Marketing's Dominant Logic

CK Prahalad is recognized as one of the leading thinkers in the world of business strategy. Before he passed away, he wrote about organizational change in the Harvard Business Review:

“The more successful companies become, the more difficult it is for them to recognize when they must change. One reason could be that over time successful enterprises create distinct business ideologies—such as the Toyota Way and the Xerox Way. These beliefs and practices constitute a company’s dominant logic. The logic may not always be articulated, but every employee knows: That’s the way we do things here.

Companies should stop looking at threats and opportunities through the lens of the dominant logic. Instead, the moment they spot signs of change, executives must decide what they can preserve—and what they must discard—in the dominant logic as they prepare to transform the organization.”

There’s a problem here, did you catch it?

Change is constant, continuous. And creeping. There is no “moment” when a company — let alone an executive within a company — spots a sign of change.

The problem with the prescription notwithstanding, the concept of a Dominant Logic is pretty powerful. It applies not just to a single company, but often to an entire industry (note to self: write about the financial services industry’s dominant logic), and even to a discipline like marketing (note to reader: that’s what this post is about).

Marketing’s old, longstanding dominant logic was:

Brands build awareness and affinity with its target market through repeated, reinforcing, and consistent messaging.

The implications and ramifications of this dominant logic was that a brand’s primary marketing efforts revolved around advertising in (typically) mass media channels designed to reach a particular consumer segment (or segments), and persuade those consumers to try, switch, or stay loyal to that brand.

Is there a new dominant logic in marketing? I think a lot of people believe that there is. What appears to be emerging is:

Brands find and create brand ambassadors who build awareness and affinity through word-of-mouth messaging.

Take your shots at that description, if you will. I’m more interested in exploring why marketing’s dominant logic changed. What “signs of change” did marketers spot that led to a change in the dominant logic?

  • Consumers changed. There is a prevalent belief among marketers that consumers have changed: That they’ve become more “social” as it relates to choosing which brands to do business with, and that they place higher emphasis on perceived brand attributes like “green-ness” or “social responsibility-ness”.
  • Old marketing channels/tactics are ineffective. How many times in the past two or three years have you heard some marketing “expert” tell you that mass media advertising is dead, or that direct mail is dead. The prevailing belief is that if it (a marketing tactic/channel) existed before the year 2000 its effectiveness is greatly diminished.

Are these assumptions correct?

It would be ridiculous to claim that consumers didn’t change. We all change. As people. Did we change as consumers, though? The “social” aspect of many pundits’ claim is overblown.

We’ve always relied on word-of-mouth advice when making brand and product decisions. What’s really changed is technology. Technology has made word-of-mouth more efficient and scalable. Instead of getting the opinions of just my immediate friends and family, we can tap into the opinions of millions of people — and just as importantly, tap into those opinions where ever we are.

As for the ineffectiveness of old marketing channels, the picture is murky, as well. We never really knew how effective these channels really were. And with the proliferation of marketing channels — think of them as “points of influence” — over the past 15 years,  truly determining channel effectiveness is even harder.

So this leaves this question: Do the changes in technology that have amplified consumer behavior and escalated the points of influence warrant a change in marketing’s dominant logic?

My take: Yes. What’s really happening in the world of marketing is not about the emergence of new channels that are inherently more effective. Instead, these new channels — points of influence — are more efficient. They enable more frequent contact and interaction at a lower price point. The biggest impact of this is that the nature of the interaction can change because the need to show an ROI on every touch is greatly reduced.

Yet, for all of the new channels that have emerged, many marketers are simply using these new channels and tools to do the same old thing: Trying to persuade consumers why their brand is better than other brands.

So what does this mean for marketing’s dominant logic? It means it should shift from being about persuasion to:

Brands build awareness and affinity by engaging consumers in meaningful ways.

