HOME

BACK TO
MARKETING AND STORYTELLING ESSAYS

COPYRIGHT 1996 - 2008
4/6/08

mp3

Market Power and Marketing


Keynote Address American Marketing Association University of Texas at Austin May 1, 1996
David Joseph Morris, Ph.D.
Professor of Marketing University Of New Haven
300 Boston Post Road
West Haven, CT 06516
203-932-7348 office

Thank you for the honor of allowing me to speak at your annual meeting. In the brief time that we have together, it is my hope that I can bring to all of you something of value. I call on each of you to continue the relationship that we have begun today.

The field of marketing in the United States has struggled to identify and maintain those areas which are understood to be separate, unique, and unrelated to all other fields. This interpretation of what represents a functional business activity has been driven by the American philosophy of pluralism. Those who follow a pluralistic approach to life embrace the philosophy that knowledge, skills, and attitudes are separate entities, each of which function in a linear fashion. My work demonstrates that, instead of blindly accepting that marketing must be driven by separation, we must search for market power by combining marketing with all other resources. Market power is the capacity to block competition from access to targeted markets. A unitary approach to life embraces the philosophy that knowledge, skills, and attitudes are linked and connected, and that they function in a circular fashion. The depth and breadth of all my work on market power arises from one small sentence: "Combine and simplify to achieve a purpose."

In the 1960s, the systems movement in business was a feeble attempt to combine marketing into the broader business system. The systems movement failed because its leadership did not understand that the concept of a system is embedded in the underlying philosophy of combining. Because the issue of systems was not viewed as a philosophical one, the movement deteriorated into the view that marketing was its own system. Consequently, the idea that the world, the nation, business, and marketing are part of a unified whole was lost.

History

The concept of separation is by no means the product of a modern philosophy. Certainly, there were advocates of separation in ancient Greece. As a philosophy, separation has arisen as a driving social force in various times throughout history. When Martin Luther posted his famous ninety-five theses on the church door in Wittenberg, Germany in 1517, he was promoting separation. Before Luther, the pope was considered the final authority in all disputes within Europe. After Luther challenged the authority of the Church, disputes could no longer be settled by the pope. Protestants and Catholics could agree on very little, which eventually deteriorated into warfare, unrest, and separation.

Separation was viewed as the enlightened position, whereas combining was viewed as passé. The intelligentsia of Europe saw no end to this strife. Philosophers such as Francis Bacon (1561-1626) and René Descartes (1596-1650) attempted to identify God's influence on the universe and nature. The school of separation got one of its biggest boosts when Sir Isaac Newton (1642-1727) developed his theory of the rotation of the planets. God could now be understood through nature by applying a mathematical method. Now there was evidence of God’s influence on our lives. God, human, and nature could be separated. God was over human, and human would be over nature.

Western philosophers such as David Hume (1711–1776), John Stuart Mill (1806–1873), and John Locke (1632–1704) began a philosophical movement to eliminate or minimize the role of God. This new and uniquely Western view became known as science. In 1776, Adam Smith published his book Wealth of Nations, which proposed that the division of labor creates wealth. Science and the idea of separation or division gained widespread acceptance in the United States during and after World Wars I and II. Most of the education that we have received as students and delivered as academics is derived from the understanding that dividing creates market power.

Approach to New Ideas

Many in marketing are now suggesting that all is not well. The general reaction within the American academic community to a loss of market power has been to ignore these warnings and continue with a "business as usual" approach. A popular strategy by those who do not wish to rethink marketing and regain market power is to change terms but not their meanings. What comes to mind is the systems movement, where advocates were co-opted by the separators, and they simply defined the function of marketing as a system. When I asked George Fisk, who wrote one of the only textbooks on marketing systems, what happened to the systems movement in marketing, he told me that it had become "marketing management." Personally, I fail to see the relationship between marketing management and systems theory.

Another approach for those who do not wish to change marketing has been to put forth an idea which no one actually understands or knows how to apply—in other words, a living modern version of The Emperor’s New Clothes. Some outstanding examples of the emperor’s exclusive threads are relationship marketing, customer orientation, quality, mission, needs and wants, and one of the best, marketing myopia.

The third, and perhaps most destructive strategy that the marketing academics have embraced in order to avoid a rethinking of marketing has been the so-called broadening of the marketing concept. This is where the leadership of the field believed that it could expand the same functional application of marketing into all areas and sell it as something different, new, and exciting. We now have health-care marketing, international marketing, service marketing, and all the rest.

I would contend that even the word "marketing" has many expressing its importance and merits with no idea of where to start or what to do to acquire market power. In my view, the present configuration of marketing, as a separate function, has failed to demonstrate value to corporate America. I also believe that this is true for all other functional areas.

Philosophical Rut

It is impossible to change our thinking until our operating system is changed. Tenure, promotion, publishing, and prestige lie within the narrow confines of an accepted idea. All activities within American marketing practice are driven to reward those who separate marketing as a function. Marketing scholars and practitioners should not be concerned with what makes marketing different from all other fields, but rather, they should now focus on market power and what makes marketing the same as all other fields.

Scholars and practitioners in other nations are developing their businesses from a combining, circular operating system. Japan, Taiwan, Germany, Korea, Britain, Ireland, France, and Cyprus have understood the power of combining their business, government, military, religious, and educational resources within their nations to achieve business market power. I have taught in both Ireland and Cyprus. The key to unity is at the operating-system level. American marketing academics have created for themselves a philosophical prison where unity seems beyond their reach. We must relearn how to attain market power by combining and simplifying to achieve a purpose.

