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A naturological approach to marketing exchanges: Implications for the bottom of the pyramid
Journal of Business Research 63 (2010) 602–607
Contents lists available at ScienceDirect
Journal of Business Research
A naturological approach to marketing exchanges: Implications for the bottom of the pyramid☆ Ronald Paul Hill ⁎ Villanova University, 800 Lancaster Avenue, Villanova, PA 19085, United States
a r t i c l e
i n f o
Article history: Accepted 1 January 2009 Keywords: Subsistence marketplaces Base of the pyramid Stakeholder theory Naturological approach
a b s t r a c t Marketing as exchange has been the sine qua non of the field for over thirty years. While buyer–seller dyads dominate traditional conversations, other forms of transactions are included as long as value transfer occurs. The most logical extension is Stakeholder Theory, an approach with the same basic structure for understanding, maintaining, and advancing important relationships among firms and their constituencies. Together, they posit that self-contained individuals or units have a marked impact on one another, which passes across defined boundaries at discrete periods of time. Yet the failure to capture organic and dynamic ways in which such entities interact necessities a new approach, such as the naturological perspective that recognizes porous boundaries and reverberating consequences of marketing exchanges, especially among consumers and other impacted parties who survive at or near the proverbial bottom of the economic pyramid. © 2009 Elsevier Inc. All rights reserved.
1. Setting the stage The scholarly and practical field of marketing has long considered the process of exchange as its centerpiece (Bagozzi, 1975). In the most rudimentary form, buyers exist on one side of the exchange equation and sellers on the other. They transact when certain conditions are met, suggesting that each party gives up something of value in return for something they value even more. While the generic model trades goods and services for money, the broadened marketing concept includes an enlarged set of possibilities that embraces the selling of people, places, and ideas (Kotler and Levy, 1969). Regardless, the process is approximately the same—markets with distinctive boundaries are identified, exchange participants seek partners to interact with at particular times and places, and the impact is well-defined in the short-term (e.g., satisfaction) and long-term (e.g., brand loyalty). During the same timeframe, management researchers were developing the modern corporate social responsibility construct (see Frederick, 2006). Countercultural upheaval of the 1960s and acceleration of vigilance in the 1970s led to a variety of definitions that uniformly demanded firms consider the impact of their actions on internal and external constituencies. As a result, the 1980s saw the rise of Stakeholder Theory (Freeman, 1984), a perspective sharing many
☆ Ronald Paul Hill is the Richard J. and Barbara Naclerio Chairholder in Business and Senior Associate Dean of Intellectual Strategy at the Villanova School of Business. He is thankful for the inspiration provided by Bill Frederick and Madhu Viswanathan, as well as two very helpful reviewers. ⁎ Tel.: +1 610 519 3256(Work), +1 610 306 1911(Cell), +1 484 872 8464(Home). E-mail address: [email protected]. 0148-2963/$ – see front matter © 2009 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2009.01.014
characteristics of the societal marketing concept. Both approaches demarcate strict borders between and across entities (or collections thereof), with predictable and isolated consequences of their interconnections. They converge on the belief that the originators of explicit or implicit relationships are responsible for the well-being of individuals and/or groupings they affect, which fits comfortably within the rationalistic neoclassical free-market model of the economy. Taken together, these academic models posit similar structures and functions. The simplest level involves marketing exchanges composed of dyadic interactions that place buyers and sellers on opposing sides (Schurr and Ozanne, 1985). They often are viewed as differentiated bodies depicted as same-sized and close-looped circles separated by a symbol showing the possibility of some form of transaction (see bolded/ italicized circles in Fig. 1). Stakeholder extensions are a natural outgrowth of this modeling and adjoin more circles that contain other impacted entities. A typical list may include a host of distinctive constituencies such as the community, stockholders, customers, employees, suppliers, competitors, and the larger society (Snider et al., 2003). Some subsequent relationships take the form of legal contracts between the parties, while others are less formalized social contracts. The remainder of Fig. 1 provides a representation. While the elegance of this representation is its simplicity, important nuances that help define the quality of relationships are not captured (Cassill and Hill, 2007). For instance, relative size of the circles depicting firms and their customers or any other collection of individuals fails to recognize differences in status, power, and/or resources. Further, the arrows signifying some form of exchange between parties is unsuccessful at delineating the true level of impact that one unit has on another. Additionally, the line itself suggests a sole
R.P. Hill / Journal of Business Research 63 (2010) 602–607
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Fig. 1. Traditional representation of stakeholder model with embedded marketing dyad.
linkage at any given time while influence may occur on multiple occasions with a variety of simultaneous intentions and outcomes. Fig. 2 presents a different perspective showing a single consumer as miniscule compared to the selling firm, with several arrows of various sizes passing between them to reveal the extent of their interactions. This alternative model's usefulness particularly is apparent when observing impoverished consumers and their marketplace interactions. Recent research shows the importance of but lack of consistent attention by firms, corporations, and governments to impoverished consumers as they tend to satisfy individuals and organizations with greater levels of resources and influence (see Hill, 2008; Hill et al., 2007). Consequently, several billion people go without ordinary necessities such as potable water, nutritious food, adequate shelter, and basic healthcare on a regular basis. Even the novel bottom-of-thepyramid approach to serving the world's neediest (Prahalad, 2004) recognizes inherent imbalances between providers of goods and services and impoverished consumers when viewed on a particularized exchange basis. Therefore, only through some judicious combining of resources across scores of poor communities is their status enhanced enough to be worthy of exchange. As important are the nature of the boundaries and the reverberating effects of one constituency on the other(s). In this regard, the seminal work of Frederick (1998, 2004) provides an important template. His model demonstrates firms and stakeholders exist within bioeconomic ecosystems composed of entities whose daily lives and long-run survival are bound to one another. Frederick views such associations as among energy-transforming bodies that absorb some resources while placing other resources back into the larger environment. A guiding principle is resource accumulation, which unites with resource redistribution to ensure system survival (Hill and Cassill, 2004). The systemic challenge is to harmonize taking with sharing so the focal firm increases its longevity by developing or maintaining an advantageous position. An analogous marketing example includes the treatment of buyers by sellers in B2B contexts
in an attempt to maximize their profits while sustaining relationships (Hill and Watkins, 2007). Combining previous diagrammatic approaches with Frederick's naturological modeling advances a unique way of looking at marketing exchanges (Fig. 3). Several changes transform the buyer–seller dyad from its representations in Fig. 1. First, the impervious boundaries surrounding each participant that allow for limited interaction are now positioned as porous, with differences in permeability moderating external influences. Second, the arrows revealing the direction and consequence of impact are now implanted within the perimeters of each entity, demonstrating increasing or decreasing repercussions of information and product exchanges as experienced by sellers and buyers. Third, the consequences of their individual actions and reactions cause leakages across boundaries that affect other stakeholders, leading to subsequent responses and behaviors. The extraordinary work of Viswanathan (2007) and his colleagues (Viswanathan and Rosa, 2007; Viswanathan et al., 2008) provide an apt case-in-point. Some of this research is based on a multiyear project
Fig. 2. Alternative view of marketing exchanges.
