Time for a new definition of the term MARKETING?

The latest definition of the term Marketing by the American Marketing Association (AMA) dates from 2007. Marketing is defined as " the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large".
In a post of this blog in 2008 I commented on the fact that this definition replaced another one, just 3 years after its introduction in 2004. The 2004 definition was obviously heavily criticised for its myopic view on marketing.
While many traditional marketers (and other stakeholders) were obviously pleased with the 2007 AMA definition of Marketing - it is found today in almost all marketing textbooks - I think that this definition is again at the end of its life cycle; most young people entering today the marketing domain as professional would have problems to accept it.
This because a few things have dramatically changed since 2007, most important one being the staggering growth of the social media domain and the subsequent customer empowerment as a result of it. While the 2007 AMA definition is underlining the role of marketing for creating, communicating, delivering and exchanging offerings it completely ignores the customer domination of the marketplace and a number of other facts that the social media explosion has introduced to the marketing reality.
There are two main drawbacks in this definition: The first is that it is still based on the one-way, broadcasting type of thinking that still dominates the thinking of older marketers. In a customer-dominated market the broadcasting attitude must be replaced by an interactive one based on listening and engagement.
The second issue here is that two basic elements of the definition have been transformed today in something completely different than what they used to be: the creation and the communication.

• "creation" is rapidly replaced by "co-creation". Businesses failing to tap the customer creativity in developing new products, services and communication concepts will be the laggards of the future.   
• Old fashion "Communication" by means of mass media is rapidly losing ground and influence. Looking to a billboard this morning on the way to the office I suddenly realised that the only function of the ad displayed there was to inform me about a product and nothing else! My customer journey will actually start behind my laptop, iPad or smartphone where I would go searching about the product I saw by reading reviews and opinions of those who already bought it. The message is not anymore the  medium: The Customer is the medium (and the message).

These simple realities make the latest Marketing definition obsolete. I could fill pages explaining this further but I think the bottom line is that Marketing academics must bend again over the drawing board and redefine the term marketing. We are already late with this: our students and the field are waiting.

Crowdsourcing: utilize the customer's creativity

Taping the Customer Creativity (also known as Crowdsourcing) is one of the elements of my model outlining the main ways that marketers can engage the Social Media as Marketing tools.

Many examples of such initiatives are already known to those who follow what happens in the Social Media space. Most applications ( RedisignMe, Dell, Nokia, Samsung, TomTom, HP, Talpa, Google Android KLM, Starbucks, P&G, Robeco, threadless, LEGO, SAP, Kodak and many others) are focused on utilizing the customer wisdom in order to innovate. Another way to utilize the customer creativity is to ask customers to design advertisements for you or even commercials. A pioneer in this area is Current where amateur videos that appear on TV win money. Here in Holland we have also some interesting examples. A few months ago Nespresso tested two commercials as to the viewers' opinions before one of them appeared on TV (Source: MarketingFacts.nl)

Another nice example of using customer creativity is the Battle of Concepts , a Dutch (at least till this moment) platform allowing companies to organize competitions (mostly among creative business students) for solving real business problems. The site is getting very popular among students who can win up to 5.000 Euro but also among lecturers who can find there real case studies for their students! (I think to try this next year). Last but not least a new site called Creatad offers creative amateurs the possibility to make money by designing advertisements (printed or videos). I wonder if the American Marketing Association will be obliged to come soon with a new Marketing Definition taking into consideration the interactive nature of Marketing today as well as the way the New Marketing is creating value for the customer who becomes slowly marketer himself!

Marketers: Back to basics (but what basics?)

MarketingCharts: “Marketing executives are going back to basics this year, putting renewed focus on satisfying and retaining customers and investing in research and insights, but they are “sick” of hearing about Web 2.0, according to a survey from Anderson Analytics conducted for the Marketing Executives Networking Group (MENG).”

It sounds too good to be true: “Shareholder Value”, “Outsourcing”, “Value for Money” (sometimes an euphemism for marketing cheap crap made in China), Tactics instead of Strategy and other mantras that have distorted the marketing thought and practice during the last 20 years seem to lose their glitter. Light at the end of the tunnel?

I am afraid not! Going back to “Basics” (like satisfying and retaining customers and investing in research and insights) is a tedious undertaking for most marketers today; the customer is not what it used to be, the market parameters and conditions have changed, the market power has migrated from the marketers to people and last but not least the image of marketing and peoples’ trust in Marketing has never been lower.

Marketing practitioners but also Marketing Academics have their share of blame for the marginalization of Marketing and its loss of focus. Professor Frederick E. Webster Jr. wrote in the Journal of Marketing (vol 62, October 2005): “ For the past two or three decades, the tactical dimension has dominated, with an emphasis on operational (i.e., input-level) marketing decision variables and short-term business performance results, especially sales volume and market share. Methodological rigor has been emphasized over problem importance … Data and Methodology have dominated academic research at the expense of both theory development and practical relevance, retarding the progress of the marketing discipline in a rapidly changing market environment”.

Back to the survey revealing the Top Five Trends for marketers. I can’t help to comment on the findings.
“#1. Insight and Innovation Key: Insight and innovation are seen as key to combat slumped economic and business cycles. Some 72% of respondents said innovation efforts would stay the same or increase, while 39% say their use of market research will increase this year. This is significant, given that most marketing experts agree it's imperative to innovate and mine insights during a recession”

While I fully agree that insight and innovation are vital I have a piece of advice for these marketers: Instead of getting sick of Web 2.0 (#4) they better try to find out what Web 2.0 really is. Social Media can be a low cost (handy in cases of “slumped economic and business cycles”) and very effective tool for tapping customer voice and creativity: the best basis of innovation! The Web (2.0) has already become the nr 2 news information channel and for most people is already the nr 1 marketing information channel.

