Organization of Marketing for the Wal Mart Chain - Literature review Example

Literature review on service dominant logic as it relates to the organization of marketing for the Wal-Mart chain of discount stores. Introduction As the twenty first century commences and the end of the first decade looms near a new understanding of consumerism has emerged that equates the purchase of goods to the experience and understanding of the consumer in the purchase of those goods. The way in which goods and services used to be separated is now joined in a union that can be exploited through marketing not only products, but the way in which those products will serve the consumer. Acquiring goods has become an aspect of behavior that can be sociologically framed so that identity, experience, and presentation are virtually inseparable from the goods themselves. A theory has developed which represents this fusion of the intangible with what is tangible in the business of trade that can be termed under the service dominant logic theorem. Lusch and Vargo (2007) proposed this theory as a way to frame the marketing of goods so that the consumer experience is incorporated into the sale of a product so that the two ideas have become one entity. This literature review will attempt to expand upon the ideas of Lusch and Vargo (2007) by exploring the varying concepts that other scholars present as well as developing a case study of Wal-Mart as an example of how this concept is put into practice by a retail outlet. Service Dominant Logic According to Lusch and Vargo (2007), the retail industry has shifted from a basic tangible output exchange system to a service dominant system in which intangibility, exchange process, and relationships have become the forefront of the retail experience. The concept of service has changed so that service becomes not only how the customer receives the goods, but in the entire presentation of the business to the customer. In creating an understanding of service as being a central part of goods, rather than a separate entity from goods, the product becomes the service that is provided as much as the way in which the product is delivered (4). Arnould (2007) poses the relationship between service dominant theory and consumer culture theory is such that to study one is to invite the other into the discussion. The rational for discussing the two theories in conjunction with one another is based on the premise that to discuss the service aspect of consumerism is to embrace the theories of a consumerist culture and its sociological importance in regard to consumer behavior (58). Thus, the way in which a product is viewed, if seen through the aspect of service that is proposed by Lusch and Vargo (2007), then it is quite naturally associated with the aspects of behavior that are explored by consumer culture theory. Hefley and Murphy (2008) believe that two competencies must be put into place before a marketing firm can be successful in bringing service dominant logic to a comprehensive marketing plan for a business. Collaborative capability allows for open communications with all of the interested parties so that a symmetrical and truthful interaction can be achieved. Absorbtive capability provides for the capacity of a firm to absorb the environmental factors that will affect the interactions between the client and their customers (95). With these two aspects of foundation in place, the marketing firm can approach reaching a service dominant logic in the way in which they present a marketing plan that interacts with the business and its potential and current customers. According to Tadajewski, Stern, Saren, and Maclaran (2010), the goods dominant logic suggests that the purpose of a firm is to produce and sell valuable units of output (220). In other words, the purpose of a business is to produce a product that will be sold and the value is placed upon the goods that are sold. In approaching the new paradigm, a marketing firm must bring to the business an understanding that the value has shifted from being centered on the goods, but to the service with which the goods now provide. Value becomes a process that is collaboratively shared between providers and customers so that the consumer becomes a part of the process so that the service happens with the customer rather than to the customer (Burmann & Arnhold 2009: 76). Baker (2007) further explains the service dominant logic by expressing that value is based solely on the experiential evaluation of the customers (41). The purchasing experience has an equated value that supersedes the value of the purchase. This theory has created an evolution in the way in which marketing is approached. An understanding of the relationship between the provider and the consumer becomes the center of the transaction process (Baker 2007: 42). This new center of the concept of trade shifts the way in which a business is marketed. While branding has been at the heart of marketing for decades, the understanding of the consumer experience revolutionizes the way in which the approach to marketing can be explored. Before the concept of branding is explored in relation to service dominant logic, a list of efforts that are designed to improve trade has been developed by Bigler and Norris (2004) in regard to the service dominant logic. The following are recommended concepts that can help a business adhere to a more service dominant logic in order to compete in the 21st century. Process Reengineering: developing line of sight to the customer, removing all non-value-added activity Six sigma quality: striving for three parts per million defects or less and designing new products with customers and suppliers, perhaps connecting through an electronic town hall or portal capability. Supply and value chain management: creating systemic linkages from the customer back through the firm to all supplier and vendor relations. Operational excellence and lean manufacturing: employing mass customization, cycle time reduction, and all forms of just-in-time delivery and outsourcing of nonessential assembly. Customer service: offering