With the improvements in marketing efficiency, the dominant logic doesn’t need to be about persuasion. Engaging consumers — in meaningful ways, ways that aren’t meant to persuade or influence, but simply to help or improve a consumer’s life  — can be a way to build brand affinity, and then, through word-of-mouth, awareness.

But the discussion around engagement in marketing circles is very narrow. It’s agency people trying to figure out how “engaged” someone is with their ad (an ad designed to persuade someone why the brand advertised is superior). Or web analytics folks wrestling with determining how “engaged” a site visitor is with a website.

Marketing’s dominant logic is a work-in-progress. It’s definitely changing — and needs to — but the new logic isn’t fully formed just yet.

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15 thoughts on “Marketing's Dominant Logic

  1. Great points, thoughts and insight here. Could it be that what is old is new again?

    “We’ve always relied on word-of-mouth advice when making brand and product decisions.”

    This goes back to the days before the advertising boom and even after. Word of mouth is the most trusted channels because the channel is people we know and trust. Not some company blasting a message about why they are good or better than others.

    As consumers, we have been bombarded more and more with broadcast marketing signals. There is so much noise now we learn to shut it off, tune it out and put on our tin foil hats.

    Is sending a high gloss direct mail piece or overly produced TV spot “engaging in a meaningful way”?

    It may create brand awareness letting one know that the brand exists and is out there but our attention spans are short and we easily forget.

    Now, couple that same “traditional broadcast channel” with an “engaging social channel” and the brand becomes more real and tangible. It interacts. It lives.

    People now may remember more and possibly even share the experience they had with a friend or family member thus creating word of mouth with return to old school tried and true marketing.

  2. “It’s an evolution, baby!”*

    I think you nailed it. With all the “shiny object chasin'” that’s going on, we marketers need to figure out how to best adapt to the technologies that will work to effectively communicate and engage. To your point, we’ll work through that with an iterative mix of technologies that have come along and been embraced by our customers.

    “If you don’t like change, you’re going to like irrelevance even less.”
    General Eric Shinseki, Chief of Staff, U.S. Army

    *Pearl Jam

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  4. @Marshall – I love that you quoted Pearl Jam and a 4-star Army General in the same blog comment.

    @Ron – Great post.

    I think I can sum up Financial Services’ dominant logic simply: “We must offer all financial services so that the most people will use us as their PFI so that we can grow the maximum amount so that we can achieve the greatest efficiencies of scale so that we can continue to offer all services so that the most people will use us as their PFI so that we can grow the maximum amount so that…..” (loop ad infinitum)

  5. It’s not just the technology that’s changed. It’s the economics of communication and the lack of control that marketers have.

    Anyone can now talk about your products in ways you can’t control. The technology also allows any of your employees to interact with your customers. This places incredible strains on “staying on message” when you interact with customers. My advice: listen early; listen often; don’t be afraid to stand for something; and, avoid at all costs being dishonest in how you communicate with your customers as trust cannot be re-won after it’s lost.

  6. Dennis: Thanks for commenting. You make a great point about the economics of communications and marketers’ lack of control.

    But why has the economics of communication changed? Because of technology. We’ve always talked trash about the bad service we get from firms. What’s different is that any one individual’s sphere of influence is greatly expanded. Technology has become a magnifying glass: That wart a firm has in customer service can’t be hidden anymore.

    I agree 100% with your advice. What I’m arguing here is that what has changed — what has caused the need for your advice — has more to do with changes in technology than it does with any fundamental change in people or a change in the “effectiveness” of marketing channels. And that marketing’s “dominant logic” isn’t really that different than it was 10 or 20 years ago.

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  8. Pundits will always claim death. Not always the case. Direct mail is dead? Grandpa pundit claimed TV was going to kill movies.

    Direct mail is a great way to drive new account openings into branches. But the US Postal System is hemorrhaging money. Three day a week delivery should be seen in our lifetimes. Branches will be smaller with less of a transactional purpose. Direct mail will have to be more targeted. But it will still be part of the mix.

