This document contains the most important information regarding Theories of Marketing. This course is part of MSc in Business Administration at the University of Amsterdam (UvA). I passed this course with a 90.
Business Administration
2019-2020
Theories of Marketing
Build-up of this document:
Page 2-27: These pages are the focal and main take-aways of all the articles from
the ToM course. This contains the majority, if not all, you need to know for the
exam.
Page 28-126: The remainder of this document provides background info for the
smaller summaries. So, if the smaller summaries on page 2-27 require a bit more
context when reading them the first time, this information can be found on these
pages.
,Week 1
1. The effect of a market orientation on business profitability – Narver &
Slater (1990)
Market orientation (culture and climate) drives the necessary behaviors to
create superior customer value and subsequently a sustainable competitive
advantage.
Market orientation consists of 3 behavioural components:
- Customer orientation; the sufficient understanding of one’s target buyers.
- Competitor orientation; the seller understands strengths and weaknesses of
both the key current and the key potential competitors.
- Interfunctional orientation; coordinated utilization of company resources in
creating superior value for target buyers. Creating value is more than marketing.
It also incorporates 2 decision criteria:
- Long-term focus; every business needs to consider the future to survive.
- Profitability; is the main objective of market orientation.
The findings indicate that for both commodity and noncommodity businesses;
market orientation is an important determinant of
profitability. This applies to noncommodity businesses
overall, whereas for commodity businesses there is only a
positive relationship for businesses that are above the
median in market orientation. The authors expect
numerous industries (like commodities), to have a U-
shaped market orientation/profitability relationship.
Market orientation is a continuum; at some point, the
incremental costs to increase market orientation will
exceed incremental benefits.
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2. Customer-led and market-oriented: Let’s not confuse the two – Slater &
Narver (1998)
This paper distinguishes two forms of ‘customer
orientation’ that are frequently confused. The first, a
customer-led philosophy, is primarily concerned with
satisfying customers' expressed needs, and is typically
short term in focus and reactive in nature (for stable
environments). The second, a market-oriented
philosophy, goes beyond satisfying expressed needs to
understanding and satisfying customers' latent needs and,
thus, is longer term in focus and proactive in nature (for
turbulent environments).
A market orientation consists of norms for behaviour that
guide the business in learning from different types of needs,
and responding in an entrepreneurial manner to deliver
superior customer value. The capabilities arising from a
,market orientation enable the business to identify and exploit discontinuities in
markets. As a form of business culture, a market orientation is difficult for
competitors to observe, understand, and imitate, and thus is a competitive
advantage.
Lead users to a market oriented business are (potential) customers who have
needs that are advanced compared to other market members. This type of
exploration leads to discovery of solutions to unexpressed needs. Market
orientation includes the search for unserved markets.
Two essential activities in business are innovation and marketing. Market-
oriented businesses recognize that different types of customers provide different
types of information. Their characteristics enable them to achieve market-
focused innovation and sustain competitive advantage in all types of markets.
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3. Frontiers of the marketing paradigm in the third millennium – Achrol &
Kotler (2012)
Since the 70’s marketing science has been centred around the exchange
paradigm. More recently the paradigm expanded to a network level of
explanation. In this paper we develop a three-tiered explanation of the emerging
field of marketing—its sub phenomena (consumer experiences and sensory
systems), its phenomena (marketing networks), and its super phenomena
(sustainability and development).
The authors conceptualize marketing into three dimensions.
In the subphenomenal field, the focus is on the consumption experience and
human sensory processes as the fundamental bases of explanation. Major
advances in the understanding of psychology and its physiology promise to shift
from cognitive concepts to mechanisms of sensory depiction of “reality” and its
experience. This is about human senses, neurophysiology and nanotechnology
(enables ultimate personal targeting based upon individual senses and taste
buds). The aim of a subphenomenal marketing is to enhance the consumption
experience.
Phenomenal marketing; hierarchies are swapped for marketing networks,
closer towards the consumer. This process may bring production and
consumption closer together in the future. This level incorporates the evolution
of production and innovation networks (collaborating to innovate; open
innovation), Distributed production-consumption networks (e.g. power industry,
on-demand production) & consumption networks (communities, chat groups,
blogs created by consumers).
The third dimension; superphenomena, regard the societal consequences of
marketing. The focus is on sustainability and poverty. Sustainability, as
marketing encourages rapid consumption of limited natural resources and
materialism. Poverty, as the poor are not a marketable segment. This level
includes the sustainable marketing concept (from human-centred to bio-centred,
demarketing, communicating harmful side effects, nature costs), base of pyramid
, marketing (marketing model to tackle poverty), the needs-means hierarchy
(poverty has a local face, small-scale production distributed close to the
consumers is the solution) & the distributed production-consumption model
(village level micro production systems, franchising model, organized around the
need and resources of poor communities).
Customer experience management (CEM) is introduced in this article. The main
research results suggest that CEM is a firm-wide management approach that
entails three main categories: a firm’s (1) cultural mindsets, (2) strategic
directions, and (3) capabilities. Thus,
they define CEM by the following
understanding: CEM refers to the cultural
mindsets toward CEs, strategic directions
for designing CEs, and firm capabilities
for continually renewing CEs, with the
goals of achieving and sustaining long-
term customer loyalty.
- Cultural mind-sets: A firm’s cultural
mindsets refer to mental portrayals managers use to describe their competitive
advantage. If a certain mindset, for example the cultural mindset of MO,
circulates across the organization and drives the evolvement of organizational
processes, it is an intangible entity / resource.
- Strategic directions: A firm’s strategic direction refers to a set of organization-
wide guidelines on market-facing choices.
- Firm capabilities: A firm capability refers to an organizationally embedded
pattern of processes and routines.
CEM differs across different firms, therefore
the authors propose two contingency factors;
firm size (small, medium, large) and
exchange continuity. Exchange continuity
regards transactional (single, short-term
exchange, encompassing a clear beginning
and ending) and relational exchange
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