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marketing and that both exchange partners are capable of becoming better off. This principle is the foundation of long-term, mutually satisfying relationships where producers of goods and services incorporate the perceived quality of consumer experiences into their production functions (Gundlach and Murphy, 1993). The broadening of this paradigm often has stayed within the confines of the dyad portrayed in Fig. 1, with modifications made only to the embedded labels that include such diverse exchanges as voter/ politician, teenager/Smoke-Free America, and older adult/AARP. Miller and Lewis (1991) provide an exception and attempt to marry stakeholder theory with the basic value exchange models of marketing. Their primary contribution is to help firms identify organizations, groups, and people directly or indirectly impacted by corporate activities in significant ways (see Fig. 1). In a similar manner, Freeman (1984) speaks of “value creation” as a desired outcome of stakeholder management, revealing a bias toward decidedly positive outcomes to the exclusion of any perceived negative consequences (see Hill, 2002). Fig. 3. Naturological model of exchange relationships.
2.1. The naturological approach to help impoverished female consumers in South India improve their abilities to navigate local marketplaces. Their research fully recognizes the differences in resources between individual women acting as buyers for their families and sellers with more advanced levels of numeracy and literacy. Through an extensive educational program, buyers are better prepared to negotiate with sellers and band together using their combined social capital to enforce appropriate standards of exchange etiquette. As such, these women reduce the porous nature of their boundaries and open those of sellers, making them less vulnerable. This discussion sets the stage for the remainder of the paper. The research purpose is to advance a new way of conceptualizing the broadened set of exchange relationships that operate within current marketing theory and practice, emphasizing impoverished consumers and implications for subsistence markets. The section that follows provides a comprehensive critique of exchange theory, using contributions from the natural sciences to resolve its weaknesses. The material after that presents application through an example of how impoverished consumers and citizens experience a number of positive and negative, intended and unintended consequences. The final segment brings the contribution to light, discussing the importance of naturological exchange approaches to support for the world's poor. 2. Exchange theory critique While exchange represents the central ingredient of marketing processes, theory development in this area has been decidedly limited (Houston and Gassenheimer, 1987). This lack means that some original and seminal scholarship on this concept continues to receive great attention by the field, with few definitions going much beyond the tradition of describing marketing as creation and resolution of exchange relationships (Bagozzi, 1974). Of course the primary motivation of the dyadic entities labeled buyers and sellers is need satisfaction, with the common belief that parties to the exchange perceive what they give up as worth less than what they receive, describing their relationship as “equitable” or “fair.” The end result is marked increase in something referred to as “potency,” which is operationalized as the capacity to meet current and future consumption requirements (see Houston and Gassenheimer, 1987). Of course, what occurs in practice may differ from the theoretical ideal. Some unscrupulous marketers take advantage of their consumers in unethical and illicit ways, eliminating opportunities for additional transgressions as soon as customers recognize that they have been duped (Hill and Watkins, 2007). Bagozzi (1978) suggests seller strivings to maximize personal gain without regard for buyer outcomes cause such a scenario. Nonetheless, the field has accepted an underlying premise that zero-sum thinking is antithetical to good
Frederick (1998) describes a novel approach to understanding such stakeholder interactions as naturological relationships. His resulting model posits that corporations transact with various parties within ecosystems based upon the tenets of biology and other natural sciences. These ecosystems are composed of living entities whose abilities to survive and thrive are bound to each other. Thus, Frederick views firms as connected, energy-transforming bodies that absorb resources from their environments to produce and place back into the environment a variety of goods and services. The primary guiding principle, energy accumulation, combines with energy redistribution, sustaining consumers and other necessary agents who play a role in the firm's success. The marketing challenge is to harmonize personal gain with interpersonal sharing to be responsive to changing circumstances over time (Frederick, 1998). The naturological paradigm has applications in a number of situations involving social contracts. Frederick (2004) describes its history via phases of human communal development based on evolutionary biology. The first phase is adaptation/reproduction, the final phase is evolving ecosystem, and others, such as reciprocal altruism and social reciprocity, sandwiched in between. One phase—termed social exchange—is consistent with basic marketing parameters and describes transactional cooperation as determined by relative resource levels, individual and group skill bases, and perceptions of their impact on adaptation/survival. Another phase, cheater detection/punishment, posits that humans have a neurological impulse to search for and penalize persons who fail to reciprocate in exchanges and to recompense individuals who meet obligations to give back. This body of research positions firms and their internal and external constituencies as parts of biological systems, making the following questions germane: How can entities maximize their interpersonal or interorganizational gains without jeopardizing necessary levels of cooperation? Should their strategies and tactics vary during times of resource availability versus times of resource scarcity? An extension of the Frederick approach that helps answer these queries is skew selection (Cassill, 2003). This theory suggests that profit seeking and profit sharing are not opposites but complementary strategies designed to create a positive long-term impact. Thus, abundant resources when available, divide in ways that ensure the give-and-take reciprocity of external parties now and into the future. When lacking, resources are withdrawn or taken back by the entity and hoarded. Skew selection identifies this behavior as profit seeking and the underlying drive or motive as egotism, which manifests in benign or malignant varieties (Cassill and Hill, 2007). Benign profit seeking occurs when resources are put aside during periods of abundance, yet leaving more than enough for all system members to meet their current needs. Malignant profit seeking involves stockpiling resources
R.P. Hill / Journal of Business Research 63 (2010) 602–607
during periods of scarcity, causing weaker system members to go without and to face possible shortages. Biologists have found that the longevity of malignant profit-seekers in nature is often short (Cassill, 2003). Wealthy members of the ecosystem who stockpile at the expense of others may be compromised when less fortunate entities come together and appropriate their capital without reciprocating or if too many leave the fold and future resource flows diminish. A better long-term survival strategy for wealthy profit-seekers is to share with the masses as an appeasement to avoid confiscation or to keep the masses interacting to avoid predation from outsiders, consistent with the strategies employed by the global financial/banking system prior to its collapse in 2008. When faced with such threats, the most effective profit-sharing strategy is trickledown sharing in which more and more get less and less without ignoring the amounts necessary for minimal satisfaction. This process allows entities to increase their reach while maintaining elite positions or status. Trickledown (as well as lateral) sharing is an innate part of human interaction but its pervasiveness often is overlooked (Hill and Cassill, 2004). As another example, consider the policy of banking executives to place minimal facilities in impoverished U.S. communities in order to meet new regulations and create sufficient levels of goodwill to avoid stricter standards. Organizations and individuals that employ skew selection (combine profit seeking and profit sharing in a trickledown fashion) expand diversity within systems by allowing larger memberships to coexist, as when marketers expand their product offerings or segments served in order to increase sales. Diversity is central to providing sufficient flexibility for successfully coping within a complex, dynamic future. Differences in status surface within the ecosystem based on ability and motivation to seek and to share profits (Cassill and Watkins, 2003). Indeed, unequal distribution of resources may be one of nature's mechanisms for maintaining genetic diversity and survival of the fittest over evolutionary time. However, the most vulnerable to loss may be relegated to untenable conditions, especially during difficult periods. In summary, naturological models characterize firms as energytransforming bodies that convert system resources into products, payments, profits, and philanthropy. The skew selection extension of the naturological model represents a bioeconomic framework that demonstrates why organisms band together to cope with variations in resource availability (Cassill, 2002). This framework involves a flexible mixture of exchange opportunities, going far beyond marketing theory's conventional categories, to enhance the probability of surviving or thriving within ecosystems. Finding and exploiting the tipping point between profit seeking (the acquisition of resources through economizing tactics) and profit sharing (the redistribution of resources through ecologizing tactics) allows the marketer to adapt its mission, vision, values, and goals according to current conditions while at the same time protecting or advancing its status within the ecological environment. 3. By way of example One way to better visualize the naturological approach is to give some relevant context. The example provided here refers to the author's three-year experience working with various constituencies within and outside the African-American town described as “Old City” for the purposes of this research. While a complete listing of all activities is beyond the scope of this paper, they include liaison between the Downtown Chamber of Commerce and the Black Chamber of Old City, consultant to indigenous businesses located in a new complex of shops anchored by the only supermarket, bank, and post office within the 5.5 square mile city limits, and business mentor to an elementary school in the community that educated children primarily from African-American homes who were eligible for free meals at breakfast and/or lunch due to their relative poverty.
