Eller College of Management professor’s innovative new approach to marketing wins top American Marketing Association award
A shift to replace the longstanding 4 P’s of marketing (place, product, price, and promotion) has far-reaching implications for today’s managers.
TUCSON, Ariz. – February 16, 2005 – Forget what you know about buying and selling—Eller College professor Robert F. Lusch has offered an innovative way to think about business based on research that has won the American Marketing Association’s (AMA) Harold H. Maynard Award for Most Significant Theoretical Contribution in Marketing during 2004.
In “Evolving to a New Dominant Logic for Marketing” (Journal of Marketing, January 2004), Lusch and co-author Stephen Vargo (University of Maryland) suggest that to succeed, businesses must stop thinking in terms of “things” and recognize that every transaction is a service transaction. For example, when Toyota sells a car, it is actually selling transportation service. When Starbucks sells a mocha, it is selling refreshment service.
This idea that goods are actually distribution mechanisms for services is one of eight fundamental premises (FPs) that Lusch argues will soon replace the longstanding “4 Ps” of a marketing that grew out of Industrial-Revolution-era economics—place, product, price, and promotion. Other FPs of the new business paradigm include: applied knowledge (not tangible goods) is the fundamental unit of exchange; the customer is always a co-producer; and a company can’t set the value of a service, only make a value proposition.
This shift in thought has far-reaching implications for today’s managers. For starters, knowledge becomes a business’s chief asset: It is knowledge that flows through the supply chain, knowledge that drives service value, and ultimately, knowledge that gives a company a winning edge.
Additionally, a sale no longer ends a transaction, it begins one. “It used to be that we were limited in production and resources, so we were very focused on things, and selling those things meant successful business,” Lusch explains. “Now, we can turn out unlimited goods. The products themselves are just commodities. What's important is the experience that people have with services the products deliver, and that experience unfolds over time. The companies that are really going to make a difference are the ones that recognize the long-term process of creating value.”
Robert Lusch heads the Department of Marketing at The University of Arizona’s Eller College of Management and served as dean of the business schools at Texas Christian University and the University of Oklahoma. He is author or co-author of numerous books and articles on retail marketing, marketing channels, and marketing theory and management. He is one of few scholars to have won the Maynard Award twice (first in 1996). The American Marketing Association awards the Maynard annually to honor “significant contribution to marketing theory and thought.”
The Eller College of Management at the University of Arizona is internationally recognized for pioneering research, innovative curriculum, distinguished faculty, excellence in management information systems, entrepreneurship, and social responsibility. U.S. News & World Report ranks the Eller undergraduate program #14 among public business schools and three of its programs are among the top 20 — Entrepreneurship, MIS, and Management. U.S. News & World Report ranks the Eller MBA Full-Time program #44 in the U.S. and #21 among public business schools. The College leads the nation’s business schools in generating grant funds for research. In addition to a Full-Time MBA program, the Eller College offers an Evening MBA program and the Eller Executive MBA. The Eller College of Management supports approximately 5,700 undergraduate and 700 graduate students on the UA campus in beautiful Tucson, Arizona.
Liz Warren-Pederson, Eller College of Management
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