Does Marketing Need Reform?

Fresh Perspectives on the Future

Jagdish N Sheth, Rajendra S Sisodia

• Publisher: Routledge
• Year: 2015
• Print ISBN:
  9780765616982
• eBook ISBN:
  9781317472872
• Topic: Business
• Subtopic: Business General
• Index: Business

Many marketers fear that the field's time-worn principles are losing touch with today's realities. "Does Marketing Need Reform?" collects the insights of a select group of leading marketing thinkers and practitioners who are committed to restoring marketing's timeless values. The book sets the agenda for a new generation of marketing principles. As the editors note in their introduction; "Marketing is a powerful force backed up by huge resources. It must be entrusted only to those with the wisdom to use it well." The contributors seek to understand and explain how and why marketing has veered significantly off course in order to steer it back in the right direction. The concepts and perspectives presented in this book will inspire a renewed commitment to the highest ideals of marketing - serving customers individually and society as a whole by synergistically aligning company, customer, and social interests.

CHAPTER 1

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INTRODUCTION

Does Marketing Need Reform?

JAGDISH N. SHETH AND RAJENDRA S. SISODIA

More than thirty years ago, Peter Drucker wrote:

Despite the emphasis on marketing and the marketing approach, marketing is still rhetoric rather than reality in far too many businesses. “Consumerism” proves this. For what consumerism demands of business is that it actually market. It demands that business start out with the needs, the realities, the values of the customer. It demands that business define its goal as the satisfaction of customer needs. It demands that business base its reward on its contribution to the customer. That after twenty years of marketing rhetoric consumerism could become a powerful popular movement proves that not much marketing has been practiced. Consumerism is the “shame of marketing.” (1973, p. 64)

Drucker’s characterization remains as true today as it ever was. Instead of acting as partners engaged in mutually rewarding co-destiny relationships, too many marketers and consumers continue to be locked into mistrustful, adversarial relationships in which there is a constant tug-of-war to determine which side can benefit disproportionately and unfairly.

It has been evident for many years that “marketing as usual” is simply not working anymore, and that fundamentally new thinking is needed to revive and rejuvenate this most vital and potentially noble of business functions—one that has, unfortunately, become the object of skepticism and distrust among many of its stakeholders.

Our own observations over the past decade or so have led us to conclude that marketing has been losing efficiency as well as effectiveness over time (Sheth and Sisodia 1995, 1996, 2002). In other words, marketing has been and continues to be in the throes of a productivity crisis. Other business functions (most dramatically, operations/manufacturing, but also many management support functions) have made striking advances in both efficiency and effectiveness, and have been able to “do more with less” year after year. Marketing, on the other hand, has managed to “do less with more,” demanding and receiving more resources year after year, continually relying on a heavy dose of gimmicks and constant sales promotions, while delivering worse results: flat or declining customer satisfaction levels, shockingly low customer loyalty levels, and increasing numbers of alienated customers.

There was a time when marketing’s current modus operandi worked, and worked rather well. It was a time when most customers were young, the rate of household formation was high, national brands were few, national distribution was limited, national media were just emerging, television was in its infancy, latent demand in many product categories was high, and producing products of reasonable quality at low cost was a challenge. None of those conditions prevail anymore. Yet, for marketers and their increasingly irritated customers, it seems every day is Groundhog Day—recall the movie in which Bill Murray was condemned to relive the same day every day, without end. Or, as Yogi Berra would say, “It’s déjà vu all over again.”

Of course, marketing has added new things to its bag of tricks, such as pop-up ads (which make Web surfing akin to duck shooting as users attempt to close windows faster than they appear) and a tidal wave of increasingly over-the-top and offensive email messages that fill in-boxes to overflowing every morning. The problem is that marketing is too fixated on its bag of tricks. Many of those tricks were novel and may even have been interesting at one time, but they are anything but that today. Moreover, marketing’s use of such tricks has increased geometrically as the Internet has greatly lowered the direct cost of doing so; more marketers than ever before are able to use these tricks with ever greater frequency, casting ever wider nets in the hope of catching a few unwary customers.

The side effects of marketing today overwhelm its intended main effects. It seems that the more a customer is marketed to, the more frustrated and irritated he or she becomes, and the more manipulated and helpless he or she feels. This is clearly no way to win customers and influence chief executive officers. Noise pollution, information overload, empty promises, outright exaggerations—marketing’s negative effects on society have never been more pronounced.

It does not have to be this way. Sound marketing practices lead to low marketing costs coupled with highly satisfied customers, minimal spillover of marketing communication to groups outside the target market, long-term co-destiny relationships between companies and their customers, and a strong emotional bond between companies and customers. Unfortunately, these have become the rare exception rather than the rule.

The harsh reality facing marketers today is that their bag of tricks has become a useless, even dangerous, relic of a bygone era. The power in the marketplace—economic, informational, and psychological—has shifted to customers. Old-style marketers have themselves become sitting ducks now, and information-savvy customers can—and do—readily exploit them to their own advantage.