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Old City likely is resource-rich when compared to extreme impoverishment of subsistence marketplaces in countries within South Asia or Sub-Saharan Africa where many citizens exist between life and death for want of basic goods and services. Yet the stark contrast between the downtown of the larger (encompassing) metropolis and this neighborhood allows for comparisons across lifestyles that may have relevance for bottom-of-the-pyramid consumers. For example, both the unemployment and poverty rates of Old City are higher by a factor of two to three, and the value of homes and other properties is less than 50% of their Downtown counterparts. Most of the businesses are contained on a few well-known arteries, principally take-out restaurants, beauty shops, and mom-and-pop food markets. In contrast, Downtown contains several museums, a variety of upscale and ethnic restaurants, movie theatres, trendy bed-and-breakfast lodgings, and expensive high-rise condominium complexes. The divide between these communities is more psychological than geographic. Only a few short blocks from one another, little exchange occurs across boundaries. A simple drive around major business and residential districts shows most Old City residents come to Downtown when absolutely necessary and vice versa. While the political and business establishment from Downtown boasts of trade relationships with Old City, two events show this perception as decidedly onesided. In the first, the head of the local NAACP chapter came to a Downtown Chamber meeting to discuss the use of Old City contractors by board members. He was told the Chamber maintained an active list of available firms but was unable to get specifics about which contractors were receiving business. Further, the board was unwilling to make any future commitments. The second event concerned disruption at the only movie theatre complex in the entire area, which is located in the heart of Downtown and is surrounded by restaurants, shopping, and fashionable homes. The African-American community had a custom of meeting at this marketplace on the first Friday of the month, and on one occasion a fight broke out among some teenagers and their parents. Local political and civic leaders called a forum to discuss this disturbance that included the author as a panelist. Most of the conversation was directed at the African-American community and centered on the lack of recreation facilities in Old City. The principal conclusion by representatives of Downtown business owners was to develop existing and proposed venues in Old City that implicitly would keep such people out of the Downtown entertainment district. 3.1. A naturological microcosm At first glance, Fig. 2 best characterizes exchange relationships between Downtown businesses and Old City consumers, which shows residents as smaller in size and lower in impact when compared to these sellers. This portrayal seems fitting for two primary reasons. First, the options available in Old City are constrained to say the least, and important goods and services only are available from Downtown purveyors, revealing a large marketplace differential. Second, providers typically view Old City customers as troublesome because they are perceived to purchase less than and their presence drives away more affluent local residents. In the end, a tension may exist that rarely is noted in discussions of marketing as exchange. Consumers have the necessary income and desire but marketers prefer not to do business with them. As a result, Fig. 3 may provide a better representation using a naturological approach as model. Given this framework as guide, Downtown and Old City can be visualized as nearby ecosystems that have limited porous boundaries. The trade within communities occurs unimpeded except for the usual constraints of commerce; however, the volume and intensity of transactions vary enormously across these two environments. While individual consumers living in Downtown are still small when compared to the firms providing goods and
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services, their relative stature is huge in relation to their Old City counterparts who cross the system divide. The imperative involving energy accumulation by entities in Downtown seeks to limit any energy redistribution via trickledown to members of the Old City community. Therefore, the management challenge of harmonizing profit seeking with profit sharing is addressed only within rather than between ecosystems. While government officials and politicians have stated publicly their desire to see the standard of living rise among Old City residents, progress in this regard has done little to bridge the differences between communities. Instead, African-American leaders in Old City see Downtown business owners as engaging in crosssystem profit seeking that is characterized as a form of greed and prejudice. The mere “trickle” of the trickledown sharing comes across as patronizing and largely limited to avoiding upheaval associated with cheater detection and the resulting impulse to punish. In fact, much of the political talk about economic development in Old City was a reaction to earlier riots and looting by angry Old City residents. All in all, this example reveals difficulties inherent in marketing exchanges when viewed through lenses of impoverished consumers embedded in disparate bioeconomic systems. An insider–outsider phenomenon exists showing them as separate and unequal in terms of resources and opportunities to acquire them. The relative paucity of one is in stark contrast to the relative prosperity of the other, and proximity makes such differences easily discernible. The profit seeking motive may not cause significant problems until the conclusion is reached that some subsets of the larger ecosystem are unworthy of consideration beyond a cursory attempt to keep its members from upsetting the balance of power. While government as an intervening system was charged with resolving this dilemma, their principal concern remained the goodwill of wealthy Downtown entities. Fig. 4 models the situation faced by these disparate communities. Nearly impervious boundaries are revealed as Old City firms and consumers attempt to influence the actions of the Downtown Chamber and businesses in their energy accumulation activities designed to keep/attain a fair share of resources that trickledown from their more affluent counterparts. Consequently, few resources move between bioeconomic systems as profit sharing is confined within Downtown except under unusual circumstances that require a modest flow of information, goods, and services to maintain order or limit contamination. The local government often is called in by leaders of both communities to adjudicate this imbalance, but the influence attempts of Downtown interests have dominated its policies and practices due to the government's own energy accumulation needs and the much
Fig. 4. Model of resource flows across Old City, Downtown, and local government.
