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Let the Soul Catch up with the Body of the Business Let the Soul Catch up with the Body of the Business
by Prof. Michael R. Czinkota
2016-12-27 08:26:15
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I. Innovation Disruption and the Imperative of Curative Marketing

More than 7 decades ago, Joseph Schumpeter regaled us with the concept of creative disruption. He presented successful innovation as only temporary market power, threatening the profits of old firms, yet facing the pressure of new competitors beginning to commercialize their own inventions. Such cyclicality was taken on in greater detail by various subfields in business and society and delivered high explanatory value. Consider the “wheel of retailing” which Stanley Hollander described in the late 1950’s with firms starting at the bottom of the wheel and moving up in terms of services and pricing until they are transitioned out from the wheel by more efficient competitors. Today, the disruption has become broader scoped with new entrants and their disruptions coming not just from the same industry or even from similar business models.  

market01_400It is no longer sufficient to have besieged firms lower their prices. They must make entirely different products, which deliver better value to consumers. Unicorn companies like Twitter and Netflix, which are start-ups valued at over $1 billion, have succeeded and caused many casualties with their winner-takes-all market approach. When Netflix emerged in 1997, with its lower price and convenience, it quickly became too late for Blockbuster, the video rental firm with its 10,000 retail stores to deliver digital service and the firm was forced to declare bankruptcy in 2010.

But with the world becoming more dynamic and divided than ever before, security and religion appear to be held in higher esteem by society at large than the economics and the business. Corporations are increasingly expected to play a stronger role as a collaborator with government and society in finding solutions to future challenges. A winner takes all competitive plan begins to give way to a strategy based on global collaboration. Money no longer is the only or ultimate outcome of business. Firms who neglect holistic perspectives and argue based on business principles alone may increasingly find themselves on the losing side. Self-sufficient, societally supportive and leading is how many business executives like to see themselves, but their activities are only one slice of a sphere formed by a score of other components integral to society.

This is one reason for the emergence of the concept of curative marketing, which accepts responsibility for problems that marketing has caused. It then uses marketing’s capabilities to set things right and to increase the well-being of the individual and society on a global level. Curative marketing’s two key perspectives consist of looking back at what marketing has wrought and set things right in future actions.

 

Ethical Failures in Modern Society

As engagement of business in society is paving the way for sustainable development in the future, the traditional pillars of business which include risk, competition, profit, and ownership are re-defined because they no longer sufficiently sustain the corporation in today’s world. A key tenet of marketing is reverence for the customer. However, firms often choose a predatory approach which Georgetown’s Charles Skuba calls inappropriate, unjust and counterproductive “vampire marketing” Typically, this takes place when the key consumption decision has already been made, but circumstances allow for additional offers. High minibar charges in a hotel or pillows for rent on an airplane are examples.

More importantly, ethical failures of companies not only cause the loss of profit and reputation but also reduce the trust of consumers. In 2008, a milk scandal in China with the tainted infant formula of Sanlu Group involved 300,000 victims and 4 deaths of babies, which eventually led to the bankruptcy of Sanlu one year later. In an emission scandal, in Germany, Volkswagen (VW) affected 11 million of consumers with defeat devices installed to cheat on the performance test. Within one year, the cost and penalties already surpassed $16 billion. In the United States, Wells Fargo fired 5,300 employees for illegally intervening with customer accounts.

An insufficient conscience of business often brings deleterious financial impact to the business. It seems to be different and slow to fundamentally change how companies are run.

 

 

Professor Michael Czinkota was a Deputy Assistant Secretary of Commerce for international trade. He teaches international marketing at Georgetown University’s McDonough School of Business in Washington D.C. His key book is International Marketing, 10th ed., CENGAGE. To participate in the planned research group interested in international marketing and strategy under his mentorship, please reach us via the mail.

 

 


    
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Emanuel Paparella2016-12-27 13:44:06
The usual needed other side of the coin:

The other side of the coin for the two pieces on corporate capitalism and the market and their attendant, often predatory culture, is exemplarly offered by David Sparenberg's poetic description of the aspen leaf which describing metaphorically the human condition in a more holistic humanistic approach within the vision of man’s destiny, reminiscent of Christ's acute observation “consider the lilies of the field, they do not work or spin or plan and fret, and yet not even Solomon in all his spelendor was dressed as one of them.”
It all goes to say that to neglect the contemplation of the nature of man and his destiny is to ensure that he is reduced to an insignificant cog within a gigantic producing and consuming machine (the demiurge called “the market”). In philosophy the process goes by the name of reductionism. Then, almost as an after-thought, the reductionist adds the ethical component to the predatory scheme, not because it is important in itself, but because with it the profits will be more abundant. The approach remains utilitarian, purely pragmatic and materialistic, even when the word soul as an after-thought is added to the body as one of the pieces' title amply suggests. In effect the cart has been put before the horse, or as we have been reiterating as a voice crying in the wind or the desert, as the case may be, and only one side of the coin has been considered.


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