Changing Market Relationships in the Internet Age

Jean-Jacques Lambin

Publisher : Presses universitaires de Louvain

Year of publication : 2008

Published on OpenEdition Books : 3 April 2013

Serie : Hors collections

Electronic ISBN : 9782875581839

http://books.openedition.org

Electronic reference:

LAMBIN, Jean-Jacques. Changing Market Relationships in the Internet Age. New edition [online]. Louvain-la-Neuve: Presses universitaires de Louvain, 2008 (generated 09 November 2013). Available on the Internet: <http://books.openedition.org/pucl/1635>. ISBN: 9782875581839.

Printed version:

ISBN : 9782874631191

Number of pages : 189

© Presses universitaires de Louvain, 2008

Terms of use:
http://www.openedition.org/6540

This volume, which takes the form of an essay, attempts to structure a forward- looking approach to the evolving role of marketing in today’s economy. Many organisations today recognize the need to become more market responsive in view of the growing complexity of the global and interconnected market in which they operate. Internet technology is resulting in an increasingly globalised market, with easier access to information, new market players and new forms of partnerships. It is also changing consumer behaviour and reinforcing the power of the market over business. It is creating virtual markets where consumers can find customized solutions to their problems which cut across traditional market boundaries. In this new environment, traditional market participants have changing roles, new market actors are emerging and competition is intensifying. To be successful, being customer-oriented is not enough. Business leaders have to review their strategic options and stengthen the market orientation of their enterprises to cope effectively with today’s highly competitive, multi-stakeholder market. The objective of this book is to revisit the concept of traditional marketing management and to analyse changing market relationships among market players and their impact on the key decisions of strategic and operational marketing.

