THE BRAND REPORT CARD

By KEVIN LANE KELLER

- building and properly managing brand equity has become a priority for companies of all sizes, in all types of industries, in
all types of markets
o strong brand equity --> customer loyalty and profits
- problem: few managers are able to step back and assess their brand’s particular strengths and weaknesses objectively
- brand report card - a systematic way for managers to think about how to grade their brand’s performance for each of the
ten characteristics that the world’s strongest brands share
o can help you identify areas that need improvement, recognize areas in which your brand is strong, and learn
more about how your particular brand is configured
o construct similar report cards for your competitors to give you a clearer picture of their strengths and weaknesses
o caveat: identifying weak spots for your brand doesn’t necessarily mean identifying areas that need more
attention
- decisions that might seem straightforward can sometimes prove to be serious mistakes if they undermine
another characteristic that customers value more
-
The Idea in Brief
- boost brand equity --> watch profits soar
- example: Levi-Strauss launched a brand-equity measurement system that suggested the appeal of its flagship 501 jeans
was slipping, but its response to the data was flawed
o took too long and spent too little to mount a marketing campaign that would restore its brand equity
o advertising messages to its target youth market missed their mark
- brand report card – a tool showing how your brand stacks up on the 10 traits shared by the world’s strongest brands
o helps identify the actions needed to maximize your brand equity
o reward: customers’ enduring devotion and profits

The Top Ten Traits

- (1) the brand excels at delivering the benefits customers truly desire
o meaning: creates an engaging customer experience
o customers buy a product because the product’s attributes, together with the brand’s image, the service, and
many other tangible and intangible factors, create an attractive whole
o sometimes, the whole isn’t even something that customers know or can say they want
o example: Starbucks is not just a cup of coffee
- 1983: Howard Schultz was inspired by the romance and the sense of community he felt in Italian coffee bars and
coffee houses
- stayed one big step away from the heart and soul of what coffee has meant throughout centuries
- extreme vertical integration: maintained control over the coffee from start to finish – from the selection
and procurement of the beans to their roasting and blending to their ultimate consumption
- appeal to all five senses
- (2) the brand stays relevant
o meaning: elements of the brand, such as the type of person who uses the brand, are modified to fit the times
o strong brands: brand equity is tied both to the actual quality of the product of the product or service and to
various intangible factors
- “user imagery”: the type of person who uses the brand
- “usage imagery”: the type of situations in which the brand is used
- the type of personality the brand portrays: sincere, exciting, competent, rugged
- the feeling that the brand tries to elicit in customers: purposeful, warm
- the type of relationship it seeks to build with its customers: committed, casual, seasonal
o strongest brands stay on the leading edge in the product arena and tweak their intangibles to fit the times
o “relevance” has a deeper, broader meaning in today’s market
- consumers’ perceptions of a company as a whole and its role in society affect a brand’s strength as well
- corporate brands very visibly support a cause
- (3) the pricing strategy is based on consumers’ perception of value
o meaning: the nature of the product – for example, premium versus household staple – should influence price
o many managers are woefully unaware of how price can and should relate to what customers think of a product, and
they therefore charge too little or too much
- (4) the brand is properly positioned
o meaning: clearly communicates its similarities to and differences from competing brands
o occupy particular niches in consumers’ minds: similar to and different from competing brands in certain reliably
identifiable ways
o most successful brands keep up with competitors by creating points of parity in those areas where competitors
are trying to find an advantage while at the same time creating points of difference to achieve advantages over
competitors in some other areas
o branding isn’t static and is even more difficult when a brand spans many product categories
 - mix of points of parity and point of difference that works for a brand in one category may not be quite
right for the same brand in another
- (5) the brand is consistent
o meaning: marketing communications doesn’t send conflicting messages over time
o striking the right balance between continuity (the brand doesn’t get muddled or lost in a cacophony of
marketing efforts that confuse customers by sending conflicting messages) in marketing activities and the kind of
change needed to stay relevant
- (6) the brand portfolio and hierarchy make sense
o meaning: brands work logically together
o most companies create and maintain different brands for different market segments
- single product lines are often sold under different brand names, and different brands within a company
hold different powers
- corporate, or companywide, brand acts as an umbrella
o brands at each level of the hierarchy contribute to the overall equity of the portfolio through their individual ability
to make consumers aware of the various products and foster favorable associations with them
- each brand should have its own boundaries because it’s dangerous to try to cover too much ground with
one brand or to overlap two brands in the same portfolio
o examples:
- Gap has brands with distinct images and own sources of equity
o Banana Republic: high-end
o Gap: basic style-and-quality
o Old Navy: broader mass market
- (7) the brand makes use of and coordinates a full repertoire of marketing activities to build equity
o meaning: all marketing activities and channels communicate the same messages about the brand, solidifying the
brand’s identity
o a brand is made up of all the marketing elements that can be trademarked – logos, symbols, slogans, packaging,
signage, and so on
- strong brands mix and match these elements to perform a number of brand-related functions, such as
enhancing or reinforcing consumer awareness of the brand or its image and helping to protect the brand
both competitively and legally
o managers should appreciate that different marketing activities play different roles in building brand equity
- examples:
o provide detailed product information
o show consumers how and why a product is used, by whom, where, and when
o associate a brand with a person, place, or thing to enhance or refine its image
- some activities (example: traditional advertising) lend themselves best to “pull” functions – those meant to
create consumer demand for a given product
- others (example: trade promotions) work best as “push” programs – those designed to help push the
product through distributors
o make good use of all resources + ensure that the brand essence is the same in all activities = brand is hard to beat
- (8) the brand’s managers understand what the brand means to consumers
o meaning: managers know consumers’ different perceptions of the brand
o managers of strong brands appreciate the totality of their brand’s image – that is, all the different perceptions,
beliefs, attitudes, and behaviors customers associate with their brand, whether created intentionally by the
company or not
- result: managers are able to make decisions regarding the brand with confidence
- if it’s clear what customers like and don’t like about the brand, and what core associations are linked to
the brand, then it should also be clear whether any given action will dovetail nicely with the brand or
create fiction
- (9) the brand is given proper support, and that support is sustained over the long run
o meaning: companies consistently invest in building and maintaining brand awareness
o consumers should have the proper depth and breadth of awareness and strong, favorable, and unique
associations with the brand in their memory
o often, managers want to take shortcuts and bypass more basic branding considerations – such as achieving the
necessary level of brand awareness – in favor of concentrating on flashier aspects of brand building related to
image
- (10) the company monitors sources of brand equity
o meaning: companies use a formal brand-equity-management system
o strong brands generally make good and frequent use of:
- in-depth brand audits: measure where the brand has been
o an exercise designed to assess the health of a given brand
o typically consists of a “brand inventory” (a detailed internal description of exactly how the brand
has been marketed) and a “brand exploratory” (a thorough external investigation, through focus
groups and other consumer research, of exactly what the brand does and could mean to
consumers)
- ongoing brand-tracking studies: measure where the brand is now and whether marketing programs are
having their intended efforts
 o can build on brand audits by employing quantitative measures to provide current information
about how a brand is performing for any given dimension
o generally collects information on consumers’ perceptions, attitudes, and behaviors on a routine
basis over time
o strongest brands are also supported by formal brand-equity-management systems
- brand equity charter: a written document that lays out guidelines for implementing brand strategies and
tactics and documents proper treatment of the brand’s trademark
o spells out the company’s general philosophy with respect to brands and brand equity as
concepts (what a brand is, why brands matter, why brand management is relevant to the
company, and so on)
- brand equity report: describes what is happening within a brand and why
o assembles the results of tracking surveys and other relevant measures
o distributed to management on a monthly, quarterly, or annual basis

