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Summary Theories of Marketing ALL MATERIAL 2021
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Summary of all material for Theories of Marketing (): all knowledge clips, lecture notes + articles.
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Summary Theories of Marketing: Knowledge Clips + ArticlesTopic 1: Developments in Marketing Thinking
What is marketing?
Marketing is about the functions & processes/activities to deliver “customer value” → a way to
approach the market.
The first core of “marketing” was about distribution and production: profits through supplying. Over
time, selling became more important: profits through persuading people that what the organisation
happens to have, is what they really wanted. After that, the marketing concept popped up: profits
through the provision of customer satisfaction by meeting their needs and wants.
Definition 1985: “Marketing is the process of planning and executing conception, pricing, promotion
and distribution of goods, ideas, and services to create exchanges that satisfy individual and
organizational goals”.
Definition 2012: “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.”
➔ Shift in marketing from transaction- and product-driven (metric: marker share) to relation- and
value-driven marketing (metric: share of wallet; the amount a customer spends on a particular brand
rather than buying from competing brands).
Two main marketing decisions:
• Segmentation: understanding customers, their needs, wants, values, etc. with different
research techniques.
• Value differentiation: creating customer value through innovative customer journeys,
branding, and optimised customer relationships.
Market orientation as culture: set of beliefs that put the customers’ interest fist, while not excluding
that of all other stakeholders, such as owners, managers, and employees, in order to develop a long-
term profitable enterprise.
Market orientation as behaviour: the ability to generate, disseminate, and use superior information
about customers and competitors.
Marketing Orientation (article Narver & Slater, 1990)
A business that improves its market orientation will improve its market performance.
➔ Market orientation: the organization’s culture that most effectively and efficiently creates the
necessary behaviour for the creation of superior value for the buyers and superior performance for
the business. It is the implementation of the marketing concept.
Market orientation consists of three behavioral components (a, b, c) and two decision criteria (d, e):
a. Customer orientation: the sufficient understanding of one’s target buyers to be able to
create superior value → a seller understands a buyer’s entire value chain.
, b. Competitor orientation: understanding short-term strengths and weaknesses and long-term
capabilities and strategies of current/potential competitors.
c. Interfunctional coordination: coordinated utilisation of company resources in creating
superior value for target customers.
d. Long-term focus
e. Profitability; the overriding objective in a market orientation.
A distinction is made between two types of businesses:
• Commodity businesses: sell physical products, such as dimension lumber, plywood, wood
chips → identical in quality and performance to those of competitors → create superior
value by adding customer benefits to the generic product or reduce the buyers’ nonprice
costs.
• Non-commodity businesses: able to adapt generic product/service and add customer
benefits to generic product to create superior value. Examples: hardwood cabinets,
laminated doors, roof truss systems.
Effect of MO on profitability:
- Non-commodity businesses: the more a market invests in being
market oriented, the more profitable it will be (linear effect).
- Commodity businesses: profitable in two situations: 1) a great
market orientation, 2) a low market orientation; this makes the
businesses efficient and therefore have good return on
investments. Businesses that fall in the middle of those two
extremes, normally do worse on their profitability.
Conclusions on article:
Market orientation is an important determinant of profitability for both commodity and non-
commodity businesses.
Among the non-commodity businesses, the positive relationship between market orientation
and profitability appears to be monotonic, whereas among the commodity businesses a
positive market orientation/profitability relationship is found only among businesses that are
above the median in market orientation.
For both commodity and non-commodity businesses, relative costs appear to be an
important determinant of profitability.
➔ Market growth is an important determinant of profitability for both types of businesses, but the
relationship differ.
Customer-led and market-oriented (article Slater & Narver, 1998)
Customer-led businesses focus on understanding the expressed desires of the customers in their
served markets and on developing products and services that satisfy those desires.
Market-oriented and customer-led philosophies represent different degrees to which businesses
attempt to understand their markets:
A customer-led philosophy tends to be reactive and short-term in its orientation, and
focuses on customers’ expressed desires and on measures of customer satisfaction →
, mostly successful in a relatively predictable environment. It may also be attractive in some
dynamic environments because of the uncertainty and risk associated with attempting to
lead the customer.
