Do You Have The Mindset For Marketing Success?

Later I learned too that Pahuska (General Custer) had found there much of the yellow metal that makes the Wasichus (settlers) crazy… Our people knew there was yellow metal in little chunks up there; but they did not bother with it, because it was not good for anything.*
— Black Elk, as quoted in John G. Neihardt, *Black Elk Speaks*, pp. 79

Black Elk was a spiritual leader of the Native American Sioux tribe, who was interviewed from his home in 1930 by author John Neihardt.  Here Black Elk is obviously talking about gold, something considered to be of no value because it was “not good for anything” for the Sioux.

Or, for a more modern example, listen to this conversation between the founder of Patagonia, Yvon Chouinard and his head of design:

“What makes a product the best of its kind?  Early in our history our chief designer for many years, Kate Larramendy, issued me a challenge.  She said that we didn’t make the best clothing in the world, and moreover if we did, we’d go out of business.

“Why?” I asked her.

“Because the best shirt in the world is Italian,” she said.  “It’s made from hand-woven fabric, with hand-sewn buttons and buttonholes, and impeccably finished.  And it costs three hundred dollars.  Our customers wouldn’t pay for that. “

I asked “What would happen if you threw that three-hundred-dollar shirt into your washer and dryer?”

“Oh, you’d never do that.  It would shrink.  It has be dry-cleaned.”

To me a shirt that has to be treated so delicately has diminished value.  Because I think ease of care is an important attribute, I would never own a shirt like that, much less make and sell one.”

—Yvon Chouinard (2006), Let My People Go Surfing, pp. 87-88

These quotes helps us get to the very heart of our discussion of value, and hopefully helps drive home a very important point for every working Marketing Executive today to understand.

Value does not exist in and of itself.

It is not just sitting there waiting to be picked up or harvested.

Gold, when believed to be “not good for anything” is not good for anything.  It is not valuable.  $300 hand-crafted Italian shirts are not worth buying for an outdoor enthusiast who values ease of care, even at a 50% or 99% discount.

It is only when at least two people agree that something has value that it does.  This is why one of Vargo and Lusch’s 4 key axioms for their Service Dominant Logic states that “all value is co-created,” because it takes at least two actors to agree that something is truly of value!

This idea exists widely in the academic literature, but is unfortunately cloaked within complicated wording.  In many articles, value is referred to as being “phenomenological”, which in my simplified definition means that it is something that arises through experience.  Again, throughout the very long history of the study of value, the experts agree that it does not exist in and of itself.

This is so critically important to us as marketers because it means that different people will, by definition, experience value differently in terms of its:

  1. Existence [Question: is this valuable or not?]
  2. Type [Question: is this valuable for me to use for X or Y?]
  3. Directionality [Question: is this positive value (something I want more of?) or negative value (something I want less of)?]
  4. Scale [Question: how much value can be experienced from this?]

This is obviously not rocket science, as you’ve surely experienced this for yourself when something you’ve loved and recommended (i.e. a restaurant, concert, class, etc.) had a distinctly different, if not opposite, impression upon your friends or family.

Just as beauty is “in the eye of the beholder,” research has clearly proven that “value is in the mind of the experiencer”.  And while each individual may value things differently, if we are speaking about value in the world of business, in order for there to be a transaction based on this value, it must be experienced in the minds of at least two experiencers.

The Experiencers (i.e. Actors)

If we go back to the AMA 2007/2013 definition of marketing, you’ll see that they mention customers, partners, clients and society as all potential beneficiaries of value consumption.  And the firm is the fifth partner silently churning out this value and putting it out on offer.

But if we start thinking this way (which so many people do), then we need to have separate types of marketing for different types of experiencers.

And if you look at the evolution of the field of marketing, that is exactly what has happened.  When I was in business school, I learned about B2B marketing versus B2C marketing, as if businesses required different ways of marketing than customers, governments, societies, etc.

But this is a dangerous path to follow, because it assumes that marketing (and therefore what marketers do) is fundamentally different when working with partners versus with clients or customers.

Thankfully, Vargo and Lusch’s Service Dominant Logic again offers very clear guidance on this point, recommending that modern marketers move away from thinking that B2B is different than B2C, B2G or A2Z, and that instead, we must think of all exchanges as A2A; Actor to Actor.

This reasoning is also extremely important for everything we do as marketers, so let’s spend a little more time digging into this change in thinking.

