UNIVERSITY OF WAIKATO. Hamilton New Zealand

UNIVERSITY OF WAIKATO Hamilton New Zealand The Social Value of Marketing: Bridging Practice and Theory by Integrating the Disciplines Richard J Varey...
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UNIVERSITY OF WAIKATO Hamilton New Zealand

The Social Value of Marketing: Bridging Practice and Theory by Integrating the Disciplines Richard J Varey University of Waikato

Department of Marketing Working Paper in Marketing 01/96 June 1996

Richard J Varey Department of Marketing University of Waikato Private Bag 3105 Hamilton New Zealand, 3240. Email: [email protected]

Abstract An attempt is made to deal with a number of issues concerning the social context of and social construction of 'marketing' as a management technology and a social process and institution. Just as consumer behaviour has become a legitimate part of marketing theory, and marketing education so should consideration of the social role of the marketer and the social value of marketing. An eclectic range of literature sources is combined with the experience of the researcher, in the hope of sparking some new dialogue and research directions. The author attempts to overcome the partisan view presented in many marketing texts by revisiting other fields of thinking which have contributed ideas to the marketing discipline. Thus evidence of the need to develop a convergence of marketing, social sciences, human resource management and ethics will be presented from efforts to get close to the reality of the field, through a form of 'Delphi' research involving a range of specialist perspectives. It is argued that marketing thinking is still too narrow and that micromarketing and macromarketing ideas go hand in hand to give the theorist and practitioner a more balanced perspective on their craft.

Key Words marketing institution managerial technology social process marketing ideology

JEL Classification M31

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1. An Application-Theory Gap - What is Marketing? Like Total Quality Management, the marketing concept is easily understood intellectually and engenders enthusiastic exhortations amongst the initiated, but the accepted model of 'marketing orientation' is not universally applied and efforts to do so often fail. Comparison of abstract marketing theory and the reality of what marketers do in practice reveals a considerable 'application gap'. The 'pragmatists' and 'purists' in the realm of marketing remain divided, and there is little constructive dialogue. It has been suggested that the tools and techniques of marketing are advancing at a rate which outstrips the ability of marketing specialists, and especially generalists, to use them (Ferber in Fisk 1971). There are just too many ideas to deal with within any formal education programme. In addition, the information-centred educational philosophy which has prevailed has largely failed to present the technology and social nature of marketing in its broader social context, that is, beyond a business setting (Boddewyn in Fisk 1986). The accepted model of the economic process of marketing is well understood. Needs of individuals cause them to want products and services which provide value and satisfaction and demand is created. This leads to exchange, transactions and relationships between two parties. On a macro level markets are defined and in order to effect the distribution of production output marketing and marketers are needed (Kotler 1991:4; Kotler and Armstrong 1991:5). This rationality of consumption is a well-established view which is taken for granted in most texts and courses in marketing and marketing management. This is illustrated by a recent definition: ‘Marketing consists of individual and organisational activities that facilitate and expedite satisfying exchange relationships in a dynamic environment through the creation, distribution, promotion and pricing of goods, services and ideas’ (Dibb et al 1994:4)

The traditional 'marketing rationality' is apparently based on continued assumptions about the validity and appropriateness of economic values and models. Marketing theory is supposed to provide explanation and prediction of want-gratifying economic activity, in which consumption is assumed and consumer choice, demand, and producer competition are assumed to be ‘good’ things in society. But to what extent does marketing theory show the relationship of these economic distribution activities to other aspects of human behaviour and social organisation? ‘Traditional’ marketing, as currently taught, largely concentrates on products and profits and deals with the social humanistic dimension only to the extent that people are caste as consumers or marketers. Only recently have 'socio-economic' imperatives entered the mainstream texts in the form of discussion of quality and ethics.

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Kotler, amongst others, has looked beyond the realm of business to the wider social context: ‘Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value with others’ (Kotler 1991:4)

But even such enlightened writers as Kotler and Armstrong, who have described the marketing concept as a philosophy of service and mutual gain (1991:627) have not gone as far as Lazer and Kelly's (1958) social conception of marketing. Marketing is easily recognised by most students as a business activity but fewer would recognise marketing as a social theory (Watt and Mathews 1991). This alternative paradigm was discussed in the 1960s and 1970s and may be about to reassert itself in the sense that marketing is: ‘a pattern of the way of life which society has adopted. It is a social institution, an economic function, a business undertaking, a consumer oriented service’ (Bartels 1970).

