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Avoiding the Mistake of Overmarketing Robert F. LuschStephen Vargo University of ArizonaUniversity of Maryland Academy of Marketing Science 2004 Cultural.

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Presentation on theme: "Avoiding the Mistake of Overmarketing Robert F. LuschStephen Vargo University of ArizonaUniversity of Maryland Academy of Marketing Science 2004 Cultural."— Presentation transcript:

1 Avoiding the Mistake of Overmarketing Robert F. LuschStephen Vargo University of ArizonaUniversity of Maryland Academy of Marketing Science 2004 Cultural Perspectives in Marketing Conference Puebla, Mexico September 24, 2004

2 The Old Dominant Logic 1.The purpose of economic activity is to make and distribute things that can be sold. 2.To be sold, these things must be embedded with utility and value during the production and distribution processes and must offer to the consumer superior value in relation to competitors offerings. 3.The firm should set all decision variable at a level that enables it to maximize the profits from the sale of output. 4.For both maximum production control and efficiency, the good should be standardized and produced away from the market. 5.The good can then be inventoried until demanded and then delivered to the consumer at a profit.

3 Old Logic Led to Overmarketing OVER- MARKETING Reliance on Mass Markets Loss of Customer Contact Make & Sell Philosophy Aggressive Price Cutting Marketing as Propaganda

4 Technology Contributed to Failure Division of Labor in Society Loss of Contact With Customer Micro Specialists & Professionals Growth of Marketing Technology

5 The Failure of Marketing The Old Dominant Logic Societal Alienation Growth of Marketing Technology Networked Customer Informed Customer Alienation Overmarketing Marketing Resistance 1950s – s + 21 st Century

6 Failure of Marketing: Evidence Customer Alienation Rising Marketing Expenditures Less Productive Marketing Losing Influence in the Organization

7 The Rise of Consumer Alienation What Needs More Government Regulation 1.Water pollution 2.Toxic wastes 3.Air pollution 4.Advertising 5.Nuclear safety Source: Yankelovich, Inc. 2004

8 The Rise of Consumer Alienation 54% of consumers wish for a quieter and simpler life even if it means less stuff. 61% of consumers feel the amount of marketing and advertising is out of control. 36% believe shopping experiences less enjoyable because of all the pressures to buy. Source: Yankelovich, Inc. 2004

9 The Image of Marketing Positive Words Creative Fun, funny Attractive Negative Words Lies Deceitful, deceptive Annoying Manipulative Gimmicks Exaggeration Invasive Intrusive Brainwashing Source: Raj Sisodia; Bentley College

10 Marketing Loses Influence in Organization Marketing is being forced out of the equation. Sales is not guided by marketing strategy, but by the need to hit metrics for volume and margin. Marketing managers are not finance-literate. Other managers are often not marketing-literate. Marketing and strategic planning require investment and then promise only uncertain future results. Marketing ideas are not linked to driving profits. Making the financial numbers isnt the only thing, its everything. Source: Fred Webster (Dartmouth & U of Arizona)

11 Evolving To a New Frame of Reference To Market (matter in motion) Market To (management of customers & markets) Market With (collaborate with customers & partners to produce & sustain value) Through Future

12 All Exchange is Service Centered the great economic law is this: Services are exchanged for services…. It is trivial, very commonplace; it is, nonetheless, the beginning, the middle, and the end of economic science…. - Frederic Bastiat 1860 services are the application of specialized competences (knowledge and skills) through deeds, processes, and performances for the benefit of another entity or the entity itself. (Vargo and Lusch 2004)

13 Growth of Marketing Institutions Service for Service Goods, Money, Organizations are Intermediaries

14 Marketing Assists Change & Evolution Division of Labor Exchange Change Increasing Degree of Change in Society

15 Goods Logic Goods Tangibles Operand Resources Asymmetric Propaganda Value Added Transactional Maximize Profits Service Dominant Services Intangibles Operant Resources Symmetric Conversation Value Propositions Relational Financial Feedback Global Sustainability Customer Alienation Respect for Marketing In Firm Less More Less More Less More The Emerging Reform of Marketing

16 Meta-Competences for Competitive Advantage Competences for a Highly Specialized World Relational Collaborative Competences for a Rapidly Changing World Absorptive Adaptive

17 Reforming the Marketing Curriculum Fundamental of Marketing (service dominant) Competency Building and Competitive Advantage Managing Cross Functional Business Processes Designing Value Propositions & Pricing Strategy Integrated Marketing Communication Managing Networks & Value Constellations Consumer Buying, Usage & Co- Production Designing and Delivering Service Flows The Role of Marketing in Society

18 Closing Comments


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