The Value of Balance

- goal: maximize all ten characteristics to build a strong brand
o in practice, it is tremendously difficult because in many cases when a company focuses on improving one, others
may suffer
- example: a premium brand facing a new market entrant with comparable features at a lower price
o temptation to rethink pricing strategy, but consider also the long term effects
- trick: get a handle on how a brand performs on all ten attributes and then to evaluate any more from all possible
perspectives
- even effectively monitoring brand performance can have negative repercussions if you just go through the motions or
don’t follow through decisively on what you’ve learned
- in strong brands, the top ten traits have a positive, synergistic effect on one another
o excelling at one characteristic makes it easier to excel at another
- instituting an effective brand-equity-measurement system can:
o help clarify a brand’s meaning
o capture consumers’ reactions to pricing changes and other strategic shifts
o monitor the brand’s ability to stay relevant to consumers through innovation

Brand Equity as a Bridge

- the power of a brand lies in the minds of consumers or customers, in what they have experienced and learned about the
brand over time
- heart of brand equity - consumer knowledge
- the value to marketers of brand equity depends on how they use it
o brand equity can help marketers focus, giving them a way to interpret their past marketing performance and
design their future marketing programs
o marketers who build strong brands have embraced the concept and use it to its fullest to clarify, implement, and
communicate their marketing strategy

HOW IS HUMANISTIC MARKETING POSSIBLE?

By A. FUAT FIRAT

- Question: whether and how marketing can become humanistic and what the results of this transformation might be if it
can occur
- marketing as we know and practice it today has unsatisfactory characteristics and outcomes
- marketing - the institutionalized practices of the modern institution we know as ‘the market’
o has several dimensions, but this article focuses on only one dimension: persuasive communication
- persuasive communication - specific, cognizant effort at persuading others when one communicates (specifically,
marketing in modernity)
o there is persuasion in all communication (examples: parents want to influence their children’s behavior, teachers
want students to learn, friends want their friends to go along)
o least degree of persuasion intended in any communication: someone pay attention or at least be exposed to it
- marketing communication differs from persuasive communication
o has a purpose to persuade parties to engage in exchanges which have the ultimate goal of expanding the
market, or at the very least the marketing ideology
o the “broadening concept” made us realize that the marketing sensibility could be utilized for promoting non-
market exchanges, the idea that an audience of marketing practices would be considered a “market”
o diffusion of market ideology to, what used to be, non-market relations (example: students at a university are often
seen as “consumers”, members of the market)
- infuses certain expectations into all relationships, specifically, expectation that the relationship is an
exchange that requires equal values to be transacted
- the value exchanged is judged in terms of market value
- “values” not connected to market valuations are becoming increasingly insignificant
- separating “market”ing from its historical baggage of connections to the market (the institution in and for which practices
called “marketing” were developed) is difficult if not impossible
 o question: whether such efforts can be successful as long as the market is central to human lives