Table of contents

Endorsements

Preface

List of figures, list of tables

Chapter 1. Traditional marketing revisited

1.1. THE TRADITIONAL MARKETING CONCEPT

1.2. THE SHORTCOMINGS OF TRADITIONAL MARKETING

1.3. DOES MARKETING CREATE NEEDS?

1.4. DOES MARKETING PROMOTE ONLY MATERIALISTIC VALUES?

1.5. CAUSE-RELATED MARKETING

1.6. IS THE EUROPEAN MARKET ECONOMY SYSTEM DIFFERENT?

Chapter 2. The market orientation concept

2.1. AN ALTERNATIVE: THE MARKET ORIENTATION CONCEPT

2.2. THE EXTENDED MODEL OF MARKET ORIENTATION

2.3. THE INTERNET TECHNOLOGY

2.4. ACTORS IN THE GLOBAL MARKET

2.5. IMPLEMENTING STRATEGIC MARKETING

2.6. TRANSACTIONAL VERSUS RELATIONSHIP OPERATIONAL MARKETING

2.7. CHARACTERISTICS OF A MARKET DRIVEN ORGANISATION

2.8. CAN MARKETING ALLEVIATE POVERTY IN THE WORLD?

APPENDIX 2. Internet penetration in Europe

Chapter 3. Sub-orientations in market-driven management

3.1. CUSTOMER ORIENTATION : WHO IS THE REAL CUSTOMER ?

3.2. DISTRIBUTOR’S SUB-ORIENTATION IN B2C MARKETS

3.3. COMPETITORS’ SUB-ORIENTATION IN THE GLOBAL MARKET

3.4. AN INFLUENCERS’ SUB-ORIENTATION

3.5. “OTHER STAKEHOLDERS” SUB-ORIENTATION

3.6. AN INVESTORS’ SUB-ORIENTATION IN THE GLOBAL MARKETS

Chapter 4. Impact of internet on market-driven decisions

4.1. THE SOLUTION APPROACH AND THE VIRTUAL MARKET

4.2. IMPACT OF INTERNET ON CHANNELS DECISIONS

4.3. IMPACT OF INTERNET ON PRICING DECISIONS

4.4. INTERNET ADVERTISING : A CONSUMER DOMINATED MEDIUM

Chapter 5. Measuring operational marketing performance

5.1. THE CHALLENGE OF MARKETING MEASUREMENT

5.2. IS MEASURING MARKETING ROI A REALISTIC OBJECTIVE ?

5.3. ARE MARKETING MODELS USEFUL AS DECISION SUPPORTS ?

Conclusion. Upgrading the marketing function

View the market as a dual-trading arena

Place a stronger emphasis on innovation strategies

Reinforce strategic marketing

Reinforce collaboration with the other functions

Develop customer solution strategies

In B2C markets, treat large distributors as B2B customers

Capitalise on the power of user-generated media

View marketing budgets as investments

Be aware of your corporate social responsibility

Develop new capabilities and skills

Endorsements

1This book provides rich and up-to-dated insights on the profound changes triggered by the globalisation of markets, the Internet technology, the rise of business ethics and the active presence of multiple stakeholders. Marketing is clearly at a turning point.
Brigitte Cerfontaine, Director of Advertising Development, Procter & Gamble, Europe.

2It is a very good and concise book on market orientation dealing with key strategic issues and analysing the impact of Internet on marketing decisions. It is practically oriented, without losing the academic rigor of a great specialist as the author is.
Carlo Gallucci, Professor of Marketing, ESADE, Barcelona.

3It is the first time that we find such a complete overview of the marketing discipline and of the way it should be revisited in light of the most recent changes in the environment. Jean-Jacques Lambin focuses on the essential issues of today‘s marketing discipline.
Isabelle Schuiling, Professor of Marketing, IAG School of Management, Belgium

4This book exalts the academic and professional itinerary followed by Jean-Jacques Lambin from Louvain University to the Università Milano-Bicocca. In line with his previous work, this book proposes a critical and in-depth analysis of the market orientation concept, emphasizing the new market relationships prevailing in the digital communications era.
Silvio M. Brondoni, Professor of Marketing and Director of ISTEI, Milano-Bicocca.

Preface

1Three major evolutionary changes are deeply modifying today’s business environment: (a) the globalisation of the world economy, (b) the development of the Internet technology and (c) the emergence of new values promoting a market economy model aimed at sustainable development. These trends open new markets, change the competitive landscape, stimulate the development of more responsible management models, affect the way companies interact with customers and alter the balance of power among market players. The analysis of the world market as an interconnected global economy has the merit to evidence the shortcomings of the traditional marketing management concept as a normative framework that provides an inadequate and an incomplete view of today’s business complexity.

2During years, the traditional marketing management concept has been widely accepted in industrialised countries as an adequate business philosophy in a market economy system. For over sixty years now, managers have been exhorted “toput the customer at the top of the organisational chart” and to use the paradigm of the 4Ps to implement such customer oriented strategy. In reality, market relationships have been dominated and regulated by the marketing laws. Traditional marketing has placed the emphasis on creating market power to influence or to manipulate demand to match supply and was developed within the framework of a top-down business model where companies make decisions about what to produce for passive audiences to consume. The Internet technology is changing this top-down relationship, giving rise to lateral and more equalitarian relationships.

3Many organisations today recognise their needs to become more market responsive in view of the growing complexity global markets in which they operate. The Internet technology expands the geographical size of the market, gives easier access to information, introduces new market players and new forms of collaboration, modifies consumers’ behaviour and reinforces the power of the market over the power of the firm. It creates virtual markets where consumers can find customised solutions to their problems, which cut across traditional market boundaries, thereby matching the supply market concept based on products and services against the consumers’ cognitive market space concept based on their needs and perceptions. Internet is an important countervailing force offsetting the market power of dominant brands or firms. In today’s information society, the Internet technology is a great enabling tool for implementing a much stronger market orientation business philosophy which is more under the customer’s control.