larger share of its resources that originate from Downtown versus Old City. 4. Closing remarks The explanatory power of naturological models is in their ability to capture the complexity of exchange relationships. Such associations do not happen in a vacuum, as implied by early interpretations of theoretical developments. Instead, transactions occur or fail to occur within dynamic and organic systems, by entities operating as individuals or in groups in order to meet diverse sets of needs. As noted previously, some exchanges are motivated by commercial success while others may be political in nature. Regardless, all ecosystem members are interconnected in myriad ways that influence their long-term capacity to survive or thrive. Thus, an important strategic marketing implication is that vigilance regarding significant systemic changes is paramount at all times. Although shifting tides in the form of preferences and resulting changes in position within the system hierarchy are unlikely to replace persons at the bottom with individuals at the top, other factors play a role as described by skew selection. Its tenets suggest that inequality is a fact of nature that will always exist, but that inequity is rarely tolerated by people whose requirements remain unfulfilled over time. Accordingly, high status members such as business owners and their managers must recognize that a trickle down approach to resource allocation only works if viewed widely as evenhanded. All other circumstances will activate the innate tendency to punish transgressors who block the pathway to what is believed to be one's share of environmental abundance. This retribution always seeks to reduce the affluence and influence of guilty parties. Of course, this perspective is counter to relationship marketing and applied ethical mandates that posit the fundamental value of the individuals served and their inalienable rights (Murphy et al., 2007). However, such positions take for granted that people representing business interests are willing to serve impoverished consumers. In fact, underlying premise of bottom of the pyramid marketing is that money is to be made by selling to the poor. If this orientation is valid, firms should come to this conclusion on their own, especially in freemarket economies. Why has such attention not happened on a regular basis? A naturological explanation is profit seeking and profit sharing may harmonize in ways that are mutually satisfying only when entitled groups exchange with one another, and the excluded remainder of the bioeconomic system is expected to be contented with the crumbs from their proverbial tables, breeding continuous discontent around the world. This position indicts skew selection's trickledown concept and recognizes the failure of naturological mechanisms designed to keep resources equitably distributed. Thus, base of the pyramid participants are blocked from full participation in the market by their limited (naturological) resources as well as the reluctance of those well endowed with resources to enter into social contract arrangements with them, along with all of the exchange paraphernalia of fairness, reciprocal altruism, and reward-and-punishment impulses. They are treated as market pariahs, unworthy of attention (e.g., Old City). As a consequence, the overall economic wealth-producing potential of the entire ecosystem is thereby lowered through denial of undeveloped symbiotic linkages so characteristic of more advances ecosystems that exist elsewhere in nature. While solutions are limited, the first step is recognition that subsistence markets share many of the characteristics of the Old City– Downtown scenario. The more wealthy consumers of any country tend to congregate in communities that have a significantly greater abundance of goods and services, demonstrating their relative status as well as their existence within bioeconomic ecosystems higher on Frederick's scaling of human development. Thus, elite consumers experience systemic harmonizing strategies toward the altruistic end of the
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spectrum (Hill and Watkins, 2007), where tipping points between profit sharing and profit taking are balanced in the direction of social rewards that spawn mutually satisfying longer-term reciprocal relationships. For example, consider the personal contact and care associated with the Four Seasons Hotels or Lexus Automobiles. On the other hand, subsistence markets tend to mirror Old City, where a relative dearth of alternatives exist locally that often are overpriced and of unacceptable low-end quality. While the existence of better-heeled parallel marketplaces signal availability, harmonizing tendencies between resource-rich and resource-poor ecosystems synchronize using a minimum of trickledown, where the tipping point favors profit taking over profit sharing unless disruption of the latter by the former is likely to occur. Hence, just enough goods and services cross impervious boundaries between rich and poor communities and marketplaces so that contamination from poor to rich is avoided. Once again, consider research by Viswanathan and his colleagues who found that women in impecunious parts of South Asia where subjected to unscrupulous vendors without acceptable alternatives. The best strategy for change on the part of impoverished consumers in subsistence markets is through education and organization. The novel approach and exciting success of Viswanathan with training of indigent and illiterate women to help them utilize their scarce resources more effectively has the simultaneous benefit of empowering them with regard to sellers in their communities. However, movement of needed products into their neighborhoods that expand consumption possibilities and increase levels of competition also enhance the quality and quantity of goods and services within their ecosystems. For this change to occur, the impoverished need to come together in ways that demonstrate their richness in alternative forms of resources such as social capital that can be deployed to open the floodgates of products between themselves and the wealthy (Lee et al., 1999). References Bagozzi Richard P. Marketing as an organized behavioral system of exchange. J Mark 1974;88:77–81 [October]. Bagozzi Richard P. Marketing as exchange. J Mark 1975;89:32–9 [October]. Bagozzi Richard P. Marketing as exchange. Am Behav Sci 1978;21(4):535–54. Cassill Deby L. Yoyo-bang: a risk aversion investment strategy by a perennial insect society. Oecologia 2002;132:150–8. Cassill Deby L. Skew selection: nature favors a trickledown distribution of resources in ants. J. Bioecon. 2003;5:83–96.
