Download Relationship marketing and a new economy: it`s time for de

Relationship marketing and a new economy:
it’s time for de-programming
The Authors
Evert Gummesson, Professor, School of Business, Stockholm University, Stockholm,
Sweden
Abstract
Some economic conditions change gradually and sometimes sudden discontinuities occur
whereas other conditions remain stable for decades, even centuries. In this sense there is
always a new economy in the making. The author claims that marketing theory lags behind
and that marketing as it is taught and researched today is a relic of the 1960s, patched up with
decorations such as services, relationships and e-business. Academe is hiding behind an
allegedly scientific front of deductive and reductionistic customer surveys, applying
increasingly sophisticated statistical techniques that process data of decreasing quality.
Generation of marketing theory requires more of inductive and systemic case study research
allowing us to confront the complexity, ambiguity and dynamism of the real world with more
common sense and less ritual. We need to keep developing marketing theory to avoid turning
education into brainwashing. New marketing theory should focus on the value of the total
offering; a balance between production-centric and customer-centric aspects; and should
recognize relationships, networks and interaction as core variables.
Article Type:
General review
Keyword(s):
Relationship marketing; Economics; Statistics; Theory.
Journal:
Journal of Services Marketing
Volume:
16
Number:
7
Year:
2002
pp:
585-589
Copyright ©
MCB UP Ltd
ISSN:
0887-6045
Change demands de-programming
Conditions in the economy and the market have changed, sometimes incrementally,
sometimes through discontinuities and quantum leaps. They keep changing, in some areas at a
progressively faster pace. A natural corollary to this declaration is: as marketing practitioners
and marketing scholars we also need to change. This seems so evident that there should be no
need to print it – if marketing was readily adaptable. Although we institute some change, it
does not necessarily come naturally, either in academic research, or in marketing practice.
Need to adapt mindsets
In two areas in particular, marketing has offered new approaches and explanations; services
marketing has become a field of its own and so has relationship marketing with CRM
(customer relationship management). These will form the springboard for a discussion about
the future and the need to adapt our marketing mindsets. It is my contention that we cannot
keep adding new knowledge on top of the old and call services marketing and relationship
marketing special cases whereas in fact they dominate the real life arena. They are therefore
the general case. Today’s “general” textbooks perpetuate the established marketing
management epic from the 1960s with the new just added as extras. It is further my contention
that marketing education has taken an unfortunate direction and has crossed the fine line
between education and brainwashing. The countdown of a painful – but revitalizing – process
of de-programming has to be initiated.
What do we need in such a situation? A shrink? No, it is less sophisticated than that. All we
need is systematic application of common sense, both in academe and in corporations. We
need to use our observational capacity in an inductive mode and allow it to receive the true
story of life, search for patterns, and build theory. Yes, theory, general marketing theory that
helps us to put events and activities into a context. This is all within the spirit of grounded
theory, widespread in sociology but little understood by marketers. My interpretation of a
recent book on the subject by Glaser (2001) is as follows:
Take the elevator from the ground floor of raw substantive data and description to the
penthouse of conceptualization and general theory. And do this without paying homage to the
legacy of extant theory.
In doing this, complexity, fuzziness, and ambiguity are received with cheers by the
researchers and not shunned as unorderly and threatening as they are by quantitative
researchers. Oddly enough, natural sciences – which are by mainstream social scientists,
including marketing researchers, looked on with envy as being rich in objectivity and
orderliness – accept chaos and complexity (see further Stacey, 1996).
Good theory
Good theory offers a context, a map, and a flashlight that help us find our way home in the
dark. Good theory is useful for scholars and practicing managers alike (Gummesson, 2002a).
Let us now approach some pivotal aspects of our de-programming and the possible content of
future marketing theory.