“#2. Customers at Top of List: Basic customer satisfaction and retention remain the top two concepts of interest to marketers, followed by marketing ROI, brand loyalty and segmentation. Together, these represent a move back to the core principles of marketing”.

If “basic customer satisfaction” is really the top priority for marketers they have to sell the idea first to greedy shareholders! As to customer satisfaction and retention they must come up with some new ideas next to low cost. A piece of advice: they better realize that Web 2.0 is the place they have to be in order to find out if their customers are satisfied or what will make them satisfied.

“#3. Green Marketing, Global Warming Lose Importance: The topic of global warming showed the largest decrease in importance (dropping 14 places in the rankings), while green marketing showed a statistically significant 5% drop”.

If this is true I am afraid that marketers are once more out of touch with the new realities further marginalizing Marketing as a corporate function. You can’t blame marketers entirely though for such attitudes when the departing Bush administration has been the good example by consistently undermining these issues. Bad news for these marketers: A recent survey indicated that 85% of consumers having to chose between a product related to a cause and one not related to any cause would prefer the first one. Advice: read once more the new AMA definition of Marketing and ask yourself why it replaced the previous one in just 3 years!

“ #4. Marketers "Sick" of Web 2.0: Twice as many marketers are "sick" of hearing about Web 2.0 and related buzzwords such as "blogs" and "social networking," compared with last year's survey. However, marketers still admit they don’t know enough about it. This was evident in results from a November 2008 MENG social media study showing 67% of executive marketers consider themselves beginners when it comes to using social media for marketing purposes”.

This is my favorite: Marketers are sick of Web 2.0 but admit that they don’t know enough about it!! A statement that could come straight from Dilbert. No Comments.

“#5. Most Opportunity in China and among Boomers: China ranks as the #1 greatest area of opportunity (53%) for marketers with international responsibility, while India is a distant second, with votes from 17% of respondents. In terms of the best opportunity for customer targeting, execs still feel Boomers hold the most promise. But the perceived importance of Generation X and Generation Y grew significantly, compared with 2008 survey results”.

While I would agree about the Boomers and possibly about the X / Y generations I would be much more careful ranking China as #1 opportunity area. The effects of the financial crunch are already dramatic for China: sweetshops and all kinds of low labor cost outsourcing facilities (see #3 above) are closing. The low cost, export-based model seems unsustainable for developing the Chinese econoly in the long run. Western customers are cutting on spending and the reputation of Chinese products is deteriorating (see the latest milk scandal). Many draw a parallel between China today and Japan in the 70’s and 80’s but don’t forget that China is not Japan! I am afraid we have not seen the worst yet.

Conclusion: Marketing practitioners have realized that they drive in a dead-end road and try to turn back. They could better start the process of rehabilitation by first making some effort to understand the real world (and not to forget the Web) around them, keeping in mind that now the customer is the dominant party. Back to basics sounds good, only the basics have dramatically changed. The sooner they recognize this, the better the chances to survive in a world that is not any more what it used to be.

New AMA Marketing Definition: Back to Basics

Searching some familiar sites I was surprised to see that the American Marketing Association without much fanfare adopted again a new definition of the term Marketing, only three years after the previous revision. Since some of my readers are possibly not aware of this development I copy the text presenting the new and old definitions and the raison d'être for the change as one can find it in the web site of the AMA:

“New Definition of Marketing (est. in 2007)

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Previous Definition (est. in 2004)

Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

The new definition takes into account input from a broad cross-section of the Association membership. Marketing is regarded as an 'activity' instead of a 'function' and positions marketing as a broader activity in a company/organization, and not just a department. The new definition also positions marketing as providing long term value rather than narrowly as an exchange of money (short-term) for the benefit of the shareholder/organization.”

Source: http://www.marketingpower.com/Community/ARC/Pages/Additional/Definition/default.aspx

I am glad with the new definition if only for one reason: The new focus of the on “providing long term value rather than (positioning marketing) narrowly as an exchange of money (short-term) for the benefit of the shareholder/organization”, as AMA explains.
As you possibly remember sometime ago I criticized the almost religious emphasis of the contemporary management on short-term results and “shareholder value” as a strategy mantra that has caused and keeps causing substantial damage to corporations, the economy and the society in general. The colleagues of the AMA seem to worry also about the impact of the short-termism and “shareholder value” and decided to take action by pronouncing the “transparency, broad participation and continuity” as the basic tenets of the new definition while restating the client/customer and the society as beneficiaries of the marketing.
Interestingly the new definition came about with feedback provided by the industry that clearly was in favor of a new definition rather than a revision of the old one. Possibly the endless stream of corporate scandals and several examples of top (mis)managers often rewarded with hundreds of millions of dollars in stock options have contributed in this attitude. I also suspect that the increasing recognition by marketers of the new role of the customer and the customer empowerment have played also some role here.
I hope that the new definition of the Marketing will help the corporate management to correct its course and re-focus to their customers than the shareholders. It should also help marketers to better understand their mission and give to the marketing the position it deserves as corporate activity.