provided many answers....and now it's time for me to go lecture in corporate strategy...interestingly enough, today's lecture is on social responsibility....! Thanks for the great questions!
Wendy: Thanks, Pete. Actually I have found this to be one of the most difficult classes we have had so far! That's a great thing, and could be why the students are so much more engaged in it.
Thursday, October 18, 2007
New Dominant Logic of Marketing
Stephen Vargo and Robert Lusch have made some exciting assertions in their article “Evolving to a New Dominant Logic for Marketing” (2004, Journal of Marketing). They claim transformation in the field of marketing from goods to services, putting more emphasis than ever on the relationship with the customer, even calling the customer a “co-creator” of the project (p. 10). Vargo and Lusch predict a shift in the dominant logic of marketing by identifying and pulling together the many threads of academic thought that have been evolving in the field.
The articles in this week’s assignment were variations on the themes of new ways of understanding the customer relationship and the importance of whole-company mindset of service, or marketing. The article I most related with Vargo and Lusch is “From Sales Obsession to Marketing Effectiveness” by Philip Kotler (1991, Dolan, ed., Strategic Marketing Management). Since Kotler’s article was written thirteen years before “Evolving to a New Dominant Logic for Marketing,” one could see it as a foreshadowing of what was to emerge in the new dominant logic. For example, Kotler, Vargo and Lusch all put an extremely high responsibility on the role of the executive of a company to manage the complete company wide marketing system in what Kotler calls “systems management” (p. 474). Vargo and Lusch describe a management role that must “be performing the role of a network integrator that develops skills in research, forecasting, pricing, distribution, advertising and promotion” (2004, Journal of Marketing, p. 13). This marks a change in the role of the executive, demanding a more complete understanding and direct involvement with the details of organizational operations.
In “From Sales Obsession to Marketing Effectiveness” Kotler was predicting a shift in the role of customers. What he called “customer philosophy” (1991, Dolan, ed. Strategic Marketing Management , p. 474) put the customer first, not just to satisfy or please him or her, but to actually let the customer shape what the company produces and develops. Vargo and Lusch’s service-dominant logic demands that the knowledge of the consumer is essential in a partnership model of co-creating the future production of the company (2004, Journal of Marketing, p.10). This similarity is striking, despite the difference in the writers’ motivation, with Kotler’s goal being to maximize profits rather than sales (p. 471) and Vargo and Lusch insisting that the end product should be long term value rather than immediate profit (p. 2).
The role of knowledge as the key competitive edge is common to both articles. Kotler lists “adequate information” for executives as one of his audit measurements for effective management (1991, Dolan, ed., Strategic Marketing Management , p.476). He also sees knowledge and training as the solution for poor economic performance (p. 477). Vargo and Lusch insist that knowledge and skills are the fundamental unit of exchange in their new paradigm (2004, Journal of Marketing, p.6). These views differ from past assumptions that actions (work) and products (results of work) were the basic units of economic power. In the age of technology and quantum physics, our mindset has changed into an abstract system in which the realm of knowledge is more valuable than the physical world.
In their conclusion, Vargo and Lusch predict that “consumers will develop relationships with organizations that can provide them with an entire host of related services over an extended period” and they give examples in which that is already happening in the marketplace (2004, Journal of Marketing, p.13). Kotler did not have this vision, but he did forecast that companies need to think long term as they plant the seeds for future crops (1991, Dolan, ed., Strategic Marketing Management, p. 479). The managers who followed Kotler’s instructions to be customer led, knowledge based and long term oriented might well have been the leaders who inspired the Vargo and Lusch new dominant logic.
References
Dolan, Robert, ed., Strategic Marketing Management, 1991, McGraw-Hill Book Company: United States.
Vargo, Stephen, and Lusch, Robert, “Evolving to a New Dominant Logic for Marketing,” Journal of Marketing, 2004, Vol. 68)
The articles in this week’s assignment were variations on the themes of new ways of understanding the customer relationship and the importance of whole-company mindset of service, or marketing. The article I most related with Vargo and Lusch is “From Sales Obsession to Marketing Effectiveness” by Philip Kotler (1991, Dolan, ed., Strategic Marketing Management). Since Kotler’s article was written thirteen years before “Evolving to a New Dominant Logic for Marketing,” one could see it as a foreshadowing of what was to emerge in the new dominant logic. For example, Kotler, Vargo and Lusch all put an extremely high responsibility on the role of the executive of a company to manage the complete company wide marketing system in what Kotler calls “systems management” (p. 474). Vargo and Lusch describe a management role that must “be performing the role of a network integrator that develops skills in research, forecasting, pricing, distribution, advertising and promotion” (2004, Journal of Marketing, p. 13). This marks a change in the role of the executive, demanding a more complete understanding and direct involvement with the details of organizational operations.