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Cassill Deby, Hill Ronald Paul. A naturological approach to corporate governance: an extension of the Frederick model of corporate–community relationships. Bus Soc 2007;46:286–303 [September]. Cassill Deby L, Watkins Alison. Mogul games: in defense of inequality as an evolutionary strategy to cope with multiple agents of selection. In: Koppl R, editor. Advances in Austrian Economics. Norwell, MA: Kluwer Academic Publisher; 2003. p. 35–59. Frederick William C. Creatures, corporations, communities, chaos, complexity. Bus Soc 1998;37:358–89 [December]. Frederick William C. A biocultural guide to social contract, prepared for contractarian approaches to business ethics: the evolution of integrative social contracts theory. University of Pennsylvania; 2004 [November 12–13]. Frederick William C. Corporation, be good! Indianapolis, IN: Dog Ear Publishing; 2006. Freeman R Edward. Strategic management: a stakeholder approach. Boston: Pitman; 1984. Gundlach Gregory T, Murphy Patrick E. Ethical and legal foundations of relational marketing exchanges. J Mark 1993;57:35–46 [October]. Hill Ronald Paul. Stalking the poverty consumer: a retrospective examination of modern ethical dilemmas. J Bus Ethics 2002;37:209–19 [May]. Hill Ronald Paul. Disadvantaged consumers: an ethical approach to consumption of the poor. J Bus Ethics 2008;80(1):77–83. Hill Ronald Paul, Cassill Deby. The naturological view of the corporation and its social responsibility: an extension of the Frederick model of corporate–community relationships. Bus Soc Rev 2004;109:281–96 [September]. Hill Ronald Paul, Watkins Alison. A simulation of moral behavior within marketing exchange relationships. J Acad Mark Sci 2007;35:417–29 [September]. Hill Ronald Paul, Felice William, Ainscough Tom. International human rights and consumer quality of life: an ethical perspective. J Macromark 2007;27:370–9 [Fall]. Houston Franklin S, Gassenheimer Jule B. Marketing and exchange. J Mark 1987;51:3–18 [October]. Kotler Philip, Levy Sidney J. Broadening the concept of marketing. J Mark 1969;83:10–5 [January]. Lee Renee G, Ozanne Julie, Hill Ronald Paul. Improving service encounters through resource sensitivity: the case of health care delivery in Appalachia. J Public Policy Mark 1999;18:230–48 [Fall]. Miller Richard Lee, Lewis William F. A stakeholder approach to marketing management using the value exchange models. Eur J Mark 1991;25(8):55–68. Murphy Patrick E, Laczniak Gene R, Wood Graham. An ethical basis for relationship marketing: a virtue ethics perspective. Eur J Mark 2007;41(1/2):37–57. Prahalad CK. The fortune at the bottom of the pyramid: eradicating poverty through profits. Upper Saddle River, NJ: Wharton School Publishing; 2004. Schurr Paul H, Ozanne Julie L. Influences on exchange processes: buyers' preconceptions of a seller's trustworthiness and bargaining toughness. J Consum Res 1985;11:939–53 [March]. Snider Jamie, Hill Ronald Paul, Martin Diane. Corporate social responsibility in the 21st century: a view from the world's most successful firms. J Bus Ethics 2003;48:175–87 [December]. Viswanathan Madhu. Understanding product and market interactions in subsistence marketplaces: a study in South India. Product and Market Development for Subsistence Marketplaces. Amsterdam: Elsevier; 2007. Viswanathan Madhu, Rosa Jose A. Product and market development for subsistence marketplaces: consumption and entrepreneurship beyond literacy and resource barriers. Amsterdam: Elsevier; 2007. Viswanathan Madhu, Gajendiran S, Venkatesan R. Enabling consumer and entrepreneurial literacy in subsistence marketplaces. Amsterdam: Springer; 2008.
Contents lists available at ScienceDirect
Journal of Business Research
A naturological approach to marketing exchanges: Implications for the bottom of the pyramid☆ Ronald Paul Hill ⁎ Villanova University, 800 Lancaster Avenue, Villanova, PA 19085, United States
a r t i c l e
i n f o
Article history: Accepted 1 January 2009 Keywords: Subsistence marketplaces Base of the pyramid Stakeholder theory Naturological approach
a b s t r a c t Marketing as exchange has been the sine qua non of the field for over thirty years. While buyer–seller dyads dominate traditional conversations, other forms of transactions are included as long as value transfer occurs. The most logical extension is Stakeholder Theory, an approach with the same basic structure for understanding, maintaining, and advancing important relationships among firms and their constituencies. Together, they posit that self-contained individuals or units have a marked impact on one another, which passes across defined boundaries at discrete periods of time. Yet the failure to capture organic and dynamic ways in which such entities interact necessities a new approach, such as the naturological perspective that recognizes porous boundaries and reverberating consequences of marketing exchanges, especially among consumers and other impacted parties who survive at or near the proverbial bottom of the economic pyramid. © 2009 Elsevier Inc. All rights reserved.
1. Setting the stage The scholarly and practical field of marketing has long considered the process of exchange as its centerpiece (Bagozzi, 1975). In the most rudimentary form, buyers exist on one side of the exchange equation and sellers on the other. They transact when certain conditions are met, suggesting that each party gives up something of value in return for something they value even more. While the generic model trades goods and services for money, the broadened marketing concept includes an enlarged set of possibilities that embraces the selling of people, places, and ideas (Kotler and Levy, 1969). Regardless, the process is approximately the same—markets with distinctive boundaries are identified, exchange participants seek partners to interact with at particular times and places, and the impact is well-defined in the short-term (e.g., satisfaction) and long-term (e.g., brand loyalty). During the same timeframe, management researchers were developing the modern corporate social responsibility construct (see Frederick, 2006). Countercultural upheaval of the 1960s and acceleration of vigilance in the 1970s led to a variety of definitions that uniformly demanded firms consider the impact of their actions on internal and external constituencies. As a result, the 1980s saw the rise of Stakeholder Theory (Freeman, 1984), a perspective sharing many
☆ Ronald Paul Hill is the Richard J. and Barbara Naclerio Chairholder in Business and Senior Associate Dean of Intellectual Strategy at the Villanova School of Business. He is thankful for the inspiration provided by Bill Frederick and Madhu Viswanathan, as well as two very helpful reviewers. ⁎ Tel.: +1 610 519 3256(Work), +1 610 306 1911(Cell), +1 484 872 8464(Home). E-mail address: [email protected]. 0148-2963/$ – see front matter © 2009 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2009.01.014
characteristics of the societal marketing concept. Both approaches demarcate strict borders between and across entities (or collections thereof), with predictable and isolated consequences of their interconnections. They converge on the belief that the originators of explicit or implicit relationships are responsible for the well-being of individuals and/or groupings they affect, which fits comfortably within the rationalistic neoclassical free-market model of the economy. Taken together, these academic models posit similar structures and functions. The simplest level involves marketing exchanges composed of dyadic interactions that place buyers and sellers on opposing sides (Schurr and Ozanne, 1985). They often are viewed as differentiated bodies depicted as same-sized and close-looped circles separated by a symbol showing the possibility of some form of transaction (see bolded/ italicized circles in Fig. 1). Stakeholder extensions are a natural outgrowth of this modeling and adjoin more circles that contain other impacted entities. A typical list may include a host of distinctive constituencies such as the community, stockholders, customers, employees, suppliers, competitors, and the larger society (Snider et al., 2003). Some subsequent relationships take the form of legal contracts between the parties, while others are less formalized social contracts. The remainder of Fig. 1 provides a representation. While the elegance of this representation is its simplicity, important nuances that help define the quality of relationships are not captured (Cassill and Hill, 2007). For instance, relative size of the circles depicting firms and their customers or any other collection of individuals fails to recognize differences in status, power, and/or resources. Further, the arrows signifying some form of exchange between parties is unsuccessful at delineating the true level of impact that one unit has on another. Additionally, the line itself suggests a sole
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Fig. 1. Traditional representation of stakeholder model with embedded marketing dyad.