Issues with marketing

- Why do people in general tend to have an issue with the marketization of relations and the dependency on the market
that has grown with modernity?
o for classical modern economists, the market was a positive influence in human lives: a savior for people who had
to endure the traditional dependencies
- modern project: to free the human individual from all such dependencies, facilitated by modern
institutions
o for modern economists, the market was a step further than all other modern institutions: it was not even an
institution but a “mechanism”, an “invisible hand”, and thus without any reproduced, recurring, sustained
principles or values
- all (and any) values or principles and preferences were permissible and acceptable in a market; all were
equal as long as they found a demand
- demand was solely due to the free will that individuals entered the market with; thus, any demand was
equally valid and precious
- the market simply acted as a mechanism that enabled those with a desire to purchase to find each other
an exchange
- market (today) - an institution of modern culture with its particular norms, principles, practices that have to be sustained
and reproduced, repeatedly continued
o most central principle: the values exchanged must be equivalent to ensure the optimization of the allocation of
material resources, making this allocation most efficient and thereby maximizing productivity in economic terms
o marketing: institutionalized practices of the market organized to expand the market in order for this economic
maximization and growth to be realized
- distribution of the products of maximized economic production has to follow the principles that foster
economic growth
- principles must not be contaminated by other concerns
- concern: simply economic growth and vitality
- idea: such growth will create humanity’s grand future
- key concern: marketing practices are amplifying the condition in which dimensions of human existence other than the
economic one are being stultified in favor of economic growth
o complaint against the centeredness of marketing communications: economic concern overpowers all other
concerns that humanity may have (equal wealth distribution, access to basic needs, ecological health)
- ordinary persuasive communication is not marketing communication
o (1) typical sources of knowledge
- PC: personal experience, general education
- MC: market research, academic research
o (2) means of communication
- PC: conversation
- MC: mainstream media, promotion channels, publicity, PR, lobbying
o (3) sought outcome
- PC: conversation/s with potential changes of mind or behavior/s
- MC: market exchanges
o (4) criteria of success
- PC: agreement, persuasion
- MC: market exchanges, market expansion
- origins of marketing: the institutionalization of the market
o the role it plays is inscribed in the history of marketing’s constitution and shouldn’t be expected to operate
otherwise
o a different order of principles constituted into different institutions must be expected or sought if an outcome
other than maximizing market expansion and economic growth is desired
o an institution constituted to realize a particular outcome cannot be expected to deliver otherwise

Issues with persuasive communication

- no reason to blame persuasive communication per se
o all communication has a degree of persuasiveness
- often, the intention to persuade is faulted because persuasive communication changes a state that would have
remained if such a communication had not occurred
- major issue with persuasive communication originating from organizations: access to resources that improve the
effectiveness of persuasion
o two resources make participation possible but intensify the disparity
- research: access to information regarding what makes communication persuasive
- mainstream media: access to the ability to make voices heard
o disparities make it impossible to enter the public conversation, using persuasive communication, on an equal
footing for all concerned
o argument: it also becomes impossible to humanize marketing
 o very large corporations with immense financial resources find insights into the contemporary human psyche that
human beings who are the subject of research cannot decipher
- is it possible to ever change the course of marketing and, indeed, humanity when such power disparities exist? no, unless:
o (1) catastrophic event/s that shake/s the foundations of the way we live
o (2) momentous shift in consciousness globally, which, then leads to a reorganization of life
- human communication is central to human behavior in that it determines largely what humans think and do; and it is
persuasive in nature
o unless access to resources of persuasion is evenly distributed, the power to determine how humans think and what
they do will be fraught with disparities and some will always have the advantage of guiding others’ minds and
actions

Organizations and individuals

- organizations further complicated the distribution of agency in the modern organization of life
o large inequalities have evolved between the organizational “individuals” and actual individuals in terms of
agency
- corporate power exhibits itself through many ways
o corporations possess and control economic resources well beyond any individual’s means
o with mainstream media, they control much, if not all, knowledge in the contemporary world
- it is unlikely that marketing can evolve into a humanistic institution
o a substantive, radical transformation needs to occur in the structure of human communication
o the interest of expanding markets will continue to reign as long as disparities in access to knowledge that enables
persuasion
- one way to overcome this predicament: all knowledge must be equally accessible to everyone
o knowledge must not be owned or controlled by any one entity such that others do not have access to it
o includes all knowledge, including knowledge of knowledge (knowledge of how available knowledge can be
used and for what ends)
- inequitable distribution of knowledge leads to lopsided, one-directional and persuasive capabilities
o a culture of democracy and the possibility of humanistic marketing remain only an ideal
- humanistic marketing: based on human beings being able to communicate their different points of view
equally persuasively, their preferences for the organization of life, and as an extension, their desires as to
what products they consume