In “From Sales Obsession to Marketing Effectiveness” Kotler was predicting a shift in the role of customers. What he called “customer philosophy” (1991, Dolan, ed. Strategic Marketing Management , p. 474) put the customer first, not just to satisfy or please him or her, but to actually let the customer shape what the company produces and develops. Vargo and Lusch’s service-dominant logic demands that the knowledge of the consumer is essential in a partnership model of co-creating the future production of the company (2004, Journal of Marketing, p.10). This similarity is striking, despite the difference in the writers’ motivation, with Kotler’s goal being to maximize profits rather than sales (p. 471) and Vargo and Lusch insisting that the end product should be long term value rather than immediate profit (p. 2).
The role of knowledge as the key competitive edge is common to both articles. Kotler lists “adequate information” for executives as one of his audit measurements for effective management (1991, Dolan, ed., Strategic Marketing Management , p.476). He also sees knowledge and training as the solution for poor economic performance (p. 477). Vargo and Lusch insist that knowledge and skills are the fundamental unit of exchange in their new paradigm (2004, Journal of Marketing, p.6). These views differ from past assumptions that actions (work) and products (results of work) were the basic units of economic power. In the age of technology and quantum physics, our mindset has changed into an abstract system in which the realm of knowledge is more valuable than the physical world.
In their conclusion, Vargo and Lusch predict that “consumers will develop relationships with organizations that can provide them with an entire host of related services over an extended period” and they give examples in which that is already happening in the marketplace (2004, Journal of Marketing, p.13). Kotler did not have this vision, but he did forecast that companies need to think long term as they plant the seeds for future crops (1991, Dolan, ed., Strategic Marketing Management, p. 479). The managers who followed Kotler’s instructions to be customer led, knowledge based and long term oriented might well have been the leaders who inspired the Vargo and Lusch new dominant logic.
References
Dolan, Robert, ed., Strategic Marketing Management, 1991, McGraw-Hill Book Company: United States.
Vargo, Stephen, and Lusch, Robert, “Evolving to a New Dominant Logic for Marketing,” Journal of Marketing, 2004, Vol. 68)
Tuesday, October 16, 2007
The Dynamics of Differentiation, Cost-to-Serve, and Marketing Myopia
How does “Success Through Differentiation--Of Anything” resonate (or fail to resonate) with “Manage Customers for Profits (Not Just Sales)”?
Shapiro, Rangan, Moriarty and Ross point out an example early in their essay “Manage Customers for Profits (Not Just Sales)” of a plumbing fixtures manufacturer who raises prices on their custom orders in order to get rid of these accounts. This business thought of the small custom orders as worthless, yet later learned that those very orders were their most profitable (1991, Dolan, Strategic Marketing Management, p. 307.) This is a perfect example of differentiation as described by Levitt in his article “Success Through Differentiation—Of Anything.” The plumbing customers were willing to pay a higher price and be loyal to the company because that business offered something that no other did—a unique product.
Levitt writes that “the more a seller expands the market by teaching and helping customers to use his or her product, the more vulnerable the seller becomes to losing them” (1991, Dolan, Strategic Marketing Management, p. 200.) He explains that the customer has then had all questions answered and so goes on to base his or her decision on price. This reminds me of Shapiro’s description of aggressive customers which aren’t worth serving because of their expensive demands yet fickleness on price (p. 312).
There are also ways that these two articles don’t resonate at all. Most obviously, Levitt is focused on the customer, Shapiro on the producer. Shapiro develops a plan where to win requires pinpointing costs, knowing profitability dispersion, doing and repeating analysis and providing support systems (1991, Dolan, Strategic Marketing Management, p. 314-318.) Levitt’s formula for winning is simply to make sure that you stand out from your competitors and continue to innovate your product to please your customers (p. 194). Finally, Levitt asserts that “intangibles” make the difference (p. 194) but doesn’t take into account Shapiro’s warning to measure the “cost to serve” that intangibles could increase (p. 311).
How is this discussion tied into Levitt’s article “Marketing Myopia”?
In “Success Through Differentiation—Of Anything” Levitt offers the differentiation by product development as an antidote to marketing myopia, the apathy some companies fall into when they believe they are at the pinnacle of success. Levitt writes on p. 199 that an augmented product “goes beyond what was required or expected by the buyer” while in a state of marketing myopia the company assumes the product or service does not need to be improved (1991, Dolan, Strategic Marketing Management.)
Shapiro’s article enhances the overview of marketing myopia by pointing out the difference between sales and profit (1991, Dolan, Strategic Marketing Management, p. 307.) Levitt makes a corresponding analogy between selling and marketing on p. 38. Shapiro’s notion of what is profitable compares to Levitt’s description of true managerial marketing, a holistic look at the entire lifespan of the creation of a product.
