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ACADEMY OF MARKETING and AMA CONFERENCE
Dublin Institute of Technology
July, 2005
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From One-to-One to
Many-to-Many Marketing
in the Network Society
Professor
Evert Gummesson
Stockholm University
School of Business
Copyright E. Gummesson 2005
SE-10691 Stockholm, Sweden
tel +46-8-7531434 or +46-8-162840;
fax +46-8-6747440;
[email protected]; www.fek.su.se/home/eg/
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ABSOLUT
VODKA
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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 one
supplier, one-to-one, whereas all customers
live in complex networks, many-to-many”
ANSWER
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?
What is...
?
MARKETING?
RELATIONSHIP MARKETING?
CRM (CUSTOMER RELATIONSHIP
MANAGEMENT)?
ONE-TO-ONE MARKETING?
MANY-TO-MANY MARKETING?
?
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PROBLEMS WITH MARKETING THEORY
AND MARKETING EDUCATION:
Marketing is a series of
scattered claims, deriving from…
fragmented research of detail
microeconomic theory
various social sciences
experience
observation
hype
success stories
…and there is little effort to generate
comprehensive, grand theory.
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Mainstream 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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1960s - and still?
Marketing management:
the marketing mix of the 4Ps:
product, price, promotion and place
or…
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…even the 15 Ps:
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Product
Price
Promotion
Place
People
Politics
Public relations
Probe
Partition
Prioritize
Position
Profit
Plan
Performance
Positive implementations
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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, and
delivering value to customers and for managing
customer relationships in ways that benefit the
organization and its stakeholders.”
See AMA’s website: www.marketingpower.com
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I DISAGREE (UNDERLINDED):
“Marketing is an organizational function and a set
of processes for creating, communicating, and
delivering value to customers and for managing
customer relationships in ways that benefit the
organization and its stakeholders.”
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MY REVISED DEFINITION (CHANGES UNDERLINED)
“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 the
organization, its customers and other stakeholders.”
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Customers are not just consumers and users!
Customers are also…
…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
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MY DEFINITION OF RELATIONSHIP MARKETING:
“Relationship marketing is
interaction in
networks of relationships.”
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CORE VARIABLE
NETWORKS
Relationships
Interaction
Subcore variables
The core and subcore variables of a future grand marketing theory.
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MY CONCLUSION
Modern network theory – from social sciences
but more so from natural sciences – offers the
best methodology for understanding complex
realities, including marketing.
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A JUSTIFIED CONCERN:
From: [email protected]
To: Evert Gummesson
Copy:
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
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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 marketing
describes, 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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PRICE
PROMOTION
PRODUCT
PLACE
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 all
necessary balls in the air (including the helmet).
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One-to-one marketing
according to Peppers and Rogers
Many-to-many marketing
according to Gummesson
The customer’s
network
The supplier’s
network
one-to-one
* identify your customers
* differentiate your customers
* interact with your customers
* customize
* learning relationships
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* identify your networks of relationships
* differentiate the relationships and networks
* interact in your networks
* customize
* learning networks
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Business-to-Business Marketing
B2B
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Business-to-Consumer Marketing
B2C/C2B
Consumer-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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...LINUX
operative system
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B2C/C2B
plus C2C
Shouldice.com
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Surgeon
Other
patients
Anaesthesiologist
General
practitioner
Complementary medicine
Other staff
MEDICAL
CONSUMER
Pharmacy
Informal
channels
Family and
friends
Brand
Former
patients
Colleagues
B2C/C2B and C2C network showing the hernia consumer’s position in a network
of relationships at Shouldice Hospital (www.shouldice.com).
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B2B
NANO NETWORK
Anasthesiologists
Other medical
staff
Surgeons
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Hospital administration and
working staff
Owner
families
Health care
providers
The medical
community
Patients
Education
& research
Suppliers
Politicians/
governments
MARKET
NETWORK
Film & TV
producers
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Media
Clergy
MEGA NETWORK
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But they are all connected:
B2B2C2C2B2B...
and they include a total offering
of goods, services or whatever is
of value:
A ”VALUE PACKAGE”
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B
B2B
A value
package
B2C
C
C2B
C
C2C
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B
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WHAT IS NETWORK PHILOSOPHY AND
NETWORK THEORY?