A new economy 1: goods + services + information technology
Anachronistic threefold division
The overriding division of economies into agriculture, manufacturing industry, and services –
for occult reasons still upheld by economists and statisticians – must be dissolved. Giarini
(2001) claims that the “tertiary sector” – services – is the core of a new economy. I agree that
the tertiary sector designation is an anachronism, although one could argue what is the actual
outcome of economic activity. In statistics, services are conventionally presented as a list of
various sub-sectors (hotels, transportation, etc.) and even with this classification they account
for 60-70 percent of all employment in Western countries. Then the services provided by
companies allocated to the “manufacturing sector” are not counted. For a long time General
Electric and General Motors have been huge in financial services. B-to-B (business-tobusiness) services have expanded, not least through outsourcing. IBM’s core business used to
be computer hardware; today it is computer services. Furthermore, internal services in
organizations are not properly pinpointed. If we add up all this, services may account for as
much as 90 percent of all employment. In services, customer-supplier interaction and
relationships in the service encounter stands out as the most distinctive feature separating
them from goods.
Goods are actually critical
At the same time – and this is not appreciated in the service literature – we have more goods
than ever before in the history of mankind. How can that be? It is because mass
manufacturing systems are now so mechanized, robotized and digitalized that they need few
workers; they need supportive services. So contrary to what the employment statistics indicate,
goods are more critical than ever.
Above all activities today hover the opportunities offered by the brain power and intelligence
of information technology. Like all technology, it does not provide an automatic solution. It
enables us to spawn the magic of a benevolent fairy or a sinister witch; who will dominate is
up to us.
Everything today being a combination of goods, services, and information technology, I like
to propose – not for the first time – that we merge all these and zoom in on the total offering.
We should leave the antiquated division in official statistics where it belongs, in an auction of
memorabilia, or perhaps better in the Saturday flea market. In a new economy it has only
ceremonial meaning, excluding such core phenomena as information; software; the Internet;
and customer input in production, voluntary work, and do-it-yourself.
A new economy 2: value + networks
Two sub-economies
There are many views of what a new economy contains. Frequently used labels are the service
economy, the knowledge society, and the information era, stressing that we have entered the
post-industrial or even the postmodern age and left an old economy. The problem with these
labels is that they are product-centric, not customer-centric; services, knowledge and
information are means of production. My suggestion is that we offer two sub-economies
within a new economy:
1. (1) the value economy, stressing the desired output; and
2. (2) the network economy, stressing the character of the input.
At first sight one might take the value economy as being customer-centric and the network
economy as being supplier-centric. But in a new economy and as research is teaching us,
suppliers both produce and consume value and exist in networks, and customers do the same.
Therefore they are both part of the value economy and the network economy.
The value economy
Different concepts of value
Value is a ubiquitous and integral part of life, and as such hard to seize and define although
we all experience it daily. There are overlapping labels and concepts; among the more
frequently used are satisfaction, perceived quality, and utility. Many have written about it
both in philosophy, economics, and marketing (see Oliver, 1996; Ravald and Grönroos, 1996).
For want of a more generic understanding of value and satisfaction, marketing usually settles
for a proxy, namely perceptual data from consumer surveys.
Value creation is traditionally associated with the supplier role, and consumption with the
customer role. We must relax the distinction between the producer and the consumer and
eventually grow up and take the consequences of the knowledge we have accumulated over
decades. The consumer is not a passive recipient and a value destroyer but an active coproducer, user and value creator. Value is not present until an offering is used for something
and experienced as satisfying a need for somebody.
The network economy
In focusing the input – the structure and organization of the resources necessary to produce
value – research in services and relationship marketing point to the network as the basis. From
a sociological angle, Castells (1996) has established at length the network properties of a new
economy, reinforced by the networks of the Internet and mobile telecommunications. From a
marketing angle, relationship marketing can be defined as “marketing based on interaction
within networks of relationships” (Gummesson, 2002b). This is a more inclusive, generic and
conceptual definition than the common “developing, maintaining and enhancing long term
customer relationships”, which is merely descriptive. CRM is a young offspring which I
define as “applying the values and strategies of relationship marketing in practice, with
particular emphasis of the customer-supplier relationship, largely but not solely dependent on
information technology.” A network approach emerged in B-to-B marketing and in Jackson’s
research the terms transaction marketing and relationship marketing were defined as two
complementary ways of doing business (Jackson, 1985).