4The objective of this book is to revisit the traditional marketing management concept (Chapter 1) and to propose as an alternative the market orientation concept. The development of the Internet technology is shaping two types of markets: global traditional markets and global electronic markets. In this dual trading arena (Chapter 2), traditional market participants have changing roles and new market actors are emerging. Given the increased complexity of the global market, being customer-oriented is not enough and other market orientations - called sub-orientations - have to be adopted by the market-driven firm (Chapter 3). The Internet technology is changing market relationships among market participants and its impact on the main decisions of strategic and operational marketing is analysed in Chapter 4. Finally, the issue of marketing performance measurement is raised (Chapter 5). With the rising share of marketing expenditures in the firm’s total budget, pressure grows from shareholders to quantify operational marketing’s contribution to the bottom line.

5By way of conclusion, ten recommendations are proposed to upgrade the marketing function in order to reinforce its capacity to cope with the increased complexity of the global market.

Acknowledgements

6This book is an academic essay. It presents forward looking after-thoughts on the evolving role of marketing in today’s economy. Academic essays tend to be discursive. They begin with a review of the discipline’state of the art and contain extensive bibliography. Acknowledging opposing views and either refuting them or conceding to them is a common practice in this form of essay. By tradition, an essay is a piece which does not claim to cover exhaustively the topic.

7This book would not have been possible without the institutional support of the Université degli di studi di Milano-Bicocca who welcomed me as Professore Ordinario after I reached teaching retirement age according to the Belgian law at the Université Catholique de Louvain.

8My gratitude goes first to Silvio M. Brondoni, a long time colleague and friend and to the members of ISTEI, in particular Margherita Corniani, Emanuela Tesser and Flavio Gnecchi. I am also obliged to Michele Zenga and to Marisa Civardi, successive Presidents of the Faculty of Economia for their support.

9I thank Valérie Swaen and Isabelle Schuiling, both from Louvain-IAG School of Management, and Carlo Gallucci from ESADE-Barcelona for their critical and positive remarks on an early version of this book. Special thanks go to Brigitte Cerfontaine from P&G who has found the time to read my final text and to make constructive comments and suggestions.

10Bousval, June, 2008

List of figures, list of tables

LIST OF FIGURES

11. The extended model of market orientation 53

22. The key market actors in the global market 62

33. The global market : a dual-trading arena 68

44. Innovation and strategic marketing 69

55. Typical organisation of a market-driven company 79

66. The different customer roles 94

77. Competitors identification matrix 105

88. The prescription market 111

99. Who are the stakeholders 118

1010. The home ownership virtual and meta markets 127

1111. Measuring short-and long-term marketing effectiveness 161

LIST OF TABLES

121. Contrasting Operational and Strategic Marketing 22

132. The Credibility Gap of Traditional Marketing in the literature 29

143. Consumers attitudes to corporate support of causes 39

154. Social topics addressed in sustainability reports published by Fortune Global 250 121

165. European Online Ad Spending 147

176. Commonly Used Brand Equity Metrics 154

187. Key Measures of Customer Response 156

198. Monitoring the Customer Engagement Cycle 157

Chapter 1. Traditional marketing revisited

1 The objective of this chapter is to review the traditional marketing concept and to analyse its main ambiguities as presented in popular textbooks. The traditional marketing management model placing heavy emphasis of the marketing mix is in fact a supply-driven approach of the market, using the understanding of consumers’ needs to mould demand to the requirements of supply, instead of adapting supply to the expectations of demand. To clarify the true role of marketing, a distinction is made between strategic and operational marketing. Other issues raised by traditional marketing are also discussed in this chapter.

1.1. THE TRADITIONAL MARKETING CONCEPT

2 Since more than fifty years now, the marketing concept has been heralded by marketing academics and practitioners and its acceptance is still viewed as the optimal marketing management philosophy. In the management literature, the marketing concept has been described in various ways by different authors, but the term has become synonymous with having a customer orientation. The shortest definition of marketing is the one proposed by Kotler and Keller (2006, p. 5) 1 is “...meeting needs profitably”. The traditional marketing concept is based on three pillars:

A customer orientation: Implying that an intimate understanding of his or her needs and wants should be the focal point of all managerial actions.

Integration of efforts: Implying coordination with the other functions (R&D, production, accounting and financial activities) within the firm to disseminate the customer orientation.