It is important for students of the marketing discipline to recognise that the marketing concept is a normative proposition that can be derived from the theory of competitive rationality (Dickson 1994:16). This is not based on an ethic or moral value system that is freely chosen. The firm has no choice but to adopt it, if it wishes to succeed in a market economy. But the dominance of economic thinking has obscured what Fisk (1971:2) has described as the ‘organic quality of all human behaviour, including that of marketing’. The marketing discipline is clearly dependent upon the ideology of the competitive model of capitalism and consumer sovereignty (Smith 1987:508). Much of what is taught and researched, as distinct from what is done by businesses, is based on, from its economic origin, the capitalist model of competition, and teachers, writers, and consultants may not be aware of alternative models. According to the competitive model the individual's pursuit of self-interest results in the welfare of the community. However, self-interest tends towards short-term 'satisfactions' which may have long-term (and possibly irreversible) costs in terms of losses such as ecological damage and psychological disturbances, and may cause unethical decisions. Marketing theory and practice are distinct and separate and upon inspection are not part of each other. Marketing focuses in practice on the interests of the producer when in theory it should address the interests of both parties in markets. Smith (1987:502) feels that marketing and consumer sovereignty are contradictory. He suggests that the latent function of marketing 4

is to make the activities and power of business acceptable to society by proclaiming that control rests with consumers. Thus favourable attitudes to private capitalism, which distributes power, wealth and prestige, are achieved (Smith 1987:502). Thus the ideology of marketing seems to mask sources of guilt over dubious practices in presenting a structure of ideas and in legitimating some people's interests. Smith questions whether the widely held belief that consumer sovereignty is the basis for marketing thought and action is supported by evidence (op cit. p.503). 2. The Economic and Social Value of Marketing Most marketing literature describes marketing as a social process, and then treats it as a management technology (Fisk 1986:ix). There is a dichotomy in marketing between the supposed satisfier of consumer needs and a form of consumer exploitation through the invention of unreal needs and wants. On the one hand marketing provides value to the individual as a consumer and therefore to society, whilst on the other it persuades and manipulates for the benefit of the producer. According to Bartels (in Fisk 1986:41): ‘The issue is whether marketing is an economic technology responsible to markets for distribution of goods and services, or an institution responsible to society for meeting those consumption needs in the context of society's ethical and spiritual expectations’ Much of economic theory has concerned the resource allocation behaviour of firms in the 19th century and sought to apply a doctrine of competition and an ideology of social improvement through the pursuit of individual self-interest, although material enrichment may not be the raison d'être of human existence (Kempner et al 1976). Economic values centre on performance measured by monetary profit, saleability, return on investment, growth, and expansion though competition. Economic concerns focus on whether something yields a monetary profit. This is a fragmentary judgement which seems to ignore all other aspects of life, is short-term, and ignores man's dependence on the natural world. Much of our decision-making assumes the need for continued economic growth and a management belief in the need for growth in consumption has become ‘embedded in the ethos of our civilisation’ (Kempner et al. 1976:204). Mishan (1969:111) has identified in managers ‘a propensity to keep their eyes glued to the speedometer without regard for the direction taken’. Marketing writers have sought to promote an explicit connection between competition, customer service and self-interest so that competition is seen as forcing a seller to serve the 5

interests of consumers. But direct benefits to some may impose social costs on others. Thinking on competition in markets is largely restricted to product attributes and price. No consideration is then given to the social impacts of the organisation's activities. The consumer is not sovereign over these 'external' costs (Smith 1987:506). Competition encourages consideration of direct benefits to the self and organisation, and there are increasing calls to consider the wider interdependence between parties in a social system and to consider whose goals are being served (see, for example, Doyle 1994). If we are indeed now dependent on markets for the sustenance of modern life are we trapped in a 'vicious cycle' in which economic values alone must prevail? 3. Consumer Needs, Wants, Value and Satisfaction Do marketers satisfy real needs or manufacture desire? Do the capitalist imperatives of expansion, profit and competition necessarily lead to a shaping of what consumers think they want and need in order to fit what is produced? Have marketers an overriding vested interest in creating and increasing consumption, including non-essential consumption (i.e. excessive consumption)? Is the economist's view of 'added value' a demand-led short-term reactive view geared to current needs rather than a future and investment orientation (a supply model). Who gains from excess product benefits, features and performance beyond pure use value (utility)? If finite resources are wasted in producing under-utilised products, for example some forms of packaging, is there mutual gain or a self-serving attitude? Are consumers exploited? ‘Providing customer satisfaction is a means to achieving a company profit objective and thus does not imply protection of the consumer's welfare’ (Bell and Emory 1971). Buttle (1989) has suggested that a need is ‘an internalised state which serves to motivate behaviour when aroused to a critical point’ and that they are the requirements of living a social life. Leiss et al (in Buttle 1989:20) suggests that modern life is shaped partly by the actions of marketers: ‘... marketing and advertising... teaches us how to live any given sort of western life’