linkage at any given time while influence may occur on multiple occasions with a variety of simultaneous intentions and outcomes. Fig. 2 presents a different perspective showing a single consumer as miniscule compared to the selling firm, with several arrows of various sizes passing between them to reveal the extent of their interactions. This alternative model's usefulness particularly is apparent when observing impoverished consumers and their marketplace interactions. Recent research shows the importance of but lack of consistent attention by firms, corporations, and governments to impoverished consumers as they tend to satisfy individuals and organizations with greater levels of resources and influence (see Hill, 2008; Hill et al., 2007). Consequently, several billion people go without ordinary necessities such as potable water, nutritious food, adequate shelter, and basic healthcare on a regular basis. Even the novel bottom-of-thepyramid approach to serving the world's neediest (Prahalad, 2004) recognizes inherent imbalances between providers of goods and services and impoverished consumers when viewed on a particularized exchange basis. Therefore, only through some judicious combining of resources across scores of poor communities is their status enhanced enough to be worthy of exchange. As important are the nature of the boundaries and the reverberating effects of one constituency on the other(s). In this regard, the seminal work of Frederick (1998, 2004) provides an important template. His model demonstrates firms and stakeholders exist within bioeconomic ecosystems composed of entities whose daily lives and long-run survival are bound to one another. Frederick views such associations as among energy-transforming bodies that absorb some resources while placing other resources back into the larger environment. A guiding principle is resource accumulation, which unites with resource redistribution to ensure system survival (Hill and Cassill, 2004). The systemic challenge is to harmonize taking with sharing so the focal firm increases its longevity by developing or maintaining an advantageous position. An analogous marketing example includes the treatment of buyers by sellers in B2B contexts
in an attempt to maximize their profits while sustaining relationships (Hill and Watkins, 2007). Combining previous diagrammatic approaches with Frederick's naturological modeling advances a unique way of looking at marketing exchanges (Fig. 3). Several changes transform the buyer–seller dyad from its representations in Fig. 1. First, the impervious boundaries surrounding each participant that allow for limited interaction are now positioned as porous, with differences in permeability moderating external influences. Second, the arrows revealing the direction and consequence of impact are now implanted within the perimeters of each entity, demonstrating increasing or decreasing repercussions of information and product exchanges as experienced by sellers and buyers. Third, the consequences of their individual actions and reactions cause leakages across boundaries that affect other stakeholders, leading to subsequent responses and behaviors. The extraordinary work of Viswanathan (2007) and his colleagues (Viswanathan and Rosa, 2007; Viswanathan et al., 2008) provide an apt case-in-point. Some of this research is based on a multiyear project
Fig. 2. Alternative view of marketing exchanges.
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marketing and that both exchange partners are capable of becoming better off. This principle is the foundation of long-term, mutually satisfying relationships where producers of goods and services incorporate the perceived quality of consumer experiences into their production functions (Gundlach and Murphy, 1993). The broadening of this paradigm often has stayed within the confines of the dyad portrayed in Fig. 1, with modifications made only to the embedded labels that include such diverse exchanges as voter/ politician, teenager/Smoke-Free America, and older adult/AARP. Miller and Lewis (1991) provide an exception and attempt to marry stakeholder theory with the basic value exchange models of marketing. Their primary contribution is to help firms identify organizations, groups, and people directly or indirectly impacted by corporate activities in significant ways (see Fig. 1). In a similar manner, Freeman (1984) speaks of “value creation” as a desired outcome of stakeholder management, revealing a bias toward decidedly positive outcomes to the exclusion of any perceived negative consequences (see Hill, 2002). Fig. 3. Naturological model of exchange relationships.
2.1. The naturological approach to help impoverished female consumers in South India improve their abilities to navigate local marketplaces. Their research fully recognizes the differences in resources between individual women acting as buyers for their families and sellers with more advanced levels of numeracy and literacy. Through an extensive educational program, buyers are better prepared to negotiate with sellers and band together using their combined social capital to enforce appropriate standards of exchange etiquette. As such, these women reduce the porous nature of their boundaries and open those of sellers, making them less vulnerable. This discussion sets the stage for the remainder of the paper. The research purpose is to advance a new way of conceptualizing the broadened set of exchange relationships that operate within current marketing theory and practice, emphasizing impoverished consumers and implications for subsistence markets. The section that follows provides a comprehensive critique of exchange theory, using contributions from the natural sciences to resolve its weaknesses. The material after that presents application through an example of how impoverished consumers and citizens experience a number of positive and negative, intended and unintended consequences. The final segment brings the contribution to light, discussing the importance of naturological exchange approaches to support for the world's poor. 2. Exchange theory critique While exchange represents the central ingredient of marketing processes, theory development in this area has been decidedly limited (Houston and Gassenheimer, 1987). This lack means that some original and seminal scholarship on this concept continues to receive great attention by the field, with few definitions going much beyond the tradition of describing marketing as creation and resolution of exchange relationships (Bagozzi, 1974). Of course the primary motivation of the dyadic entities labeled buyers and sellers is need satisfaction, with the common belief that parties to the exchange perceive what they give up as worth less than what they receive, describing their relationship as “equitable” or “fair.” The end result is marked increase in something referred to as “potency,” which is operationalized as the capacity to meet current and future consumption requirements (see Houston and Gassenheimer, 1987). Of course, what occurs in practice may differ from the theoretical ideal. Some unscrupulous marketers take advantage of their consumers in unethical and illicit ways, eliminating opportunities for additional transgressions as soon as customers recognize that they have been duped (Hill and Watkins, 2007). Bagozzi (1978) suggests seller strivings to maximize personal gain without regard for buyer outcomes cause such a scenario. Nonetheless, the field has accepted an underlying premise that zero-sum thinking is antithetical to good
Frederick (1998) describes a novel approach to understanding such stakeholder interactions as naturological relationships. His resulting model posits that corporations transact with various parties within ecosystems based upon the tenets of biology and other natural sciences. These ecosystems are composed of living entities whose abilities to survive and thrive are bound to each other. Thus, Frederick views firms as connected, energy-transforming bodies that absorb resources from their environments to produce and place back into the environment a variety of goods and services. The primary guiding principle, energy accumulation, combines with energy redistribution, sustaining consumers and other necessary agents who play a role in the firm's success. The marketing challenge is to harmonize personal gain with interpersonal sharing to be responsive to changing circumstances over time (Frederick, 1998). The naturological paradigm has applications in a number of situations involving social contracts. Frederick (2004) describes its history via phases of human communal development based on evolutionary biology. The first phase is adaptation/reproduction, the final phase is evolving ecosystem, and others, such as reciprocal altruism and social reciprocity, sandwiched in between. One phase—termed social exchange—is consistent with basic marketing parameters and describes transactional cooperation as determined by relative resource levels, individual and group skill bases, and perceptions of their impact on adaptation/survival. Another phase, cheater detection/punishment, posits that humans have a neurological impulse to search for and penalize persons who fail to reciprocate in exchanges and to recompense individuals who meet obligations to give back. This body of research positions firms and their internal and external constituencies as parts of biological systems, making the following questions germane: How can entities maximize their interpersonal or interorganizational gains without jeopardizing necessary levels of cooperation? Should their strategies and tactics vary during times of resource availability versus times of resource scarcity? An extension of the Frederick approach that helps answer these queries is skew selection (Cassill, 2003). This theory suggests that profit seeking and profit sharing are not opposites but complementary strategies designed to create a positive long-term impact. Thus, abundant resources when available, divide in ways that ensure the give-and-take reciprocity of external parties now and into the future. When lacking, resources are withdrawn or taken back by the entity and hoarded. Skew selection identifies this behavior as profit seeking and the underlying drive or motive as egotism, which manifests in benign or malignant varieties (Cassill and Hill, 2007). Benign profit seeking occurs when resources are put aside during periods of abundance, yet leaving more than enough for all system members to meet their current needs. Malignant profit seeking involves stockpiling resources
