Growth,Excess and Opportunities

Introduction

Exchange is natural and ubiquitous. It pervades our lives and the lives of all living beings on earth. The anthropocentric perspective that dominates our consideration of exchange fails to recognize that animals engage in exchanges of; genes, grooming, protection and food. They also exhibit many behaviors that may be considered as marketing. Ants and bees are frequently compared to large groups of people working in construction or a factory, or vice versa, due to the complexity of their interactions and their working for a common goal. But, they are working together, not engaging in exchanges.

The bird of paradise male prepares and protects his display area, carefully chosen, and advertises his wares/genes through song and display (Attenborough 2006, episode one). The difference between the bird of paradise and a retailer would be hard to distinguish for an alien visiting earth. It is only the scale that differs. All species, except those that reproduce asexually, engage in some degree of promotion, positioning and exchange, simply to further their species.

The differences between the exchange we see in animals and humans is the complexity of our marketing systems, our use of currency, distant trust, and the indirect exchanges that are ubiquitous in human marketing systems. Similar to humans, the ‘need’ for fairness is present in exchanges in monkey studies (Brosnan and De Waal 2003). Analogous to species, product categories can cease to be relevant to their customers and become extinct (Levitt 1960). This article considers what marketing systems are, as well as their goals and the goals of society. The article then discusses marketing systems’ past, present and the potential contributions to society of marketing systems.

Business, Marketing Systems and Their Purpose(s)

Classical liberalism (free markets and limited government) currently holds sway in Western societies. While many extol the competition of markets, the essence of market activity for firms appears designed to avoid the substitutability of a firm’s products and services—to create local monopolies. Of course, marketing is the means used to pursue such local monopolies.

Marketing is about the allocation of scarce resources, matching heterogeneous demand and supply (Alderson 1957). As such, marketing is a provisioning technology—an information matching system to enable exchange. Information is at its very center (as Shannon would suggest, information is at the center of all things (Gleick 2011; Shannon and Weaver 1949)).

Marketing is a technology that seeks to satisfy the needs of multiple individuals or organizations through double search followed by exchange that increases the potency of assortment of both parties to the exchange (Alderson 1965). Previous analyses of the contribution of marketing to society, though extremely thorough, have verged on hagiography (Wilkie and Moore 1999), largely ignoring externalities and claiming many contributions that may not be associated with marketing. Such analyses have typically focused on the market economy, the aggregate of marketing systems, and have highlighted positive externalities (Cadeaux 2000).

Marketing systems may be one of the key things that set humans apart from other animals. It is without question that marketing systems have had major contributions to our development as a species, through the exchange of goods, services and ideas, across vast distances.

A marketing system has the following attributes:

It is a network of individuals, groups and/or entities. Embedded in a social matrix.

Marketing systems are also replete with 1) path dependencies (Layton and Duffy 2018), 2) high levels of complexity (Holbrook 2003; Lewin 1992; Holbrook 2003; Barabasi 2002), 3) contain self-organized critical states (Buchanan 2000), 4) are at times chaotic (in the academic sense) (Gleick 1987), 5) include phase transitions which may or may not be visible (Campbell-Hunt 2007), and due to all these features are 6) very difficult to research (Wooliscroft 2016). Social psychology is struggling with a replication crisis that has divided the discipline (Open Science Collaboration 2015; Maxwell, Lau, and Howard 2015; Francis 2012). For insights into the innate complexity of marketing systems see Layton (2009, Figure 2 and 3, page 355 and 356) for a list of structural options or settings of marketing systems.

Marketing systems are often discussed as though they are natural, and that there are no other choices, or settings that can be made for how they operate. The idea of markets ‘evolving’ is common (Layton 2007, 2014), but evolve has attached positive connotations that are not always justified. Just because something has arisen over time does not make it a) natural, or b) innately good. There are a multitude of institutions that have arisen over time but that we find intolerable and in some cases obscene (slavery for example). Unrestrained markets will almost inevitably lead to a monopoly over time, at least with actors operating under the assumptions of neoliberal economics.

Markets and market players change/mutate and seek ecological niches where they can survive and flourish, in the same way that species mutate to find a niche. The fact that begging as a marketing system has pervaded society for centuries does not make it a good, or ‘evolved’, thing (Conejo and Wooliscroft 2018). It is a failing of society that our mainstream marketing systems have no place in them for those that beg. Their enduring ecological niche demonstrates that marketing systems are not ‘evolving’ for all.