Conclusion
- disparate access to sources of persuasion, specifically knowledge, and the ability to persuade is exacerbated by the
differential access ordinary individuals – as opposed to organizational “individuals” – have to means of disseminating
persuasive communication
o corporations have inordinate access to communicate through mainstream media with very large audiences
o ordinary citizens cannot generally get access to such channels due to costs and the system of relations that
develop among organizational entities – media organizations themselves included
- most inhibiting factor: ordinary communicators do not know what might be the most persuasive means given that they are
denied access to research sponsored by corporations
o whoever pays for knowledge owns that knowledge and has the sole right to decide whether it will be shared or
not
o knowledge provides a strong edge in being able to affect and persuade market members
- our consciousness should be guided by philosophy and the consequences of differential versus equal access to all
knowledge for humanity’s good

THE MARKETING MIX (From Customer Equity: Building and Managing Relationships as Valuable Assets)
By ROBERT C. BLATTBERG, GARY GETZ, JACQUELYN S. THOMAS

- for customer equity management to assist managers, it is essential that it lead to tactics that are different from typical
brand marketing
- STP (segmentation, targeting, and positioning): traditional approaches to marketing strategy and tactics
o brand-driven approach to marketing works well with products and services for which the major issue is branding or
making some product modifications (i.e., slight changes in the attributes can allow the firm to reposition the
product)
- ARA (acquisition, retention, and add-on selling) model of marketing: paradigm that drives customer equity
- two critical issues that influence the marketing mix decisions:
o (1) the individual’s stage in the customer life cycle
o (2) industry thresholds for acquisition, retention, and add-on selling

Marketing Strategy and Tactics by Stage in the Life Cycle

- to most effectively manage customer equity, firms must be able to identify customers at different stages of the life cycle
and be willing and able to market to them differently
- six elements of the marketing mix: advertising, sales force efforts, pricing, promotion, product or service offering, customer
service
(1) Prospects
- presents two major marketing problems:
o (a) making the prospect aware of the firm’s products or services
- tool: advertising and other communication tools
o used to position the product and to generate awareness
- tool: calling on prospects directly and communicating the product’s value
o require the highest advertising investment because they are the least likely to know about the
product
o in many industries, the sales force devotes its most intense effort to wooing prospects
o (b) inducing initial purchase
- tool: promotions
o offer price discounts to generate the initial trial of products that customers repurchase frequently
- tool: the concentration of sales efforts on the company’s lead product or service
o lead products: basic products the customer can buy that eventually lead to trade-ups and add-
on selling
o later, sales of related and premium products will evolve
- customer service: does not play a very prominent role, because the prospect has yet to make any purchase
o but initial contacts with the company, such as interactions with sales staff, will give the prospect expectations of
what future customer service will – or should – be like

(2) First-time Buyers

- customers in the trial stage: have made a purchase but are still evaluating the firm and the product
- strategy should have two objectives:
o (a) to reinforce the customer’s belief that the firm’s products are superior
- tool: advertising
o advertising reinforces the new customer’s decision to buy, and its message should emphasize the
product’s value and benefits
- tool: customer service
o demands on customer service can vary among industries
o (b) to induce a second purchase
- product offering: second lead product (another product that is easy for the customer to buy)
- promotions: need to induce repeat purchasing without hurting the product’s image
- aggressive promotions: may develop a low reference price for the product, which leads to long-term price discounting
- pricing: important, but less critical as long as the product offered provides good value to the customer

(3) Early Repeat Buyers

- less vulnerable than first-time buyers
o have made several purchases and have signalled their interest in the firm’s products
o have indicated that the current value provided by the firm’s products is acceptable; pricing does not play a
major role as long as it is competitive
- three factors that can cause defection:
o (a) customer service problems
- what to do: provide excellent customer service to this group
o (b) product performance problems
o (c) superior products from competitors
- what to do: the firm should lower its price to early repeat buyers in recognition of their value in the long
run
- promotions: do not play a large role for this customer segment
o should focus on making these customers more routine buyers
o product offerings should consist of add-on products that complement or are related to the firm’s core products
- advertising: not critical to these customers, but some communications should convey the firm’s appreciation for their
business

(4) Core Customers

- the firm’s most highly valued customers who are critical to overall profitability
- the firm must develop aggressive strategies to keep them on board
o promotions: should be used to signal to core customers their importance and value
- can be effectively accomplished by reward systems
o pricing: very complex
- a firm’s best customers commonly end up paying higher average prices than its new customers do
o higher switching costs
o a greater knowledge of the firm’s products to recognize the superior value these products
provide
- includes risks, as manifested by ISP customers who have learned the advantages of frequently switching
in pursuit of low introductory charges
- sales force’s goal: to provide superior customer service and to identify quickly any problems these customers might have
 - general rule: advertising and other marketing communications should take advantage of any available customer
information
- should receive product information relevant to their historical buying patterns

(5) Defectors
- core customers who for some reason have decided to stop doing business with the company
o (a) may be caused by external events: nothing the firm can do to reinstate them
o (b) may be salvageable: their high potential customer equity makes them worth a strong effort
- defectors were highly valuable customers before and could be again, so the firm can afford to make a
significant investment in their return
- marketing strategy begins with an understanding of why the customer defected in the first place
o it pays to invest in personal contact with the customer
o once the problem is identified, the firm can develop a personal selling solution to overcome the problem
- may include an “apology reward” (an apology for the error along with a free offer), a personal visit, or
special pricing