Market-oriented philosophy: proactive market orientation, understands and satisfies latent
needs, is long-term in focus and proactive in nature. It creates superior value by sharing
knowledge broadly through the organisation and generally acting in a coordinated and
focused way; recognises that different customers provide different information.
Responsive MO (customer-led) Proactive MO (market-oriented)
Orientation Expressed wants Latent needs
Style Responsive Proactive
Focus Short-term Long-term
Objective Customer satisfaction Customer value
Learning type Adaptive Generative
Learning processes Customer surveys, key account/focus Observation, Lead-users/experiments
groups
➔ Focus Satisfaction & relationships. Stable Innovation & unserved markets.
environments. Turbulent environments.
➔ Both the response market orientation and proactive market orientation are part of the total
market orientation:
Example – Apple
The question is whether the introduction of the iPod and iPhone is based on a responsive or
proactive market orientation. Apple realized that it was about the content: having the music (with
apps and iTunes) already on the device (MP3 player). However, nobody had ever expressed that
needs (latent needs). Therefore, it is proactive market orientation.
New developments in marketing thinking: marketing paradigms (knowledge clip 1.1, article Achrol
& Kotler, 2012)
The marketing system – recent changes
- Marketing thinking is contextual; our thinking has to change with the situation and the
environment that companies are in and that they have to compete in.
- If you have to change your paradigm, something has changed why we need different
assumptions to explain what is going on in the real world.
- Value chain: suppliers > organisation > distributors. In the last decades, many has changed in
three of these levels.
, - The drivers of most recent marketing paradigm shift:
o Internet: possibility of direct and multichannel communication channels, worldwide
network interaction between organizations and consumers.
o Definition of business: the organization is not defined by its product capacity
anymore, but by its brand. Example: Nike outsourced shoe production when they
realised the brand counts more than the shoe; defining themselves by brand gave
them flexibility in the value chain, as long as they fulfilled the brand promise.
o Dependency on suppliers: companies are more dependent on their suppliers,
because they have to produce what the brand is promising.
What is a paradigm?
• Paradigm: “intellectual perception or view, accepted by an individual or a society as a clear
example, model, or pattern of how things work in the world.” – the implicit assumption from
which you try to understand and therefore influence phenomena in the world.
• Paradigm-shift: “fundamental change in an individual’s or a society’s view of how things
work in the world.” – e.g. when people were thinking the earth was flat, a lot of phenomena
were explained because of this. The moment they understood the earth was round, a lot of
phenomena were explained differently and fit better with the new assumptions.
We should shift from an exchange paradigm to a network paradigm to better explain what is going
on and make decisions. We have to do this because of changes in:
• Sub-phenomena: consumption experiences
• Phenomena: marketing networks
• Super-phenomena: sustainability/society
➔ An exchange process is about two individual entities (e.g. buyer and seller) that are exchanging
value (information/products). A network process is about networks interacting with other networks.
1. Sub-phenomena: consumption experiences
• Consumer behaviour has changed from satisfaction to consumer experiences; engage with
the consumer and not just satisfy particular needs.
• Consumer behaviour also shifted from cognitive processes to stimulating the senses.
Technology may help with influencing senses, measurement physiology and nanotechnology
influencing experience.
➔ Company goal is to create experiences and to do so touch consumers on many more levels
through a network of signals.
2. Phenomena: marketing networks (the actual value chain)
From dyadic exchange to → marketing networks. All parties have become networks interacting with
networks rather than individual parties. On all levels in the value chain you see changes:
• Supply: production and innovation networks resulting in outsourcing and alliances as a way
to focus on innovation and marketing, e.g. Symbian Foundation.
• Production: micro-production systems resulting in disintermediation.
o Consumers integrating with the company and their products through
(nano)technology (local/personal production) and co-production/co-creation, e.g.
3D-printers or consumers designing their own Nike shoes.
• Interaction: vertical & horizontal consumption networks. Consumers form networks with
other consumers or with companies., e.g. blogs, chats, social networks.
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