A profit objective: The marketing concept is intended to make money for the firm, as a reward for its focus on customer satisfaction.

3 Developed in the management literature in the 50s, the paternity of the concept is generally attributed to Peter Drucker (1954) 2 and to McKitterick (1958) 3 a leading marketing executive from GE. The Keith’s article (1960) 4 is one of the earliest presentations of the concept in the academic literature.

4 For the lay man, the basic idea at the root of the marketing concept is by no means perceived as very original, if not simply a platitude. Any street vendor organises its business to insure that its clients get what they want, where and when they want it, and expects reward in return. Since the beginning of times, people are engaged, through barter or trade, to mutually satisfactory exchange relationships and the customer focus clearly existed “... when the king ordered boots from the boot maker”.

5 Under conditions of general scarcity, demand tends to be basic and the identification of attractive markets easy. But in highly competitive markets, under conditions of oversupply, a business philosophy is required which states that supply should be market-driven and that the process of manufacturing should start with a clear statement of customers’ needs.

6 The marketing concept suggests that the pursuit of customers’ interests, in the end serves the selfish interest of the firm: a win-win situation. The same idea was expressed by the Roman Emperor Marcus Aurelius in its Meditations on Stoic Philosophy (160 A.D.): “ If you serve others, you serve yourself. In the economic literature, this principle was formalised by Adam Smith (1776) 5 and, till today, forms the basis of the market economy system and can be summarised as follows:

...society’ swell being is the outcome, not so much of altruistic behaviour, but rather of the matching, through voluntary and competitive exchange, of buyer and seller’s self interest.

7 Although in modern economics this basic principle has been amended with regard to social (solidarity) and societal issues (externalities, collective goods, Government regulations), it nevertheless remains the main principle driving the economic activity of a successful firm operating in a free - but regulated - competitive market. Those ideas have been developed and implemented in management by authors such as Chamberlin (1933) 6 , Drucker (1954) 7 , Abbott (1955) 8 , Alderson (1957) 9 , McKitterick (1957) 10 , Howard and Sheth (1969) 11 , the main founding fathers of today’s marketing discipline.

• The ambiguity of marketing

8 The term “marketing” itself generates ambiguity. In plain English it refers to the process of going to the market and the concept places implicitly the emphasis on the “downstream” activities of the marketing process, i.e. the marketing mix in action and does not refer to the “upstream” activities, that necessarily precede the market entry, i.e. the confrontation of customers needs with the firm’s creative abilities and skills.

9 Many authors and managers do not make a careful distinction among customer oriented, marketing oriented and market-driven. They lean toward the traditional marketing concept to describe the orientation of a firm that stay close to its customers.

10 The linguistic definition of polysemy refers to “...a word that has multiple but related meanings” 12 . Unlike finance people, marketing people are still divided by their understanding about the meaning of the word “marketing”. One symptom of the lack of consensus on language among managers - and in particular among CEOs - is evidenced by the type of answer received to the following first interview question to a sample of CEOs: “How has marketing been changing in your company in the past three years?” With a comment along the lines of “... that depends upon what you mean by marketing ” (quoted by Webster Malter and Ganesan, 2005, p. 36) 13 .

11 This level of confusion remains high among marketing practitioners and scholars as well. For example, while we will call “market-driven management” what the whole firm is doing (strategic and operational marketing) to secure customer preference and thereby to achieve higher returns, Ambler (2000, p. 61) 14 uses the term “Pan-company marketing” and Kotler and Keller (2006, p. 17) 15 the term “holistic marketing”. In many sectors, companies tend to equate marketing with sales; others with brand management and sales; others with advertising, merchandising and sales and others with sales and communication, etc. As stated by Kotler, Rackham and Krishnaswamy (2006, p. 74) 16 , “All too often, organisations find that they have marketing function inside Sales and a sales function inside Marketing”. This conceptual looseness and lack of semantic rigour are unworthy of a discipline having, since more than sixty years now, scientific and academic ambitions.

