J. of the Acad. Mark. Sci.
(2012) 40:35–52
DOI 10.1007/s11747-011-0255-4
CONCEPTUAL/THEORETICAL PAPER
Frontiers of the marketing paradigm in the third millennium
Ravi S. Achrol & Philip Kotler
Received: 11 March 2011 / Accepted: 13 April 2011 / Published online: 11 May 2011
# Academy of Marketing Science 2011
Abstract The domain and theories of marketing have been
expanding since the origins of the discipline. Since the
1970s marketing science has been organized around the
exchange paradigm. Marketing concepts apply to all forms
of exchange, whether it is goods, services, personages,
places or ideas, and whether it is between individuals, for-
profit and nonprofit firms, governments and NGOs. Marketing
theories evolved from a firm oriented view to encompass the
exchanging dyad. More recently the paradigm expanded to a
network level of explanation, and relational theories have
come to the fore. But even as the field struggles to grasp its
new fields of explanation, there is a Kuhnian shift happening at
its boundaries. The shift significantly bends the marketing
worldview as well as the theoretical tools and methodologies
we use to study it. In this paper we develop a three-tiered
explanation of the emerging field of marketing—its subphe-
nomena (consumer experiences and sensory systems), its
phenomena (marketing networks), and its superphenomena
(sustainability and development).
Keywords Marketing paradigm . Marketing future .
Marketing theory . Consumption experience .
Consumer sensory processes . Consumer neurophysiology .
Nanotechnology . Marketing networks . Consumer
networks . Sustainable marketing .
Marketing and poverty alleviation
R. S. Achrol (*)
Professor of Marketing Science, School of Business,
The George Washington University,
Washington, DC, USA
e-mail: achrol@gwu.edu
P. Kotler
S. C. Johnson & Son Distinguished Professor of International
Marketing, Kellogg School of Management,
Northwestern University,
Evanston, IL, USA
Introduction
A number of prominent scholars have analyzed the evolution
of the marketing paradigm (for example Bartels 1962; Hunt
2002; Sheth et al. 1988). The evolutionary path can be traced
from the functionalist paradigm to the marketing manage-
ment paradigm to the exchange paradigm. The functionalist
paradigm described the institutions of marketing and their
functions. The marketing management paradigm is rooted in a
firm view of marketing processes (the archetype firm being the
classic manufacturing company). Under it, marketing’s role and
responsibilities expanded from sales and advertising to product
development and a firm-wide responsibility for customer care.
The impetus behind this major expansion was provided
by the generic and exchange paradigms (Bagozzi 1975;
Kotler 1972; Kotler and Levy 1969). Marketing theories
and research were generalized beyond the exchange of
goods, services and money to include any valuable resource
like time, energy, feelings, places, ideas, symbols or
information. They were extended to exchange with customers,
employees, suppliers, the public, and even competitors, and
applied to all types of organizations—for profit, nonprofit,
social service agencies, government, NGOs and nation states.
The exchange paradigm, with its focus on inter-firm
relationships (Achrol et al. 1983; Dwyer et al. 1987), brought
the concept and theories of the marketing channel to the fore,
and from there it was almost a natural step to where we stand
today—at the threshold of the network paradigm (Achrol and
Kotler 1999; Iacobucci 1996). Relational theories of
exchange are highlighted in an exchange network (Achrol
1997; Anderson et al. 1994; Gummesson 1998; Morgan and
Hunt 1994; Sheth and Parvatiyar 1995). These changes in
the marketing paradigm are significant in themselves, but
they are occurring at a time of even greater change at the
boundary and foundations of the discipline.
The plurality of domains and theoretical riches is difficult
to address systematically without an organizing framework.
36
As marketing expanded over the years, scholars sought to
synthesize its fundamental premises into “general theories.”
Prominent among early contributions are the theories of
Robert Bartels and Wroe Alderson (see discussions in Sheth et
al. 1988). Of more recent origin are the resource-based
theory of competition (Hunt 2002) and the service dominant
logic (Vargo and Lusch 2004). Bartels and Alderson’s
general theories addressed aggregate levels of marketing
phenomena. The service dominant logic builds its arguments
on a reductionist foundation. The resource-based theory is an
intermediate level of generalization. The debate over the
superiority of reductionist versus phenomenal theories will
surely rage for a long time. Perhaps the complexity of
marketing phenomenology and the infancy of its theories are
such that it behooves the discipline to pursue a multi-tiered
paradigmatic structure to its science.
In this paper we pursue a somewhat unusual line of
inquiry. This paper is not about a general theory. Neither is
it synthetically constructed from the theories and research
about the phenomenon of marketing as we know it. Rather
we construct a three-tiered framework based on emerging
shifts in the phenomenology of marketing. The three fields
Table 1 Key assumptions of the received vs. emergent marketing paradigms
Received paradigm
Consumer satisfaction
Cognitive psychology of behavior
Products as “delivered services”
Massive-scale manufacturing by contract manufacturers
(phase one networks); early phase two innovation networks
Dominant technologies: digitization and computer controlled
systems
Management as internal coordination of finance, marketing,
production, R&D and personnel in the firm
Core competency: idiosyncratic resources, usually technology
Management priorities: growth, customer life-time value,
targeting middle and upper class high value markets
Dyad as unit of analysis; theories of hierarchical control,
power and dependence; early relationship marketing,
social norms of behavior
Corporate social responsibility (reactive, adaptive)
Public policy: laissez-faire capitalism
J. of the Acad. Mark. Sci. (2012) 40:35–52
are (1) consumption experiences, (2) marketing networks, and
(3) sustainable development. The fields span a reductionist to
holistic construal of marketing phenomena.
A paradigm for the third millennium
It is frequently useful for marketing to organize the growing
inventory of empirical and theoretical data in a codex that
consolidates that which is important in what we know and
points to that which is important in what we do not know. We
decided not to look in the rear view mirror. However, for the
purpose of providing some reference points and summarizing at
a glance what is proposed in the “shift” discussed in the rest of
this forward-looking article, Table 1 contrasts key assumptions
defining marketing’s current paradigm with how these are
transformed under the emerging paradigm. The received
paradigm is a collection of a number of streams of literature,
some enduring and some of more recent vintage. A few of the
theories span current and future possibilities. For example,
some aspects of the service dominant logic (co-creation and
co-production) and network and relational theories can only
Emergent paradigm
Consumer sensations and sense-making
Neurophysiology of consumer behavior and sensory experiences
Products and services as sensory experiences
Small-scale distributed production-consumption networks.
Products built atom-by-atom. Customer co-creation
and co-production (phase three networks)
Dominant technologies: biotechnology, nanotechnology
Management as customer care and network development–interorganizational
coordination of finance, innovation and production.
Core competency: Focal firm—marketing; Network—relational solidarity,
synergy and mutuality
Management priorities: sustainable marketing (including demarketing,
counter-marketing), growth from lower middle and
base-of-the-pyramid markets
Multi-level networks as units of analysis; bottom-up networks;
relational management of the economic and ecological
“commons”; social engagement (proactive)
Proactive corporate strategies in ecology and development
Public policy: regulated capitalism (embedded regulation, self regulation);
conscientious capitalism, conscious capitalism, social capitalism
J. of the Acad. Mark. Sci. (2012) 40:35–52
be partially realized at present but are likely to achieve their
full potential under the emergent paradigm.
Looking ahead, how does one extract the critical features
of a turbulent field that pervades the entire fabric of society
and condense them into a forward-looking framework for
marketing? We propose the way to make this complexity
tractable is to conceptualize it in three dimensions—
marketing’s substructure, its structure and its superstructure.
In this way we can span:
(1) the theoretically more tractable domain of the marketing
microcosm, its subphenomena;
(2) its phenomenal realm (including the managerial realm)
with its mid-range theories that have predictive power
even if their putative mechanisms are less than
rigorously explicated; and
(3) the superphenomenal realm of marketing and society,
a largely descriptive field of analysis.
In the subphenomenal field we focus on the consumption
experience as the fundamental domain of relevant theory
and human sensory processes as the fundamental bases of
explanation. Major advances in the science of the mind are
imminent due to a covergence in the understanding of its
psychology and its physiology. This promises to shift the
theoretical tools of consumer behavior analysis from
cognitve concepts such as attitudes, information storage
and retrieval theories to the mechanisms of sensory
depiction of “reality” and its experience.
The field of phenomenal marketing is complex and is
shifting. Hierarchies have given way to marketing net-
works. The theories of exchange that served marketing well
for 40 years are giving way to relational concepts. Networks
are inverting many aspects of traditional marketing processes.
