Copyright E. Gummesson 2005 1 ACADEMY OF MARKETING and AMA CONFERENCE Dublin Institute of Technology July, 2005 Professor Evert Gummesson Stockholm University

Copyright E. Gummesson 2005

1ACADEMY OF MARKETING and AMA CONFERENCEDublin Institute of TechnologyJuly, 2005

Professor Evert GummessonStockholm UniversitySchool of Business

SE-10691 Stockholm, Swedentel +46-8-7531434 or +46-8-162840; fax +46-8-6747440; [email protected]; www.fek.su.se/home/eg/

From One-to-One to Many-to-Many Marketingin the Network Society


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ABSOLUTVODKA


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Glimpses from an adventurous and never-ending journey within a Nordic School tradition

A travel account is found in two of my books:*Total Relationship Marketing and the 30Rs approach;*Many-to-Many Marketing


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“Why have relationship marketing; CRM and one-to-one marketing not become as successful in practice as their advocates had hoped?”

QUESTION


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“A major reason is the narrow focus on the dyad of one customer and onesupplier, one-to-one, whereas all customers live in complex networks, many-to-many”

ANSWER


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MARKETING?RELATIONSHIP MARKETING?

CRM (CUSTOMER RELATIONSHIP MANAGEMENT)?

ONE-TO-ONE MARKETING? MANY-TO-MANY MARKETING?

?

?

?What is...


7PROBLEMS WITH MARKETING THEORYAND MARKETING EDUCATION:

Marketing is a series of scattered claims, deriving from…

fragmented research of detailmicroeconomic theoryvarious social sciencesexperienceobservationhypesuccess stories

…and there is little effort to generatecomprehensive, grand theory.


8Mainstream academic research in marketing is scared of the

fuzzy complex ambiguous chaotic unpredictable multifaceted, and overwhelming...

...REALITY!


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Four types of marketing:

Transaction marketing Database marketing Relationship marketing Network marketing

Source:Coviello, N. E., Brodie, R. J. and Munro, H. J. (1997), “Understanding Contemporary Marketing : Development of a Classification Scheme”, Journal of Marketing Management, Vol. 13, No. 6, pp. 501-522.


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Marketing management:the marketing mix of the 4Ps: product, price, promotion and placeor…

1960s - and still?


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ProductPricePromotionPlacePeoplePoliticsPublic relationsProbePartitionPrioritizePositionProfitPlan PerformancePositive implementations

…even the 15 Ps:


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AMERICAN MARKETING ASSOCIATION’S (AMA)NEW DEFINITION OF MARKETING 2004

“Marketing is an organizational function and a set of processes for creating, communicating, anddelivering value to customers and for managing customer relationships in ways that benefit theorganization and its stakeholders.”

See AMA’s website: www.marketingpower.com


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“Marketing is an organizational function and a set of processes for creating, communicating, anddelivering value to customers and for managing customer relationships in ways that benefit theorganization and its stakeholders.”

I DISAGREE (UNDERLINDED):


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“Marketing is a culture, an organizational function and a set of processes for creating, communicating, and delivering value with customers and for interacting in relationships in ways that benefit theorganization, its customers and other stakeholders.”

MY REVISED DEFINITION (CHANGES UNDERLINED)


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…collaborators and partners:▲Customers are co-developers ▲Customers are co-producers▲Customers are co-managers▲Customers are co-marketers

…and adversaries:▼Customers are competitors▼Customers are prisoners

Customers are not just consumers and users!Customers are also…


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MY DEFINITION OF RELATIONSHIP MARKETING:

“Relationship marketing isinteraction in

networks of relationships.”


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CORE VARIABLE

NETWORKS

Relationships InteractionSubcore variables

The core and subcore variables of a future grand marketing theory.


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MY CONCLUSION

Modern network theory – from social sciencesbut more so from natural sciences – offers the best methodology for understanding complex

realities, including marketing.


