BEYOND THE 4P S OF MARKETING: A PARADIGM SHIFT OR MERE REPACKAGING? Parimal Bhagat, Philadelphia University A discipline evolves over time as the paradigms shift and models are redefined. Like any other discipline, Marketing has changed in its meaning, content and context. The new conceptualization brings in new ideas while old concepts are enhanced, modified or dropped. The concepts of Value and Relationship Marketing replace Satisfaction and Exchange in a new definition of Marketing as approved by the American Marketing Association. Further, the traditional structure of the 4 P s of marketing are not included in the definition. This paper visits this transition of the discipline and provides a new structure for a course in Marketing Management based on the new definition and other developments of our time. INTRODUCTION The recent announcement of the new definition of Marketing by the American Marketing Association, the leading professional association for marketing academics and practitioners, has implications for academic researchers and teachers, textbook publishers, marketing consultants, and practitioners. This formal re-haul of the definition after almost twenty years 1985 - was, to many in the field, long over due. In fact, the financial community changed the cost item advertising expenses to marketing expenses only in early 1985 (Marketing News, April 1985). The differences are both substantive in some aspects and philosophical in others. Some welcome the change as refreshing, others as an expected evolution, and yet others write it off as an academic exercise. This paper compares the old with the new and identifies opportunities for modifying the Marketing Management curriculum to both reflect the change and extend the reach of the marketing discipline. While the four P s of marketing are gone from the definition, this paper expands this concept further with the objective of providing structure and comprehensiveness to the marketing management curriculum. THE NEW DEFINITION: A CRITICAL EVALUATION One of the purposes of this paper is to critically examine the consequences of the new definition rather than debate or second guess the motives in terms of its impact: Is the change going to usher in a new paradigm of marketing with changes in strategic planning processes or would it entail a refocus of resources. Midgley (2002) offers four purposes for doing so: 1. facilitate the progress of marketing as a science, 2. to promote the discipline within its institutional and professional environment, 3. to better educate and credential the potential manager, and 4. to provide competitive advantage. The focus and intent of this paper is on 3. to better educate and credential the potential manager. In order to compare and contrast, a restatement of the old and new definitions is given below:
(Old) Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. American Marketing Association, March 1985 1 (New) "Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders." American Marketing Association, August 2004 2 The one common element of the two definitions and even the one before these managing the flow of goods and services from manufacturer to consumer (Ettenberg 2003) is the continued focus on the process aspect of marketing. Such a process orientation is essential to the nature of businesses in the 21 st century predominantly service oriented as opposed to being manufacturing oriented. The first distinction is the explicit identification of marketing as an organizational function. While the rationale for this emphasis is not readily obvious, such a categorization may be seen by some to be a step back in the current era of crossfunctional integration in both the academic business curricula and business organizations. Others see the change as protecting the meaning of the marketing function from becomes too diffused and subsequently absorbed into other functional areas under the guise of customer orientation. The second distinction in the new definition is the extension of the concept of exchange to specifically mean customer relationships a concept close to the now notso-new buzzword customer relationship management in marketing (and technology) circles. The origins of relationship marketing may be traced back to the parallel developments of the research paradigm in the U.S. and Europe since the early to mid eighties. Just a few years after the earlier definition was officially accepted in the U.S., scholars in Northern Europe began rethinking the definition for themselves and noted by Gronroos (1989) (the role of )..Marketing is to establish, develop, and commercialize long-term customer relationships so that the goals of the involved parties are being met. He goes on to suggest that personnel, technology, and systems resources of the firm be directed at strengthening the customer s trust in the company. The third distinction is the identification of the benefits of marketing to all stakeholders. This focus has been discussed in management literature for several decades and including it formally in new definition is a mere acknowledgement of the state of affairs. A fourth distinction is the move away from the delivery of products (defined as ideas, goods, and services ) to the delivery of value. The term value increasingly crops up in all traditional functional areas of business. Accounting and Finance may see it as economic value or in the valuation of assets. Engineers refer to the value-in use when designing new products. Operations professionals look for value in the supply chain. Strategic management literature refers to concepts such as value drivers. Confusion in the definition of value is borne out in Chematony et al. (2000) 1 Marketing News, March 1, 1985, vol. 19, Iss. 5; pg.1. 2 Marketing News, September 15, 2004. 2