Relationship marketing
Research in both consumer goods marketing, services marketing and B-to-B marketing
currently converge and come together under the label of relationship marketing. Within the
spirit of grounded theory, relationship marketing could be appointed the core variable, with
relationships, networks and interaction as sub-core variables, thus offering the beginnings of a
general marketing theory. The relationship marketing label is perhaps new, the phenomenon
is not. It had just not been properly observed and conceptualized; marketing professors seem
to be the last to notice the reality around them.
Directions in a new economy
Fresh foundation
New knowledge is sometimes accumulated on old knowledge. At some point, however, we
have to start with a fresh foundation; we have to shift the paradigm. To learn, we must unlearn.
Even if part of the old merges with the new, it has lost its lead role and will have to step down
to a humbler position. I have used the more theatrical language of brainwashing versus deprogramming to accentuate the gravity of the situation.
Surveying perceived trends – not just falling in love with the popular hype but settling for the
solid and sustainable – is a laborious task. Despite the uncertainty, we need to wrestle with the
trends to design future scenarios in our marketing and business plans. The following review of
conclusions and recommendations is here to serve as food for thought:
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Need for theory and context. Marketing management today suffers from theory
anorexia and cannot properly feed on and digest what is happening in a new economy.
Both practitioners and academics are vulnerable to con men offering panaceas and
explanations supported by the ever-present media hype. There is need for more
healthy and vitamin-rich feeding of the marketing mind. We need marketing theory,
good theory, essential for scholars and practicing managers alike. There is currently no
general theory of marketing in existence, just reminiscences of outdated
microeconomics and fragmented models or concepts, often called theories but so out
of management context that they do not survive beyond the shelter of an academic
ivory tower.
Healthier marketing theory
General marketing theory in the making. Relationship marketing and CRM with a
focus on relationships, networks and interaction submit the most promising approach
to a more valid and general theory of marketing, replacing a dinosaur marketing
management and marketing mix consumer goods paradigm from an old economy.
Relationship marketing and CRM help us give context on a comprehensive,
conceptual and general level, that is, generate healthier marketing theory.
The total offering. We must eventually learn to see the offering – previously referred
to as goods and services but where I now find it necessary to include information
technology as well – and its value-producing potential and not get stuck in its
constituents parts. To avoid CRM becoming a myopic eCRM we need the
counterbalance of hCRM where “h” stands for human. We need to head for an optimal
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trade-off between eCRM and hCRM. We need to properly absorb the values of
relationship marketing or CRM will forever be no more than an expensive computer
system.
Value and networks. A new economy has been described from two perspectives, as
value output and network input. We need to think in those terms, but thinking is not
enough; we also need to commit ourselves and take action. It includes viewing the
roles of the supplier and the customer in a dimmer light. We must accept that a
supplier can add value but the customer also adds value.
Viable research strategy
Inductive research. It means that we also use our senses and our common sense,
intuition, tacit knowledge, and experience in conjunction with systematic, scholarly
research and everyday observations from practice. Grounded theory has already been
mentioned as a viable research strategy. Personally I embrace its merger with action
research, introspection, narrative research, and case study research packaged in what I
recently named interactive research (Gummesson, 2000, 2001).
Complex and ambigous
Complexity and ambiguity. The world is bewildering and so is marketing. It is
complex and ambiguous. Research in marketing must put a halt to the excessive, even
obscene indulgence in quantification and surveys. We need less deductive hypothesestesting of isolated concepts out of context, and more inductive research where true
observation is encouraged. Our observations as practitioners, consumers and
researchers must be given priority over repositories of old theories, concepts, axioms
and other claims of marketing. In discussions, a new economy is more often than not
treated on the terms of an old economy, using its concepts and trying to squeeze a
reluctant reality into it.
Balanced centricity. The marketing concept, holding that companies should focus on
customer needs and not become navel watchers of their own products and
manufacturing, is the foundation of today’s interest in the customer. However, both
perspectives are needed. Customer-centricity and production-centricity need one
another. They must shake hands and make friends in a balanced productionconsumption centricity.
References
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economy", Progress, No.33, pp.20-8.
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Glaser, B. (2001), The Grounded Theory Perspective: Conceptualization Contrasted with
Description, Sociology Press, Mill Valley, CA, .
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Gummesson, E. (2000), Qualitative Methods in Management Research, 2nd (revised) ed.,
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