Kempner has suggested that in the developed world 'needs', when defined in conventional terms, are now largely imaginary (Kempner et al 1976:200). Needs are perhaps no longer individually but socially determined when people compare themselves with others (Kempner et al 1976).

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It has been suggested that the market has limited scope for dealing with collective needs (Ward and Dubos in Kempner et al 1976:214) and better serves the individual's self-interest. Further Kempner believes that economic thinking fails society because: ‘the deliberate stimulation of dissatisfaction with one's existing standard of living is an integral feature of modern consumer capitalism (Kempner et al. 1976:79).

Marketers may not have a clear view of their role in defining and satisfying wants as distinct from needs when they pressure partially ignorant consumers through their propaganda (Carter in Kempner 1976:237). 4. The Cost of 'Good' Marketing? Since the satisfaction of consumers' wants is the economic and social justification of a company's existence (Stanton 1964) then measures of marketing success have emphasised demand stimulation and producer profits. But is want satisfaction through the generation and nurture of material consumption a social welfare gain or just an economic gain by the producer? Effectiveness measures have gauged performance according to the degree of goal attainment and have not included the costs of securing the goals, which must be related to the costs incurred by others. Nason (in Fisk 1986) has discussed the notion of a 'social cost-benefit' which requires businesses to consider the consequences of market actions. Whilst micromarketing focuses attention on the performance of the firm, macromarketing requires a wider view of market transactions which may have foreseen and unforeseen effects. These effects may be direct to the parties to the transactions or indirect to all other parties (who are then unwitting stakeholders). These 'externalities' can have positive or negative effects. Consumption-based culture is dysfunctional and marketing has encouraged and conditioned us with the desire for new and convenience goods. Some practices have detrimental social effects on individuals and society (negative externalities), and an increasing recognition of the costs of technological advances will throw into question the balance between the social value and benefits of marketing technology and systems (Cox 1962) and the resulting social costs, such as financial losses, dissatisfaction, health and safety problems, resource depletion, or discrimination. The marketing literature has focused largely on environmental effects on the marketing exchange rather than the effects of the exchange on the environment (Robin and Reidenbach 1987:47). Future economic and political decisions will be controlled partly by concerns for our physical environment and, in turn, these will affect what we think we need in our daily lives (Stanton et al 1994:xxiii).

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Economic growth does not necessarily translate into better quality of life and self-interest may be incompatible with broader social objectives because it largely ignores long-term interests. Economic efficiency, consumer sovereignty, and business freedom of enterprise are implicitly assumed to be more important than public welfare and are based on material affluence goals. The future environmental goals will (have to) transcend economic goals and severely constrain them as resource allocation by the market mechanism continues to decline relative to the total of finite resources used (Fisk 1971:447). 5. Balanced Values for Marketers The student of marketing technology may not deliberately behave anti-socially since: ‘personal and organisational value premises that underlie a manager's decisions typically have not required him to consider systematically the overall social consequences of business actions’ (Gelb and Brien 1971).

Parties to a transaction tend to serve their own interests with imperfect knowledge of possible or likely effects on themselves or others. However, some consequences are known and foreseeable by the transacting parties prior to a transaction. The traditional business ideology or cultural assumptions based on economic values of profit, efficiency and growth may not be ethical and can be contrasted with a managerial ideology of social responsibility which recognises the importance of social values. Moral worth is determined by the consequences of an act, such as a net increase in well-being or welfare within society and efficient use of the means for enterprise and society. There is a growing need for 'social accounting' which requires macromarketing thinking beyond the short-term profit goals of a single organisation. Society expects business to provide economic goods and services efficiently but traditional marketing rationality based on economic values can mis-allocate resources and distribute benefits unfairly. There is a need for the convergence of societal values and systems with those of privately owned and conducted enterprise by considering the social consequences of marketing policies, decisions, and actions, and by considering markets and marketing activities within a total social system. Cox (1962) was concerned that: ‘the social problem often becomes one of seeing how individual people with their self-centred interests tied into narrowly circumscribed units can be induced to seek social objectives broader than their own immediate wants’. This has remained an often not discussed central issue. 8