In the post-information economy, vertical integration is
receding. Marketing functions and value-added are moving
forward in the network and closer to the consumer. This
process may take a giant leap in the future by bringing
production and consumption close together.
The third dimension is marketing’s superphenomena.
This is an area of marketing where our science, including
its theories and empirical findings, is likely to be more
descriptive than causative. Nevertheless, as marketing’s
footprint and societal consequences loom ever larger, the
superphenomena of marketing are going to represent a
critical agenda in its paradigm. There are too many issues to
address in a single article. We picked the two we believe are
the most significant—sustainability and poverty.
Sustainability has been creeping up on Eric Fromm’s
homo consumens for a long time (Kotler 2011). Marketing
has well-known negative impacts. It encourages rapid
consumption of limited natural resources, it does not
restrain the wants it encourages, and it over-fulfills
materialistic wants and under-serves nonmaterial wants.
37
Poverty, on the other hand, is a novel subject for marketing.
The poor do not consitute a marketable segment. They are
the subject of government agencies, NGOs, charitable
trusts, religious orders, altruists, sociologists and econo-
mists. But there is a growing realization that the world of
business and the world of development are on convergent
paths. Leading scholars in business schools are proposing
models for development that offer alternatives to conven-
tional approaches originating in economics, sociology and
anthropology.
The subphenomena of marketing
The fundamental process in marketing is consumption, and
the elemental concepts in consumption are satisfaction,
value and utility. If there is a “new” concept in the digital
age of information, knowledge products and the service
economy, it is that of consumer experiences. Yet as
Holbrook (2006) points out, the idea that the consumption
experience is at the bottom of consumer value goes back
some 25 years, and even further back to the economist
Lawrence Abbott:
The thesis … may be stated quite simply. What
people really desire are not products but satisfying
experiences … People want products because they
want the experience bringing services which they
hope the products will render (Abbott 1955, p. 40)
At the nucleus of consumption is a need and its
satisfaction. As consumers, we go about need satisfaction
via a complex of experiences filtered through our senses.
The senses record and filter all that we feel and know about
the world around us and its pleasures and pains. These
include the visual (perceptual), auditory and olfactory senses,
the sense of taste and the so called “other” senses—the
sense of touch and feel (tactile and haptic sense), the sense
of limb position and motion (proprioception and kinesthesis)
and the sense of whole-body orientation and motion
(vestibular sense).
The senses are the vehicles by which we experience the
world, but the question remains, what does it mean to say
that “we experience” something, and that the experience
was a satisfying one or not? That is the primary subject
domain of consumer behavior theory and research. The
bulk of it is informed by cognitive psychology (including
theories of attitudes, emotions and information processing),
which has constituted the dominant behavioral paradigm in
marketing and psychology for many decades now. But there
is an important shift in the behavioral sciences from
cognitive psychology to neurological psychology. The
disciplinary divide between mind (cognitions) and the brain
(the physiology of the mind) is rapidly disappearing.
38
Marketing and the human senses
Beyond the obligatory treatment in consumer behavior
texts, little research attention has been directed to consumer
sensation and sense-making (Jacoby et al. 1998). There
may be a good reason for the long hiatus in academic studies.
We draw much of our inspiration in consumer behavior from
psychology, and the psychology of the senses has been
moribund for a while. In the preface to his 1953 edition of The
Human Senses, Princeton psychologist Frank Geldard notes
that not too long ago the greater portion of psychology was
about the human senses: “Experience was psychology’s
proper object of study, and experience comes by way of
man’s senses.” He goes on to lament that psychology
evolved into the science of behavior and concepts like
learning, motive, attitude and interest rose to the fore: “These
trends in psychological fashion, partially account for the
current rarity of books on sensation” (Geldard 1972).
This leaves a void in how behavior and the reality we live
in are connected to the building blocks of matter and to the
theories of mind and body. The void appears to be narrowing.
The convergence of physiological and behavioral theory in the
shape of neurophysiology has led to a revival of scientific
interest in sensory processes (e.g., Zaltman 2003). On the one
hand are phenomenological reasons. In his A History of the
Senses: From Antiquity to Cyberspace, Jutte (2005, p. 16)
observes: The “rediscovery of the senses, which is in some
ways a mere few decades old, certainly has a lot to do with
commercialization, but it is also a response to the growing
needs of a post-industrial leisure society, in which the senses
are befuddled by artificial worlds and overstrained by
incessant stimulation.”
On the other hand are a growing field in cognitive
neuroscience linking cognition and molecular genetics (e.g.,
the Journal of Cognitive Neuroscience) and an emerging
field in neuroeconomics (e.g., Sören et al. 2008). Interest in
sensory research in marketing appears to be increasing
(Bloch 1995; Groeppel-Klein 2005; Gulas and Bloch 1995;
Li 2008; Mitchell et al. 1995; Morrin and Ratneshwar 2003;
Peck and Childers 2003; Raghubir and Krishna 1999;
Spangenberg et al. 1996). The attention is focused on visual
and auditory processes, which is to be expected in a media
and communications driven managerial paradigm. Sight and
sound are often considered the superior senses. The classical
hierarchy of the senses dates back to Aristotle who ordered
them thus—visus (sight), auditus (hearing), odoratus (smell),
gustus (taste), and tactus (touch). Jutte (2005) observes that
“the hierarchy of the senses is both a cultural construction …
and a product of the phylogenetic development of the human
species.”
There may be a cultural evolution happening in what
stimuli we respond and relate better to. Some believe we
are now entering a haptic age (John Naisbitt’s high touch
J. of the Acad. Mark. Sci. (2012) 40:35–52
society). The German weekly Die Zeit published a
“Manifesto for the Emancipation of the Sense of Touch”
(April 11, 1997). The popularity of leather seats, massages,
touching zoos, hugging and the like are witness to a more
touchy-feely culture. Marketing practitioners are quick to
pick up on stimulating consumers’ olfactory and haptic
sensations. The popular press is abuzz with article titles like
“Dollars and Scents” (Hoppough 2006) and “Bringing
Senses into Play” (Musgrove 2007). Predictably, the buzz
follows the old sales-orientation—i.e., how can I get
customers to turn on the buying impulse?1
Early efforts by the movie industry (dating as far back as
the 1940s) to incorporate scents into the movie experience
were largely failures (LA Times 2006), probably due to
rather crude technology. Today there is a whole new
technology of artificial aromas, including the possibility
of transmitting them electronically to TVs fitted with
artificial-scent boxes. There is a push to design haptic
experiences into virtual products. New game systems by
Sony and Philips incorporate sense effects via vibrations,
breezes, thunder and lightening, 3-D, and so on. A company
called Immersion claims to have designed a computer mouse
that can obtain tactile impressions of the textures of solid and
liquid surfaces (e.g., the softness of a mattress) provided
suppliers program their websites to facilitate it (Jutte 2005,
p. 251). “Seeing, hearing, tasting, smelling, and touching are,
thus, well on the way to becoming digitalized, computer-
transmitted processes that will progressively complement or
even replace impressions traditionally supplied by the five
‘natural’ organs of sense” (Jutte 2005, p. 330).
Cyberspace and virtual reality have the potential to
separate our minds and bodies, to allow us to experience
the body’s needs by a virtual projection of the mind into
cyberspace. There exist well-known virtual worlds on the
Web such as Second Life, where one can create an avatar to
move around, shop, meet other avatars, and in effect, lead a
second life at that site. Soon avatars will be able to move
freely about the Internet, connecting virtual worlds and
stand alone sites. 3-D avatars created to one’s measure-
ments can meet other avatars anywhere on the Web, hold a
conversation, socialize, go shopping with friends, try on a
pair of jeans for fit and so on (McConnon 2007).
Those of us who grew up in the physical world cannot
begin to imagine life as it will be for those who grow up in
a digital world. The digital world will offer nearly endless
1
In the early 1990s a study by the Chicago based Smell and Taste
Treatment Research Foundation in a Las Vegas casino purported to
show that the right kind of scent induced customers to spend 45
percent more on the slot machines (Lee 2004). Now Sony stores are
being spritzed with a custom vanilla-and-mandarin scent created for it
by Scent-Air of Charlotte, NC. Other Scent-Air customers reportedly
include Doubletree Hotels, Westin Hotels & Resorts, Hard Rock Hotel
in Orlando, and Procter & Gamble (Hoppough 2006). Some advocates
see a brand having a unique scent image of its own.