Two areas have been successful at combining in the United States. They are the areas of small business and the military. The submarine service is a good example: If the crew were not multiskilled, and got sick or died when the submarine was under an icecap, it would be disastrous for the entire crew. In light of the potential consequences, it is only logical that the entire crew must be multiskilled. In much the same way, we, as a nation, worked together during World War II. But after the war, big business became obsessed with separation. Americans failed to understand that they had market power because they had won the war.

Market Power

A company does not sell products or services. It sells its direction, resources, and process. Organizational direction, resources, and process are configured so that the company can gain market power. In 480BC, Xerxes, King of Persia, was confident in his attack on Greece because the Greek city states were not willing to unite against the Persian invasion. King Leonidas of Sparta took 300 Spartans to face 100,000 Persians at Thermopylae. The Spartans were successful in slowing down Xerxes because they assembled their resources in a way that gave them market power. A Greek, Ephialtis, betrayed Leonidas and showed Xerxes a way through the mountains and behind Leonidas. When this occurred, Leonidas chose to die rather than escape. My own view is that Leonidas should have escaped to fight once again. All business people have the same challenge as Leonidas. How to configure all your resources to attain market power.

In the 1890s Japan gave four families the power of monopoly. These monopolistic families—known as zaibatsu—were Mitsubishi, Mitsui, Sumitomo, and Yasuda. In the 1930s, the Japanese military pushed to have other zaibatsu added to the original four, which the military believed were not dedicated to the war efforts. During the post–World War II US Occupation of the Japanese, General Douglas MacArthur dismantled the old zaibatsu companies. In 1946, Mao Zedong began to make inroads in China. The Americans, not wanting to have Japan vulnerable, helped the zaibatsu to be reinstated under the keiretsu and now sogo shosha or the big ten. Subsequently, the Korean War was used to rebuild Japan, and when the war ended, Japan was not going to be allowed to falter. Markets were opened and the rest is our current history. Outside industries that combined were now competing against those who separated. All the world continues to combine, yet Americans continue to separate. It behooves us to consider just how to gain market power through combining. In so doing, we must discuss direction, resources, and process.

Direction

American business has avoided the issue of a common direction since World War II. It has somehow bought into the absurd idea of a mission statement, which in my estimation is an unnecessary and ineffective exercise. What is far more efficient and appropriate is to pick a common goal and then clearly describe that goal to all within the organization. The CEO and the board of directors are then responsible for the attainment of that goal. Classic economics declared that the only goal for a corporation is profit maximization. Peter Drucker in the 1950s convinced corporate America that companies can and should have many goals. My view is that organizations have many possible goals, but only one should be selected at a time. This goal is the sole responsibility of the CEO and the board. All resources then become a means to that end.

Resources

There are five resources, not functions. They are marketing, human, physical, intangible, and financial. I call these resources the 5Rs. The marketing resource consists of segmentation, targeting, positioning, and the four Ps. I have developed a method for combining these five resources called the assembly model. All five resources are viewed as an assembly. Resources are made up of three components. These components are structure, language, and tools. The structure comes apart and goes back together. The language describes the coming apart and the going back together and the tools are used to take the structure (resource) apart and put it back together.

Filling a hole in a sidewalk and filling a cavity in a tooth are essentially the same activity. The mason and the dentist disassemble and clear the debris from the hole. Each then cuts the corners of the hole to hold the new material. The hole is then filled, tamped off, and surfaced. The point of this analogy is not to suggest that masons are dentists, but to illustrate how simple it is to identify similarities between seemingly disparate activities. What happens in one area can and should be combined with another.

No resource is more or less important than any other. Dentistry is no more or less able to bring insights than is masonry. The configuration of the resources that are brought against competition are determined by organizational direction and the quest for market power. We should not be fighting internally over the application of one resource over another. I would like to see the day that even the general label of resource disappears. Resources are just tools applied to a process.

Process

Western marketing academics and practitioners change process every time they change content. Process can and should be held constant. Some textbooks change their process up to forty times. Every time a new area is brought forth, a new process is added. This is unnecessary and counterproductive. All resources apply the same process. This streamlines and combines thinking. The only ones that have the time to learn all the different processes that are available are those marketing professors who have nothing else to do with their time. Industry cannot afford to be so inefficient. The process that I have chosen is what is called "ADDIE Model," which stands for analysis, design, development, implementation, and evaluation.

As a process, ADDIE Model is a universal method that enables combined resources to be moved in a common direction. In opposition to ADDIE Model are the reengineering advocates who take a linear view to process, in which they identify a sequence of actions and then treat that process as an assembly line. What the reengineers do not do is combine organizational functions. More efficient linear assembly lines are not going to beat the Japanese or the Germans. It is the philosophical battle of combining versus separation that I am talking about—not the changing of one linear activity for another. Once the philosophy of combining replaces the one of separation, new configurations of resources will follow. It is our cognitive capacity to combine and simplify to achieve a purpose that will allow the organization to gain market power. Because the reengineers have it backwards, they are doomed to failure. They are feeding you for a day, but not teaching you how to fish.

Conclusion

The enlightened of the future may be the ones who combine rather than separate. Can those of us in business and in business education rethink marketing from the market power perspective of combining rather than separating? We were willing to combine in the past to win World War II. Market power is the ability to combine resources to block competition from access to targeted markets.

A common direction unites all within the organization. Resources are combined by applying the assembly model. Structure, language, and tools are organized and combined. These combined assemblies are then moved toward common action through the standard process of ADDIE.

We have separated direction, resources, and process to the point where we are once again at the Tower of Babel. If we want to live and work together, we must begin to develop methods to combine our direction, resources, and processes. If we choose not to, we will continue to decline when facing those who do. It all comes back to that one simple sentence: Combine and simplify to achieve a purpose.