12 This definitional confusion about the labelling and the scope of the marketing concept creates problems, not only for the teaching of marketing, but more importantly for its implementation. We have seen many examples of poor marketing practices adopted in the name of the marketing concept. As stated by Christensen, Cook and Hall (2005)17, “... thirty thousand new consumer products are launched each year. But over 90% of them fail - and that’s after marketing professionals have spent massive amounts of money trying to understand what their customers want What’s wrong with this picture? We believe that some of the fundamental paradigms of marketing are broken. We are not alone in that judgment.” Even CEO’s Procter & Gamble A.G. Lafley (2005)18, arguably the best-positioned person in the world to make this call, says, “We need to reinvent the way we market to consumers. We need a new model”.

• The marketing mix paradigm

13 The operational counterpart or support of the marketing concept is commonly referred as to the marketing mix or to 4Ps paradigm - product, place (or distribution), price, promotion (or communication) - proposed by McCarthy (1960) 19 , i.e. the specific techniques by which the firm seeks to satisfy consumers needs (the firm’s commercial arm). The marketing mix paradigm includes the marketing tools that the manager combines in a specific way to deal with a specific marketing situation.

14 Borden (1964) 20 groups these techniques in the following areas: product planning, pricing, branding, channels of distribution, personal selling, advertising, sales promotion, service, physical distribution, and market research. Recognising the special character of services as products, Boons and Bitner (1981) 21 add, in addition to the standard 4Ps, an extra three Ps, totaling seven: People, any person coming into contact with customers, Process, the “servuction” 22 process involved in providing the service, and the Physical evidence provided to make the service tangible for the potential customer.

15 Several criticisms have been formulated against the marketing mix in the academic literature. For an extensive review, see Constantinides (2006) 23 and Moller (2006) 24 . The most significant criticism of the 4Ps or 7Ps paradigm is its lack of strategic content making it unfitted as a planning instrument, in particular in turbulent environments. It is implicitly assumed in the marketing mix paradigm that the business to cover, the customers to serve, the competitors to outperform and the distributors to partner with, are known and well identified. These strategic tasks are the most difficult to assume and will determine the long term future of the firm. It is only once these strategic options are taken that the marketing mix paradigm becomes relevant.

16 A second important criticism is that, unconsciously, the marketing mix paradigm emphasises an “inside-out” view of the market, whereas the marketing concept pretends to be an “outside-in” approach giving the primacy to customers. In the market orientation concept described below, the 4Ps or 7Ps paradigm is analysed in a more customer-centric perspective in the framework of the “solution-to-a-problem” approach (see section 4.1. below).

17 Finally, a third criticism formulated in particular by Grönroos (1991 and 1994) 25 , is that the marketing mix paradigm’s focus is more on short-term market transactions than on building relationship with customers, an approach more appropriate for FMCG markets but less relevant for services and B2B markets. Grönroos and his colleagues from the Nordic School (Gummesson, 1987 and 1997) 26 view marketing as an interactive process where relationship building and management are the priority objectives. Gilles Marion (2001) 27 challenges this distinction between transaction and relationship marketing made by Grönroos. As soon as we have exchange, there is a relationship. A distinction between “limited” and “extensive” relationship would probably be more appropriate (see Section 2.6. below).

18 The traditional marketing management model placing heavy emphasis of the marketing mix is in fact a supply-driven approach of the market. The objective is to use the understanding of consumers’ needs to mould demand to the requirements of supply, thereby focusing on the needs of the seller. The true customer orientation concept is concerned with what can be done for customers by adapting supply to the expectations of demand 28 , in a win-win perspective. To clarify the real role of marketing a distinction should be made between strategic and operational marketing.