The goal of marketing systems is matching heterogeneous demand and supply, but the societal goal for marketing systems can be something else, a higher order goal. The current dialogue is dominated by the mantra of maximizing profit or shareholder value. J.K. Galbraith’s final book highlighted the mis-distribution of return in business, with management taking an excessive share, while labor and shareholders, the providers of capital, receive less than their fair share (Galbraith 2004) while having more skin in the game (Taleb 2018). This shift to over-compensating management while squeezing labor costs, combined with historically flat progressive tax rates, has been at the center of the change in income distribution in many developed countries.

There is a growing movement to governments running their countries in the name of maximizing well-being or quality of life, instead of GDP (see for example New Zealand and the United Kingdom). Given that marketing systems are a subsystem of society, should we consider their goal to be increasing well-being through the application of a provisioning technology? That would take us back to a definition of marketing (systems) from Breyer:

Marketing is not primarily a means of garnering profits for individuals. It is, in the larger, more vital sense, an economic instrument used to accomplish indispensable social ends. Under a system of division of labor there must be some vehicle to move the surplus production of specialists to deficit areas if society is to support itself. This is the social objective of marketing. (Breyer 1934, p. 192)

Tobacco is an example of a predatory and addictive marketing system, with significant externalities. Exercise has become an ‘industry’, even though people do not need to buy things to walk, swim, etc. at the levels required to gain the benefits of exercise. Elements of the food industry, particularly in developed countries, are accused of operating in a way similar to tobacco, loading foods with hidden sugar, salt and advertising to children, while displacing local food cultures and marketing systems. Happiness is currently discussed as an industry, but it should perhaps be the goal of all marketing systems - satisfied and happy producers, intermediaries and consumers.

Growth: Marketing Systems’ Contributions to Society

The history of marketing systems is much longer than the history of marketing, its roots are found in anthropology. As humans settled and produced excesses, or desired products from other places there were two choices war or trade. In spite of our history of wars, humanity has chosen trade much more often than war and conflict. Mass urbanization during the industrial revolution created the discipline of marketing - then, the study of how we get goods to our (now distant) markets (Sheth, Gardner, and Garrett 1988).

There has been increasing complexity of those trading systems with trade routes developing, international ship transport, air transport, and now digital transport of information. People still need physical products; food, drink, shelter, etc. but the dominant dialogue is in danger of ignoring them. Recently advertised positions for marketing professors would suggest that goods and logistics no longer matter, the world is now digital.

We know surprisingly little about how early marketing systems contributed to subjective quality of life (QOL). That the standard of living increased along with life expectancy as a series of technologies associated with, particularly, food storage reduced the likelihood of catastrophic food shortage in much of the world, is clear (Pinker 2018; Easterlin 2000; Steckel 1995; Olshansky et al. 2005; Simon and Graham 2003; Koepke and Baten 2005). Our lives have become longer, and we consume more, but subjective QOL hasn’t changed significantly since we started measuring it on a national level, at least in developed countries.

That may be a function of the way it’s measured as much as the level of QOL. We don’t see a clear change in subjective QOL the developed world, even though we’ve gone through times of; war, recession, growth and prosperity (for many but not all), war, financial crisis, political upheaval, the wider spread occurrence of terrorism, etc. In the short term perceived QOL may be affected but over time there is limited impact - the Easterlin Paradox (Easterlin et al. 2010), a heavily contested and debated phenomena.

Our window into the past is colored by our current understanding of life. We are fascinated that the smile did not appear in paintings - except the Mona Lisa - and photographs until recently (Trumble 2004). Why was the smile too frivolous to record for so long? Attempting to understand the past through written sources is also problematic as until the rise of mass literacy it was the privileged few who could read and write and their experience of the world is likely to be markedly different to the masses. Our insights will always be limited. We can see the spread of consumption through societies, rising and falling, but rising overall through time.

The (in-)equality in societies have risen and fallen through time as well, with associated conflict, increases in crime and ill-health at times of high in-equality (Stiglitz 2012; Wilkinson and Pickett 2011). At its height inequality can be found in slavery and feudal systems, one person not just owning more things than other people, but owning other people. Slavery was, and remains in some parts of the world, a marketing system and can be studied as such, distasteful as it may feel. The roles marketing systems play in inequality is related to the return on labor and the return on capital (Piketty, Goldhammer, and Ganser 2014). High returns on capital have resulted in increasing wealth in-equality through time.