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From: [email protected]: Evert GummessonCopy: Subject: Comments on your papers

December 3, 2004 Dear Evert: ---The question becomes whether marketing management theory is useful as a subspecie of network theory or should be totally rejected as leading to specious conclusions and dysfunctional marketing decisions. ---Best regards,Phil

A JUSTIFIED CONCERN:


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MANY-TO-MANY MARKETING:

Marketing in the network economy


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Definition of Many-to-Many Marketing:

“Many-to-many marketingdescribes, analyzes and utilizes

the network properties of marketing.”


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Advantages of network theory.It accomodates:

COMPLEXITY CONTEXT CHANGE BOTH TECH AND PEOPLE


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Would you hire a one-ball juggler who wears a safety helmet to your party?

The juggler metaphor is adapted from Townsend, Pat and Gebhardt, Joan (2006), Quality Makes Money. Milwaukee, Wisconsin: American Society for Quality (ASQ).


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PRODUCT

PRICE

PLACE

PROMOTION

PEOPLE

Would you hire a Four P juggler who wears a safety helmet?


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No, you should hire a juggler who can keep allnecessary balls in the air (including the helmet).


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The supplier’s network

The customer’s network

many-to-many

* identify your networks of relationships * differentiate the relationships and networks * interact in your networks * customize * learning networks

one-to-one

* identify your customers* differentiate your customers* interact with your customers * customize* learning relationships

One-to-one marketingaccording to Peppers and Rogers

Many-to-many marketingaccording to Gummesson


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Business-to-Business Marketing

B2B


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Business-to-Consumer Marketing

B2C/C2BConsumer-to-Business Marketing


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Customer-to-Customer Marketing

C2C


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Message-ID: [email protected] From: [email protected] (Linus Benedict Torvalds) To: Newsgroups: comp.os.inix Subject: What would you like to see most in minix? Summary: Small poll for my new operating system

Hello everybody out there using minix-I’m doing a (free) operating system (just a hobby, won’t be big and professional like gnu) for 386 (486) AT clones. This has been brewing since april, and is starting to get ready. I’d like any feedback on things people like/dislike in minix, as my OS resembles it somewhat

Any suggestions are welcome, but I won’t promise I’ll implement them

Linus

This was the humble beginnings of the...


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...LINUXoperative system


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Surgeon Other patients

MEDICALMEDICALCONSUMERCONSUMER

Anaesthesi-ologist

Family andfriends

Colleagues

Informalchannels

Pharmacy

Other staff

B2C/C2B and C2C network showing the hernia consumer’s position in a network of relationships at Shouldice Hospital (www.shouldice.com).

Shouldice.com

General practitioner

Formerpatients

Brand

Complemen-tary medicine

B2C/C2Bplus C2C


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SuppliersPoliticians/governments

Hospital admini-stration andworking staff

Owner families

The medicalcommunity

ClergyMedia

Surgeons

Patients

Other medical staff

Anasthes-iologists

MEGA NETWORK

NANO NETWORK

MARKETNETWORK

Education& research

Film & TVproducers

Health careproviders

B2B


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But they are all connected:

B2B2C2C2B2B...

and they include a total offering of goods, services or whatever isof value:

A ”VALUE PACKAGE”


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B

C C

B2B

C2C

C2BB2C

B

A valuepackage


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WHAT IS NETWORK PHILOSOPHY AND NETWORK THEORY?


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“No man is and island, entire of itself.”

“No business is an island.” Håkan Håkansson & Ivan Snehota

Researchers of B2B networks

“Society is a network of relationships - and so is business.”

“Everything touches everything.” Jorge Luis Borges

Argentinean author

Evert GummessonParadigm shifter

“...nothing happens in islolation.”

Albert-László BarabásiProfessor of Physics

John Donne (1572-1631)English poet

“Tell me who you associate withand I will tell you who you are”Euripides (400 BC)

Dramatist

“Networks are the fundamental stuff of which neworganizations are and will be made.”Manuel Castells

Professor of sociology


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Fritjof Capra on network theory:

”One of the key insights in the systems approach has been the realization that the network is a pattern that is common to all life. Wherever we see life, we see networks.”