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during periods of scarcity, causing weaker system members to go without and to face possible shortages. Biologists have found that the longevity of malignant profit-seekers in nature is often short (Cassill, 2003). Wealthy members of the ecosystem who stockpile at the expense of others may be compromised when less fortunate entities come together and appropriate their capital without reciprocating or if too many leave the fold and future resource flows diminish. A better long-term survival strategy for wealthy profit-seekers is to share with the masses as an appeasement to avoid confiscation or to keep the masses interacting to avoid predation from outsiders, consistent with the strategies employed by the global financial/banking system prior to its collapse in 2008. When faced with such threats, the most effective profit-sharing strategy is trickledown sharing in which more and more get less and less without ignoring the amounts necessary for minimal satisfaction. This process allows entities to increase their reach while maintaining elite positions or status. Trickledown (as well as lateral) sharing is an innate part of human interaction but its pervasiveness often is overlooked (Hill and Cassill, 2004). As another example, consider the policy of banking executives to place minimal facilities in impoverished U.S. communities in order to meet new regulations and create sufficient levels of goodwill to avoid stricter standards. Organizations and individuals that employ skew selection (combine profit seeking and profit sharing in a trickledown fashion) expand diversity within systems by allowing larger memberships to coexist, as when marketers expand their product offerings or segments served in order to increase sales. Diversity is central to providing sufficient flexibility for successfully coping within a complex, dynamic future. Differences in status surface within the ecosystem based on ability and motivation to seek and to share profits (Cassill and Watkins, 2003). Indeed, unequal distribution of resources may be one of nature's mechanisms for maintaining genetic diversity and survival of the fittest over evolutionary time. However, the most vulnerable to loss may be relegated to untenable conditions, especially during difficult periods. In summary, naturological models characterize firms as energytransforming bodies that convert system resources into products, payments, profits, and philanthropy. The skew selection extension of the naturological model represents a bioeconomic framework that demonstrates why organisms band together to cope with variations in resource availability (Cassill, 2002). This framework involves a flexible mixture of exchange opportunities, going far beyond marketing theory's conventional categories, to enhance the probability of surviving or thriving within ecosystems. Finding and exploiting the tipping point between profit seeking (the acquisition of resources through economizing tactics) and profit sharing (the redistribution of resources through ecologizing tactics) allows the marketer to adapt its mission, vision, values, and goals according to current conditions while at the same time protecting or advancing its status within the ecological environment. 3. By way of example One way to better visualize the naturological approach is to give some relevant context. The example provided here refers to the author's three-year experience working with various constituencies within and outside the African-American town described as “Old City” for the purposes of this research. While a complete listing of all activities is beyond the scope of this paper, they include liaison between the Downtown Chamber of Commerce and the Black Chamber of Old City, consultant to indigenous businesses located in a new complex of shops anchored by the only supermarket, bank, and post office within the 5.5 square mile city limits, and business mentor to an elementary school in the community that educated children primarily from African-American homes who were eligible for free meals at breakfast and/or lunch due to their relative poverty.
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Old City likely is resource-rich when compared to extreme impoverishment of subsistence marketplaces in countries within South Asia or Sub-Saharan Africa where many citizens exist between life and death for want of basic goods and services. Yet the stark contrast between the downtown of the larger (encompassing) metropolis and this neighborhood allows for comparisons across lifestyles that may have relevance for bottom-of-the-pyramid consumers. For example, both the unemployment and poverty rates of Old City are higher by a factor of two to three, and the value of homes and other properties is less than 50% of their Downtown counterparts. Most of the businesses are contained on a few well-known arteries, principally take-out restaurants, beauty shops, and mom-and-pop food markets. In contrast, Downtown contains several museums, a variety of upscale and ethnic restaurants, movie theatres, trendy bed-and-breakfast lodgings, and expensive high-rise condominium complexes. The divide between these communities is more psychological than geographic. Only a few short blocks from one another, little exchange occurs across boundaries. A simple drive around major business and residential districts shows most Old City residents come to Downtown when absolutely necessary and vice versa. While the political and business establishment from Downtown boasts of trade relationships with Old City, two events show this perception as decidedly onesided. In the first, the head of the local NAACP chapter came to a Downtown Chamber meeting to discuss the use of Old City contractors by board members. He was told the Chamber maintained an active list of available firms but was unable to get specifics about which contractors were receiving business. Further, the board was unwilling to make any future commitments. The second event concerned disruption at the only movie theatre complex in the entire area, which is located in the heart of Downtown and is surrounded by restaurants, shopping, and fashionable homes. The African-American community had a custom of meeting at this marketplace on the first Friday of the month, and on one occasion a fight broke out among some teenagers and their parents. Local political and civic leaders called a forum to discuss this disturbance that included the author as a panelist. Most of the conversation was directed at the African-American community and centered on the lack of recreation facilities in Old City. The principal conclusion by representatives of Downtown business owners was to develop existing and proposed venues in Old City that implicitly would keep such people out of the Downtown entertainment district. 3.1. A naturological microcosm At first glance, Fig. 2 best characterizes exchange relationships between Downtown businesses and Old City consumers, which shows residents as smaller in size and lower in impact when compared to these sellers. This portrayal seems fitting for two primary reasons. First, the options available in Old City are constrained to say the least, and important goods and services only are available from Downtown purveyors, revealing a large marketplace differential. Second, providers typically view Old City customers as troublesome because they are perceived to purchase less than and their presence drives away more affluent local residents. In the end, a tension may exist that rarely is noted in discussions of marketing as exchange. Consumers have the necessary income and desire but marketers prefer not to do business with them. As a result, Fig. 3 may provide a better representation using a naturological approach as model. Given this framework as guide, Downtown and Old City can be visualized as nearby ecosystems that have limited porous boundaries. The trade within communities occurs unimpeded except for the usual constraints of commerce; however, the volume and intensity of transactions vary enormously across these two environments. While individual consumers living in Downtown are still small when compared to the firms providing goods and
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services, their relative stature is huge in relation to their Old City counterparts who cross the system divide. The imperative involving energy accumulation by entities in Downtown seeks to limit any energy redistribution via trickledown to members of the Old City community. Therefore, the management challenge of harmonizing profit seeking with profit sharing is addressed only within rather than between ecosystems. While government officials and politicians have stated publicly their desire to see the standard of living rise among Old City residents, progress in this regard has done little to bridge the differences between communities. Instead, African-American leaders in Old City see Downtown business owners as engaging in crosssystem profit seeking that is characterized as a form of greed and prejudice. The mere “trickle” of the trickledown sharing comes across as patronizing and largely limited to avoiding upheaval associated with cheater detection and the resulting impulse to punish. In fact, much of the political talk about economic development in Old City was a reaction to earlier riots and looting by angry Old City residents. All in all, this example reveals difficulties inherent in marketing exchanges when viewed through lenses of impoverished consumers embedded in disparate bioeconomic systems. An insider–outsider phenomenon exists showing them as separate and unequal in terms of resources and opportunities to acquire them. The relative paucity of one is in stark contrast to the relative prosperity of the other, and proximity makes such differences easily discernible. The profit seeking motive may not cause significant problems until the conclusion is reached that some subsets of the larger ecosystem are unworthy of consideration beyond a cursory attempt to keep its members from upsetting the balance of power. While government as an intervening system was charged with resolving this dilemma, their principal concern remained the goodwill of wealthy Downtown entities. Fig. 4 models the situation faced by these disparate communities. Nearly impervious boundaries are revealed as Old City firms and consumers attempt to influence the actions of the Downtown Chamber and businesses in their energy accumulation activities designed to keep/attain a fair share of resources that trickledown from their more affluent counterparts. Consequently, few resources move between bioeconomic systems as profit sharing is confined within Downtown except under unusual circumstances that require a modest flow of information, goods, and services to maintain order or limit contamination. The local government often is called in by leaders of both communities to adjudicate this imbalance, but the influence attempts of Downtown interests have dominated its policies and practices due to the government's own energy accumulation needs and the much
Fig. 4. Model of resource flows across Old City, Downtown, and local government.