Marketing Strategy to Influence Industry Thresholds for the Components of Customer Equity
- firms can adopt a marketing mix strategy that is appropriate for different stages in the customer life cycle, but they still
may be limited by industry thresholds for acquisition, retention, and add-on selling
- upper thresholds or maximum levels of acquisition, retention, and offer response for an industry
o if the firm spends an infinite amount on acquisition spending, the maximum acquisition response will be a number
far less than one
o reason: no matter how much a firm spends, a large segment of customers will not purchase the product or service
- each component of customer equity has a maximum level
o retention is constrained because of the natural turnover rate in an industry and changes in consumer preferences
o add-on selling is constrained because of the limited need for a specific new product or service offered
- firms must be aware of the drivers of the industry thresholds so they can be effective at employing the marketing mix to
change them and increase customer equity
o a firm must recognize the significant number of business strategies and tactics that can be used to affect the
industry thresholds
o a firm must also develop actionable, cost-effective plans to capitalize on them
o success can give the firm a strategic advantage, which then requires a significant investment for competition to
replicate

The Federal Express Story

- changed the air service industry
o before: air delivery firms would use the scheduled airlines to move packages from point A to B --> delays and
cancellation problems --> customer dissatisfaction and low retention rates
- developed a marketing mix strategy that focused on distribution and was unique to the industry
o introduced the idea of a central hub (Memphis) to which all packages came and were them routed to their final
destination & purchased their own fleet of planes, which eliminated the dependency on the scheduled airlines
- result: above average retention rate and market leadership

(1) Acquisition Thresholds

- primary determinants of maximum levels for acquisition response:
o (a) the stage of the industry in its product life cycle
- general rule: the acquisition threshold is highest during the growth stage of the product life cycle, declines
as the product matures, and ebbs as the product life cycle reaches the decline phase
o (b) industry innovation
- the greater the innovation in an industry, the more reason customers have to change suppliers --> new
customers being acquired
o (c) purchase frequency
- the shorter the purchase frequency, the greater the number of opportunities to switch suppliers
- industries with products with short purchase frequency will have far greater overall acquisition rates (due
to switching) than do industries with long purchase frequency
o (d) switching level (low retention rates)
- low retention rates generate higher acquisition baseline rates
- changing thresholds on acquisition rates
o need: develop a strategy to increase the maximum acquisition rate after it has been understood
o requires a one-time expenditure or a process change
- distinct from increasing per-period expenditures, which affect how rapidly the firm reaches the upper
threshold, not the overall level
o methods to increase the threshold level: done through marketing communications, sales force, and distribution
- new industry positioning
- increasing the market size
- increasing awareness
(2) Retention Thresholds
- changing maximum retention rates has been the focus of most of the customer relationship management (CRM) literature
o does not describe its objective as changing baseline retention rates, but in actuality that is the focus
o explain how a firm can make one-time investments to develop contact strategies, improve customer service, and
affect the culture of the organization: affect the maximum retention rate
- three mechanisms to change retention thresholds:
o (a) improving product or service reliability
- example: Southwest Airlines has a different operational model which provides customers with a much
better on-time record and fewer cancelled flights than the traditional service-oriented carriers
o (b) improving product or service quality without increasing price
- usual mechanism: technology
o (c) introducing new products or services
- obvious, but difficult to implement

(3) Add-on Selling Thresholds

- primary determinants affecting the upper limits of responses to add-on selling:
o (a) size of the market
- trying to increase the size of the market through a one-time investment versus ongoing marketing costs
requires repositioning the firm’s product lines to fit new markets
o generally requires some product modifications, not simply a sophisticated advertising campaign
o (b) affinity the customer has with the firm
- requires rethinking the business or businesses the firm is in (a one-time decision)
- changes the maximum response potential to add-on selling offers
o (c) how cost-effective the firm is in making offers
- database marketing and sophisticated statistical methods: allow firms to drive down the costs of making
offers by matching customers with the appropriate products
- increases the number of offers that can be made for the same cost, hence increasing the maximum add-
on selling rates

Summary
- ARA model of customer equity: requires a new approach to making the marketing mix decision
o different elements of the marketing mix affect each component of ARA
- the marketing mix decision is not a static decision
o it should vary as customers evolve through different stages of the customer life cycle
o firms can proactively affect their success at the different stages by understanding the drivers of the thresholds to
ARA

SOCIAL BUSINESS – EVERYBODY’S BUSINESS

By MICHAEL J. BAKER

- “humanism”: a complex concept covered by a wide variety of definitions and explanations

- Richard J. Varey (editor): any perspective and point of view would emerge from a synthesis of the materials submitted
- “well-being marketing”: operates on humanistic principles, primarily dignity and human flourishing
- business: the careful use of resources to accomplish a better quality of life for all – by fulfilling basic needs – that is
rewarded with profit for effective and efficient provisioning within limits

