Value creation is a continuous process which aims to increase the worth of goods and services offered by the businesses. In the contemporary world, the focus of marketers has shifted from value creation for shareholders to the value creation for all stakeholders. All of the marketing activities are now directed towards the creating better value for customers and all other stakeholders. Marketing refers to the activities which are referred to buying and selling of a product or service. There are various activities which are part of marketing, the examples include advertising, promotion, distribution, pricing and product development (Brassingtonand Pettitt2014). Marketing is one of the core functions of organisations and it helps them to attract and retain customers for a longer period of time. There are various stakeholders of marketing activities, including the competitors, suppliers, owners, lenders, local communities, special interest groups, retailers, government entities and employees. The function of marketing is quite important for creating value for these stakeholders (Frowand Payne, 2011). The main aim of this function is to create value for its stakeholders. The purpose of this essay is to critically reflect on the meaning and importance of marketing for creating the value for its stakeholders. This essay starts with the general introduction of value creation and meaning of marketing, then it analyses the importance of marketing and then it moves towards analysis on how the marketing is creating value for its stakeholders.
The most primary objective of any business is to create value. In every organisation, every marketer is dedicated towards the function of value creation for its stakeholders. Marketing is also defined as an activity and process which aims to create, communicate, deliver and exchange those offerings which have the value for stakeholders (Grewal and Levy, 2014). From this definition, it can be observed that marketing is a function which actually aims to create the value for the stakeholders. The first step for marketers it to define the value proposition, then customers are to be selected. After this the value proposition has to be customised as per the needs of the customers. This value creation is not a stagnant process as marketers have to move up the ladder every time and they have to develop the relationship with the customers on the ongoing basis. This is the customer relationship management process which helps in creating the value on a continuous basis. Moreover, the relationships has to be consolidated for ongoing basis for the value creation process (Ballantyne and Varey, 2006).
Jobber and Ellis-Chadwick, F. (2013) stated that there was a time when value creation was aimed to be for increasing profits only; the value was captured in terms of the process through which the firm can maximise its profits through the use of its resources. However, in the contemporary world, the shift has moved away from this typical notion of the value creation (i.e. economic value theory). As it is said by value theory that value creation is a process of transforming raw material into such outputs that could create value for the organisations. This theory also reflects that traditionally marketing did not consider the value creation for all stakeholders. Now, as per the contemporary marketing meaning, this function is actually proposed to co-create value for all stakeholders where communication with all stakeholders is done to produce such outcomes which are beneficial for both the organisation and its stakeholders. through this way, marketing has shifted its focus towards creating the value not only for its shareholders but for all of its stakeholders (Lepak, Smith, and Taylor, 2007).
According to Freeman (2010), recently, a new value theory – social value theory - is introduced where the focus is on the improvement of economic and organisational performance through the process of value creation of all stakeholders. This value theory states that with the intersection of stakeholders and producers, the capacity for value creation could be improved. As per this theory of marketing, the public confidence on marketing and its initiatives has improved. This is even helping in spurring economic growth and recovery. This theory of value creation known as new market ethic has a focus on relationship building, knowledge management and stakeholder management and these all are considered as the value assets that are critical for improving organisational and economic performance. In this second decade of the twenty first century, many of the successful and profitable companies are actually focusing on the process of creating value for all stakeholders and this is helping them to succeed in the market (Grewal and Levy, 2014).