larger share of its resources that originate from Downtown versus Old City. 4. Closing remarks The explanatory power of naturological models is in their ability to capture the complexity of exchange relationships. Such associations do not happen in a vacuum, as implied by early interpretations of theoretical developments. Instead, transactions occur or fail to occur within dynamic and organic systems, by entities operating as individuals or in groups in order to meet diverse sets of needs. As noted previously, some exchanges are motivated by commercial success while others may be political in nature. Regardless, all ecosystem members are interconnected in myriad ways that influence their long-term capacity to survive or thrive. Thus, an important strategic marketing implication is that vigilance regarding significant systemic changes is paramount at all times. Although shifting tides in the form of preferences and resulting changes in position within the system hierarchy are unlikely to replace persons at the bottom with individuals at the top, other factors play a role as described by skew selection. Its tenets suggest that inequality is a fact of nature that will always exist, but that inequity is rarely tolerated by people whose requirements remain unfulfilled over time. Accordingly, high status members such as business owners and their managers must recognize that a trickle down approach to resource allocation only works if viewed widely as evenhanded. All other circumstances will activate the innate tendency to punish transgressors who block the pathway to what is believed to be one's share of environmental abundance. This retribution always seeks to reduce the affluence and influence of guilty parties. Of course, this perspective is counter to relationship marketing and applied ethical mandates that posit the fundamental value of the individuals served and their inalienable rights (Murphy et al., 2007). However, such positions take for granted that people representing business interests are willing to serve impoverished consumers. In fact, underlying premise of bottom of the pyramid marketing is that money is to be made by selling to the poor. If this orientation is valid, firms should come to this conclusion on their own, especially in freemarket economies. Why has such attention not happened on a regular basis? A naturological explanation is profit seeking and profit sharing may harmonize in ways that are mutually satisfying only when entitled groups exchange with one another, and the excluded remainder of the bioeconomic system is expected to be contented with the crumbs from their proverbial tables, breeding continuous discontent around the world. This position indicts skew selection's trickledown concept and recognizes the failure of naturological mechanisms designed to keep resources equitably distributed. Thus, base of the pyramid participants are blocked from full participation in the market by their limited (naturological) resources as well as the reluctance of those well endowed with resources to enter into social contract arrangements with them, along with all of the exchange paraphernalia of fairness, reciprocal altruism, and reward-and-punishment impulses. They are treated as market pariahs, unworthy of attention (e.g., Old City). As a consequence, the overall economic wealth-producing potential of the entire ecosystem is thereby lowered through denial of undeveloped symbiotic linkages so characteristic of more advances ecosystems that exist elsewhere in nature. While solutions are limited, the first step is recognition that subsistence markets share many of the characteristics of the Old City– Downtown scenario. The more wealthy consumers of any country tend to congregate in communities that have a significantly greater abundance of goods and services, demonstrating their relative status as well as their existence within bioeconomic ecosystems higher on Frederick's scaling of human development. Thus, elite consumers experience systemic harmonizing strategies toward the altruistic end of the
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spectrum (Hill and Watkins, 2007), where tipping points between profit sharing and profit taking are balanced in the direction of social rewards that spawn mutually satisfying longer-term reciprocal relationships. For example, consider the personal contact and care associated with the Four Seasons Hotels or Lexus Automobiles. On the other hand, subsistence markets tend to mirror Old City, where a relative dearth of alternatives exist locally that often are overpriced and of unacceptable low-end quality. While the existence of better-heeled parallel marketplaces signal availability, harmonizing tendencies between resource-rich and resource-poor ecosystems synchronize using a minimum of trickledown, where the tipping point favors profit taking over profit sharing unless disruption of the latter by the former is likely to occur. Hence, just enough goods and services cross impervious boundaries between rich and poor communities and marketplaces so that contamination from poor to rich is avoided. Once again, consider research by Viswanathan and his colleagues who found that women in impecunious parts of South Asia where subjected to unscrupulous vendors without acceptable alternatives. The best strategy for change on the part of impoverished consumers in subsistence markets is through education and organization. The novel approach and exciting success of Viswanathan with training of indigent and illiterate women to help them utilize their scarce resources more effectively has the simultaneous benefit of empowering them with regard to sellers in their communities. However, movement of needed products into their neighborhoods that expand consumption possibilities and increase levels of competition also enhance the quality and quantity of goods and services within their ecosystems. For this change to occur, the impoverished need to come together in ways that demonstrate their richness in alternative forms of resources such as social capital that can be deployed to open the floodgates of products between themselves and the wealthy (Lee et al., 1999). References Bagozzi Richard P. Marketing as an organized behavioral system of exchange. J Mark 1974;88:77–81 [October]. Bagozzi Richard P. Marketing as exchange. J Mark 1975;89:32–9 [October]. Bagozzi Richard P. Marketing as exchange. Am Behav Sci 1978;21(4):535–54. Cassill Deby L. Yoyo-bang: a risk aversion investment strategy by a perennial insect society. Oecologia 2002;132:150–8. Cassill Deby L. Skew selection: nature favors a trickledown distribution of resources in ants. J. Bioecon. 2003;5:83–96.
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