What role does the use of segmentation (Smith 1956) and other marketing technologies play in exacerbating inequality? Every time business focuses on a segment they exclude, usually through neglect though at times through malice, other potential customers. The two part paper in Harvard Business Review on the possibility of, and attractiveness of, targeting African Americans was published just over 50 years ago (Bullock 1961a, 1961b).

In the developed world the path to a high standard of living frequently fails to recognize the extraction of natural resources from other countries, be those resources minerals, energy, cheap labor or crops, and how they have ‘subsidized’ our development. Our path to development will not necessarily work for developing countries, their situation is different; frequently labor rich and capital poor, often with their natural resources already depleted. Those countries remain in the growth phase while developed countries experience excess.

Excess: Marketing Systems Embedding Excess Consumption in Society

Keith Robert (1960) proposed that business - through his single case study of the Pillsbury Company - was in the process of moving to its fourth, and perhaps final, era;

Production Era

Business in the developed world has, largely, moved beyond what Keith Robert (1960) would have recognized as an era of marketing control, where business seeks out and satisfies the needs and desires of consumers, with the consumer’s needs at the center of the organization.

What is the current era? Is it green, ethical and charitable as Schlegelmilch (1994) suggested? There is considerable academic writing and many column inches/centimeters in the popular press regarding green, ethical and charitable consumers, but we have not seen a revolution in business behavior. There are certainly some highly publicized cases of ethical business, Patagonia, the Body Shop (before it was bought by a multinational), Ben and Jerry Ice Cream (before it was bought by a multinational), etc. held up as the way business is behaving differently. They are unfortunately exceptions not the rule.

There is a case to be made that we have entered an era of market stimulation? An era of excess consumption driven not by human needs that are fundamental but rather by the need for businesses to sell more and more, where business creates ‘needs’ amongst profitable customers, while neglecting the bottom of the pyramid at home and overseas. Planned product obsolescence through frequent changes in fashion and updates in technology have accelerated the disposable nature of consumption.

Frequently unused, or underused, goods are stored, not only in the consumer’s garage, but in remote storage sheds rented for the sole purpose of storage. The stored goods are unlikely to be taken out of storage. While there is considerable potency of assortment in households with remote storage units (Alderson 1965) that potency is not realized. Our system is designed to create utility and much utility sits unrealized, while other people lack the ability to afford the goods, which would generate utility in their lives. What could be achieved by releasing the utility present in the storage units around the English speaking world?

There has been a change in the mindset of many business people and consumers, and with it an expression of the collective purpose of the marketing system, from ‘I want to make furniture/grow corn/raise sheep/provide legal advice, and associated with that I hope to make a fair profit, pay tax, and be seen to be a good citizen’ to ‘I want to make money/grow wealth, and I don’t really care what I am doing to achieve that’. We have become more like Adam Smith’s (1887) hypothetical self-interested/greedy individual (Holbrook 2013), a caricature of the reality of people full of contradictions, simultaneously and alternating generous, mean, kind, and nasty. There has been surprisingly little attention given to the relationship between human nature and its impact on marketing systems (Lawson and Wooliscroft 2004). The way we treat people is the way they behave (Bowles 2016) and we have chosen to treat people as if they were greedy - if that were our goal we should not be disappointed by the outcome.

Current excesses of individual consumption have led to, for the first time, lower life expectancies for today’s American children than their parents, through diabetes, obesity and other lifestyle diseases (Daniels 2006; Olshansky 2005; Lakdawalla, Goldman, and Shang 2005). The counter argument for lower longevity is that a technocratic solution will emerge - science will find exercise in a pill form, etc. instead of changing individual behavior. Instead of humans moving as they were designed to do, a marketing system will emerge around a product that substitutes for an essentially human experience.

We have numerous Tragedy of the Commons problems (Duffy, Layton, and Dwyer 2017) including:

food: the massive waste of food, while others are hungry (Principato 2018)

The tragedies do not relate to a common in the sense of a piece of land with a designated border. The earth is a system and pollution in one country will eventually impact on others. Over-consumption in one country will impact on the ability of other countries to consume. Climate change, caused by excess carbon emissions through food production, energy generation and transport has led to increases in extreme weather events. If the lifestyle of Western developed societies were generalized to the whole world, the number of earths required to support that lifestyle is many times one earth (Marshall and Toffel 2005). This highlights the current inequality in the world. Estimates of the ecological footprint are that humanity is currently using 1.5 earths, possible only because of the excess of carbon that we emit, emissions that are most definitely not sustainable (O’Neill et al. 2017).