According to Slater and Narver (1994), there was a time where there existed the dichotomy between the value perspective of the producer and consumer. By this, it meant it was either the producer or customer who could actually gain benefit from the value creation process. The value for the producers was created through the process which the resources were used in a manner that consumers are convinced to pay the price for their offered product. the value perspective for customers was based on the fact that how the offerings of the producers are fitting into the need of the customers that actually motivate them to pay a certain price for the offerings of the producer. Now, this new perspective of value creation for all stakeholders emphasiseon reconciliation of interests of all stakeholders where not a single stakeholder has to suffer. According to Anderson, (1995), This social value theory eliminates the dichotomy between the interests of stakeholders, hence, the marketing which is based on the new perspective on value as recommended by the social value theory, is helping the firms in a way that where no stakeholder has to suffer at the expense of other stakeholder. However, the critical analysis of the statement which states that marketing aims to create value for all stakeholders is supported with the social value theory. However, it is important to mention that the this theory or perspective is based on the assumption that interests of all stakeholders could be integrated such that satisfaction for all stakeholders could be achieved. Though, this could be a challenging process for marketers to co-create the value integrating the interests of all stakeholders (Masterson and Pickton, 2014).
As there are various stakeholders, and it is the core function of marketers to consider the satisfaction of all stakeholders, a recent concept or perspective has been introduced by the marketing theorists and practitioners. This concept is known as the co-creation of value which is also based on the assumption that interest of marketers and stakeholders could be integrated for improving the organisational economic performance and satisfaction of all stakeholders (Masterson and Pickton, 2014). As per this theory of value creation, the use and exchange of value is reconfigured where consumers who were considered the passive participants have become active participants in this process of value creation (Palmer, 2012).As said by Vargo (2011), this perspective has empathised on increased significance of relationship building and there is more emphasis on service-dominant logic. As per this perspective, this is the relationship building process which is considered more important instead of prior emphasis on production and assembly lines. Though the old paradigm which was internally driven can still work effectively and firms can make profit by offering what they believe, could bring value for the firms. However, this new paradigm which is market driven says that marketing can actually maximise the value and benefits for all stakeholders through the process of co-creation where interests of all stakeholders are integrated (Sanders and Stappers, 2008).
According to Cravens and Piercy (2006), in this contemporary world, organisational and structural transformations has led towards this shift in the perspective of the marketing which is also known as market-driven perspective. The transformations has led the marketers from firm-centric view of economic activities of marketing towards the market driven activities where marketers offer value proposition to the consumers including all other stakeholders and this view has focus on building stronger relationship with the stakeholders. However, this process needs more input and participation from the stakeholders for co-creation. Though, Prahalad and Ramaswamy (2004) are known as the pioneer of this new view of marketing where orientation is shifted from value production for the firm to the value creation for all stakeholders. Traditionally, marketing was about exchanging products and services for the creation of value. But now there is a need for infrastructure, governance and functional capabilities for ensuring the co-creation of value. Therefore, this must be considered that if marketers are striving for co-creation, they have to invest in the development of these capabilities.
As per the definition of Kotler (2009), marketing emerged with the rise of telecommunications and now it has become a mean to interact with customers. Kotler stated that marketing is effective only when it is responsive to the needs, wants, and desires of the consumers. It was mentioned again and again by this author that marketing is a process of providing stakeholders which that which they need, want and desire. From this, it could be analysed that by its very definition marketing is a process of creating value for individuals and groups [Stakeholders] by fulfilling their needs, wants and desires. Thus, marketing activities are important as they help the firms to offer what is considered meaningful for creating and exchanging value for stakeholders. From this, it is reasonable to argue that it was Kotler who actually shed light on the significance of value creation for stakeholders (Kotler and Armstrong, 2014).
According to Kotler and Armstrong (2010), marketing focuses on the improvement of overall quality of life of its stakeholders. Marketing activities focuses on increasing the quality and value for the stakeholders. To be more precise, marketing is not to find ways and techniques to dispose of what is made by a firm, rather it an art which aims at genuine creation of customer value. It was said that now there is a shift from the industrial age paradigm where there was no link in activities of production and consumption and both were considered separate. Now, there is more educated knowledge workers and they all look for such products and services which are valuable for the. Referring to the motivational theories, instead of still focusing on the behaviorism, this is the time where marketing activities has to focus on the humanistic approaches (Hoyer et al., 2010). Therefore, it could be said that marketing is a process where value is created for all stakeholders if the humanistic approach is followed where marketers do not consider the extrinsic and instrumental means but they consider the intrinsic end goals. Hence, the marketing activities do not have such orientation where interest of any stakeholder is compromised while the end goal of value creation is achieved through the humanistic approach of marketing (Kotler, 1986).