Business and human welfare

- the evolution of civilization as we know it today is inextricably linked to the development and growth of commerce and
trade – “business”
- task specialization and exchange are a major factor in increasing productivity, well-being, and the quality of life
- “business” is a force for good, but not all business is good
o business may yield enormous benefits, but can also have negative effects
o social business as a recurring theme in history and the teachings of all the world’s great religions
o recognition of the need to achieve a sustainable and equitable equilibrium has become particularly strong and it
may be that we have reached a “tipping point” when decisive action needs to be taken to achieve this
- requirement: “social business” with an emphasis on improving the well-being of society in general that goes beyond the
narrow interests of transactional exchanges that are the primary focus of marketing and commercial exchange
o a kind of business that meets the criteria of “Varey’s well-being marketing”

Social business
- Nobel Laureate Mohammed Yunus: prompted current interest in social business
o a business whose purpose is to address and solve social problems, not to make money for its investors
o non-loss non-dividend company
o the efficiency, competitiveness, and dynamism of the business world can be harnessed to deal with specific
social problems
- Building Social Business: Yunus’ vision for a new dimension for capitalism is seen as an approach for “harnessing the
energy of profit-making to the objective of fulfilling human needs”, and creating “self-supporting, viable commercial
 enterprises that generate economic growth even as they produce goods and services that make the world a better
place”
o social business targets business opportunities neglected by traditional profit-maximizing companies and invests
any profits not in rewarding shareholders but in extending the ambition of the business
o not-for-shareholder capitalism: your investment is returned and does not confer continuing “property” rights
- weakness: unlikely to address, let alone solve, the problem
o philanthropy and charitable giving by individuals, and by the governments of affluent economies on behalf of
their citizens – in the form of aid, are significant but have failed to make a major impact
o Yunus model: this needs to be built into the notion of recouping one’s investment capital, i.e. profit needs to be
earned and set aside for this purpose
- the way ahead must lie in channelling savings and capital through commercial organizations dedicated to earning
returns in excess of their outlays in highly competitive markets
o Jonathan Foreman: while microfinance was seen as a panacea with universal application that would make good
the shortfall in investment in underdeveloped economies, it has proven to be a methodology that works only in
certain cultures
o charitable giving and foreign aid were not being applied to the objectives for which it was provided
o failing was largely due to an absence of control, accountability and governance
- if progress is to be made it requires the active involvement of major organizations and especially those involved with what
is seen as “big business”
o Matthew Bishop and Michael Green: the UK Prime Minister’s flagship policy for a Big Society will founder if it
doesn’t get capitalist talent on board
o Roger Carr: “In energy, we are committed – legally and philosophically – to carbon reduction, both in the way we
generate power and the way we encourage efficient consumption.”
- sustainability, through carbon reduction, is an important objective for humanity, but not without cost
- challenge: balance the pursuit of prosperity in our economic world with desire for a healthy and long lasting planet
o challenges are not only environmental, but also about the need for an overriding commitment to responsible
capitalism
o unless we sustain business as a force for good in society, we will lose the glue that binds people with the wealth-
creating bedrock on which society depends
- all businesses are increasingly judged not just on how much money they make, but how they make money
o malpractice in the media and the disreputable activities of the banks has continued to poison the general
public’s view of business – and particularly big business
- sustainability, transparency, accountability: issues on which we will all be judged, especially by younger people
o if business if not viewed as a desirable destination for the talented and ambitious we will see our youth drift
elsewhere and our competitive edge eroded beyond repair
- strong governance and great performance must go hand in hand if we are to prosper as a society and be valued in our
communities

Capitalism and social business

- the governance and direction of major commercial organizations is the responsibility of its chief executive acting on the
advice of a board of non-executive and executive chief directors
o this group of persons set the organizational culture and exercise leadership in determining how the institution
implements that culture through its operations
- Breakthrough Capitalism report by Volans: shows that not all CEOs are cast in the previously mentioned mould
o summarizes the findings from interviews with 120 thought leaders on what business can and must do to help fix the
systems upon which society depends
o identified three scenarios:
- Breakdown: paints a blear scenario where a lack of understanding and resistance to change frustrate
efforts to address the challenges of climate change, resource crunches and population growth
- Change as Usual: consists of earnest efforts to patch up the existing, dysfunctional system
- Breakthrough: envisages a scenario where “innovators, entrepreneurs, intrapreneurs, investors and
policymakers dare to create ventures with ambiguous targets and then, over time, drive them to change
the market and political systems within which they operate”
o distinguishes four criteria required of initiatives to achieve Breakthrough outcomes
- Future-ready
- Ambitious
- Fair
- Disruptive
o question: how to engage the Global C-suite members of the thousand or so companies that control half of the
world market capitalization?
- Robert Eccles and George Serafeim (Top 1000 Companies Wield Power Reserved for Nations): “Globalization has
concentrated economic power within a group of large companies who are now able to change the world at a scale
historically reserved for nations. Just 1000 business are responsible for half of the total market value of the world’s more
than 60,000 publicly traded companies.”
o 1980: the world’s largest 1000 companies earned $6.99 trillion --> 2010: $32 trillion (49 per cent of the total world
market and responsible for the employment of 67 million people directly)
 - Paul Polman, Unilever CEO: “…business will have to change… It will have to see itself as part of society, not separate from
it. And it will have to recognize that the needs of citizens and communities carry the same weight as the demands of
shareholders.”
o Oxfam’s latest “scorecard” scores and ranks the “Big 10” food companies on their policies and commitments in
sourcing agricultural commodities from developing countries
- first: Nestle (54 per cent against seven criteria) and tenth: Associated British Foods plc (19 per cent)

