Marketing Does More Harm to Society Than Good free essay sample

The purpose of this paper is to critically evaluate the statement; â€Å"Marketing does more harm to society than good† This is done by outlining why the statement is made and then to present arguments for the relevance of marketing in society. 2. Introduction to Marketing Marketing has been a foundational study for many business schools since the 1950s and the practice has flourished internationally due to marketing’s universal concept of achieving value for the business firms and its customers. During the 1950s a management expert named Peter Drucker lead the development of the â€Å"marketing concept†, which asserted that firms must create value for customers and see the business from the customer’s point of view. This concept of â€Å"customer orientation† depends on all functional groups of the firm to adopt this type of management thinking (Drucker, 1954). Then in 2008 the American Marketing Association defined marketing as â€Å"an organization function and a set of processes for creating, communication, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. Harm of Marketing to Society In the 1950s the role of marketers in society was directly criticized by two commentators, Vance Packard and Kenneth Galbraith, who viewed the practice as immoral and self-seeking. These attacks were primary directed at the commercial aspects of marketing and more specifically at the advertising industry. In the next section of the paper we will look at Parkard’s and Galbraith views of marketing and also consider the view of Naomi Klein, who is a modern critic of how marketing harms society. 3. Criticism of Marketing in the 1950s. In Vance Packard’s 1957 book, The Hidden Persuaders, he describes the psychological dominance of advertising and how marketers look for the why of our behavior so that they can more effectively manipulate our habits and choices in their favor (Packard, 1957). His argument was that marketing made people buy things they did not want or purchase products that were bad for them. Packard raised two points of concern. First, if we suspect all organized communication is manipulated, then how can we know what to elieve? Second, Packard deemed the manipulation of our psyches disrespectful of the individual personalities (Packard, 1957). Schools of marketing may have been the scapegoat for deceptive advertising practices because of influences by Freudian psychoanalytic concepts and techniques in business during that time. In Ernest Dichter’s Harvard Business Review article in 1947, he discusses how both businessman and psychologist are interested in what makes people tick, what motivates them, and how consumers can be molded and influenced (Dichter, 1947). Dichter’s article further mentions motivation research, marketing strategy, and a technique for influencing consumer behavior. Dichter’s psychoanalytic approaches to marketing at the time caused damage to the budding field of marketing and were heavily criticized by Packard. In Kenneth Galbraith’s 1958 book, Affluent Society, he argued that sales promotion and advertising activities motivate people to consume more without making them better off because their desires were artificially created by marketers (Galbriath, 1958). Thus, in affluent societies, ever-increasing levels of production and consumption do not equate to an increased level of social welfare (Dutt, 2008). This relationship between consumption and welfare (happiness) was termed the â€Å"Dependence Effect† by Galbraith. Galbraith foresaw grave consequences flowing from this preoccupation with consumption and growth. He felt it imperiled economic security from the runaway growth in consumer debt that is part of the salesmanship activities (Stanfield, 1983). In Friedrich Hayek’s 1961 response to the â€Å"Dependence Effect,† he outlines why Galbraith’s conclusion does not logically flow from previous examples and statements in the Affluent Society. Heyek’s counter-argument is based consumers’ acquisition of taste through cultural interactions and socialization versus through channels directed by want-creating activities of producers (Hayek, 1961). 3. 2 Modern Criticism of Marketing Branding In Naomi Klein’s 2002 book, No Logo, she â€Å"skewered the role of brands in contemporary culture and the insidious power of corporations to infiltrate institutions throughout society, including schools and hospitals† (Rutland, 2009). This anti-corporate sediment was triggered by branding practices creating artificiality by stretching the notion of value and not taking into consideration aspects of corporate social responsibility. Brand equity mania in the 1980s was defined by the moment when Philip Morris purchased Kraft for $12. 6 billion, an amount six times its book value. The price difference between balance sheet valuations and the price paid was attributed to the value of the word and images related to â€Å"Kraft†. This meant that for the first time a big monetary â€Å"value had been assigned to something that had previously been abstract and unquantifiable: a brand name† (Klein, 2002). Klein goes on to describe how corporations’ choice of marketing over value defined a shift in thinking where the product was mere filler to branding. Nike, for example, leverages the deep emotional connection that people have with sports and fitness. With Starbucks, we see how coffee has woven itself into the fabric of peoples lives, and that is our opportunity for emotional leverage (Klein, 2002). In the case of both Nike and Starbucks we see how the concept of capturing emotional appeal through branding allows for a premium price, above and beyond intrinsic value, to be charged. As Nike CEO Phil Knight explains: For years we thought of ourselves as a production-oriented company, meaning we put all our emphasis on designing and manufacturing the product. But now we understand that the most important thing we do is market the product. Weve come around to saying that Nike is a marketing-oriented company, and the product is our most important marketing tool. † (Geraldine, 1992) In contrast to Klein’s work, Peter Doyle, through work on value-based branding strategies looks at how marketing professionals diluted the problem of building successful and lasting brands by not considering stakeholder impact. This is due to how brands can have a strong consumer connection and emotional appeal yet still not generate value for investors. â€Å"Marketing has overwhelmingly focused on the importance of developing an attractive consumer proposition† (Doyle, 2001). Doyle does however identify that financial orientation and profits depend crucially on the ability of the firm to satisfy its customers thereby shifting the focus to value-based activities of marketing. 4. Benefit of Marketing to Society After the assaults on the practice of marketing in corporations during the 1950s Philip Kotler in 1967 published â€Å"Broadening the Concept of Marketing† to refute accusation by critics like Packard and Galbraith. Kotler encourages readers that â€Å"marketing is a pervasive societal activity that goes considerably beyond selling of toothpaste, soap and steel†. This is because the true nature of marketing is a function the drives product improvement, pricing, distribution, and communication in order to serve and satisfy human needs (Kotler and Levy, 1967). The next section of this paper looks at the role of marketing in satisfying a higher social purpose. 