Is it possible for a manager to successfully differentiate her products, segment her customer base and avoid the pitfalls of marketing myopia?
Surely this goal must be possible to achieve. However, it would require constant complex effort and understanding. All three of these objectives are leaning toward a business model that focuses the long term, insists on detailed managerial analysis, and refuses to be complacent in the midst of success. Customer satisfaction, profit margins, and innovation need to be balanced into that magic formula for long-term success.
References
Dolan, Robert, ed., Strategic Marketing Management, 1991, McGraw-Hill Book Company: United States.
Shapiro, Rangan, Moriarty and Ross point out an example early in their essay “Manage Customers for Profits (Not Just Sales)” of a plumbing fixtures manufacturer who raises prices on their custom orders in order to get rid of these accounts. This business thought of the small custom orders as worthless, yet later learned that those very orders were their most profitable (1991, Dolan, Strategic Marketing Management, p. 307.) This is a perfect example of differentiation as described by Levitt in his article “Success Through Differentiation—Of Anything.” The plumbing customers were willing to pay a higher price and be loyal to the company because that business offered something that no other did—a unique product.
Levitt writes that “the more a seller expands the market by teaching and helping customers to use his or her product, the more vulnerable the seller becomes to losing them” (1991, Dolan, Strategic Marketing Management, p. 200.) He explains that the customer has then had all questions answered and so goes on to base his or her decision on price. This reminds me of Shapiro’s description of aggressive customers which aren’t worth serving because of their expensive demands yet fickleness on price (p. 312).
There are also ways that these two articles don’t resonate at all. Most obviously, Levitt is focused on the customer, Shapiro on the producer. Shapiro develops a plan where to win requires pinpointing costs, knowing profitability dispersion, doing and repeating analysis and providing support systems (1991, Dolan, Strategic Marketing Management, p. 314-318.) Levitt’s formula for winning is simply to make sure that you stand out from your competitors and continue to innovate your product to please your customers (p. 194). Finally, Levitt asserts that “intangibles” make the difference (p. 194) but doesn’t take into account Shapiro’s warning to measure the “cost to serve” that intangibles could increase (p. 311).
How is this discussion tied into Levitt’s article “Marketing Myopia”?
In “Success Through Differentiation—Of Anything” Levitt offers the differentiation by product development as an antidote to marketing myopia, the apathy some companies fall into when they believe they are at the pinnacle of success. Levitt writes on p. 199 that an augmented product “goes beyond what was required or expected by the buyer” while in a state of marketing myopia the company assumes the product or service does not need to be improved (1991, Dolan, Strategic Marketing Management.)
Shapiro’s article enhances the overview of marketing myopia by pointing out the difference between sales and profit (1991, Dolan, Strategic Marketing Management, p. 307.) Levitt makes a corresponding analogy between selling and marketing on p. 38. Shapiro’s notion of what is profitable compares to Levitt’s description of true managerial marketing, a holistic look at the entire lifespan of the creation of a product.
Is it possible for a manager to successfully differentiate her products, segment her customer base and avoid the pitfalls of marketing myopia?
Surely this goal must be possible to achieve. However, it would require constant complex effort and understanding. All three of these objectives are leaning toward a business model that focuses the long term, insists on detailed managerial analysis, and refuses to be complacent in the midst of success. Customer satisfaction, profit margins, and innovation need to be balanced into that magic formula for long-term success.
References
Dolan, Robert, ed., Strategic Marketing Management, 1991, McGraw-Hill Book Company: United States.
Tuesday, October 2, 2007
The Marketing Theories of my Organization and Consumer Choice
It is not surprising that the marketing theories I choose as my preference, both personal and in the workplace are those of the Interactive-Noneconomic school of thought, as Jagdish Sheth, David Gardner, and Dennis Garrett discuss in their book Marketing Theory: Evolution and Evaluation (1988, p.20). Since I have no experience in the field of economics, and as my personal impetus in business is driven by social relationships, the Systems School of thought and the Social Exchange School of Thought seem very natural to me.
In my organization The International College of Integrative Medicine our marketing strategy is based on a complex web of systems. We maneuver our outreach as part of the constantly changing systems of political change, public perception of heath care, and personal networks of colleagues and companies who support the learning of integrative medicine as a legitimate alternative to conventional medical practice.