Why capitalism?
- capitalism: a mechanism for utilizing the potential of stored value (wealth) to create greater wealth by combining it with
land (physical resources) and labor, especially when the productivity of labor can be enhanced by task specialization
and “division” (job simplification)
- Reisman: it is the division of labor that frees the individual to sell their work in return for wages which they can use to satisfy
their consumption needs – a market economy, “free” in the sense that it is the individual who can decide what
combination of goods and services will offer the greatest satisfaction to them in return for their disposable income
- Adam Smith’s 18th century conceptualization of free markets and the invisible hand was founded on the prevailing
conditions of monopolistic competition: many small firms compete with one another in selling similar but not identical
products
- as a consequence of scale and experience effects some organizations will reduce their costs and can use their
enhanced profitability to offer lower prices and/or increase the value of their product offering
o leads to industrial concentration and the accumulation of market power in the hands of one or a small number of
suppliers, who may then use this to the disadvantage of their customers
o the development of “managed capitalism” induces the state to introduce regulations, thereby restoring the
balance of power between suppliers and their customers
- achieving equilibrium is a notoriously difficult task and frequently leads to an over-correction
- real issue: about the distribution and uses to which the increased wealth is put (not about the principle of using capital to
fund increased wealth creation)
o Michael Hudson: argues forcefully for a return to this original idealistic conceptualization, that was clearly aligned
to the current vision of social business
- Language of Looting: the original concept of a “free market,” envisaged by classical political economists
such as Adam Smith, John Stuart Mill, and Karl Marx, “has been turned into the language of deception to
help the financial sector mobilize government power to support its own special privilege”
- Dominic Barton, Global Managing Director of consultants McKinsey and Co. (Harvard Business Review): reports on his
findings from interviews with over 400 international business leaders and policymakers
o capitalism remains the “greatest engine of prosperity ever devised”
o but there needs to be a radical change if the “social contract between the capitalist system and the citizenry” is
to survive
o there has to be a shift away from the tyranny of the quarterly report – what he calls “quarterly capitalism” – to
“long-term capitalism”, with a time horizon between five and seven years
- needs more than just a next-generation view; it will require a fundamental change in the ways in which
“we govern, manage, and lead corporations,” accompanied by a change in the way in which the value
of business is assessed, together with its role in society
- involves three essential changes:
o (a) business and finance must jettison their short-term orientation and revamp incentives and
structures in order to focus their organizations on the long-term
o (b) executives must infuse their organizations with the perspective that serving the interests of all
major stakeholders – employees, suppliers, customers, creditors, communities, the environment –
is not at odds with the goal of maximizing corporate value; on the contrary, it’s essential to
achieving that goal
o (c) public companies must cure the ills stemming from dispersed from dispersed and disengaged
ownership by bolstering boards’ ability to govern like owners
o “Great Recession” of 2008-2009 as the time when “trust in business hit historically low levels”
- “…stemmed from failures of governance, decision making, and leadership within companies”
o difference between East and West: business and political leaders adopt a quite different timeframe when making
major decisions
o argues that, “The second imperative for renewing capitalism is disseminating the idea that serving stakeholders is
essential to maximizing corporate value”
o concludes that capitalism “must be renewed, both to deal with the stresses and volatility ahead and to restore
business’s standing as a force for good, worthy of the public’s trust”

Transformational marketing – the way ahead?

- 1950: articulation of the modern marketing concept
- period of rapid and accelerating change – technological, social, and economic – that has had a major impact on the
competitive environment
o 1950s: post-war reconstruction
o 1960s: materialism/consumerism
o 1970s: newly industrializing countries
o 1980s: globalization
 o 1990s: emerging economies and sustainability
o 2000s: the Internet and social media
- growth of interest in the importance of interaction and networks, giving rise to an emphasis on Relationship Marketing
o highlighted the importance of Corporate Social Responsibility and the view that marketing is “everybody’s
business”, with a consequential focus on internal marketing
o the impact of Communications and Information Technology, and particularly the Internet, has promoted the view
that we are seeing the emergence of a “New Economy”
o “social business”: search for a new “business model” with an accent on value and its creation through the
exchange process
- marketing has been blamed as a practice that promotes materialism and excessive consumption, but it is also a discipline
that offers the best prospects for encouraging conservation and sustainability
o if marketing tools and techniques have the ability to shape attitudes and modify behavior there is no reason why
they cannot be deployed for this purpose by means of what has come to be known as “transformational
marketing”
- 2010: few if any taking a multidisciplinary approach of social business
- Professor Ken Peattle, Director of the ESCR Research Centre for Business Relationships, Accountability, Sustainability and
Society at Cardiff University (Towards sustainability: achieving marketing transformation – a retrospective comment): need
to rethink marketing if it was to have a transformative effect
o Christian Goornos: describes marketing as an area of business thought and practice that has failed to evolve
- proposes an alternative vision of marketing that is centred around the process of managing relationships
with customers, rather than facilitating exchanges with them
o Sustainability Marketing: Meeting the Green Challenge: proposed that the evolution from the managerialist
“modern marketing” that has dominated the mainstream for the past 50 years can be achieved by integrating
two emerging schools of thought:
- (1) transition from transactions to relationships perspective
- (2) increase the scope of marketing from a narrow and short-term focus on the wants of current
consumers to a much broader consideration of stakeholders
o result: marketing based on relationships while delivering sustainable value to consumers and society