J. of the Acad. Mark. Sci. (2012) 40:35–52
possibilities of shaping life and experiences so that the
physical world will pale in significance and may well
become a secondary world in which our bodies live wired
to a digital reality. Like so much of science fiction, the
movie Avatar may be prophetic. It triggered a rush to 3-D
television. We stand at the threshold of a virtual world of
experiences and an incredible expansion of the science by
which experiences are experienced.
Neurophysiology and marketing
The relationship between the brain and “mind” has puzzled
scientists and philosophers for centuries (the classical
model is often traced to Rene Descartes). The modern
science of sensation and perception takes a neurophysio-
logical approach to the subject based on cellular biology.
The core concept is that of cellular mapping networks
located in specific areas of the brain. For example, a
monkey’s visual system (the human system is believed to
be similar) consists of some 34 different maps which
analyze different attributes (color, shape, orientation,
speed, depth) of what is recorded by the retina. Specific
cells in the map are linked to specific areas of the retina,
and adjacent areas in the retina are linked to adjacent
cells in the brain. The maps are organized in a
hierarchical manner into “what” pathways and “where”
pathways that connect the primary visual area in the back
of the brain to the temporal lobes in the lower middle of
the brain and parietal lobes in the upper middle,
respectively (Posner and Raichle 1994). The important
point here is that neuroscientists believe human sensory
and motor systems are analyzed and controlled by
precisely located networks of cells in the brain. That is
one part of the unfolding mind-brain puzzle. The second is
monitoring the activity and functioning of the networks.
Two functional processes are noteworthy.
There are about 100 billion cells or neurons in the brain.
Neurons come in many configurations and consist of a
nucleus, dendrites, axons, etc. Signals are transmitted and
processed by the nervous system as electrical energy and
are subject to the concepts of electricity such as charged
particles (ions), resistance and potential difference. The
signals can be transmitted to distances up to a few meters.
One methodology of analyzing the functioning of the brain
is measuring its electrical activity (EEG); this has been used
in clinical practice for over sixty years. But the EEG is not
very effective in isolating the multiple cell assemblies
located in different parts of the brain. It was not until the
development of PET and MRI methodologies, especially
fMRI in the 1990s, that the cognitive neurophysiology of
the brain really took off. Both technologies involve highly
sophisticated measurement systems (working at the level of
atoms and positrons) that measure changes in the blood flow
39
in response to neural activity (Posner and Raichle 1994).
Neural cells increase consumption of energy from glucose
and decrease their use of oxygen, resulting in a local increase
of blood flow to the precise region of neural activity.
The reason for this brief discussion is to highlight the forces
behind the growth of a physiologically driven cognitive and
behavioral science. The methodologies driving this momen-
tum are only going to become more and more sophisticated.
The future science of consumer behavior and consumption
experiences is inextricably linked to this future. The new
science shows some interesting throwbacks to marketing
quandaries of the past: (1) how large a role do Skinnerian
stimulus-response processes play in consumption behavior,
and (2) is there a subliminal learning process after all (due to
the so called “priming” effect)?
For those who believe all this is too premature for an
applied behavioral science, or that this is just another
galvanic skin response fad, here is the reality. The field of
“neuroeconomics” has been quickly established, led by
economists like Colin Cramer at Caltech. The UK’s Journal
of Consumer Behavior devoted a special issue in 2008 to
“neuromarketing.” And long before it is clear that there is a
verifiable body of knowledge here, marketing consultants
are charging into the practice of neuromarketing (notably
UK-based Neursense and Bright-House Neurostrategies
Group of Atlanta). For example, a company called Mind-
Sign Neuromarketing says:
We look at the subject brain response to your ad,
game, speech, or film. We look at how well and how
often it engages the areas for attention/emotion/
memory/and personal meaning. We also look at how
well it activates the brain as a whole. From this data
we can tell what your audience was thinking while
using your software or watching your content,
moment by moment, regardless of what that content
is. Were they scared or sleepy, happy or sad? Were
they even paying attention? We can show you how
your product is affecting the consumer brain even
before the consumer is able to say anything about it.
Additionally, an fMRI experiment using the “Pepsi
Challenge” by neuroscientist Read Montague (published in
Neuron, October 2004), articles in Forbes, Time and the New
Yorker, and a book by Martin Lindstrom titled buy.ology
(2008), had a lot to do with publicizing the new science.
Marketing and nanotechnology
Nanotechnology is the creation of materials, devices and
systems through manipulation of matter at scales of 1–100
nanometers, essentially via manipulating atoms and mole-
cules. A nanometer is a billionth of a meter (the width of a
human hair is 200,000 nanometers). In the realm below 50
40
nanometers the common laws of physics no longer apply,
and the surreal world of quantum physics takes over.
Materials take on surprising new properties: something that
was red may now be green, metals may become translucent
and thus invisible, insoluble substances may dissolve and
much more (Montague 2004).
The U.S. National Science Foundation has labeled the
impending revolution in science as NBIC—a nanotechnology
driven convergence of nanotech, biotech (manipulation of
genes), infotech and cognotech (cognitive). Largely unno-
ticed, the application of nanotech to consumer products is well
on its way. Nano particles, nanotubes and carbon nano crystals
are being manufactured in ton quantities for commercial use.
Scientists have made breakthroughs in the holy grail of
nanotech—self-assembling systems that can grow and evolve
like the human cell (NewScientist.com 2003).
The U.S. is investing big in nanotechnology. The
National Nanotechnology Institute was created in 2001
and will have disbursed $12 billion for research in the field
through 2010. Hundreds of products containing nano
particles have already reached the market—metal surfaces
and paints that clean themselves when it rains; sub-
miniature data storage devices (aiming to hold the Library
of Congress in a computer the size of a sugar cube);
specialty lubricants; long-mileage vehicle tires; nano-
reinforced plastics for stronger automobile fenders; light-
weight military armor; anti-reflective and scratch-resistant
sun glasses; super-slippery ski wax; powerful tennis rackets
and long-lasting tennis balls; inkjet photographic paper
intended to hold an image for 100 years; efficient drug and
vaccine delivery systems; anti-wrinkle cosmetic creams;
and so on (Montague 2004).
NBIC promises consequences so radical that they are
likely to change the very nature of the world and human
experiences as we know them. According to Freitas’ (1999)
Nanomedicine, artificial nanodevices can be designed and
programmed to proceed directly to our approximately
12,000 taste buds and trigger any combination of desires
or taste sensations. Likewise thousands of nanodevices can
target our 50 million odd olfactory sensors and provide
complete olfactory sensation control. Consider the scary part:
nanotech portends the ultimate in targeted marketing, directly
(even surreptitiously) targeting an identified individual’s
senses. It reads like science fiction, but it is very real science:
Just like bloodhounds and mosquitoes follow a
quarry’s scent, airborne nanobots can be designed to
identify and home in on the senses of “host patients”
identified by specific characteristics (odortypes).
Aerial nanorobots could be released as aerosols
(chemtrails) engineered to deliver complete visual
and auditory hallucinations to recipients. The odor-
types which can be used to target individuals may
J. of the Acad. Mark. Sci. (2012) 40:35–52
include naturally produced scents; behavior related
scents (due to exercise, fear reactions, sexual activity,
intoxication, and the like); artificial scents (cosmetics);
and taggants (messenger molecules). The airborne
nanorobots can stationkeep in the vicinity of the host
patient, navigate and avoid no-fly zones, and commu-
nicate among themselves. They can also be spread from
person to person like diseases–by direct physical contact
(e.g., handshaking or sexual activity), by indiscriminate
broadcast transfers (e.g., sneezing, bleeding, sharing
tools or utensils), by serendipitous anonymous contacts
(e.g., doorknobs, public toilet seats, library books), or by
deliberate airborne nanorobot migrations. (Freitas 1999)
The aim of a subphenomenal marketing is to enhance the
consumption experience. But, with the lengthening shadow
of NBIC, it is equally important that the discipline be in a
position to protect the consumer from insidious marketing.
Regulation and regulatory norms are seriously lagging.
Congress intended to create the American Nanotechnology
Preparedness Center (to study nanotech’s potential societal
and ethical effects) when it created the National Nanotech-
nology Initiative, but apparently that part of the legislation
ran into trouble. Recently a coalition of consumer protec-
tion groups led by the International Center for Technology
Assessment filed a legal petition with the EPA seeking a
ban on consumer products (over 200 of them such as odor
resistant socks, baby bottles and clothes washers) which use
nanoparticles of silver as a germicide (www.icta.org; www.
nanoaction.ord).