”Living social systems...are self-generating networks of communications. This means that a human organization will be a living system only if organized as a network or contains smaller networks within its boundaries.”

Capra, F.(2002), The Hidden Connections, HarperCollins, London; quotations from pp. 8 and 93.


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HUB

NODE

LINK

CENTRALIZED NETWORKDECENTRALIZED NETWORK

DISTRIBUTED NETWORK


42NETWORK CONCEPTS AND ISSUES FROM PHYSICS AND MATHEMATICS:

* Random networks* Planned networks* Clusters* Connectors* Hubs* Preferential attachment* Scale-free networks* Power laws

* Phase transition* Robustness, error tolerance* Thresholds* Self-organizing* Rich gets richer, winner takes all* Six degrees of separation* What is the Internet, really?


43Infrastructural network


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SAS other airline partners

Other Finnair Plus partners

Other Finnair partners

One World

Qantas

American Airlines

British Airways

Deutsche BA

Cathay Pacific

Aer Lingus

Lan Chile

Air New Zealand

Ansett Australia

Austrian Airlines

Thai

Tyrolean

United

Varig

ANA

Air Canada

Star AllianceLauda-Air

Lufthansa

MexicanaAir BalticAir BotniaCimberSkywaysWidersoe

Well connected with SAS

SAS Scandianvian Airlines

Singapore Airlines

Estonian AirGronlansflyHelikopterservice Euro AirIclandairMaersk AirSpanair

bmi british midland

CrossairGolden AirLot

Air FranceLithuanian AirlinesLuxairMalevUkraine InternationalAir China

Finnair

Iberia

KLM/Northwest Airlines alliance

airAlps

Alaska Airlines

China Southern Continental Airlines

CSA Czech Airlines

Cyprus Airways

JAS Japan Air System

JET Airways

KLM

KLM cityhopperKLM uk

KLM exel

Aer Lingus

Northwest Airlines

Kenya Airlines

Malaysia Airlines

Malev

Martinair

SNCF

Surinam Airlines

Swisswings Airlines

Thalys

Transavia airlines

Maersk Air

Lithuanian Airlines

Ukraine International

Alliances changethe market

Blue 1Snowflake

Lågbudget-bolag


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Network in humanorganizations:the Internet in 1998

Source: Buchanan, Mark (2003), Small World. London: Phoenix, p. 81.


46Networks of life:network of interactionsbetween proteins inbaker’s yeast

Source: Buchanan, Mark (2003), Small World. London: Phoenix, p. 144.


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OVERLOAD?


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High Tech

High Touch


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High TouchHigh Tech

Restore the balance!


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Amazon.comBarnes & NoblePartille Bokhandel

Same business, different networks:


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CEOChief Executive Officer

or

NEONetwork Executive Officer

LEADERSHIP IN NETWORKS:


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to lead (male) orto follow (female)

or both?


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“Return on Networks (RON)is the long term effect on profitability

caused by the establishment and maintenance of an organization’s

networks of relationships.”

“Return on Relationships (ROR)is the long term effect on profitability caused by the establishment and maintenance of an organization’s

customer relationships.”


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Long relationships can be profitable and productive...profitable and productive...

...but they must be properly managedand evaluated!


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Certain things cannot be measured or predicted,such as:

LeadershipVisionNew products and servicesDiscontinuities

Business means risktaking!


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SUMMARY

• Realize that we live in many-to-many networks!

• Apply network theory to all marketing!

• Address complexity, context and change!

• Balance high tech/high touch!

• From CEO to NEO – lead and follow!

•Measure ROR and RON - when they can be measured!


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“The problem with good ideasis that they quickly degenerateinto hard work.”

Peter Drucker, 95 The world’s No. 1 management author and guru

But efficient implementation is the key!


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THE END

“Tack för eruppmärksamhet!”