Final comments
- attempt to spell out the ambitions and objectives of social business and the means of achieving them
- aim and aspiration of Social Business: to provide a medium through which “business” means of improving well-being and
quality of life may be publicized and promoted
o interdisciplinary journal: offers the opportunity to integrate and synthesize multiple approaches to the
improvement of well-being and human welfare through initiatives and activities associated with the conduct and
practice of “social business”
- “social business”: about sustaining positive outcomes over time and combating processes that impoverish people, or
underpin oppression and structural injustice
o key: plural principles, such as equity, sustainability and respect for human rights
o essentially about allocating scarce resources so as to optimize the return on them in an environmentally
sustainable way, always provided that the value of the return exceeds the cost of creating it
o pragmatically, capitalism built on a concept of enlightened self-interest appears to offer the greatest opportunity
for success
o ambition: to attract contributions from scholars of any discipline who perceive the opportunity to apply their work
to the critical issues facing modern society

THE SCIENCE BEHIND PORNOGRAPHY

By KEVIN MAJERES

In a nutshell: Purity is still possible for those who are hooked on pornography

- In cognitive-behavioral therapy: Behavior has a kind of momentum that works a lot like physical momentum
o Like a bicycle going downhill: momentum gradually increases, making it harder to slow down
o The kind of momentum you find in vicious circles

Vicious circles v. Virtuous circles

- Virtuous circles: amplifies a person’s willpower
- Vicious circles: a person becomes a slave to the vice, causing despair and loss of freedom
o Commandments, morals, and rules protect us from vicious circles
- Purity: a virtue that shines — especially from the eyes.
o It is a light in our souls, and it makes the body feel light — that is, the soul doesn’t feel weighed down by the flesh.
o Strengthens the mind; our intelligence increases, our grasp of ideas increases in clarity; we are more focused and
motivated; and we are able to love others without selfishness.
o The triumph of love in our lives
o For Families: the purity of the father is the strength and stability of the family
o Elevates sex in a way of showing real love and affection of one’s spouse, not a way of getting pleasure
- Lust: makes pleasure the main goal of sex, making sex an end in itself
The science of sexual interest
- Where is sex ruled? The upper or lower brain?
o Upper brain: where rational thought occurs; free will, abstract reasoning, and morals
o Lower brain: where impulses, emotions, memories, feelings take place (e.g. self-reproduction)
o In young couples, the romance comes from the lower brain, driven by strong emotions and impulses
- It takes a higher, truer for form of love – charity – to maintain sexual interest

Pornography
- Offers a man an unlimited number of seemingly willing females; every time he sees the new partner, with each click, it
gears up his sex drive again.
- Pornography’s power comes from the way it tricks the man’s lower brain
o Drawback: can’t tell the difference between image and reality
o “Dopamine:” The drug of desire
- When you see something desirable, your brain pours out dopamine, saying, “Go for it! Do whatever it
takes!”
o Fixes your attention on that desirable object, giving you your power of concentration
- Causes a vicious circle
o When someone views pornography, he gets overstimulated by dopamine; so his brain destroys some dopamine
receptors
o Pornography makes a man feel depleted
o He goes back to pornography, but having fewer dopamine receptors, this time it requires more to get the same
dopamine thrill
o People have found a trick for increasing the excitement: add adrenaline in the mix
- Stimulate another emotion: fear or disgust or shock or surprise
o Start moving to kinkier things
o Start experimenting with various perversions
- Causes numbing
o The overstimulation of dopamine by pornography, and the resulting destruction of dopamine receptors, means
that there is little dopamine left for ordinary life
- Telltale signs of low dopamine: feeling bored or lazy; feeling like you can’t focus well on anything; feeling
restless, anxious, or depressed, or irritable; being unmotivated; being unable to look other people in the
eye.
o A person becomes unable to feel the more subtle joys of life
o Dopamine is tied with motivation and willpower
- When it gets depleted, so does the motivation and willpower
- The perfect trap: “as he keeps getting downhill, he discovers he has loss the power to brake”

Overcoming Pornography
- People have to recognize the damage and the dangers, and react strongly; they also need to grow in love for the virtue
of purity by seeing the joy and peace and host of benefits it brings
- Three way of setting the stage for self-control:
o (1) We need to see the times of challenge as opportunities for growth, rather than simply as threats.
o (2) We need to stay deliberate and recollected while the unsatisfied craving is present; this is the work of
mindfulness.
o (3) You have to embrace the challenge.
- This means that you see trials as practice, and you use the trial to master the component skills of self-
control.
- This means seeing yourself as capable of growth, and seeing that the effort you put into the struggle,
over time, will always bring proportionate growth.
- No matter what you’ve been through, the virtue of purity is always possible.