• Strategic versus operational in marketing

19 As underlined above, one of the negative side effects of the marketing mix paradigm is its overemphasis upon operational marketing tools (the 4ps) which are appropriate to provide tactical responses in a short-term perspective in undersupplied markets, but are unable to cope with the complexities of the intense competition of oversupplied markets. In the early 1980s, this shortcoming was pointed out by Day and Wind (1980) 29 , by Webster (1981) 30 and by Wind and Richardson (1983) 31 . By contrast strategic marketing focuses explicitly on the quest for long run competitive or consumer advantage. Thus, a strategic perspective was missing from the development of the marketing thought and practice. The oddity is that the marketing strategy literature has been developed primarily by non-marketers like Ansoff (1965) 32 , Andrews (1971/1987) 33 , Abell and Hammond (1979), 34 and Day (1981) 35 among others. The first marketing scholars having integrated a more strategic orientation in the marketing discipline and in marketing education are Larreche and Gatignon (1977/1979) 36 from INSEAD with the highly popular marketing simulation game MARKSTRAT, followed later by INDUSTRAT (Larreche and Weinstein, 1987) 37 . It is interesting to note that the strategic marketing perspective has been introduced by Kotler 38 , only in 1980 in the fourth edition of his popular marketing management textbook, i.e. 13 years after his first 1967 edition. Today, most marketing textbooks have introduced the strategic marketing perspective in their content. See for example Baker (2007) 39 , Best (2004) 40 , Kerin, et al. (2007) 41 , Lendrevie, Levy and Lindon (2007) 42 , Raimondi (2005) 43 . The differences between operational and strategic marketing are summarised in Table 1.

Table 1. Contrasting Operational and Strategic Marketing

Source: Lambin et al. (2007)

20 Strategic marketing is, an analysis-oriented process focused on the analysis of the needs of individuals and organisations. The role of strategic marketing is to follow the evolution of the reference market (Levitt, 1965 44 and Abell, 1980 45 ) and to identify various existing or potential product markets or segments on the basis of an analysis of the diversity of needs to be met. Once the product-markets are identified, they represent economic opportunities whose quantitative and qualitative attractiveness needs to be evaluated. For a given firm, the appeal of a product-market depends on its own competitiveness, in other words on its capacity to meet customers’ needs better than its rivals (Henderson, 1983 46 ). This competitiveness will exist as long as the firm holds a competitive advantage, either because it can differentiate itself from its rivals due to sustainable distinctive qualities, or because of higher productivity, putting it at a cost advantage. The process of strategic marketing has a medium- to long-term horizon; its task is to specify the firm’s mission, define objectives, elaborate a development strategy and ensure a balanced structure of the firm’s product portfolio (Day, 1977) 47 .

21 Operational marketing is an action-oriented process that is extended over a short- to medium-term planning horizon and targets existing markets or segments. It is the classical commercial process of achieving a target market share through the use of tactical means related to the product, distribution, price and communication decisions. The operational marketing plan describes objectives, positioning, tactics, and budgets for each brand of the company’s portfolio in a given period and geographical zone. When restricted to operational marketing, marketing tends, however, to degenerate into a sales orientation and an exclusive concern for marketing communication. Operational marketing will be efficient only if it is based on well defined and solid strategic options.

• The traditional marketing concept in practice

22 Born in the 1950s and adopted during the Golden 1960s, the success of the traditional marketing concept can be explained by the fact that both American and European companies were operating at that time in fast growing seller markets, with demand larger than supply and well known needs and wants.

23 Marketing has played an important role in the American and European market economies, not only by improving the productivity of the distributive system of goods and services but also because, by doing so, it has triggered a virtuous circle of economic development. The steps of this development process are the following:

The marketing concept helps identify poorly satisfied or unmet market needs and stimulates the development of new or improved products.

The tools of operational marketing (the 4Ps) create and/or develop market demand for these new products or services.

This increased demand generates cost decreases that make possible price reductions, thereby opening the market to new groups of customers.

The resulting enlargement of the market requires new investments in production capacity that generates economies of scale and stimulates further efforts in R&D to create new generations of products.

24 These developments were so dramatic in the past 50 years that the period was characterised as the golden years of progress to the Good Life, as evidenced by the wide variety of modern discretionary purchase categories that were not even imaginable 100 years earlier: cars, televisions, videos, DVDs, computers, vacation homes, boats, recreational vehicles, pension funds, health clubs and widespread travel opportunities, etc., with market penetration rates observed well above 60 per cent in most industrialised countries.

