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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