MARKETING: THE GOOD, THE BAD, AND THE UGLY

Marketing practice today is rife with three major types of problems, as depicted in Figure 1.1. First, many marketing actions are either exploitative or downright unethical; in those cases, the marketer seeks to benefit by taking unfair advantage of the customer. Second, some marketing actions are so poorly thought out that they leave the company vulnerable to being exploited by increasingly deal-savvy consumers. We refer to these actions as “dumb marketing.” And third are those marketing actions that benefit neither customers nor companies, and can only be characterized as utterly wasteful. In some cases (as with advertising so heavily as to induce a backlash against the brand), increased marketing spending not only does no good, it actually harms the company! Anheuser-Busch and Campbell Soup discovered this years ago after conducting numerous advertising experiments (Ackoff and Emshoff 1975; Eastlack and Rao 1989).

Collectively, these three types of actions represent the misalignment of marketing—and, ultimately, all of them are dumb as well as wasteful. As the figure shows, any benefits accruing to marketers or customers at the expense of each other are short-lived at best, and usually lead to subsequent losses that more than offset previous gains.

So why is this happening, nearly half a century after the “marketing concept” became an integral part of the business vocabulary? Marketing is supposed to be about aligning company and customer interests. Practiced properly, it should result in happy, loyal customers, motivated and fulfilled employees, and satisfied shareholders. The norm, however, is quite different. Marketing has become synonymous with hype, gimmickry, and the primacy of image over substance; marketers at many companies wittingly or unwittingly end up exploiting their own customers or becoming exploited by them. Marketing swallows up huge resources—the financial resources of companies as well as the time, attention, and efforts of customers—while too often delivering little of value to either side in return. All chickens do eventually come home to roost, and the internal and external consequences of unethical, dumb, and wasteful marketing cannot be escaped forever. Marketing managers must alter their business practices before their companies go out of business or are forced to reform by the heavy hand of regulation. Marketing has become addicted to these unethical, dumb, and wasteful practices. Like any addict, it needs an intervention to break the addiction.

Figure 1.1 Marketer and Customer Benefits

Marketing’s current problems are rooted in organizational inertia, misaligned incentive systems, poorly designed value propositions, and outmoded ways of thinking about markets and customers. The culture of marketing, especially in consumer marketing, has become too corrupted and disfigured by short-term thinking and a loss of focus on the fundamental human values that require that companies and customers treat each other as allies and partners in value creation rather than as adversaries and potential victims.

The Bad: Unethical Marketing

To achieve their sales and market share goals, more and more companies are resorting to exploitative and unethical marketing practices. Unethical marketing is that in which the marketer attempts to mislead, misinform, or otherwise take unfair advantage of customers, or knowingly engages in activities that have a harmful effect on society. In these cases, marketers seek to benefit at the expense of customers rather than with them.

Too many companies try to exploit a customer’s emotions, trust, confusion, lack of organization, or lack of knowledge. Companies take advantage of vulnerable customers such as children, the elderly, and the indigent. They convey a false sense of objectivity in their advertising, engage in opportunistic pricing or price gouging, push harmful or unnecessary products, make it difficult for unhappy customers to leave them, create and exploit customer addictions, pressure customers into making hasty decisions, or unduly influence trusted advisors (such as pharmacists and doctors) to give customers poor advice.

Such hit-and-run marketing is so widespread that it sometimes appears to be the norm rather than the exception. Some examples are egregious, others somewhat subtle. Three prominent ones are: brazenly misleading advertisements (e.g., weight loss products), manipulative sales tactics (e.g., automobile retailing), and most forms of multilevel marketing. Telemarketing has earned a deservedly terrible reputation as the last refuge of hit-and-run marketers, and is estimated to result in over $50 billion of consumer fraud annually. Other frequently criticized practices include price gouging (e.g., ink cartridges for printers), advertising to children, and many pharmaceutical marketing techniques.

Unethical marketing may appear to pay off in the short run, but its long-term consequences can be deadly. There are many examples of highly successful companies demonstrating very high standards of marketing ethics. Ethical marketing is financially beneficial in the long run, as it builds customer trust. It is also essential to building employee morale and loyalty, which are prerequisites to delivering superior customer service and customer satisfaction.

The Ugly: Dumb Marketing

Many marketing practices are detrimental to the long-run interests of the marketer, but may offer customers a (usually) temporary benefit. These situations need not involve scams or illegal activities on the part of customers. Rather, they occur when shrewd customers, behaving quite reasonably and rationally, respond to poorly conceived and implemented (i.e., dumb) offers from marketers. For example:

• Some companies indiscriminately try to “buy” customers, as the major long distance companies did in the 1990s, leading many customers to switch providers repeatedly to take advantage of the incentives. The net result was the destruction of brand loyalty in the industry.

• Many customers cherry-pick only deeply discounted “sale” items from retail stores, resulting in a loss for the retailer every time they shop at the store.

• Many marketers use coupons in such a broad, untargeted manner that even those customers who would have readily bought the product at regular price receive a windfall. Traditional coupons are als...

Table of contents

• Cover
• Half Title
• Dedication
• Title Page
• Copyright Page
• Table of Contents
• 1. Introduction: Does Marketing Need Reform?
• Part 1. Mirror, Mirror on the Wall
• Part 2. Are Marketing’s Problems Self-Correcting?
• Part 3. Rethinking Marketing’s Sacred Cows
• Part 4. Adjusting to Marketing’s Changing Context
• Part 5. Marketing and Its Stakeholders
• Part 6. Academia, Heal Thyself: Reforming Marketing Scholarship and Education
• Part 7. A New Mission for Marketing
• About the Editors and Contributors
• Index