The phenomenal structure of marketing
The previous section recounted the directions of prospective
change in the micro science of marketing. Equally powerful
changes are occurring in the way business organization is
structured and functions. The post-industrial, vertically
integrated, multidivisional firm is evolving into complex
global business networks from the production end to the
consumption end.
Network theory is rapidly becoming the lingua franca
of all science, from anthropology to physics (Borgatti
and Li 2009). Marketing networks are superior to
hierarchies in the production and exchange of knowledge.
To function, networks rely on relational governance
processes rather than hierarchical authority or power
(Achrol 1997). One stream of the literature highlights the
vertical disaggregation of functions in the network and the
reorganization of individual firms along horizontal syner-
gies rather than vertical ones (Achrol and Kotler 1999). It
emphasizes the shift in control and coordination mecha-
nisms from power-based systems to norm-based relational
J. of the Acad. Mark. Sci. (2012) 40:35–52
systems (Anderson et al. 1994; Dwyer et al. 1987; Morgan
and Hunt 1994) and parallels the development of relation-
ship marketing theory in general (Gummesson 1998;
Sheth and Parvatiyar 1995).
The evolution of production and innovation networks
Contemporary business networks evolved in two phases.
First came the routinization of the production function and
its backward outsourcing. The focal “firm” specialized in
the innovation and marketing functions. The fortunes of the
leading production specialists like Flextronics and Jabil
continue to soar.
Phase two networks involve the routinization and
outsourcing of innovation. In the last five years smaller
aggressive competitors (primarily from Taiwan) have
carved away a large share of the contract manufacturing
business in cell phones, PDAs, laptops and digital cameras.
This pushed contract manufacturers like Flextronics into
technology development, product design and engineering.
R&D constitutes a key part of the strategic core of the
firm, guarded zealously as its primary source of sustainable
competitive advantage. Nevertheless, even technology
leaders such as Philips, Motorola, Boeing and Eli Lilly
are being forced to turn to faster and cheaper innovators
around the globe for significant portions of their technology
and design needs. A VP of a Taiwanese innovation
company was quoted as saying: “Customers used to
participate in design two or three years back. But starting
last year, many just take our product. Because of price
competition, they have to” (Engardio and Einhorn 2005).
Cost is one factor, but equally important are the complexity
of tomorrow’s technologies and the uncertainty of success.
Few firms have the knowledge resources to tackle major
innovation on their own. Network organization is not only
about utilizing knowledge resources; it is about creating new
knowledge. The open innovation model, as this network form
has been dubbed (Chesbrough 2003), is more effective in
both creating and applying new knowledge.
Alongside the outsourcing of these core functions there has
been a quiet spinning-off of many support functions, including
accounting and human resources. HR hiring through contract
suppliers has expanded from clerical and labor to include
technical professionals and managerial talent in areas such as
marketing. This leaves what used to be the classic “manufac-
turing firm” close to becoming a pure marketing company. A
recent survey of executives by the Economic Intelligence
Unit and Anderson Consulting (Vision 2010: Designing
Tomorrow’s Organization) concluded that:
The company of the future will consist of a small team
running its affairs from a single office. The team will
build and use its knowledge of market demands and
41
customer requirements, potential suppliers and partners,
and bring them together through sophisticated electronic
links to respond quickly and painlessly to changes in
fashion and economic circumstance. The process of
creating value will be set free from all unnecessary
activities, and for that reason alone will be significantly
more efficient.
Evolution is an ongoing process. As firms search out
new sources of efficiency, their attention will inevitably
focus on the remaining vestige of the industrial era
economy, the distribution system. The business environ-
ment and technological possibilities are pushing network
structures slowly but surely toward phase three. We predict
that phase three networks will invert functional disaggre-
gation to forward outsourcing. Production will move as
close to consumption as possible.
The distribution component accounts for the largest share
of the final price of consumer products, and this share has
been growing steadily. When the Internet and e-commerce
arrived, many expected widespread disintermediation would
follow. Conventional resellers survived the threat of obsoles-
cence from e-marketing. Disintermediation didn’t happen.
Rather, the electronic medium became intermediated by
“etailers” like Amazon and eBay. The growth of the echannel
has been slower than anticipated. In 2009 e-commerce
accounted for just 3.7 percent (up from 3.3 percent in 2008)
of the $3,683 billion in total retail sales (U.S. Census Bureau).
Its biggest impact has been in products and services that can
be delivered electronically: thus the demise of Tower Records
and Hollywood Video, the impending demise of Blockbuster,
and the rapid growth of online sales of travel and leisure
products. But we predict the story of the 21st century is going
to be about products which cannot be delivered electronically;
it will be about micro production systems.
Distributed production-consumption networks
We call phase three networks distributed production-
consumption networks. They represent the ultimate in the
just-in-time model. Technology is approaching the point
where production can be enjoined to or juxtaposed with
consumption. Leading the way is the power industry of the
future. Distributed generation (also called on-site, dispersed
or embedded generation) produces electricity from small
energy sources—solar, wind, fuel cells—at or close to the
consumption site. A large number of commercial buildings
already use in-house systems that produce a significant
amount of their power needs. Figure 1 pictures the
difference between the conventional centralized production
system and the distributed generation system.
Solar and wind powered units for individual homes are
available and growing in efficiency. The consumer market
42
Fig. 1 Conventional and distributed power generation systems.
Source: Maribu, Karl Magnus (2006), Modeling the Economics and
Market Adoption of Distributed Power Generation, Doctoral Thesis,
in Europe for rooftop wind-powered systems is off to a
solid start and is emerging in the U.S. In “Marketing
Myopia,” Ted Levitt (1960) predicted that in the future
homes will be powered by a small chemical fuel cell unit
sitting in a closet. That is a technical reality today and no
doubt will become a commercial reality soon. Recently the
media featured the success of California-based Bloom
Energy’s fuel cell that can run on natural gas or biogas
and is in operation at Google, eBay, Wal-Mart, FedEx,
Coca Cola, and the like. The startup anticipates it will be
able to produce refrigerator-sized units for the home for
about $3,500 within the decade.
Similar distribution of production or assembly capabilities
to wholesale and retail levels can be visualized for many kinds
of products except the most technologically complex. Xerox’s
Book-In-Time system, properly marketed to local retail-
producers (e.g., small printing firms, Kinkos), could have
seriously eroded the position of the giant publishing houses and
retail chains in the book business. Now Amazon’s Kindle and
Apple’s iPad threaten to do away with printed media altogether.
The same technologies that facilitated the emergence of
giant production specialists in phase one networks lie behind
the opportunity for distributed micro production systems.
Small computer controlled automated manufacturing or
assembly systems can be designed to operate at the level of
local markets. In concept, the distributed facilities are linked to
a core firm (a brand marketing firm or, in some cases, a
technology specialist) via an information system that provides
the technical information and controls the computers that run
the distributed plants. The operations will likely be franchised
to smaller local firms, retailers or wholesalers in the industry.
In some cases, the distributed systems may be decentralized
all the way to the ultimate customer and be located on
customer premises. Obviously, the economics upon which
J. of the Acad. Mark. Sci. (2012) 40:35–52
Norwegian University of Science and Technology, Department of
Electrical Power Engineering
such systems are contingent is that the efficiencies of
decentralization are greater than its cost. Producing to demand
at the point of demand offers efficiencies in inventories and
logistics and reduces the uncertainties of innovation. These
advantages become bigger and bigger as the share of
distribution cost becomes disproportionately large and the
marketplace becomes the globe.
The previous section discussed how nanotechnology is
poised to dramatically alter consumer experiences. The
potential of the NBIC revolution to impact manufacturing
goes beyond our comprehension today. Today everything,
down to the tiniest micro-circuit, is fashioned by hammering,
melting, squeezing and sculpting chunks of matter, something
like force-herding masses of molecules into a desired form. In
contrast, nanotech construction or molecular assembly
arranges individual atoms or molecules one at a time (in the
ideal scenario they will self-assemble like living cells) into the
desired configuration. Instead of cutting trees to make a table, a
table will be “grown” by swarms of nanorobots that can be
programmed to fashion any kind of molecule and construct
any kind of product (see Bonsor 2007; Drexler 1992;
Feynman 1960; Montague 2004). How far removed is this
reality? In January 2011 the Department of Defense published
a request for proposals to develop micro robotic fabrication
machines. STTR Solicitation 2011.a states: “Desktop manu-
facturing is the ability to use a personal computer to drive a
miniature fabrication station for the creation of new objects
with complex geometry ... This topic focuses on a particular
approach of using a coordinated and distributed swarm of
microrobots that are capable of handling and manipulating
nano- and micron-scale building blocks in the process of
synthesizing novel materials and structures.”