which finds that added value is a multidisciplinary construct, playing diverse roles, and interpreted in different way by different people. Marketing, on the other hand, may have recognized the concept of value earlier than most but called it benefits. Thought leaders in marketing and management such as Theodore Levitt, Philip Kotler, and Jagdish Sheth have always stressed that customers do not buy products but rather buy benefits. The definition of benefits the perception of value to the user obtained from the attributes of the product presupposes the concept of value. There are two viewpoints of this new direction. On one hand, this new orientation does not provide a tangible, concrete, or, for some, an actionable set of guidelines for teachers in the classroom and practitioners in the field. On the other hand, the concept of value permeates all fields both horizontally and vertically and, thereby, giving a role for marketers to influence business thinking with a broad stroke. For researchers, the measurement of value has been a vexing issue just as the measurement of customer satisfaction had been earlier. Marketing would have a role in the discovery, delivery, and management of value. The final and, in my view, the most significant change is the removal of the implicit 4 P s structure in the definition arguably the most recognizable tenet of marketing. This does not mean that we stop teaching the concept in the present form. On the contrary, I see this as an opportunity to expand the concept to develop a more comprehensive structure that includes all the elements or stages of the marketing process the part of the definition that carries over from the old to the new. Stephen Vargo and Robert Lusch 3 (2004) argue for a new dominant logic for marketing emphasizing the predominant role of services in all modern economies. They track the focus of marketing with natural resources in the 1800 s to goods in the 1900 s and services in recent years. The management of flow of goods has similarly progressed from the management of supply chains to that of value chains, value webs, and now value constellations. In an invited response to their paper (cf. Day et al., 2004), several leading academicians in marketing provided their own insights on the emerging changes in marketing. George S. Day predicts that if this is a tipping point in the way we perceive the world of marketing, we academics and practitioners will need to change mindsets, schemas, and mental models. John Deighton and Das Narayandas predict the change in measure of productivity from units-of-output to a service flow. Evert Gummesson propose that all goods are really services and producers become providers. Shelby Hunt suggest the new dominant logic is a vindication of their resource-advantage theory of competition. C. K. Prahalad notes that the customer is always a coproducer in the buyer-seller relationship. THE NEW P S OF MARKETING The following is a broad categorization of the marketing process and a proposed structural layout of a course in Marketing Management that incorporates current thinking about Marketing. A. Discovering Value 1. Passion, Philosophy, and Purpose 2. Predictive analysis: marketing information, knowledge management and AI 3 Incidentally, Robert Lusch also spearheaded the discussions among academics that resulted in the change in the definition of marketing. 3
3. People: stakeholder value, relationship marketing, CRM, and Customer Experience 4. Positioning: psychological value and Share-of-Mind Space B. Delivering Value 5. Processes: Managing the Value Constellation: integrating product planning & development; sourcing & procurement; fulfillment & replenishment. 6. Pricing: economic value to stakeholders; dynamic pricing; negotiations. 7. Persuasion: communicating value to stakeholders; integrated marketing communications; building and protecting brand and corporate equity; creating evangelists. C. Managing Value 8. Performance and Profits: Return on Marketing; Measuring Marketing Productivity. 9. Philanthropy: CSR; economic, social, cultural, and environmental sustainability. 10. Prescient Prescriptions: ethics; globalism and cultural sensitivity; technology in strategic planning. CONCLUSIONS AND IMPLICATIONS The purpose of the paper to better educate and credential the potential manager in the new paradigm of marketing requires educators to rethink the traditional curriculum of marketing. Marketing is both a social science and an organizational science. As shown here, the discovery, delivery, and management of value is truly a interdisciplinary task. Customer orientation is not a marketing function but requiring a total company effort. The 10 P s structure for a Marketing Management course hopes to bring about such integration. There are three issues which permeate all business decisions and, therefore, cannot be included in isolation global, ethical, and technological considerations. 4
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