25 The marketing concept has contributed to the development of a business democracy because (a) it starts with the analysis of the citizen-consumers’ needs, (b) it guides investment and production decisions on the basis of these expressed or anticipated market needs, (c) it is respectful of the diversity of tastes and preferences by developing adapted products and (d) it stimulates innovation and entrepreneurship.

26 In the 1970s, the development of strategic planning (Ansoff, 1965) 48 , with its emphasis on shortterm financially-oriented measures of management performance, contributed to the decline of management interest in the traditional marketing concept. The major criticism (Webster 1980, p. 11) 49 was that marketing managers are generally unsophisticated in their understanding of the financial dimensions of marketing decisions and lack a bottom line orientation. They tend to focus more on sales volume and market shares changes than on profit contribution and returns on assets.

27 The changes in the business environment in the 1990s - saturation of core markets, technology-push innovations, globalisation - have contributed to increase the complexity of markets and to reduce the effectiveness of traditional marketing practice. A resurgence of management interest for marketing has been observed in the 1990s (Webster, 1988) 50 , with the development of the market orientation concept presented in next chapter.

• Is the marketing concept of universal application?

28 The traditional marketing concept holds that products or services should be created in response to the expressed needs and wants of their consuming publics because that would be the way to meet the organisation’s own needs, whether these needs are financial profits or some other non-financial goals. Is this normative framework applicable for any organisation insofar as they have customers and products? As argued by Kotler and Levy (1969), 51 marketing constitutes an applied behavioural science consisting of a set of functions, the core of which is the exchange transaction (Bagozzi R., 1979) 52 . Such reasoning expanded the marketing concept from the realm of economically based exchange to resources based exchange in a broad range of social organisations. Topics range from public transportation, to political campaigns, hospitals, universities and arts.

29 In contradiction with this view Hirschman (1983, p. 46) 53 , argued that the marketing concept - as a normative framework - is not applicable to two broad classes of producers, artists and ideologists because their personal goals are not satisfied by commercial success. Typically the artist is motivated by the need to achieve self-fulfilment via his/her creativity. That is the creative process itself is intrinsically satisfying. Artists achieve success in their own eyes. Similarly ideologists formulate beliefs about the nature of reality and values regarding desirable states of reality. These creators, like artists, formulate ideology largely out of a need for self-expression. This includes religious leaders who seek to have their own religion tenets accepted, but would not be willing to modify them to achieve greater market acceptance. These producers are characterised by “self-oriented creativity” and practice “product-centred marketing”. For this category of creators, Hirschman (1983) 54 states, “... there are three potential audiences: (1) the self, the creator’s own feelings of self fulfilment and satisfaction; (2) peers and industry professionals, such as other artists or ideologists or professional critics; and (3) the public at large, which may consist of one or several market segments.” To the extent that personal and peer values conflict with those of the public at large, then the customer orientation advocated by the marketing concept is irrelevant.

30 Two other categories of producers will not rely on the marketing concept. The producer who has fixed established inventories or production facilities (sunk costs) and does not have the opportunity to tailor offerings to suit the needs of customers. Also when product offerings are highly desirable but available in limited supply, there is little incentive for the marketer to seek out his/her customer. In these situations, the production-oriented or the sales-oriented concepts will be more appropriate business philosophies (Lambin et al., 2007) 55 .

1.2. THE SHORTCOMINGS OF TRADITIONAL MARKETING

31 Despite the undisputable achievements of traditional marketing, several criticisms have been formulated about the marketing practice (see Kaldor, 1971 56 , and Bell and Emory, 1971 57 ). The most severe criticism is the charge of manipulative marketing, through hard selling and misleading advertising, with the objective to mould demand to the requirements of supply. In the 1960s, leading corporations have been accused of: (a) misleading and manipulating children through TV advertising; (b) producing merchandise with miracle ingredients which in fact are of little value; (c) advertising ordinary or inferior features in a way to suggest that they are actually superior features; (d) offering warranties for the consumer protection that are not understood by the consumer and, in fact protecting more the seller than the buyer; (e) using advertising in a way that exploit the agonies and anxieties of individuals.

