The Development of Marketing and its Role in the Contemporary Competitive Markets

The changes in markets and the evolution of marketing management

In the early 1900s, marketing as a field of practice and discipline was introduced in the USA (Firat, Dholakia and Venkatesh, 1995) to bridge the market gaps of the modern society. Berner and Tonder (2003) discussed that modernism is associated to the transition experienced in social and economic institutions, which was characterized as a progressive and innovative movement started unfolding in the preceding century (Burke, 2012), and finally shaped during the industrialization in 1920s (Hassard, 1993). In the modern society, success was perceived as the outcome of industrialization and mass production (Thomas, 1997); where the role of marketing was merely to meet the basic market needs. During this modernist era, customers were satisfied, as soon as they recognized their needs were met, i.e. they can find their desired products on the shelves of their nearby shops.

In the modernist market, once the extent of mass-production was reached to its peak and products were remaining unsold, producers were started to think to bridge the market gaps more philosophically, alongside the basic utility of a product against a basic need, in order to compete and survive. As a result, the gurus of marketing helped to introduce the traditional 4Ps (product, price, place and promotion) philosophy during the 1950s in the mass consumer markets of the USA (Little and Marandi, 2003), as a replacement to the production and sales concepts. The 4Ps emphasis that marketing success depends on recognising the market gaps not only from the angle of the basic utility of a product, but also from the angles of its competitive pricing and location, backed by concentrated advertising and other promotional mix. Here, the marketing success was perceived based on the 4Ps philosophy, emphasising to bridge the market gaps not only through the basic utility of a product, but also bridge the market gaps through competing centred on the customers’ needs in relation to the product’s pricing, distribution channels and promotions. As a result, the added-value against the basic utility had started to form the base of competition advantage.

The technological development in the 1970s has brought an unprecedented change in the marketing management. Here, the postmodern concept was introduced, which coincides with the era of information revolution. Many young professionals started using the term postmodernism instead of modernism (Featherstone, 1991). This postmodern society relies on global knowledge democracy, emergence management, value optimization and knowledge creativity instead of the modernist concepts of knowledge control, control management, single-disciplinarily, value-maximization and so forth (Graham, 2003).Therefore, the postmodern market realigns the 4Ps marketing mix and the added value concept to niche and customized production from modern market’s standardized mass production, as the postmodern consumers have a profound knowledge of immediacy and expects services/tasks to be done straight away (Berner and Tonder, 2003), in relation to their expectation and acceptance (Graham, 2003). Since, the postmodern consumer lives in an era filled with “doubt, ambiguity and uncertainty” (Thomas, 1997, p. 58), postmodern marketers niche to offer additional value by utilising information intelligence rather than only utilizing industrialized power of modernist concept. In order to keep the post-modern customers loyal, the concept of service was rather introduced through repair and maintenance options for the product-driven marketing in the 1970s, however the service logic was completely absent in the marketing management, especially for the service industries, i.e. hospitality, airlines, travel and tourism and so forth (Gummesson, 2014).

In the 1990s, relationship marketing (RM) has been introduced in the marketing management, which aligns well with the service logic (Gummesson, 2008; 2014), where customers as active co-creator of service value, contribute to the product/service development processes. In RM, in contribution of the target markets, marketers work together to design and realign processes to support each other. Fundamentally there is a continuous and collaborative effort between the key stakeholders to the relationship and an understanding of long-term commitment (Tomer, 1998). In the post-2000 postmodern market, the service-dominant (S-D) logic is coined by Vargo and Lusch (2008), which perceives goods are the distribution device for service (Gummesson, 2014). For example, the IT companies offer their goods (e.g. computer hardware) as the device to distribute/place their service (e.g. the World Wide Web and the related software). The S-D logic is centred on the “co-creation of value and resource integration between suppliers, customers and other stakeholders” (Gummesson, 2014: 659), which is a fundamental logic of RM as well, if we see the co-creation and integration of resources between the key stakeholders based on the joint power and share of dependency risk and uncertainty among the associated stakeholders (Gummesson, 2002; Kurtz, 2009; Agariya and Singh, 2011). As a result, the postmodern market can be divided into three eras, such as early-postmodern era (early 1970s to late 1980s), mid-postmodern era (early 1990s to pre 2000s) and the contemporary postmodern era (post-200s) to compete in the transforming contemporary competitive market.