What a transformation from Henry Ford’s famed
integrated factory on 2,000 acres along the Rouge River,
J. of the Acad. Mark. Sci. (2012) 40:35–52
Michigan, with its own blast furnace, steel mill, glass factory,
and more than 90 miles of railroad track and conveyor belts to
run the production lines. The manufacturing machines (nano-
robots) of the future may well be so small that thousands of
them will fit in the period at the end of this sentence (Bonsor
2007). It is not far fetched to go a step further and imagine a
general purpose production machine in every consumer’s
basement that can, with the right software and programming
(accessed online), manufacture anything a consumer wants
from a “jar” of commodity atoms and molecules. Everything
in the physical world is simply the result of a particular
arrangement of atoms. Arrange them one way and you have
steel, arrange them another way you have corn. The ultimate
outsourcing of production and distribution will have taken
place, and a true era of consumer co-production and co-
creation will have arrived (Jaworski and Kohli 2006).
Consumption networks
Today when we speak of consumption networks we think
mostly of the consumer communities organized by marketing
firms. Firms seeking to develop enduring relationship ties
with their consumers do so by creating forums for consumer
interaction, by developing extensive databases on the con-
sumers and by targeting customized communications and
offers to them. This is the classic relationship marketing
model. But firm-driven vertical consumer networks will likely
erode in the near future, giving way to a bottom-up marketing
phenomenon shaped by horizontal consumer networks.
The Internet has created a vast channel of horizontal
information flows, word-of-mouth and technical advice from
user communities and websites in practically every class of
consumption. There is probably no area of consumer interest
today that does not have a dedicated chat group, blog, or
interactive forum created by an enthusiast or a group. It is
frequently said that power is shifting from media institutions
to consumer communities and firms are taking note. This
explains the rapid growth of online brand monitoring services
led by market leaders Nielsen BuzzMetrics and Cymfony.
These firms specialize in automatic searching of text-based
keywords and data on blogs, chat rooms, message boards,
subject groups, social networks, bulletin and message boards.
Del Monte allocates between 10 and 15 percent of its research
funds on online research (see Kim [2006] for a review).
Consumer communities hold the power to usher in a
bottom-up market model to rival the top-down manufactur-
ing firm–controlled information supply (the so-called
“prescription model”) with important effects on concentra-
tion and heterogeneity of preferences (Benghozi and Paris
2005; Gensollen 2005; both cited in Curien et al. 2005).
The sociology of consumer communities (Smith and Kollock
1999) will be important in understanding consumption in the
future. A community is a “network of social relations
43
marked by mutuality and emotional bonds” (Bender 1978,
p. 7). Brand communities are nurtured by avid enthusiasts
and fans of a brand. They perpetuate sentiments of belonging
or “consciousness of kind” (Gusfield 1978). Because this is a
spontaneous consciousness and is not motivated by pecuni-
ary interests, it creates a fierce in-group loyalty, causing
feelings of betrayal and animosity toward members who
defect to other brands (Muniz and O’Guinn 2001).
Communities vary greatly in motivations and resources.
There are experience-sharing, brand rating and user commu-
nities that make consumer choice easier for experience goods,
epistemic communities (knowledge sharing communities)
which disseminate knowledge about complex goods and
subjects and file-sharing communities of peer-to-peer networks
that exchange cultural goods (Curien et al. 2005). Consumer
communities, with the exception of brand communities, are
particularly sensitive and inhospitable to individuals who are
seen as promoting particular products or companies.
Consumer communities are social networks and develop
complex organic properties but are inherently lacking in formal
structure and mechanisms. The networks are fluid and
membership is transient. Communities can form and reform a
number of times among leaders who come and go. They are
organized by mutuality, tradition, trust, reputation and norms
of behavior. Trust is one of the most important variables in the
success of a community and often the one most threatened by
opportunism. Consumer communities are a public good and
are subject to the “tragedy of the commons.” Individuals
under-invest in a public good because its non-excludability and
non-rivalry provide incentives to free riders who benefit from
the shared resource without contributing to it (Curien et al.
2005; Varian 2004). Curien et al. (2005) call it “the curse of
under participation, seemingly inherent to the management of
shared resources.” The 2009 Nobel laureate in economics,
Elinor Ostrom (Ostrom 1990; Ostrom et al. 1994) argues that
self governing systems are possible for managing common
properties and interests.
Should consumer networks become embedded with firm
networks in a distributed production-consumption system, the
clash of values, interests, dependencies and vulnerabilities will
spawn a socio-economic environment the likes of which cannot
be fully visualized today. An example of the clash of consumer
and producer networks occurred in February 2004 when
Amazon.com mistakenly disclosed the real identities of some
of its book reviewers. A sizable proportion of those reviewers
were the books’ own publishers, authors and even competitors.
The network framework will need to evolve to provide a
structure for studying exchange as a social system. In that line
of thought, there is an even more encompassing dimension to
future marketing that reaches beyond economically empowered
networks of consumers, marketers and producers. It highlights
the social externalities of consumption and the well-being of
humankind. We call this the marketing superphenomenon.
44
The superphenomena of marketing
We paraphrase Heinrich Kluver in his introduction to
Hayek’s The Sensory Order (Hayek 1952):
It has been said that a philosopher is a man who has a
bad conscience whenever he hears the word philosophy.
Nowadays [marketing] scholars no longer seem to
develop feelings of guilt when they hear the word
[marketing]. This state of affairs certainly cannot be
accounted for by believing that the field of [marketing]
has acquired the status of a science.
Kluver was talking about psychologists. But is it time for
marketing scholars to develop a guilt complex over our
preoccupation with the managerial interests of marketing?
Marketing ethicist George Brenkert (2008) says it best:
marketing does not simply surround us, it envelops us; it is
in part how a society defines itself and its treatment of its
members. A person might think that such a pervasive
activity would be the object of widespread moral agreement
or that it is at least subject to well developed norms of
social behavior and accountability.
Notwithstanding the tireless work of a dedicated cadre of
researchers in public policy, non-profit, environment and
social marketing fields, marketing has not embraced a
worldview commensurate to its vanguard role in the social
and economic well-being of nations.
Ultimately marketing is about more than individual firms
and their consumers; it is about the economic, social and
ecological sum of these contributions. The U.S. consumer-
driven economy (consumer spending accounts for 70
percent of GDP) has proved superior in creating wealth,
raising standards of living and providing opportunity. But
the consumer economy has created excesses, waste and
harmful side effects. How much marketing-at-any-cost can
society tolerate? The current crisis in financial and real
estate markets is a product of such excesses on the part of
firms and consumers.
Just as economists are engaged with stimulating the
growth of the economy as much as they are with controlling
its malfunctions (inflation, recession, unemployment, pov-
erty), marketing is responsible for the functions and
malfunctions of consumption. Marketing science should
be about creating a healthy consumption environment as
well as about protecting the consumer from overconsump-
tion. There are too many facets to the superphenomena of
marketing science to be covered in an article, so we focus
on two very large and pressing facets: the concept of a
sustainable marketing ideology and the dark side of the
middle-class prosperity created by consumption economies,
i.e., the dark face of poverty. There are two powerful forces
driving our attention on these two areas—the carrying
J. of the Acad. Mark. Sci. (2012) 40:35–52
capacity of the environment and the consumption capacity
of developed economies.
The sustainable marketing concept
The three decades of unprecedented prosperity following
the Second World War swept companies along a path of
relentless growth to become multi-product, multi-market,
multi-divisional firms. Despite concerns voiced by promi-
nent voices like Rachel Carson (Silent Spring, 1962), Ernest
F. Schumacher (Small is Beautiful, 1973) and the Club of
Rome report (Limits to Growth, 1972), the growth model
remained the dominant logic of the corporation. It is not
until the late 1980s that we see the first signs of maturing
markets and overconsumption beginning to slow corpora-
tions and right size them.
Sustainable marketing is founded on the key premise that
society and marketing are poised at a fundamental transition
from an anthropocentric (human centered) paradigm to a
biocentric (nature centered) one (Fuller 1999, p. 12). The
imperative for sustainable marketing can be characterized by
two types of carrying capacity—market capacity and
resource capacity. Market capacity concerns whether the
present consumption level in a society is too high to permit
the next generation to achieve the same consumption level.