ultimate levels of convenience and guarantee fulfillment, and gaining customer knowledge to improve service, sometimes before customers are even aware they have needs (68-69). By utilizing these concepts, the service oriented firm fulfills the needs that are core to the service centered relationship. This new concept in marketing a product, no longer markets the product, but markets the experience of the acquisition. Branding and the Relationship Gummesson (2008), whose work was integral in the work of Lusch and Vargo (2007) (Arnould 2007: 58), suggests that relationship marketing is interactions in networks of relationships (5). The basic dyad relationship that exists in a marketing situation is that of supplier to customer. A network of relationships forms when the various contributors to the product marketing interact to form the entire experience (Gummesson 2008: 6). This concept leads to the dynamic of overall service experience that dominates the service dominant logic. This web of relationships creates an overall context for trade that is inclusive of each member of the network, including the consumer. What has occurred as this network has developed has been the realization of the emergence of communities that are part of those networks of relationships. These communities are associated with brands in such a way that their relationship to the success of the marketing is central to the overall dynamic of the product. One example of this is the marketing of Apple computers in that a clear division between PC users and Mac users has been created so that communities have formed with relationships to the brands to which they are loyal (Hatch & Schultz 2008: 158). This loyalty develops an emotional connection to the entire experience of acquiring the product. No longer has the purchase become just about owning the product, but becoming a Mac user places the individual in the community. In creating these communities, positive global results can be attained through the mobilization of these groups. Hatch and Shultz (2008) provide a variety of examples of how this development of communities can be used for positive promotions. Nike and Google formed a relationship in order to create JOGA, a community of soccer players who were dedicated to protecting the game and keeping it morally elevated in the way it is experienced in response to the violence that has erupted from aggressive fans. Wikipedia is a community of people who write encyclopedia styled entries on topics intended to increase education on a wide variety of subjects (158). By mobilizing communities with similar goals, firms have attained positive efforts because of emotional attachments to the community of the product. Branding has become the effort of building a culture. No longer is it the job of a marketing campaign to present a product, but to present the culture to which a buyer will belong once the product is purchased. Having participated in a purchase relationship, a consumer is suddenly identifying and identified with the brand that has been adopted as a new part of his or her experience. The car, the computer, even the soda that one drinks identifies the individual with that brand. By using the product, the consumer becomes a part of the marketing program, thus a part of the experience of trade. Brand become so powerful that items no longer reflect their generic name, but the brand name. Items such as Kleenex, Coke, and Starbucks become their product with the culture of that product dominating the industry (Holt, et al 2003). Wal-Mart: A Case Study In order to form a better understanding of the service dominant logic, exploring a contemporary retail outlet will allow for a specific understanding of the theory. According to LePla, Davis, and Parker (2003), the greeter at Wal-Mart has become as much a part of the branding as the discounted prices. This aspect of the Wal-Mart experience creates a sense of tradition that the community of consumers who enter to the store expect to see (4). However, a failure to support an aspect of the community of a discount outlet might be found through the experience at the check-out counter. LePla, Davis, and Parker (2003) further explore this possibility through a promise made to its customers. If a retail outlet promises to honor coupons from a competitive distributor, but then makes it a difficult transaction requiring the assistance of a manager, inconveniencing the consumer and causing possible stress to the cashier, an aspect of the branding is then made uncomfortable and difficult to the consumer (Lepla et al 2003: 4). The relationship link from the consumer to the store now has experienced tension that may lead to an eventual break in that relationship. An example of this can be seen in the Rubbermaid company and how it actually contributed to the success of discount stores like Wal-Mart. Rubbermaid was rigid in many of the ways in which it identified itself. One example of this was in limiting the colors available. Discount stores such as Wal-Mart capitalized on this by offering the more expensive Rubbermaid products along side more profitable products that offered more of a variety. This diminished the power of Rubbermaid and increased the profitability of offering lesser quality items with more flexible services to the consumer (Helfat 2007: 52). Wal-Mart can be used to demonstrate the way in which a brand can be mobilized in order to benefit a community. When Hurricane Katrina hit New Orleans and devastated the area in 2005, Wal-Mart found its stores, its trucks, and its network of resources able and available to assist in providing relief. Sherry and Fischer (2009) list a series of incidents of Wal-Mart managers and employees providing individual support as well and the culture of the Wal-Mart organization is credited for the actions that were independently taken to support relief (157). This example shows how the culture of a firm can infiltrate not only the promotion of products, but the way in which employees respond. Without a strong overall ethic and culture, this opportunity for promotion as well as serving the