In a humanistic perspective the decision framework of marketing explicitly incorporates the subjective assessment of relationships and other criteria of a social and an environmental nature. Thus marketers' thinking would include value judgements on the social benefit of their intended actions, multiple perspectives, aesthetics, and recognition of their own attitudes on long-run sustained social behaviour and ecological balance. The manager would be 'mindful' (Langer 1989). The practice of moral deliberation, which requires careful reasoning in which the consequences of decisions are outlined and given appropriate consideration would be more prevalent. Marketers would decide on their own 'social contract' for which: ‘marketing planners have to decide whether they live in a society where they are expected to care about the welfare of others' (Dickson 1994:209).

Marketers have to consciously decide whether their social responsibilities are to be fulfilled in the pursuit of traditional objectives of profit and growth or by a more socially conscious approach to business practise (Kempner et al 1976:11). The latter requires the intentional design of marketing activity to gain the desired ends, and marketing and consumption are means and not ends. Cox (1962) recognised that the 'economic entity' (the firm) is a means to society's ends, but individual managers may not have considered this. For this to work we need performance criteria, rather than market directed resource allocation, which recognise a combination of group interests. ‘If the well-being of society is not only determined in economic terms, the means to human ends should not be allowed to focus only on economic criteria’ (Nason in Fisk 1986:290).

Added social value in marketing activity must be seen as the net result of total stakeholder value less total social cost. Kotler refers to this as societal delivered value (1994:38) and requires that short-run and long-run value and costs to all parties are included in assessments of social value. Much education and training in business management concentrates on only one perspective, that of the manager and the business, and largely ignores the society in which the enterprise operates. The manager may not develop a deep personal integrated understanding of the enterprise and its impact on society as they are encouraged to concentrate on ‘how to do it right’. Means and ends are not clearly defined, delineated, and understood. Individual marketers must practice a 'social conscience' in their dealings with customers and other stakeholders to their enterprise. This requires recognition of their views of themselves, of others, of organisations, society, nature, and the universe! (Kotler 1994:16790). Both micromarketing technology and macromarketing social issues must be understood and integrated in a personal philosophy of 'good' business practice. A balance is required 9

between consumer want satisfaction, company profits and other economic performance objectives, and the public interest in improvement of society's well-being. This requires decision-making which includes society's interests and marketers will have to consciously increase the breadth and time dimensions of their marketing goals. Whilst we should seek the application of a concept of enlightened marketing (Kotler and Armstrong 1991:637) which sees marketing as consumer-oriented, innovative, valuebuilding, and societal with a sense of mission, it is essential that we realise that we cannot simply abandon our commitment to economic values. What is needed is a balance between social and economic values. This is a role for ethics and morals in marketing and requires a greater awareness of assumptions of marketing based on competitive capitalism model and alternatives. Marketers will have to be enlightened and mindful. A business ethic is perhaps nothing more than a socially conscious way of conducting business. This will be aided by a shift from the ‘me’ society to a ‘we’ society. Of course, as scholars of the early marketing literature can point out, normative judgements of a 'social marketing' concept are not new. A concern for the societal impact of marketing actions and systems has been discussed and early writers were often accused of being insufficiently managerial (Hollander in Fisk 1986:20). 6. Understanding the Social Construction of 'Marketing' If marketing is indeed a social process then the personal constructs and meanings of the actors need to be understood before any measurements of patterns of behaviour are worthwhile. The 'reality' of the process and its participants must be observed with an 'insider's account' rather than from the perspective of an 'objective' researcher who tests preknowledge. The crucial role of employees, many of whom do not recognise themselves in a marketing role, must be understood from their perspective. This requires a particular research data generation and interpretation approach. Needs, wants, fashion, status, value and other marketing concepts are social constructions as is the exchange process upon which marketing theory is fundamentally (some would argue falsely) based. The question remains, whose construction rules? The positivist approach of measuring given patterns assumes too much about the nature of the phenomena and cannot get beyond a superficial level of understanding and fails to take the view of the actors. We need a view which encompasses the totality of a situation from multiple perspectives in which the observer interacts and concepts and theory are built from generated data. This is a much more reflexive approach which at least stands some chance of finding out something 10