More and more economies are operating near their market
capacity limits; Europe, the U.S., Japan and the Five Tigers
are all bouncing near the limits. Operating at near market
capacity is a recipe for marketing excesses. The resulting
crises are due to the marketing shadow—overconsumption—
whether it is oversold currencies, financial instruments, real
estate, business opportunities or dreams.
On the other side of the consumption capacity problem is
the resource capacity problem. In nature populations grow
faster than their stabilizing forces (such as predation) when
there is a surplus of supporting resources. In the days when
food was the limiting factor, Thomas Malthus postulated
that the human population was growing at a faster rate than
the food supply and this would lead to mass starvation.
Now there is even more at stake. The ecological con-
sequences of a mass consumption society range from
rapidly depleting scarce resources, environmental degrada-
tion due to extractive and manufacturing processes,
dangerous pollutants that persist in the environment,
emissions and waste due to logistics and distribution, and
emissions, waste and waste products due to the consump-
tion and post consumption processes. Together they
threaten to make planet Earth uninhabitable to many
species, including humankind.
Approaching the limit of carrying capacity, small displace-
ments cause large oscillations. To illustrate the argument, the
instability in the system as it approaches carrying capacity is
depicted in Fig. 2. The carrying capacity K is depicted as an
J. of the Acad. Mark. Sci. (2012) 40:35–52
increasing function over time to allow for growth in resources
due to new discoveries and technology. It may indeed be
characterized by periodic discontinuities or “steps” (for
example, corresponding to revolutions in mechanization and
polymer chemistry in the past, digitalization and biotechnol-
ogy in the present, and coming soon, nanotechnology). Even
when the function steps up, the speed with which businesses
respond globally to exploit the opportunities is such that re-
convergence is a matter of a few years (not decades like it
was with mechanization and the industrial revolution).
The theoretical impact curve is depicted here as the well-
known Ehrlich equation I=PAT (where P is population, A per
capita affluence, and T the damaging side effects of
technology per unit of consumption). If overshoot is
accompanied by irreversible damage to carrying capacity,
the result could be catastrophic extinction of species (called r
selection). K selection, on the other hand, means a stable
equilibrium population, but a turbulent equilibrium due to
human tendencies. Hence the recurring “bubbles.” The impact
function and its variants have been empirically tested (e.g.,
Chertow 2001), and a number of alternative measurements are
also being used like ecological footprint, critical natural
capital, materials flow and economic throughput analyses.
Marketing scholars are cognizant of the imperative for a new
and probably radical reformulation of its fundamental philos-
ophy, its operational premises and the heuristics that are used to
make marketing decisions. But what are the conceptual
underpinnings of such a worldview? How can we construct
an orderly set of criteria that can reverse or at least slow down
the operational mindset and theorems that have guided
marketing’s activities for over a half century? Sustainable
marketing starts where marketing starts, at the very beginning
of the product development cycle. It ends where marketing
ends, disposal of the side effects and detritus of consumption.
In his influential book The Ecology of Commerce, Hawken
(1993) phrases it succinctly, “Business has three issues to
face: what it takes, what it makes, and what it wastes.” These
Fig. 2 Carrying capacity
45
three principles can be laid across marketing’s venerable
planning framework, the product life cycle, to create its
shadow life cycle—see Fig. 3. At the bottom of the figure are
listed the kinds of questions that will need to be answered as
part of marketing decision making. So far marketing has taken
a passive and reactive position vis-à-vis sustainability—by
developing “alternatives” (often perceived as more expensive
and less effective) for the ecology-sensitive consumers
among, for example, the LOHAS segments. In contrast we
emphasize a new philosophy for firms to proactively:
(1) communicate the harmful side-effects of wasteful
consumption,
(2) grow the segments of environmentally conscious
consumers, by developing superior products at stan-
dard market prices, and
(3) demarket/countermarket certain products, technologies,
and marginal consumer segments (e.g., consumers who
cannot afford expensive homes).
Currently, in their decision calculus, companies have to
worry only about the costs of operations they undertake (and
in some cases, the costs of foregone opportunities) relative to
projected returns. Society bears the cost of environmental
impact, but there is a growing accountability to agencies like
the EPA that can require companies to clean up their
environmental messes and a growing movement around the
“polluter pays” principle. The BP oil spill tragedy in the Gulf
is a stark case in point. In the not too distant future firms will
be required to cost-in their nature costs of operation. It is an
opportune time for the discipline to be developing environ-
mental cost accounting models that can become an integral
part of its decision calculus.
In Fig. 4, three types of hypothetical nature cost curves
have been overlaid on the product life cycle. Curve A may
be a company in the petroleum industry, with a bipolar
distribution depicting high nature costs during exploration and
refining and during the consumption (combustion) of its
46 J. of the Acad. Mark. Sci. (2012) 40:35–52

Fig. 3 Ecology of sustainable

product life cycles

Technology Component Product Product Product Waste

Development Production Manufacturing Distribution Consumption Recycle
Search for Scarce, harmful materials Excessive consumption scarce material
alternative Footprint, emissions, waste Slowing “planned obsolescence”
technologies Emissions, waste
Health side effects of consumption

products. Curve B could be a firm in the transport industry
(automobiles, airlines, trucking, shipping) where the products
have a long consumption life span. Curve C could be a firm
with a product that contains persistent organic or chemical
pollutants (like DDT, lead, mercury, nuclear waste) and leaves
lasting long-term damage in the ecology at a growing cost of
recovery. There is a pressing need for:
(1) developing the accounting concepts for measuring
such nature cost curves,
(2) defining the joint space of environmental and marketing
decisions over the product life cycle, and
(3) a cap-and-trade framework for consumption related
environmental effects.
Sustainable marketing almost inevitably implies a slow
down in sales growth and product obsolescence cycles, and
in some cases, even shrinkage of the market. Assuming then
that developed economies are going to grow slowly close to
market saturation and are able to rein in their consumption
capacity at some stable level just below carrying capacity,
what does that mean for the global economy and the growth
opportunities for business? That is where the BOP, the billions
of people at the base of the pyramid that the consumer society
left behind, enters the equation.
Base of the pyramid marketing
The economic miracle of the 20th century is far less amazing
when it is considered from its underside. Over three billion
people, nearly half the world’s population, live on less than U.
S. $2.50 (purchasing power parity) a day; using the standard
of $10 a day for an affluent country like the U.S., puts maybe
about ninety-five percent of humanity in poverty (Ravallion et
al. 2008). The share of global income of the poorest forty
percent of the world population was a mere five percent in
2005, whereas the wealthiest twenty percent received
seventy-five percent of it (Watkins et al. 2005).

Fig. 4 Nature costs and the Sales Revenue/

product life cycle Nature Costs ($)

Time
Product Introduction Growth Maturity Decline
Development
J. of the Acad. Mark. Sci. (2012) 40:35–52
It is perplexing—why one of the oldest problems plaguing
humankind persists with few solutions in sight? Some argue
that it is due to a lack of determined effort by governments and
the community of nations Only a few nations achieve the
small UN target for development aid of 0.7 percent of GDP.
The Borgen Project, an anti-poverty advocacy organization,
estimates the annual cost of eliminating starvation globally at
$19 billion a year, a mere drop in the bucket compared to the
$1000 billions spent annually on military expenditures (www.
wikipedia, 2007). Some believe that the solution calls for a
vast transfer of money from the wealthy to the poor nations
(Sachs 2005). But directing more and more money to the
problem will be only as effective as the development models
in use. The theories and development tools used to date have
had an impact (Watkins et al. 2005), but it seems
insignificant in the face of the size and gravity of the
problem. It is possible that there are more effective
development models that can be designed based on the
theories and methodologies of business management.
Around the turn of the century Nobel Laureate in economics
Amartya Sen proposed the concept of “empowerment,”
arguing that economic development is fundamentally “the
expansion of individual freedom of choice” (Sen 1999). He
inspired a shift toward empowering the poor as the key to a
lasting end to poverty. Under Wolfenshon the World Bank
adopted empowerment as its primary strategy in “attacking
poverty” (Narayan 2002). But one cannot simply jump to
empowerment. Premature empowerment can be destabilizing,
as we learned from the Soviet Union’s instant transition to a
market economy compared with the gradual approach adopted
by China.