The role of marketing in the contemporary competitive market

However, the marketing research and practice have been evolving since its beginning to cope up with the changing market needs; the traditional production and sales focused transaction marketing and the 4Ps marketing mix have not been rejected. Since, they are the core of marketing management. The value-driven postmodern market adapts the traditional 4Ps with the stakeholder (including customers) relationship management marketing, based on the S-D logic, where the target markets contribute to the service co-creation process. In this ever competitive postmodern market, brand loyalty is losing its sustainability so frequently, as consumers are overwhelming of information and have available alternative brands with competitive value propositions. As a result, the postmodern customers avoid brand commitment frequently and exercise the right of moving to the alternative competitive proposition (Gould and Lerman, 1998; Little and Marandi, 2003). Kotler (2003) described how postmodern customers estimate which brand will offer the most value. As the value-optimizers, the postmodern customers form an expectation of value within their search costs and available of information and act on it (Kotler, 2003). Following the service encounters, the postmodern customers convey their service expectation and accordingly take part in the service co-creation process, which in general leads to a firm’s competitive advantage. But, because of the ease of information in the postmodern market economy, the sustainability of a competitive advantage relies on the integrated resources and the subsequent co-created value proposition’s capabilities to survive through the ‘valuable, rare, inimitable and non-substitutable’ (VRIN) test of the resources (Barney, 1991) and the co-created value through that integrated resources.

If a competitive advantage cannot be sustained because of its lack of VRIN competency, in order to at least prolong that competitive advantage, the resource integration among the key stakeholders and the subsequent co-creation of the S-D and relationship management logic could rely on the analysis of the cause and consequence of stakeholder relationships and interactions. Since, various stakeholder relational perspectives, such as trust; satisfaction; commitment; communication; reciprocity and co-creation, reliability, responsiveness, bond and so forth (Agariya and Singh, 2011) are usually derived and enriched through the cause and consequence of stakeholder relationships and interactions as a stakeholder causal scope (SCS) of strategic market/stakeholder orientation. These SCSs usually recognise exceptional unique condition(s) from the relational experience of the stakeholders, which could further enrich the relational perspectives to reinforce the co-creation processes among the key stakeholders, and to prolong that relationship. Such SCS driven exceptional unique conditions could outplay the VRIN features, as that unique condition is learnt from a firm’s market relationships and overall learning experience of its internal and external stakeholders (Peteraf et. al., 2013). For example, the resource integration among the key stakeholders and the successive co-creation driven competitive advantage that is originated through such SCS centred unique exceptional condition(s), would be valuable until the promised value meets the goals of the involved stakeholders. These relationships and interactions among the key stakeholders would also be rare in the market in favour of the competitive advantage, until a specific stakeholder withdraw their commitment and/or concurrently relates with the competitors. Again, the part of the cause and consequence of stakeholder relationships and interactions (SCS) is perceived by the competitors, could be imitable. However if the success of such relationships is based on any unique and secret understanding of share of dependency, risk and uncertainty and an anticipated win-win value, which is exclusively learnt from the relational experience of specific stakeholders, it could outplay the imitable capacity of the competitors in some extent. Especially that unique reason that is evolved only based on the joint power of those specific stakeholders would not be imitable by their competitors.

Therefore, the role of marketing in the contemporary competitive markets is to identify and enhance value for the target market, based on a unique and customized condition recognised from the cause and consequence of a firm’s relationships and interactions with their target markets, so that the reinforced value would be mutually valuable for them, but would be rare; inimitable and non-substitutable for the competitors, in order to authentically differentiate the relevance of that value to prolong its competitive advantage. Similarly, the contemporary marketing management is centred on understanding the cause and consequence of stakeholder relationships and interactions (the SCS), and differentiating a value proposition based on that understanding, to promote why stakeholders should be associated with that value proposition, instead of the alternative competitive propositions. Appendix 1 summarizes the analysis of this essay.

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