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“Tell me who you associate with
and I will tell you who youEuripides
are” (400 BC)
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Dramatist
“No man is and island, entire of itself.”
No business is an island.”
John Donne (1572-1631)
English poet
Håkan Håkansson & Ivan Snehota
Researchers of B2B networks
“...nothing happens in Albert-László Barabási
Professor of Physics
islolation.”
“Networks are the fundamental stuff of which
Castells
neworganizations are and will be made.” Manuel
Professor of sociology
“Everything touches
Jorge Luis Borges
everything.”
Argentinean author
ociety is a network of relationships and so is business.” Evert Gummesson
Paradigm shifter
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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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DECENTRALIZED NETWORK
CENTRALIZED NETWORK
HUB
LINK
NODE
DISTRIBUTED NETWORK
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NETWORK 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?
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Infrastructural network
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Air Canada
Air New Zealand
ANA
Ansett Australia
Austrian Airlines
bmi british midland
Lauda-Air
Lufthansa
Mexicana
SAS Scandianvian Airlines
KLM cityhopper
KLM uk
KLM
KLM exel
Star Alliance
Singapore Airlines
Thai
Blue 1
Tyrolean
Snowflake
United
LågbudgetVarig
bolag
Well connected
with SAS
Air Baltic
Air Botnia
Cimber
Skyways
Widersoe
Estonian Air
Gronlansfly
Helikopterservice Euro Air
Iclandair
Maersk Air
Spanair
SAS other airline partners
Aer Lingus
American Airlines
Cathay Pacific
British Airways
Deutsche BA
Finnair
One World
Iberia
Qantas
Lan Chile
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Crossair
Other Finnair
Golden Air Plus partners
Lot
Other Finnair partners
Air France
Lithuanian Airlines
Luxair
Malev
Ukraine International
Air China
Alliances change44
the market
Aer Lingus
airAlps
Alaska Airlines
China Southern Continental Airlines
Cyprus Airways
CSA Czech Airlines
JAS Japan Air System
JET Airways
KLM/Northwest Airlines alliance
Northwest Airlines
Kenya Airlines
Lithuanian Airlines
Maersk Air
Malaysia Airlines
Malev
Martinair
SNCF
Surinam Airlines
Swisswings Airlines
Thalys
Transavia airlines
Ukraine International
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Network in human
organizations:
the Internet in 1998
Source: Buchanan, Mark (2003), Small World. London: Phoenix, p. 81.
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Networks of life:
network of interactions
between proteins in
baker’s yeast
Source: Buchanan, Mark (2003), Small World. London: Phoenix, p. 144.
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OVERLOAD?
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High Touch
High Tech
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High Tech
Restore the balance!
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High Touch
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Same business, different networks:
Amazon.com
Barnes & Noble
Partille Bokhandel
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LEADERSHIP IN NETWORKS:
CEO
Chief Executive Officer
or
NEO
Network Executive Officer
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to lead (male) or
to follow (female)
or both?
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“Return on Relationships (ROR)
is the long term effect on profitability
caused by the establishment and
maintenance of an organization’s
customer relationships.”
“Return on Networks (RON)
is the long term effect on profitability
caused by the establishment and
maintenance of an organization’s
networks of relationships.”
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Long relationships can be
profitable and productive...
...but they must be
properly managed
and evaluated!
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Certain things cannot be measured or predicted,
such as:
Leadership
Vision
New products and services
Discontinuities
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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But efficient implementation is the key!
“The problem with good ideas
is that they quickly degenerate
into hard work.”
Peter Drucker, 95
The world’s No. 1 management author and guru
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“Tack för er
uppmärksamhet!”
THE END
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Publications 2000-2006 (selected)
On networks and many-to-many marketing
Gummesson, 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 ServiceDominant Logic of Marketing: Dialog, Debate, and Directions. New York:
Sharpe (forthcoming).
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On relationships and services
Gummesson, 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.
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On theory generation and research methodology
Gummesson, 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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