After decades of programs designed around development
theories proposed by economists, sociologists and anthropo-
logists, there is a new movement in the field—development
approaches proposed by scholars in business schools. Two
events acted as catalysts. One is the late C. K. Prahalad’s
influential book Fortune at the Bottom of the Pyramid
(Prahalad 2005). The second is the award of the 2006 Nobel
Peace Prize to Muhammad Yunus. Business Week named
Yunus (founder of the Grameen Bank and modern micro-
finance), among the greatest entrepreneurs of all time,
joining Bill Gates, Steve Jobs, Henry Ford, Thomas Edison,
John Rockefeller and the like. These high visibility influen-
ces have drawn the attention of large multinational corpo-
rations (MNCs) and venture capitalists to the problems and
potential of the BOP.
Prahalad’s model is based on aggregating the demand of
the BOP and equipping poor people with the microfinance
to start and run businesses. According to Prahalad the
purchasing power of the BOP collectively amounts to $8
billion per day, making them a multi-trillion dollar annual
market for the world’s products. Prahalad recounts many
business success stories such as Hindustan Lever in India
47
and Casas Bahia in Brazil. An especially arresting example
is about cell phones in Africa. A single cell phone in a Sub-
Saharan region can create a business opportunity for a small
reseller of calls by the minute. In several African countries
cell phone sales are growing 150 percent a year, far in
excess of saturated Western markets. Prahalad’s calcula-
tions and assumptions have been questioned by Karnani
(2009), but we emphasize that a purely commercial solution
ignores how vulnerable the poor consumer is to exploitation
(Chakravarti 2006). As narrated in a Business Week feature
story (Grow and Epstein 2007), commercial abuse of the
poor consumer is rampant even in a sophisticated and
regulated society like the U.S.
An alternative model has been developed by Kotler and
Lee (2009) based on the social marketing model. The
model is equally relevant to profit minded commercial
firms, nonprofit minded NGOs and charitable trusts and
public service minded government agencies. The theories
and methodologies of marketing can greatly enrich the
quality and effectiveness of ongoing programs. For exam-
ple, the techniques for market segmentation, consumer
analysis, and targeting can immediately improve the quality
of program design and delivery. Almost all current
approaches use census-style “mass market” methods of
aggregating the poor and broadcasting aid programs to the
mass segments. To marketers it is evident that these mass
segments can be usefully analyzed based on differences in
needs, means, sub cultures, motivations, literacy, life
cycles, social class, benefits and so on. Even the poor have
distinct “existence styles.”
In this paper we offer the elements of a different marketing
model for tackling poverty. It is based on two core ideas. The
first is an adaptation of one of marketing’s oldest theories
adopted from sociology—Maslow’s venerable hierarchy of
needs (Maslow 1943). It is a time worn tool in marketing
pedagogy and probably largely irrelevant in a developed
society. But it is a useful framework to order and align the
problems and solutions of subeconomic communities, issues
which are leap-frogged by Sen’s empowerment model and
Prahalad’s MNC business model. The second is the
application of the concept of marketing networks and the
distributed production-consumption model discussed earlier.
The needs-means hierarchy
Maslow’s hierarchy is well known to marketing—a person’s
motivations progress from satisfying physiological needs, to
safety needs, to the social needs for love and belonging, to the
need to be recognized and esteemed among society, and
ultimately to the need to actualize oneself. Once a need level is
satisfied it ceases to be a motivating factor, and the person
switches to pursuing the next higher order need. The
interpretation of each need is likely to be different for people
48
raising themselves out of abject poverty. Most important, the
need hierarchy of the poor has to be understood in the context
of a critical parallel hierarchy—a hierarchy of means. This is
depicted as an inverted pyramid in Fig. 5, implying an
expanding horizon of means.
One reason for the meager results of global aid programs is
that they target multiple levels of the hierarchy simultaneous-
ly, maybe even indiscriminately. Many are missing their
targets and the motivations of their targets. Instead of creating
a harmony of ends and means they are creating a muddle of
inefficiency and dependency. Marketing logic teaches us to
start by analyzing the unique needs of specific groups of the
poor, and then develop products, services, solutions, distribu-
tion channels and communication programs reflecting their
unique circumstances. Needed are instrumental measures for
segmenting the poor, and targeting and positioning need-
solutions and means to them.
Figure 5 highlights that a comprehensive poverty
alleviation campaign needs to integrate two parallel worlds
of the poor. On the one hand it should design intervention
strategies that match the subjects’ movement along the need
hierarchy. On the other it must create the wherewithal and
pathways for the subjects to navigate themselves along an
opportunity hierarchy such that their means-motivations
match their needs-motivations. Thus the second integral
component of our model is applying the concepts of
networks and distribution channels to operationalize the
needs-means hierarchy in a way that the economic benefits
are shared among the poor and become the means by which
they can satisfy their needs. The franchising model can be
applied to creating distributed production-consumption
networks in ways that foster economic opportunities.
Many articles have been written about the need to re-
engineer products and packaging for the poor markets. But
the game-changing innovation may be reengineering
production itself. Flooding the markets of the poor with
products manufactured in modern plants in distant cities
Fig. 5 The needs-means
hierarchies of subeconomic
communities
J. of the Acad. Mark. Sci. (2012) 40:35–52
and countries is not a self-sustaining solution. Poverty has a
local face. More value-added must be located near value
consumption. Automated small scale production distributed
as close to the consuming populations as possible is the
solution. Only then can the needs-means hierarchy become
self-generating and self-sustaining.
The distributed production-consumption model
Distributed production is the opposite of the mass production
factories of the 20th century; it is the anti-Flextronics. It would
be terribly cost ineffective if it wasn’t for the revolution in
automated, computerized manufacturing. It is now conceiv-
able to develop village-level automated micro production
systems linked to the parent company via the Internet and
programmed to assemble modern quality products in small
quantities on demand. One does not even need to wait for
nanotechnology to make this happen. Such systems would
take just-in-time from production all the way to consumption,
and eliminate much of the costs of marketing, logistics and
distribution, which constitute the largest chunk of the
delivered price of many consumer goods.
An excellent example that this can be done is offered by the
NGO KickStart. This NGO’s approach is to develop
rudimentary mechanical products that are directly connected
to improving the productivity and income of rural popula-
tions in impoverished areas of Kenya, Tanzania and Mali,
with plans to extend to West Africa, India, Haiti and
Kyrgyzstan. It sees its mission in the spirit of the Chinese
proverb “Give a man a fish and he will eat for a day; teach a
man to fish and he will eat for the rest of his life.” KickStart
developed a leg-powered irrigation pump that allowed poor
farmers to move from subsistence farming to growing cash
crops like fruits and vegetables. It developed a hand press for
processing oil seeds into higher value products like cooking
oil and oilseed cake. It developed a technology for making
cheap building blocks for constructing homes. It produces
J. of the Acad. Mark. Sci. (2012) 40:35–52
the products locally and markets them through rural
channels, maximizing as much downstream employment
and profits as it can. The NGO claims to have created 88,600
enterprises generating $88.7 million in profits and wages
annually, and moved 439,000 people out of poverty forever
at a cost of $60 per person (www.kickstart.org).
The managerial model for distributed networks is the
franchising model. The MNC that tries to set up its own
distributed production and distribution network will not be
localized enough to adapt to the structure and culture of
poverty as it exists locally. It will not transfer enough of the
wealth creation process to impact the means creation process
locally. It will not distribute enough motivational forces
among the populations to make the model self-sustaining.
Distributed production-consumption networks must be
organized around the need and resource structure of poor
communities, not around downsized need structures of the
wealthy. The evolution of the need structure and its
satisfaction should be gradual and not driven by visions of
leap-frogging. No doubt there are areas such as communica-
tions, entertainment and utilities where leap-frogging is
inevitable, but pushing consumption across a broad spectrum
can cause market fractures and is likely to be unsustainable.
Promoting markets for the shared use of cell phones and TVs,
cheap gas and electricity is one thing, marketing video games,
refrigerators, skin lightening cosmetics, and athletic shoes is
leap-frogging the means hierarchy and may atrophy it.
The product-market composition of distributed networks
is a function of the natural resources and livelihood
characterizing a particular community. Urban poor, for
Fig. 6 Distributed production- Electric
consumption networks
Natural
Gas
Utility
Production
Bio
Fuels Distribution
Franchises
Communications
Phone, TV
Fruits &
Vegetables
Processed
Food
Staple Franchises
Grains
Milk
Meat
49
example, most often provide manual labor or household
services to the wealthy—services such as laundry, land-
scaping, cleaning and cooking. Rural communities continue
to be predominantly agricultural and pastoral. If the village
community is large enough, it will also support the basic
trades like carpentry, masonry and shop keeping. Sustain-
able production-consumption networks are those that
directly engage the predominant indigenous sources of
livelihood in a community.