new about the 'application gap' in the field of marketing. This can be achieved by mapping the domain of marketing as a social phenomenon. 7. Marketing – A Value-Laden Language? Interpretative study is needed for the study of marketing as a human and social 'science' which is driven by human interests. We cannot continue to ignore the role of personal values and beliefs in the application of theory. We teach supposedly objective (i.e. value-free) marketing technology, but fail to deal with the values of the individual theorist and practitioner. It is not always clear to what extent the implicit economic values and assumptions of marketing texts and courses are discussed with students of the discipline. We cannot continue to see theory as a determiner of practice, when its true role is in explaining and predicting situations as a management guide. Perhaps this helps to explain why many still see marketing as a means of exploitative management rather than as a satisfier of societal needs. If many practitioners and their teachers lack the appropriate values and thinking necessary to apply the marketing concept as a social value-builder which enhances the quality of life, how will the increasingly undesirable 'application gap' be closed? The need to deal with the increasingly egocentric lifestyles of modern society has major implications for recruitment, selection, training and education in marketing principles. In recent years some attempt has been made to attribute social respectability to marketing through the rise in literature on societal and social marketing. Much of this is actually about ethics and the acceptability of, or tolerance towards, organisational objectives which appear to display social responsibility. Given that much of social marketing seeks to modify behaviour, should we not more carefully consider the underlying values which drive the objectives and programmes? 8. The Integration of Multiple Perspectives Future research in the marketing field must be involved with the situation under study and consider the possibility that marketing does not exist as a discrete field of thinking. To date, the integration of psychology has been limited to measuring consumer behaviour patterns. A new area of study which examines the psychology of marketing management needs to consider how marketing concepts and roles are constructed at individual and group level in the minds of practitioners. It seems that there is a gap between theory and practice rather than a problem of poor application of accepted theory. What is needed is newly constructed theory grounded in the 'reality' of practice. A holistic marketing framework which places the individual within a realistic social context can be derived from an integration of marketing, sociology and psychology and demands collaborative research for its achievement. Just as market research often looks at the 11

socio-cultural factors amongst consumers, it is time researchers were seriously considering the same approach amongst marketing practitioners and academics. Perhaps then a marketing ideology which stands a chance of truly adding value, in its many forms, to society as a whole, rather than mainly to producers in the form of profits, will be possible.

9. A Multi-Disciplinary Interpretation Although many marketing specialists may claim that marketing is a science ‘from a negative point of view ..... marketing is just a hotch-potch of ideas 'borrowed' from other disciplines’ (Baker 1974:21-22)

Marketing is perhaps best thought of as a social institution and as part of a human science (Trusted 1987). As such, marketing research should be concerned with understanding human actions rather than just description from fact finding in some detached 'objective' manner. We need to understand the patterns of thought which lead to beliefs which in turn guide our actions. Do we understand marketing rationality of self-interest or are managers actions based on individual attitudes and feelings in tension with group norms? In what ways do marketing practitioners' behaviours differ from espoused intentions and why? How does the marketing practitioner construct marketing (as a philosophy, activity, tool, technology, or institution?). What are the individual's constructs of the 'what?' and 'why?' of modern marketing? This is especially pertinent when there is evidence that marketers do not understand their contribution to society (Matthews 1989). Since marketing theory is based on economic rationality, it would be interesting to see what questions specialists from social psychology, sociology, business policy, economics, critical theory, and marketing would ask about the 'dismal science' (Kempner et al 1974:2). The normative nature of marketing theory is directed towards establishing norms for behaviour and belief. Developments might include how social relations might operate in a more egalitarian or more 'open' way, and to provide prescriptions for how people should behave. However, standard, idealised, and context-free theory has limited value to society. A more interpretative research philosophy is needed which seeks understanding of what meaning and what significance the social world has for the people who live in it, rather than explanations and predictions of social events. A behavioural approach is interested more in what marketers actually do and think. By widening the field of inquiry we can perhaps enhance the scope of advancement and application of a body of knowledge which has to date been rather partisan. Then we can aim for a consistent body of principles for practical business action in a social world.

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