Marketing as Service-Exchange: Taking a Leadership Role in Global Marketing Management

Companies with a superior understanding of the customer usage experience create offerings that promise greater value-in-use than similar competing offerings, which enables the most innovative companies in the world to outperform rivals. The Boston Consulting Group and BusinessWeek recently surveyed 1,070 senior managers in 63 countries in Asia, Europe and North America, and found that the underlying technology of many innovative products is not necessarily different or more advanced than previous models or competing offerings; instead, one of the primary keys to building a winner is a firm’s ability to embed significantly greater service potential in a relatively simple device or service. For example, the Apple iPod is not valued by customers because it’s a mobile MP3 player (there are many similar and even technically superior devices) or because it carries the Apple brand (most iPod users do not own a MacIntosh computer). Its superior value to users stems from its unique feel and shape, ease of use, and simplicity of its software, coupled with a new business model that provides consumers affordable access to plentiful content while also giving music companies access to a mass market and mechanism for collecting payment for copyrighted material. The basic technology of playing MP3 music files is unremarkable; it’s the constellation of additional service potential embedded in Apple’s version of the product that makes the iPod MP3 player so dominant (over 70 percent market share). Similarly, 3M Company excels at embedding ever-greater value-in-use in new versions of its Post-It adhesive products, and Nokia engineers excel at customizing the basic mobile phone interface (screen, menus, contact list) for use by masses of less literate and low-income consumers in India, China, and other developing countries. Other leading innovators such as Google Inc. embrace the concept of ‘‘open innovation.’’ For instance, Google extends its already substantial in-house research and development (R&D) capability by inviting customers to co-produce imaginative applications for new technologies and services, such as its global mapping software. What allows these leading innovators to surge ahead while other firms engage in endless cutthroat competition and shrinking profit margins? We argue that the world’s most innovative companies share a different mindset, or mental model, of how markets work compared with the traditional view of exchange and value in marketing and economics. Until now, marketing theory and practice have developed a logic that is heavily based upon what is tangible. This logic