32 The excesses of manipulative or “wild marketing” have led to the birth of countervailing powers (a) in the form of consumers’ organisations (the consumerist movement) initiated by consumers (in particular by Ralph Nader 58 ) and (b) in the form of legislation which increasingly reinforces the protection of consumers’ legal rights prompted by public authorities. (c) Self-discipline by companies and the adoption of rules of ethics have also contributed to the development of a more ethical behaviour. It is clear today that manipulative marketing is self-destructive for a company or for a brand and goes against its best long-term interest.

• Marketing, a frightening word

33 In the popular language, the word marketing has become the synonym -in the best case of selling but also of misleading, deceptive, untruthful, manipulating, boosting, superficial, window dressing,... Why such contempt and how to explain the discrepancy between what the marketing concept pretends to be and its perception by public opinion?

34 This insidious fear of marketing is in everybody’s mind. A first explanation of this mistrust is clearly due to the too numerous cases of manipulative marketing still observed from time to time in industrialised markets. A more paradoxical explanation can be suggested, however (Lambin and Herman, 2001) 59 . If marketing, viewed as a process of market conquest, is guided by the rules of science - a belief generally held by public opinion -this would imply the existence of forms of determinism in the functioning of the market. In other words, cause and effects relationships or laws (even probabilistic laws), observable and measurable would exist, that the firm can exploit to influence even to manipulate consumers’ behaviour in order to achieve its own growth and profit objectives. This idea is worrying and is in contradiction with the free market ideology of the consumer-king, viewed as an independent economic decider. The marketing concept would disturb and parasitize the natural spontaneity of the “invisible hand”. The claimed individual freedom and the postulated autonomy — “I choose therefore I am” — seem to be incompatible with a deterministic marketing process.

35 We have to recognise however that the axiom of complete individual freedom is unrealistic because any individual in his or her role of decision-maker is a human being socially and culturally formed. This implies that the motives of his or her choice are more influenced by imitation and social conditioning than by rational deliberation and by psychic spontaneity. A reality sometimes difficult to accept and this state of affairs can also explain the instinctive mistrust vis-a-vis marketing. Moreover, the marketing professionals know perfectly well that the scientific nature of the marketing is very relative and that few companies today are able to measure the profitability of their marketing efforts, even more modestly, to evaluate the effectiveness of their marketing and advertising investments.

•The controversial role of the market

36 A market is a social arrangement that allows buyers and sellers to discover information and carry out a voluntary exchange of goods and services. Some leftist economists (see for instance Henochsberg, 2001) 60 hold the view that, in a capitalist system, a market is in reality a “free market” that runs under laissez-faire policies. They challenge the self-regulating role of the market leading, supposedly, to welfare equilibrium. This view is simplistic and the market reality is much more complex.

37 A market is not an unorganised space of economic flows where exchange partners randomly meet (Rachline, 1996) 61 . It is a solid market place structure, based on well-defined principles and operating rules. There is no market without administrative, legal, and fiscal regulations, without logistic support of exchange transactions, without guarantee of last resort, without legislation specific to the sector of activities, without well-defined relationships between parties engaged in a transaction, without financial and accounting rules, without advertising, without competition and anti-trust legislation, without more or less explicit rules of conduct, etc. This list of constraints is long but not exhaustive. A market is not created from scratch, but is the output of a long process of negotiations among the market actors between powers and countervailing powers. The destruction of a totalitarian State will not spontaneously create a market, as evidenced by the situations observed in Central Europe and in Russia. The collapse of these planning economies has not given spontaneous birth to a social market economy system.

• Needed clarifications of the marketing concept

38 The traditional marketing concept has meant little more than looking to the customer for guidance as to what can be sold at a profit, but several ambiguities remain in the interpretation of the concept. Also key issues are...