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Publications 2000-2006 (selected)

On networks and many-to-many marketingGummesson, E. (2004), Many-to-Many Marketing, Liber, Malmö, Sweden. Book, 244 pp.; test edition in English will be available in September 2005.Gummesson, E. (2004), “From One-to-One to Many-To-Many Marketing.” Plenary Session Presentation at the QUIS 9 Symposium, Karlstad University, Sweden, June 15-18, 2004. Published in Edvardsson, Bo et al., eds., Proceedings from the QUIS 9 Symposium, Karlstad, Sweden: Karlstad University, pp.16-25.Gummesson, E. (2005), “After Relationship Marketing, CRM and One-to-One: Many-to-Many Networks.” Proceedings from the EMAC Annual Conference, Bocconi University, Milan, Italy.Gummesson, E. (2006), “Many-to-many marketing as grand theory: A Nordic School contribution.” In Lusch, Robert F. and Vargo, Stephen L. (Eds.), Toward a Service- Dominant Logic of Marketing: Dialog, Debate, and Directions. New York: Sharpe (forthcoming).


61On relationships and servicesGummesson, E. (2002), Total Relationship Marketing. Butterworth-Heinemann/ Elsevier, Oxford, UK (revised second edition).Gummesson, E. (2002), ”Relationship Marketing in the New Economy”. Journal of Relationship Marketing, vol. 1, no. 1, pp. 37-57.Gummesson, E. (2002), ”Relationship Marketing and a New Economy: It’s Time for De-Programming”. Journal of Services Marketing, vol. 16, no. 7, pp. 585-589.Gummesson, E. (2003), ”Relationship marketing: It all happens here and now!” Commentary, Marketing Theory, vol. 3. no.1, pp.167-169.Gummesson, E. (2004), ”Return on Relationships (ROR): The Value of Relationship Marketing and CRM in Business-to-Business Contexts”. Journal of Business and Industrial Marketing, vol. 19, no. 2, pp. 136-148.Gummesson, E. (2004), ”Service Provision Calls for Partners Instead of Parties.” Commentary, Journal of Marketing, vol. 68, no. 1, pp. 20-21.Lovelock, C. and Gummesson, E. (2004), ”Whither Services Marketing? In Search of a Paradigm and Fresh Perspectives,” Journal of Service Research, vol. 7, no.1, pp. 20-41.


62On theory generation and research methodologyGummesson, E. (2000), Qualitative Methods in Management Research, Sage, Thousand Oaks, CA (revised second edition).Gummesson, E. (2001), ”Are Current Research Approaches in Marketing Leading Us Astray?”, Marketing Theory, Vol. 1, No.1, pp.27-48.Gummesson, E. (2002), ”Practical Value of Adequate Marketing Management Theory.” Europan Journal of Marketing, Vol. 36, No. 3, pp. 325-349. (Also in Buber, R., Gadner, J. and Richards, L. (Eds.), Applying Qualitative Methods to Marketing Mangement Research, Palgrave, Basingstoke, UK.) Gummesson, E. (2003), “All research is interpretive!”, Journal of Business & Industrial Marketing, Vol. 18, No. 6/7, pp. 482-492.Gummesson, E. (2004), ”Qualitative research in marketing: roadmap for a wilderness of complexity and unpredictability”, European Journal of Marketing, Vol. 39, No.3/4, pp. 309-327. Perry, C. and Gummesson, E. (2004), ”Action research in marketing”. Commentary, European Journal of Marketing, Vol. 38, No. 3/4. pp. 310-320.Gummesson, E. (2005), “Qualitative research in management: addressing complexity, context and persona.” Management Decision (forthcoming).Gummesson, E. (2005), “Case Study Research.” Book chapter. In Gustavsson, B. (ed.), Kunskapande metoder (2004 in Swedish, forthcoming in English).Gummesson, E. (2006), ”Case Studies.” In Dictionary of Management Research, Sage, London (forthcoming).

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Copyright E. Gummesson 2005 1 ACADEMY OF MARKETING and AMA CONFERENCE Dublin Institute of Technology July, 2005 Professor Evert Gummesson Stockholm University