Consumers are also employees and the focus by many businesses on maximizing profits by minimizing production costs - through outsourcing/off-shoring and/or robotics and automatic plants - has had significant impacts on the value of labor in many countries. Wealth inequality has gone up and income inequality has gone up, with CEOs now earning several hundred times the median worker’s income in their own firm (Tsui, Enderle, and Jiang 2018). That CEOs are rewarded for good luck is recognized but still remains a large part of their compensation (Bertrand and Mullainathan 2001). The employees do not share the reward for luck, nor do they typically get rewarded for an increase in productivity or profitability in a firm. Many recent increases in profitability have arisen because CEOs, and other high level management, while increasing their own income, have stifled movement in workers’ income and/or moved workers to casual contracts.

The ‘shared economy’ promoted through AirBnB, Uber, Lyft, and a host of other micro rental or micro employment businesses has increased rapidly. The employment opportunities - technically often subcontractors not employees to remove the costs associated with employment - given by this ‘gig economy’ provides people with no security and typically a very low level of income, while the business has a large pool of potential workers it can utilize as and when it wants. The impact of a lack of security on mental and physical health is well known (Ferrie 2001). How can these workers plan for the future, feel secure enough to buy a house or start a family? They are stuck on a treadmill of funding and maintaining temporary employment.

When the gig economy has spread even wider and the factories are full of robots making robots making products (the much vaunted Industry 4.0) where will we find meaningful jobs (Illich 1978). Is it a human right, or a human need, to undertake useful and meaningful employment? That employment need not be paid directly, though there are many benefits in direct payment. Generations of home carers were not paid to care for their families but their work was meaningful and useful. A different model of income may resolve some of the issues associated with, previously, unpaid work.

The recognition by leading business owners, including Mark Zuckerberg (Weller 2018), Elon Musk and many more (Clifford 2017), that a universal basic income/guaranteed minimum income is likely to be necessary can be cynically seen as firms fearing for the future and requiring a steady supply of customers with money. These customers used to be employees of these same firms or other firms in the same country. Only a systems perspective recognizes that customers and employees are the same people in different roles. Our current dominant reductionist mode of studying marketing pretends that firms, employees and customers are different people.

The companies associated with these business owners and other multinational companies are most likely to be those that avoid tax in as many countries as possible using a variety of methods to achieve the goal of tax minimization (Rego 2003; Christensen and Murphy 2004; Gravelle 2009; Sikka and Willmott 2010). The aggressive off-shoring of profits is destructive to the notion of the multiplier effect within an economy and leads to firms that have a competitive advantage over local entrants by virtue of their not paying local tax, in effect a reduction in costs.

These same multinationals are at the forefront of information monopolies. They are companies who know more about citizens than governments do. With their wealth of information the companies can sell micro targeted advertising, influence elections, and destabilize governments/dictatorships. These companies operate from monopoly positions making super profits and are not faced with serious competition - a market failure. The dominant player in the marketing system does not stop with multinationals.

The information monopolies do not respect intellectual property and have been credited with the destruction of income streams for the entertainment industry, particularly musicians (Taplin 2017). Many artists have now taken to touring to generate income, as recorded music ceases to provide a living income, except for the most popular of artists. Instead of selling records/CDs/downloads artists now find themselves required, often by their record labels, to make their music available on streaming services, because of those streaming services dominant share of the music consumption market.

Information provided on the website Information is Beautiful (McCandless 2018) states that an artist would require the following number of plays on various streaming services per month to earn the US minimum wage:

YouTube – 2,100,000

It has been suggested that the record labels have shares in Spotify that lead to them depressing artist royalties in favor of shareholder return (Lesser 2018).

Most developed economies have food and big box retail dominant players who have significant power in the market. With so much dominance at the retail end of the food distribution channel in the USA the farmer’s share of the food dollar has dramatically lowered through recent decades (The National Farmers Union 2018). Typically:

for a pound of tomatoes that retail for $4.49, the farmer receives 28 cents.

