Marketing reading – week 1
The marketing definition has been updated by the AMA. The new definition is
presented as an organizational function and includes the value for customers and the
Marketing has changed as a phenomenon during the last 25 years New models of
marketing such as the b2b, relationship and service marketing have emerged along
the consumer goods marketing.
Interaction becomes the central marketing concept (between suppliers-consumers_
Interactions make coproduction (Prahalad and Ramasway). The customers value
creation is growing in importance in the marketing literature (Vargo and Lusch)
However the marketing function seems to be losing its credibility and it is coming to a
decline as its influencing the top management less than it once did. McGovern (2004)
reports that in the large US firms the board of directors spends only 10% of its time
discussing consumer related marketing issues. McKinsey – Over 50% of the CEOs in
Europe have a negative impression about their marketers.
Other members of the organization such as financers, who do not possess sufficient
knowledge or training in understanding the customers take over the responsibility of
translating the voice of customers into corporate decision making.
Marketing must be related to the strategy and not only or predominantly to occupy
itself with tactical issues. Marketing Renaissance (2005) Marketing is too
preoccupied with tactical issues and not with strategic issues as it should be.
For the last 50 years marketing relates a firm to its current and potential customers.
Its origins regard the customer, and it tries to reach him through the 4Ps model
How did it change:
It has to be more generic about customers not only focused on standardized
Marketing is a process and not a structural part of the organization. The structural
aspects should support this process. The elements that changed in the definition: 1)
The customer value concept 2) Marketing as managing customer relationships 3)
Marketing as an organizational function 4) (not added yet) An intermediate stage
between what is done and what should be achieved covering the how aspect of
marketing is discussed.
The value to customers Value in exchange VS Value in use:
Delivering the value to the customers is one of the two most important things along
with customers relationships.
Delivering the value means that the value is within the product (goods, ideas,
services, information or any type of solution).
Value in exchange = The value in products exchanged for money. However this type
of value is not considered any more. The value comes from the consumer in
interacting with the producer in co-creating a product. The value begins only when
the consumer starts using the product. Hence value is not embedded in the products
but generated by the consumers who use them. The notion that only customers can
assess value to goods and services was expressed by Levitt (1983).
Vargo and Lusch (2004) argue that value in exchange seems to be based on a
misunderstanding as it was transferred to marketing through an economic analysis.
However Alderson (1957) argued about a functionalist theory of marketing geared
towards value in use. Suppliers Value propositions / Customers Value creating
processes. According to Bendapudi and Leone (2003) co-production process gives
the customers more credit than blame thus influences positively their perception and
value creation process.
Marketers can create value propositions and then deliver it to customers through
offers communication and thus support the customers’ value creation
The suppliers offer resources and communications to the consumers.
According to the consumer culture theory (Arnould and Thompson 2005)
1: Value is not delivered by a firm to customers but created in customer processes
through support to those processes and through co-creation in interactions with
2: The role of marketing is, on one hand, to develop and communicate value
propositions to customers, and on the other hand, to support customers’ value
creation through goods, services, information and other resources, as well as through
interactions where co-creation of value can take place.
Managing customer relationships
Relationship marketing has grown during the last decade. However there is no
commonly accepted definition of what a relationship is or what is a marketing
relationship either. There is a range of notions though of what relationships consist of
such as a win-win situation between customer-supplier, or establishing commitment,
relationship tactics, loyalty schemes and so on. Ryals (2005) indicates that this is not
always the best strategy as it might cost more than benefit, when trying to retain
This relationship might refer to customers who have shown up twice or more, but
also customers who got affected emotionally and through the behaviour too, not only
monetary. There is no research that has proven that customers recognize a relation
or change from a transactional to relational model. What is certain though is that not
all the customers can be managed in relationships. Attempting to engage all the
customers into a relation, can lead to inefficient and ineffective marketing behaviour.
Finally, a firm can establish contacts with its customers, maintain, enhance and
cultivate them; but also terminate them as well.
Marketing as an organizational function:
The marketing function and marketing department cannot support the customers’
value creating processes or even develop solutions and take total responsibility for
supporting customers’ value creation. Service marketing, relationship marketing and
the IMP for business to business marketing shows that one department cannot take
the responsibility. A number of other organizational functions have to be involved as
well. Everyone in the company have to have a customer focus, in order to ensure
that value is created for the customers. Gummsesson (1987) part time marketers vs
full time marketers. Kotler 1994- marketing as the most important function or as an
integrative function. Hence, it is not valid to state that marketing is one organizational
How should it be implemented?
From “satisfy the individual and the organizational goals” to “benefit the organization
and its shareholders” and “value to customers”.
The seller makes promises concerning for example physical goods, services,
financial solutions, transfer of information, interactions and a range of future
components. Communicating and delivering therefore is not enough. Relationships
are necessary. Gronros discusses relationship marketing in general and Berry and
Bitner service relationships, obviously their conclusions regarding the role of
promises have to be the true fr any types of products in any context. The definition of
promise was triggered by Calonius (1983) – The customers purchase based on
promises of satisfaction (Levitt). In order to fulfil their promises, employees have to
be concerned with customer focus, regardless their positions. The various systems in
organizations have to facilitate and support the promises.
Some marketing activities have to do with promise making while other have to do
with promise keeping. According to Brown (2005) the marketing and sales
department have a major role in making promises to the customers, whereas
promise keeping is the role of others in the organization. However according to
Ojasalo (1999) customers might have implicit, explicit and fuzzy expectations, hence
it is not only the promises that must be kept but also the consumers’ expectations.
The above can be used for research and practical changes in marketing. Other than
that marketing is subject to various changes based on the environment surrounding
its essence. The 4P metaphor cannot be used for everything as argued as resources
and activities vary from situation to situation or customer to customer as Borden
argued. The future definitions are uncertain as changes occur constantly. For
example relationship marketing can have its own definition