To measure the accuracy of the school of thought I identified, I used Sheth Gardner and Garrett’s quote of Kazt and Kahn’s characteristics of Systems from their book The Social Psychology of Organizations (Marketing Theory, 1988, p.163). In ICIM we depend on the importation of energy from the wider environment, which comes in the form of ideological passion and commitment from both the public and doctors whom we serve. We transform that energy into conferences it can be organized into formal learning and scientific information, conferences which are our product. We experience cycles of events, both in terms of our conference planning and advertising, as well as cycles of our industry emphasis and interest. We fight constantly against negative entropy, and depend on feedback and new information, using extensive coding. Our organization works for stability as it endures attacks and disruptions from forces outside our system. We have a great need for differentiation between our work and other similar institutions, and we spend time and energy discussing our unique specialization. Finally we do take a variety of paths to achieve our ends, both in external marketing and in internal management.
In my personal life as a consumer, I am most easily influenced by the Social Exchange School of Thought, also categorized by Sheth, Gardner and Garrett as an Interactive-Noneconomic school (Marketing Theory, 1988, p.20). Though this way of thinking is controversial (p. 28), I hope it is the way of the future of business, as our culture evolves to a more local, small scale mode of economic exchange, responding to world-wide crisis of energy sources and political chaos.
As I choose what products to buy, I have a strong regional perspective, but the focus on the distance between the maker and the buyer is not based on marketing ease, but on that social contract in the relationship in the context of culture and society. I would consistently prefer to buy products from people I know than from any other source.
Interestingly, I had to admit after reading about the Social Exchange School of Thought, that this preference extends not just to makers that I know, but also to companies that I perceive that I know or have a social relationship with. For example, I have a brand loyalty to Celestial Seasonings Tea. I can trace this to the fact that I have toured the factory, read about the history of the founder, and consider myself socially invested in the company. As the authors point out, I exhibit several of the determinants of exchange relationships with Celestial Seasonings (Sheth, Gardner and Garrett, Marketing Theory 1988, p.175). I have the social actor variable of being attracted and identifying with the art in the packaging, my visit to the factory provides a social influence variable, and I enjoy a situational variable of having the tea readily available, unique and psychologically comforting.
Though I certainly perceive threads of influence from the Regional, Managerial, Activist and Macromarketing Schools of Thought, Systems and Social Exchange are the key concepts for me to understand the role of marketing in my work and personal life. I am glad to have stayed awake long enough to learn about them!
In my organization The International College of Integrative Medicine our marketing strategy is based on a complex web of systems. We maneuver our outreach as part of the constantly changing systems of political change, public perception of heath care, and personal networks of colleagues and companies who support the learning of integrative medicine as a legitimate alternative to conventional medical practice.
To measure the accuracy of the school of thought I identified, I used Sheth Gardner and Garrett’s quote of Kazt and Kahn’s characteristics of Systems from their book The Social Psychology of Organizations (Marketing Theory, 1988, p.163). In ICIM we depend on the importation of energy from the wider environment, which comes in the form of ideological passion and commitment from both the public and doctors whom we serve. We transform that energy into conferences it can be organized into formal learning and scientific information, conferences which are our product. We experience cycles of events, both in terms of our conference planning and advertising, as well as cycles of our industry emphasis and interest. We fight constantly against negative entropy, and depend on feedback and new information, using extensive coding. Our organization works for stability as it endures attacks and disruptions from forces outside our system. We have a great need for differentiation between our work and other similar institutions, and we spend time and energy discussing our unique specialization. Finally we do take a variety of paths to achieve our ends, both in external marketing and in internal management.
In my personal life as a consumer, I am most easily influenced by the Social Exchange School of Thought, also categorized by Sheth, Gardner and Garrett as an Interactive-Noneconomic school (Marketing Theory, 1988, p.20). Though this way of thinking is controversial (p. 28), I hope it is the way of the future of business, as our culture evolves to a more local, small scale mode of economic exchange, responding to world-wide crisis of energy sources and political chaos.
As I choose what products to buy, I have a strong regional perspective, but the focus on the distance between the maker and the buyer is not based on marketing ease, but on that social contract in the relationship in the context of culture and society. I would consistently prefer to buy products from people I know than from any other source.
Interestingly, I had to admit after reading about the Social Exchange School of Thought, that this preference extends not just to makers that I know, but also to companies that I perceive that I know or have a social relationship with. For example, I have a brand loyalty to Celestial Seasonings Tea. I can trace this to the fact that I have toured the factory, read about the history of the founder, and consider myself socially invested in the company. As the authors point out, I exhibit several of the determinants of exchange relationships with Celestial Seasonings (Sheth, Gardner and Garrett, Marketing Theory 1988, p.175). I have the social actor variable of being attracted and identifying with the art in the packaging, my visit to the factory provides a social influence variable, and I enjoy a situational variable of having the tea readily available, unique and psychologically comforting.
Though I certainly perceive threads of influence from the Regional, Managerial, Activist and Macromarketing Schools of Thought, Systems and Social Exchange are the key concepts for me to understand the role of marketing in my work and personal life. I am glad to have stayed awake long enough to learn about them!
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