Figure 6 depicts typical rural livelihood clusters. At the
most basic level is manual labor. This is literally manual
labor, with people working with their hands, using
rudimentary tools and carrying heavy materials around on
their heads or backs. They do not even have the benefit of a
wheel barrow. In the semi-skilled building trades, masons
still work with a hammer, chisel, trowel and a mixing pan.
Powered tools just do not exist. A local production system
for assembling modern mechanical tools and simple
powered work tools and power generators, supported by a
microfinance system and a training system, would have a
profound impact on the productivity, income and quality of
work-life for the common rural laborer. Indeed, focusing on
the needs of the rural middle class has created the anomaly
that one can spot a number of farm tractors standing in rural
villages, but no power tillers or mechanized hand imple-
ments for alleviating the toil of the menial farm worker.
Distributed production franchises can be designed to
target each employment cluster in Fig. 6. The opportunities
inherent in each are self evident. Power failures are chronic
in the villages, if they have power to begin with. Cooking
Sanitation Leather
Prep
Leather Leather
Goods Goods
Franchises
Franchises
Franchisor
MNCs
Shop
Microfinance Keeping
Banks
Tailoring
Powered
Trade -Tools
Franchises
Repairs Labor
Building
Carpentry
Trades
50
gas supply is sporadic and comes through agencies in larger
cities. Bio fuel opportunities abound but are not fully
exploited because they tend to be government-sponsored
initiatives which favor the middle class and are not
entrepreneurially embedded in the BOP. In designing
distributed networks it is important not to lose sight of the
production-consumption synergy. Training the consumer on
how to optimize the use and productivity of the products,
adapting the product to his/her needs and providing the
means through leasing or microfinance are the keys to a
sustainable needs-means virtuous cycle of development.
Understanding how the marketing model can be adapted
and applied to raising the consumption capacity and quality
of life of the world’s 4 billion consumers in the BOP in a
sustainable way is vital to the future of globalization and
world prosperity. The developed world will benefit from the
degree of poverty alleviation in the developing world. As
the poor acquire purchasing power, they provide the
“missing” market that the developed world needs to supply
full employment to its own citizens.
Yet the growth of the poor world’s purchasing power
will pose the question once again of limited natural
resources and increasing pollution and climate damage.
We cannot avoid the need to strike some balance in the
distribution of the world’s resources among the competing
claimants in different countries and social classes. Not only
must the present generation arrive at an acceptable balance
in the consumption of the world’s products and resources,
but it must also make sure that current consumption levels
do not prevent the next and future generations to inherit the
same capacities as this generation.
The marketing discipline must take a prominent position
in fashioning this understanding. Without a body of
knowledge that can address the social problems of the
world, marketing will surely lack the philosophical direc-
tion and stature it needs heading into a future rife with
global, economic, social and individual opportunities, but
also with conflicts of interest.
Conclusion
This has been a far ranging discussion of marketing’s future
possibilities. Marketing is confronted with a Kuhnian
paradigm shift, a transformation like nothing before. The
prominent features of the shift are consumer experiences,
networks and a macro domain spanning the global
commons.
Consumers experience products and services via their
senses. Our understanding of sensory experiences is fast
becoming a neurophysiological science. The growing impact
of digitization and virtual media considerably expand the
scope and impact of sensory satisfactions. Approaching is a
J. of the Acad. Mark. Sci. (2012) 40:35–52
nanotech driven NBIC phenomenology, a surreal world of
quantum physics and fantasy experiences far exceeding
virtual reality. To cope, marketing will need to develop a
vastly expanded base of theoretical and methodological tools.
The way consumer products and services are created,
delivered and consumed is also in radical shift. Gone are the
days of vertical integration. The phenomena of marketing are
being distributed between consumption networks, marketing
networks, innovation networks and production networks. The
day is not far when micro production systems that produce to
demand and are located close to or in the place of
consumption can be developed. Network organization is
evolving to a distributed production-consumption model.
Finally there is the marketing superphenomenon.
Globalization continues on its fitful but inexorable pace.
Nations like China and India with expanding consump-
tion bases are racing ahead to economic prosperity. A
more prosperous world magnifies the side effects of
consumption societies on the ecology and resources of
the world. At the same time large sections of the world
population languish on the sidelines. Economic theory
based models for alleviating poverty have had marginal
impacts. It is an opportune time, an imperative time, for
marketing to step forward with its model for a sustainable
consumer society and base of the pyramid marketing.
What does the new marketing horizon portend for key
marketing stakeholders—management, scholarship and public
policy? For managers we emphasize the following thoughts:
(1) Managers need to understand the nature and theory of
network organization. What are the various forms of
networks and the market and technology conditions
which favor one type over others; the economics of
network exchanges and the distribution of functions,
risks and rewards; the governance structures and the
organization of control, coordination and relationships;
and looking ahead, what will be the nature of
decentralized production-consumption in their industry?
(2) There is a new consumption philosophy of customer
care. Customer care means acting on behalf of the
customer and his/her long-term interests. The focal
firm’s primary function in the network is marketing
and branding, and its primary role is to act as the agent
of the consumer. This may mean demarketing and
countermarketing as often as it means marketing.
(3) Growth is not a panacea in the new marketing. For
growth firms will increasingly look to lower middle
and BOP markets. Micro marketing and distributed
production models will be prominent, and the global
strategies of firms like Nokia and Lever Brothers will
be carefully emulated.
(4) The new marketing will demand a new cost accounting
featuring nature costing. Firms will need to be active
J. of the Acad. Mark. Sci. (2012) 40:35–52
change agents in industry groups and government to
develop uniform conventions for measuring nature costs
and incorporating them in delivered price to the consumer.
(5) The decision calculus will become further complicated
by serious intangible considerations. The possibilities
for stealth marketing and consumer manipulation
posed by the NBIC revolution, demands a commit-
ment to establishing high ethical and moral managerial
values. For this too, firms will need to be proactively
engaged with industry groups and regulators.
What about marketing science? All of the five forces
affecting marketing management greatly expand the
scope of marketing scholarship. We see an already
bursting tool box of theories, areas of application, and
complex methodologies, becoming far more exacting in
detail and rigor. To be a skilled consumer researcher may
mean one has to be half a neurophysiologist with expertise in,
for example, fMRI besides the latest in research design and
statistical method. Marketing scholars will need educational
backgrounds in marketing on top of education in special fields
of science such as neurophysiology, nanotechnology and
environmental engineering. No doubt there will be an
increasingly specialized academy. But marketing scholars
may also need a new philosophical orientation, one which is
tied to the well-being of the consumer and society over the
well-being of marketing management.
Last, public policy. The implications of nanotechnology
and a threatened ecology greatly elevate the stakes of public
policy in marketing. Despite political currents to the contrary,
we dare say the old laissez-faire capitalism is approaching its
end. Modern markets are highly concentrated and
interconnected in networks of global dependencies. They bare
little resemblance to Adam Smith’s competitive markets. The
meltdown of the financial system in the U.S. and the huge
amounts of public money required to save private firms from
collapse have many scholars talking about the imperative of a
new capitalism (variously called conscious capitalism, social
capitalism and so on). This is compounded many times over
by the potential for invasive consumer technologies around
the corner. One can expect a new kind of regulatory
environment that struggles to preserve market behavior and
incentives amidst more closely monitored social performance
and obligations. One can expect a regulatory regime more
closely engaged with industry groups to develop self-
regulation norms and mechanisms (Achrol and Gundlach
2011) but also demand a clear responsibility for ameliorating
damage to consumers and the environment.
There is an Aldous Huxley brave new world awaiting
humankind in the not too distant future. It will require brave
consumers to live in it and brave marketing scholars to
understand it. The side effects and fallout of a neuro-
mapped and nanotech invaded world of consumption are
51
hard to imagine. Are marketing scholars prepared to
contribute to the new social consciousness required to
guide marketing practices and husband natural resources?
In the millennial shift, will marketing develop the scholar-
ship and methodologies to be biological and social
scientists and not just management engineers? We end this
article with this sentiment: one meaning of “millennium” is
a hoped-for period of joy, serenity, prosperity, and justice.
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