This is not expected to change in the near future according to the United States Department of Agriculture Economic Research Service (2018), with farm gate prices expected to rise at less than the rate of CPI change through to 2025. Walmart’s effect on prices has been so significant as to be credited with increasing the standard (but not quality) of living in the USA.

At an individual level, the ‘normal’ way we move is with 1.5 tons of steel, emitting carbon, travelling most places with one person in it. That 1.5 tons moves too fast and too inefficiently. It represents an excess of consumption, far beyond that necessary to move a single person, frequently over distances, which would be quicker to walk. A massive inefficiency is built into our marketing systems, our economy, our societies and our environment. A symbol of our excess consumption problem.

The externalities associated with automobility remain unallocated leading to subsidization of poor behaviors in the developed world by the rest of the world, which encourages the pursuit of that same behavior - having paid the externalities already they might as well have the same experiences that the developed world has. In this case and many others the developed world consumes more than they need to achieve a high objective and subjective quality of life. Information asymmetry and power asymmetry in marketing systems leads to an ideology of consumption, frequently wasteful consumption.

We live in a global time, where people in all but the most deprived countries have access to information (usually multimedia) about developed countries. ‘Economic refugees’ flood north from Africa and Southern America seeking to have the experiences they see. International inequality is of major concern given inequality’s relationship with personal health, both physical and mental, and societal health and security ( Wilkinson and Pickett 2011, 2018).

While there are few borders to the movement of capital and goods, labor remains tightly constrained by the concept of citizenship and the building of walls (physical and otherwise) between countries. The marketing systems for labor and goods have different settings and result in very different outcomes.

Opportunities: Choices Regarding Marketing Systems and Their Relationship with Society

There are many questions to be answered regarding marketing systems as we consider the future. There are many choices we can make, the question is—will we? Choosing not to answer these questions is not an option, humanity will not survive even more of our current dominant marketing and consumption system. It is likely that we will not find an incremental solution, but will require creative destruction to find a sustainable marketing system into the future (Schumpeter 1934).

From a policy point of view, the need for a richer set of insights at the marketing system level is also clear. Policy choices affect the technological and institutional settings that shape directly or indirectly the efficiency and effectiveness of the marketing systems of interest. (Layton 2009, p. 361)

What is the place of government, the policy maker, in marketing systems, if any? Government represents the citizens of a country, though all too often it is heavily under the influence of powerful lobby groups, and should provide those citizens’ voices when considering marketing systems. What tax/income and wealth redistribution mechanisms will we use, particularly in light of Industry 4.0 and the potential for mass under/un-employment? Historically high and progress taxes have not stifled the economy, but current thinking is that they will (at least in the dominant business dialogue). Will countries break up monopolies to remove market failure and ensure more efficient competition?

Many companies have more power and information than governments. How do we control/influence the markets to ensure equity for citizens and for other businesses? Will we see another AT&T Bell Labs monopoly solution, where intellectual property generated by a monopoly player was made available to other US companies in return for maintaining the monopoly position? Google may well be a candidate for this solution (Taplin 2017).

Will we capture externalities and assign them to producers and/or consumers? Will we capture externalities of foreign production and allocate it? Should we tax poor labor conditions, pollution, and emissions and allocate them on entry to the consuming country? If we don’t how can our people and small firms compete in a global market with different market settings? What will the situation be for labor and capital? Will capital still be free to leave countries while labor isn’t? Does a natural resource belong to the citizens of a country? If the resources leave and the citizens can’t either add value and earn income or follow the natural resources we will face more economic migrants/refugees of our own making.

Do we aim to realize Galbraith’s vision for a ‘Decent Society’ (Galbraith 1958, 1997). If so, how wide will our definition of society be? Will it include other countries, particularly those whose resources have historically been exploited, or those in greatest need? Will we see business rebalance its goals to reflect the multiple stakeholders it serves and on which it relies for its existence (Mitchell, Wooliscroft, and Higham 2010). Will we incentivize or penalize reducing inefficiencies in production and consumption? Will we help consumers move up the continuum of ethical consumption behavior, or at least remove the many barriers to consumers’ ethical choices (Wooliscroft, Ganglmair-Wooliscroft, and Noone 2014)?

As we face these questions, Macromarketing requires more studies on:

Power in channels and marketing systems, including how to readjust dominance - equity within a marketing system.

“Keep in mind that it is hubris to think that we can save the Earth: our planet looks after itself. All we can do is try to save ourselves.” (Lovelock 2010).