4. 1 Product Improvement The notion of product improvement as a social factor in marketing was initially described in Wendell Smith’s 1956 article â€Å"Product Differentiation and Market Segmentation as Alternative Marketing Strategies† and more specifically the concept of product differentiation was based on Edward Chamberlin’s â€Å"Theory of Monopolistic Competition. † Smith’s view came from a marketer’s perspective, whereas Chamberlin’s view was purely economic in nature. Through the use of information on consumer needs and wants gathered through research and evaluation of the society, marketers develops products amp; services that satisfy societal needs. For example to satisfy the emerging need and demand for an eco-friendly automobile, Toyota developed the Toyota Prius. Using an electric motor and conventional engine together with smart recharging system equals reduction of fuel consumption and CO2 emissions. Product differentiation is not only equitable to the firm but provides a social benefit through continuous product improvement and innovation. In Castro and Desender’s study in 2010, they consider technological change and innovation through product differentiation to be at the very heart of the competitive process and the major driver of economic growth (Castro and Desender, 2010). They also refer to Porter’s remark about the central importance of â€Å"innovation as the origin of competitive advantages is particularly relevant in the case of dealing with a product innovation that generates a high improvement on the consumer surplus or the price people are willing to pay resulting in profitability. Milton Friedman once argued â€Å"there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits† (Friedman, 1970). Sustainable profit margins play an important role in business but today we know more about how business contributes to society. â€Å"Good firms bring innovation to the marketplace, which facilitates their growth. Innovative, growing firms generate economic growth and employment, which, in turn, greatly improves people’s lives† (Ahlstrom, 2010). 4. 2 Pricing, Distribution and Communication In 1984 Theodore Levitt brought into the spotlight a relatively neglected debate. Levitt’s article â€Å"The Globalization of Market† advocated a standardized global marketing program versus a very narrow local adaptation. He contends that the â€Å"traditional strategy of tailoring its products to the needs of multiple markets may put it at a severe disadvantage vis-a-vis competitors who apply marketing imagination to the task of developing advanced, functional, reliable, standardized products, at the right price, on a global scale† (Levitt, 1984). Walmart in the USA, through supply chain optimization, is able to deliver products at best prices for the consumer, thereby meeting consumer expectations and providing product variety, and freedom of choice. Walmart considers customer preferences in making stocking decisions, maximizing efficiency and passing the savings back to the customers. Products that are manufactured all around the world and developed based on the prefaces of a wide range of cultures can be offered to distant customers as reasonable prices. Global convergence in consumers’ preference can be explain how â€Å"almost everyone everywhere wants all the things they have heard about, seen, or experienced via the new technologies of communication and distribution. There is a ubiquity of desire for the most advanced things that the world makes and sells-goods of the best quality and reliability at the lowest prices† (Levitt, 1984). 5. Conclusion Between 1980 and 2000 there was a paradigm shift that begins to unify the various divisions of marketing in major areas such as â€Å"customer and market orientation, services marketing, relationship marketing, quality management, value and supply chain management, resource management, and network analysis† (Vargo and Lusch, 2004). â€Å"A dominant logic began to emerge that largely views marketing as a continuous social and economic process in which operant resources are paramount† (Vargo and Lusch, 2004). This paramount shift in marketing was due to â€Å"service dominate logic† (S-D) which focuses on the building relationships that involves the customer developing customized, competitively compelling value propositions to meet specific needs through exchange of tangible (goods) and intangible (services) resources. Although S-D logic provides a framework for understanding how business and the process of value creation fosters sustainability and stakeholder thinking, it is focused only on economic value related to resources with little focus on societal and ethical consequences. Through research done by Bo Enquist and Samuel Sebhatu we see attempts of further unification of marketing concepts. The shift is now towards the inclusion of sustainable business practices with service dominate logic. Sustainability has five dimensions; ethical, social, â€Å"nature-philosophic†, economic, and legal (Enquist, 2005). â€Å"Sustainable Service Dominant Logic† was labeled to argue that value-based co-creation of the S-D logic framework can be used to create values-based services for sustainable business by examining the link between CSR and S-D logic based on values and service quality for sustainable business (Sebhatu, 2010). CSR is commonly defined as concepts and strategies involving the voluntary integration of social and environment dimensions into a firm’s business operations and stakeholder interactions. Enquist and Sebhatu used Ikea as a case study of how a firm can combine low prices, economics of scale, innovative thinking, service quality and CSR in order to develop a sustainable business model. IKEA is driven by social values, economic values, and communications (sharing). These functional qualities ensure that the design is attractive to customers and the environmental impact of packaging is minimal. The American Marketing Association has created a statement of ethics for promoting the highest standard of professional ethical norms that are expected and maintained by society and/or professional organizations (AMA, 2004). At the top of this listing of standards is that as â€Å"marketers, we must do no harm, this means consciously avoiding harmful actions or omissions by embodying ethical standards and adhering to all applicable laws and regulations in the choices we make. This shows that marketers are fully aware of the possible negative aspects of marketing but understand it is in their best interest to maintain ethical values and do no harm to society. Therefore through this critical analysis and review of the body of marketing knowledge it can be concluded that it is not the intent of marketing to do harm to society but to sustain relationships with stakeholders and possibly improve people’s lives. 6. Bibliography