UNDERSTANDING SOCIAL VALUE
The AMA has changed the definition of marketing quite a few times over the last 50 years. The 2013 definition states: "Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large." In this definition, we have broadened our intellectual horizon, moved away from the profit orientation in marketing and placed more emphasis on the creation and deliverance of "value." The definition gives us an opportunity to establish what Alfred Nobel proposed-a legacy of leaving a better world than we inherited. To understand 'social value', we have to return to the very definition of marketing.
Social value of a product or service is more than satisfying a need. It has a broader long-term impact that creates legacy. Marketers need to identify, measure, and deliver social value through a product/service. As we design a new product, this aspect needs to be highlighted. In this paper, social value is defined as the value exchanged in marketing that is useful, sustainable, affordable, observable, and ethical (see Exhibit 1).
* Usefulness emanates from the utility or the benefit that a product offers. It is innate and fundamental to the core product. Social value cannot be created unless it offers utility. Its impact is felt beyond the primary need satisfaction.
* A social value is self-sustainable. A product must be able to deliver the benefits over a long term. Even a fast food company can offer long term benefit through saving time, nourishment, and happiness. Legacy is established through sustainability.
* Affordability is actually a market test for a product. It is the price that the consumers or the society pays for a product. Social value cannot be created when prices are beyond the purchasing power of the people. For nonprofit organizations, the offering must not be more than its cost.
* Observable tangible or intangible benefits of a product are important. People must be able to see, feel, touch, or observe the social value. We should be able to measure it to some degree. The productivity gain of a microwave oven is measurable.
* Ethical standards of the group have to be recognized. Social value must be ethical in the society it is delivered. A beef burger's social value in a fast food chain could be perceived negatively in a country where cow is a sacred animal.
Marketing for a better world begins with a social value that has a long-term societal and global impact. By delivering social value, we can establish a legacy and may earn a Noble Prize someday. Porter and Kramer (2011) expressed similar views in one of their recent articles. They believe that companies are "trapped in an outdated, narrow approach to value creation," and, are "focused on optimizing short-term financial performance, they overlook the greatest unmet needs in the market as well as broader influences on their long-term success." Porter and Kramer further note, our success lies in the creation and delivery of "shared value."
APPLICATIONS IN BUSINESS
Business plays a critical role in offering social value. A microwave oven is not a kitchen item; it is a time saving device whose social value is labor productivity. So is a personal computer whose ability to create, communicate, store, and deliver knowledge advances social development. A vacation package is almost like recharging your battery for the next venture. The social value of Massive Open Online Courses (MOOC) or Khan Academy (https://www.khanacademy.org/) is in knowledge development at the proletariat level. Their effort contributes to higher productivity and better quality of life. Ted Talks (https://www.ted.com/) have demonstrated the power of new ideas coming from the common people enlightening our thought process. The spread of communication could not have been possible without YouTube or social media. Social media have given us a platform to deliver social value to an evolving world. Technology of the smartphone combined with social media sparked the Egyptian revolution of 2011.
There are other examples we can cite. Grameen Bank did not win the Nobel Prize because it gave loans to poor women. It won because it generated income in a marginal society that has empowered women in a positive way--its social impact is everlasting. Now, nearly 200 million people benefit from its activities across the globe. Similar arguments can also be made about the social value of a modern sanitary system aggressively marketed by the Bill and Melissa Gates Foundation. Its contribution in personal hygiene, health, longevity, and quality of life is phenomenal. The 2006 feature-length documentary "Black Gold: Wake Up and Smell the Coffee" has shown the entire value chain in coffee production and consumption (http://blackgoldmovie.com). We learned that Ethiopian farmers get only a few cents...