Imagine that you’ve just bought a pair of eco-friendly shoes and posted a photo of yourself wearing your new shoes on your Facebook page, and shortly after that, 100 friends like your photo, sharing it with their friends and relatives.

In this very simple scenario, who is the value “maker” and who is the value “receiver”?  Or more simply, what letter should be put before the 2 and what letter goes after it to classify the type of marketing that has happened with you and your new shoes?

Did you receive value from your purchase? Yes, so you as a “consumer” go after the 2.  But did your friends receive value from your FB post?  Yes…so then this must be an example of C2C marketing.

But wait…did you receive value from the shoe manufacturer?  Yes, so this means that the manufacturer is a “business” and you are a “consumer” of their product, so this is B2C marketing…

But again wait… did the manufacturer receive any value from your FB Post and subsequent likes from your friends?  Yes, so that means this is C2B marketing?

While many textbooks that I’ve seen like to make things magically appear neoclassical and neat, working to convince us that we live in a B2B or a B2C world, in actuality, things just don’t work this way.  And because of this, our thinking must not be limited in this way either.

Rather than going through your purchase process and deciding if it was B2C or C2C or whatever other letters we can wrap around the number 2, let’s take a step above all of this, and again as Vargo and Lusch very clearly explain, let’s agree that as marketers we are interested in A2A, Actor to Actor.

From 1 to 5

Now when marketing first got its own domain of study back at the turn of the 20th century, there really was only one main “actor” that was of interest to the folks back then.

You guessed it, the company or business was primary and customers were the obedient secondary actor who consumed whatever was prepared for them.

And the value that they were after was profit.  More boxes moved effectively equaled more profits, so move those (explitive) boxes!

But with the evolution of the definition of marketing, first from E. Jerome McCarthy in the 1960s, Philip Kotler in the 1970s and the AMA in the mid 1980s came the realization that the satisfaction of the customer was important, so this conceptualization of value moved the customer onto equal footing with the company, creating two key actors at that time.

And then by 2004, the field of actors blossomed further to include “stakeholders”, which could be considered to be the channel partners or suppliers of firms, and the communities within which these companies and their customers were embedded.

And finally, as the business world has now clearly woken up to the idea of our natural environment as an important stakeholder as well, we have arrived at Five Key Actors to whom we must pay active attention in terms of our value co-creation and delivery efforts.

We now live in a world where there are Five Key Actors whose “happiness” or benefit we should consider.  Of these, the most important are always our customers because if we do not offer products or services that inspire them to make a purchase, we aren’t really in business.

To summarize, as of today, the 5 Key Actors with whom we can co-create and experience value are:

  1. Customers
  2. Company (including our employees)
  3. Community
  4. Partners
  5. Nature

Co-creating value NOT producing/consuming

Under the old box-moving mindset, producers would make and sell things to consumers who would then use up all of the value that they had purchased.  While in some cases this may be true for foods we eat and consume, it doesn’t seem to hold equally true for other products and services.  I’ve never consumed any computers or air flights, but I have bought them.

Please think about this carefully.

Are you a consumer?

Here’s one of my favorite quotes from Chris Locke, one of the main authors of *The Cluetrain Manifesto*, a prescient book heralding in the new conversation and relationship era that the World Wide Web helped to create:

“We are not seats or eyeballs or end users or consumers.  We are human beings and our reach exceeds your grasp.  Deal with it.”
—Christopher Locke, The Cluetrain Manifesto, 2000

Vargo and Lusch (2014) point out that the idea of a “consumer” or a “destroyer” of value created by a manufacturer or firm again has its roots in neoclassical economics, in which exchange value rather than value in use was the main focus.

But as we are now taking important steps away from this way of thinking, and focusing on value in use for our marketing efforts, there are no consumers within this world view, only co-creators.  From Ramaswamy and Ozcan (2014), two of the world’s leading thinkers about Value Co-Creation:

“The co-creation based view of value creation views organizations as creating value together with stakeholding individuals… co-creation is both the means and the end, continuously evolving in a virtuous cycle of “win more-win more” outcomes.  There are potentially infinite opportunities of joint value creation.  Individuals in their role as managers must rethink the nature of both resources and opportunities, locus of competence, and how access to competence is developed.  All stakeholders represent a resource and opportunity base.”
—Ramaswamy & Ozcan, (2014),*The Co-Creation Paradigm*, pp. 15

I hope that I’ve in some way convinced you that as we talk about value, or as I explained in my last article, The 4Ps Are Dead…And what we should do about it , the “currency of Marketing” that we will not use the word “consumer” when talking about our customers.  This is because as my very short example about your buying a par of eco-friendly shoes hopefully has shown, you never really consume them.  You purchase and use them, and in doing so, help define and create the true value of using them.  And if these eco-friendly shoes were built with Cradle to Cradle  design principles, then when you discard them, they become “food” for something else to be co-created.