Kotler (2005) gave a new perspective to the meaning and importance of marketing. A movement was being started where marketers were suggested to focus on aesthetic, artistic and creative appeal of the advertisements. In opposite to the mentality of mass society and assembly line mentality, marketing became about being concerned for mood, feeling and experience which could be stimulated in the consumers (Zwick, Bonsu, and Darmody, 2008). With the transformation of media, introduction of new information technology and popularity of humanistic and positivistic psychologies, the marketers started to crave their appeals to please the whole person (Arvidsson, 2006). Hence, as a result of such transformations, marketing has become more focused towards the relationship management between the consumers and marketers instead of only focusing on the products. This is the contemporary marketing paradigm which actually seeks the satisfaction of all stakeholders by creating the value for them (Moor, 2007). As said by Gibbert,Leibold and Probst (2002), this perspective the importance of relationship building is enhanced for gaining the customer loyalty and sustainable competitive advantage. For creating the value for all stakeholders, marketing is now about knowing what their customers and stakeholders know and then designing the further activities as per their current knowledge. As per Sirgy, Morris and Samli (1985), the marketing managers need to realise that for becoming more successful they need to communicate and reflect what actually reflects the value for their stakeholders. Therefore, they need to manage the externalities such that their communication strategies are directly targeted towards the gap which exists among the knowledge of stakeholders. Likewise, the offerings of the marketers must reflect the gap between the actual and desired state of stakeholders and this is the way through which the value could be created for them.
There are various examples through which it could be analysed that how the function of marketing has created value for stakeholders. Taking example of Uber which is an on-demand transportation service and has brought a revolution in the taxi industry all over the world. It could be analysed that marketers identified the need of the stakeholders. They identified that customers want such transportation service which is available to them with a simple tap to their smartphone. They realised the importance of time for all stakeholders. hence, marketers came up with the solution where value is not only created for the shareholders ofUber but for all stakeholders. The value proposition for customers is that they get the taxi in the minimum possible time where they do not have to wait even. The employees i.e. drivers do also earn sufficiently and they are paid the reasonably by the company, hence, even they are not serving. The revenue model of Uber is enough successful that shareholders are also getting profit. Moreover, Uber also successfully maintain the relationship with stakeholders to manage this relationship effectively. Hence, needs of all stakeholders are fulfilled through the function of marketing which was market-driven (Shewan, 2016).
Likewise, another example is of Amazon. Instead of coming up with the service in which they are expert and want to deliver, they identified what is valued by the customers and stakeholders. They found that it is the choice, speed and convenience which is valued by the stakeholders when they have to shop something. Knowing what is valued by the stakeholders, Amazon presented a solution where they ensured that their stakeholders get the huge amount of choice, they could get the service in a faster manner and they could get whatever they want in the most convenient manner. Through this successful marketing, Amazon is creating value for its stakeholders (Sawhney, Verona and Prandelli, 2005).
In this essay, the meaning and importance of marketing is critically reflected in relation to the creation of value for stakeholders. It is concluded that there was a time when marketing was all about selling what is produced by the producers. But in the recent time, authors like Kotler has brought a change in the meaning of marketing. Marketing is an activity where the core focus is on creating the value for the stakeholders. Though, there are many stakeholders and customers are the core stakeholder of the marketers. It is concluded that with the shift from traditional economic value creation perspective to social value perspective and behaviorism to humanistic approach, now marketing is an important function which considers the value creation for all stakeholders. This is also observed with the help of the examples of Uber and Amazon that through marketing activities, they are creating value for stakeholders.
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