greater need would not have existed. The corporate culture of Wal-Mart, however, does not always enhance the world and its needs because as any entity of this much financial responsibility, the needs of the bottom line may outweigh the greater good. According to Flynn (2008), the corporate culture can interfere in the overall relationship of a corporation to the branding process. An example of this might be found in the form of sweat shops that might be involved in the creation of some of the products within the outlets (260). According to Kumar (2007), the relationship between globalization and the media creates an additional relationship within the network that can affect a firm in its efforts as information, such as the revelation of poor working conditions for the production of goods, affects the overall success and marketing of the business (33). Efforts to balance the needs of the many, the financial expectations, and the branding expectations creates a tenuous balancing act. Conclusion There are many aspects of interest that must be considered when creating a service dominant logic based marketing relationship network. Lifestyles and new innovations in global concepts of living require constant revitalization of the branding identity. One example of this is the concept of living green that now must be addressed by most business (Lange & Meier 2009: 93). Wal-Mart took advantage of this particular trend by launching a first in-store magazine that revealed ways that their products could be used to promote green living (McElhaney 2008: 13). Promoting relationship styled marketing and production requires a sense of cooperation that must be maintained for healthy growth. Products themselves are sometimes the result of this cooperation such as the relationship that was developed between Phillips and Douwe Egberts Coffee in order to create the Senseo coffee machine (Moers 2006: 32). These new relationships produce a more complicated overview of industry which no longer has boundaries that define each individual firm (Wit & Meyer 2010). This makes the understanding of the world market a much more complicated endeavor. As well, the creation of cross branding opportunities, exampled by Nestle that has opened Nespresso coffee shops and created a coffee machine to cross promote the brand is developed through a concept of culture and an attempt to create a new community (Piercy & Lane 2009: 81). Service dominant logic is designed to create a theory that encompasses the results of relationship networks that are developed in order to include the consumer in the experience of the marketing of a product. Communities develop around products creating cultures that have loyalties that can create a great movement within the world. As products have left the category of goods and become part of the service of consumerism, the world is both subject to and exalted by the global community that can result from this concept. The context of marketing within the service oriented delivery of product is such that the product is no longer at the center, but the culture of the product and the experience of the service that product provides becomes the center of a business. References Arnould, E. J. Service dominate logic and consumer culture theory: Natural allies in an emerging paradigm. Found in Belk, R. W., & Sherry, J. F. (2007). Consumer culture theory. Research in consumer behavior, 11. Amsterdam: Elsevier. Baker, M. (2007). Marketing theory. London: Sage Publications. Bigler, W. R., & Norris, M. (2004). The new science of strategy execution: How established firms become fast, sleek wealth creators. Westport, CT: Praeger. Burmann, C., & Arnhold, U. (2009). User generated branding: state of the art of research. Berlin [u.a.]: LIT Verl. Flynn, G. (2008). Leadership and business ethics. Issues in business ethics, vol. 25. [Dordrecht]: Springer. Gummesson, E. (2008). Total relationship marketing: Marketing management, relationship strategy and CRM approaches for the network economy. Oxford: Butterworth- Heinemann. Hatch, M. J., & Schultz, M. (2008). Taking brand initiative: How companies can align strategy, culture, and identity through corporate branding. San Francisco: Jossey-Bass. Hefley, W. E., & Murphy, W. (2008). Service science, management and engineering: Education for the 21st century. Service science. New York: Springer. Helfat, C. E. (2007). Dynamic capabilities: Understanding strategic change in organizations. Malden, MA: Blackwell Pub. Holt, D. B., Mun-oz, L., Cunha, R. D., Sousa Coutinho, M. D., Cacegas, L. D., & Herbert, M. E. H. (2003). How brands become icons: the principles of cultural branding. Boston, Mass, Harvard Business School Press. Kumar, D. (2007). Outside the box: Corporate media, globalization, and the UPS strike. Urbana: University of Illinois Press. Lange, H., & Meier, L. (2009). The new middle classes: Globalizing lifestyles, consumerism and environmental concern. Dordrecht: Springer. LePla, F. J., Davis, S. V., Parker, L. M., & Stumbo, C. (2003). Brand driven The route to integrated branding through great leadership. London: Kogan Page. http://www.lib.sfu.ca/cgi-bin/validate/books24x7.cgi?bookid=9907. Lusch, R. F., & Vargo, S. L. (2006). The service-dominant logic of marketing: Dialog, debate, and directions. Armonk (N.Y.): M.E. Sharpe. McElhaney, K. A. (2008). Just good business: The strategic guide to aligning corporate responsibility and brand. San Francisco: Berrett-Koehler. Moers, P. H. J. M. (2006). Industrial marketing in the new branding arena: How to survive the war between private labels, private brands and manufacturer brands. Amsterdam: Kluwer. Piercy, N., & Lane, N. (2009). Strategic customer management: Strategizing the sales organization. Oxford: Oxford University Press. Sherry, J. F. & Fischer, E. (2009). Explorations in consumer culture theory. New York, Taylor & Francis. Tadajewski, Mark, Stern, Barbara, Saren, Michael, & Maclaran, Pauline. (2010). The Sage Handbook of Marketing Theory. Sage Pubns Ltd. Wit, B. d., & Meyer, R. (2010). Strategy: Process, content, context. Andover: Cengage Learning. Read More