So don’t ever threaten to eat your shoes again.  There is much more value in using them than in consuming them!

The Mindset of Marketing Success: Conductor of a Value Symphony

”The conductor of an orchestra doesn’t make a sound. He depends, for his power, on his ability to make other people powerful.”
— Benjamin Zander

While the idea of being a marketing “manager” gained popularity in the efforts to elevate marketing from its box-moving history, today, the idea of managing the flow of value between these five actors again seems out of step with reality.  While there may still be psychological tricks that can be played on unsuspecting customers to get them to help us move more boxes, today’s customers aren’t so easy or gullible anymore.  With smartphones helping us to find reviews, research, opinions and competitive offerings with just the tap of a finger, and every interaction offering more experiential data to share with others, the tables have turned.  And with this reality comes the death of marketing management.  Marketers, and any other employee of any business simply are no longer in the position to *manage* customers.  Herding cats would be far, far easier.   Fight as hard as you’d like against this reality, but marketing has become unmanageable.

To again quote *The Cluetrain Manifesto*:

“There’s a new conversation between and among your market and your workers.  It’s making them smarter and its enabling them to discover their human voices.  You have two choices.  You can continue to lock yourself behind facile corporate words and happy talk brochures.  Or you can join the conversation.”
—Levine, Locke, Seals and Weinberger, 2000

And this death of marketing management is actually very, very good and exciting news.

Because today, rather than trying to find new ways to manipulate and talk down to customers, we now get to talk with real people, build real and lasting business relationships, and get their help and insights in the process of creating even better solutions to the problems that we are collectively trying to solve.

Rather than trying to be a manager of marketing, today’s marketers are most effective when they become conductors calling out the highest possible value from all of the players within the overall ecosystem surrounding the service your company is offering.

So I would like to challenge you to step up to the raised platform and find a way to call out the best music from within your customers, company, partners, community and nature for the greatest possible value co-creation initiatives ever implemented.

*****
This article is a small excerpt from my book, The Value Plan, which will be available from May 15th here  on Leanpub.  And if you have any questions about anything I’ve written about Value or Marketing, I’d be happy to discuss them here in the comments section, or on my Blog.

About The Author

Philip Sugai

Dr. Sugai joined Doshisha Graduate School of Business in 2013 where he teaches Marketing, eMarketing, Marketing Research, and Sustainable and Responsible Marketing to Global MBA program students. Prior to joining the Doshisha University faculty, Dr. Sugai taught at the International University of Japan in Niigata since 2002, where he taught similar courses and served both as Dean and Associate Dean for more than 6 years. He received his Doctoral degree from Waseda University’s Graduate School of Global Information and Telecommunications Studies and his M.B.A. in Marketing and Operations Management from New York University’s Stern School of Business. He has worked as a marketing executive at American Express, Muze, Inc., and Lightningcast, Inc., and as a marketing consultant for Advantage Marketing Information.

5 Comments

  • Saitoko

    April 23, 2015

    I find your perspective on marketing to be so refreshing compared what I remember from my Economics classes back in school! The consumer WAS just some digit companies were trying to wheedle into giving them fistfuls of dollars back then. Seems that the internet has opened up so much competition worldwide, businesses would be smart to play nice and start treating their prospective customers with a little respect and care for their needs. As a company making a product, you don’t want to keep cramming it down the public’s throats that they NEED what you’re offering (whether they do or not), you want them to come to you, saying “Shut up and take my money!”

    This is such smart advice in a day where, when someone feels as though they’re just being treated like a “body” in a room, or a “seat” on a plane, they can choose the company that is willing to take the extra step to show a little interest in their customer as a unique human being.

    I’m really looking forward to your completed book, so I can figure out who my customer is, and how to communicate with and meet their needs as best I can with what I have to offer.

  • profsugai

    April 23, 2015

    Thank you Saitoko! I completely agree, and am confident that more and more companies will switch from a pure profit motive to a value-driven marketing mindset.

    I’m getting closer to having a publishable version of The Value Plan book, and am looking forward to May 15th when it is finally published, and to see how your customer discovery and development processes unfold.

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