    Ron, you’re right. The picture is murky with old marketing channels. But one does not need a fancy crystal ball to see newspapers are on the decline. How mass will the mass media outlets be 15 years from now?

    The natural decline of the old channels along with the rise of the new can only mean marketing’s dominant logic is changing. A 360 degree change in marketing production and outlets used to happen every 250 years. Then it was every 50 years. Now it seems like it’s every 50 days.

  9. Steve: And TV didn’t kill radio. Here’s the thing: To your question “how mass will the mass media outlets be 15 years from now?”, the answer is “less”. No doubt about it. But what few of the so-called social media experts out there seem to understand is that Facebook IS THE NEW MASS MEDIA.

    And so, in a few years, when marketers want to reach a LOT OF PEOPLE, fast and cheap, they’ll turn to Facebook. And they’ll “broadcast” messages designed to reach the masses. And maybe — just maybe — the delusion that Facebook and social media represent some new and different kind of dominant logic in marketing will be understood.

  10. I used to work in radio. Up until the late 90’s, I played – Sun morning jazz show. But from ’75 to ’80 I worked nites at a dominant progressive rock FM…back when AM was the music king. Got to play pretty much whatever I wanted. (Dead, Who, etc.) Had a big share of the nighttime audience.

    But there were so few media choices then. No Internet, cable TV, iTunes. We were it, unless you wanted to hear “Having My Baby” every 20 minutes. But now broadcast radio has become homogenized. It can still be profitable – but less audience share – expenses remain. It’s boxed in pretty tight creatively – esp. in mid sized markets like Omaha.

    Facebook cuts though that. Very little cost. Huge audience. And I believe it can be both the new mass media, or a “narrowcast” channel because of the ability to segment. There’s room to be creative – stretch out a bit.

  11. The manner in which someone learns about a brand is not always the same thing that influences their decision to ultimately purchase. Marketing is certainly changing, but the basic principles haven’t. Marketers still need to create name awareness regardless of which media they choose to use. However, marketers who rely on word-of-mouth for basic name awareness will struggle.

    Why does the debate so often get framed as either/or: mass marketing or word-of-mouth (pick one)? There are lots of tools in the marketers toolbox, and not all of them do the same things equally well.

  12. I agree with Jeffry: the tools you use depend on your target and your needs, and the most effective campaigns integrate a number of tools.

    Hypothetical example: If I’m trying to pitch a new investment vehicle to senior citizens, an old-school commercial during “60 Minutes” is probably a better bet than a Facebook ad. To ensure awareness, I might combine that with some print in a dead-tree newspaper, a snail-mail delivered direct-marketing piece, and publicly-trumpted sponsorship of local symphony orchestras.

    Another example: If the target of my marketing is other businesses (as is the case with my agency), then the tools I opt for involve more direct, in-person interaction, such as conferences and networking events. Only after I meet my prospective customers and swap some analog business cards, I might invite them to read a relevant post on my blog. Facebook will likely never enter the equation. (None of my current clients even have personal Facebook accounts.)

    So, yes, there might be dominant forms of logic in marketing, just as there might be dominant strategies in professional football. But in both cases, they apply only to certain situations and circumstances — and they might become obsolete as soon as some strategic genius creates an end-around.

  13. Jeffry/Freddy: Thanks for the comments. Honestly, I’m not sure how to reply, other than to say I think you helped make my case that, for all the talk about the “new” marketing, that the old “dominant logic” really hasn’t changed: It’s STILL about figuring how to reach someone and hit them upside the head with your marketing message.

  14. Been awhile since I made a visit to the tea party and what better time then now. Great post Ron. So to clarify, the dominant logic hasn’t change in that we need to be consistent with our message it’s more that the message should be more centered around the user / consumers experience and not so much around the product you’re selling. In other words, focusing more on the customer experience side of your business versus the “our shiny widgets are better then those other shiny widgets” approach of old. If so, couldn’t agree more. Hope to have more time to visit now that I’m getting settled at my new position.

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