Marketing 3.0

From Products to Customers to the Human Spirit

Philip Kotler, Hermawan Kartajaya, Iwan Setiawan

• Publisher: Wiley
• Year: 2010
• ISBN:
  9780470609798
• Edition: 1
• Topic: Business
• Subtopic: Marketing
• Index: Business

Understand the next level of marketing

The new model for marketing- Marketing 3.0 -treats customers not as mere consumers but as the complex, multi-dimensional human beings that they are. Customers, in turn, are choosing companies and products that satisfy deeper needs for participation, creativity, community, and idealism.

In Marketing 3.0, world-leading marketing guru Philip Kotler explains why the future of marketing lies in creating products, services, and company cultures that inspire, include, and reflect the values of target customers.

• Explains the future of marketing, along with why most marketers are stuck in the past
• Examines companies that are ahead of the curve, such as S. C. Johnson
• Kotler is one of the most highly recognized marketing gurus, famous for his "4 P's of Marketing"

In an age of highly aware customers, companies must demonstrate their relevance to customers at the level of basic values. Marketing 3.0 is the unmatched guide to getting out front of this new tide sweeping through the nature of marketing.

PART I

TRENDS

CHAPTER ONE

Welcome to Marketing 3.0

WHY MARKETING 3.0?

Over the years, marketing has evolved through three stages that we call Marketing 1.0, 2.0, and 3.0. Many of today’s marketers still practice Marketing 1.0, some practice Marketing 2.0, and a few are moving into Marketing 3.0. The greatest opportunities will come to marketers practicing 3.0.

Long ago, during the industrial age—when the core technology was industrial machinery—marketing was about selling the factory’s output of products to all who would buy them. The products were fairly basic and were designed to serve a mass market. The goal was to standardize and scale up to bring about the lowest possible costs of production so that these goods could be priced lower and made more affordable to more buyers. Henry Ford’s Model T automobile epitomized this strategy; said Ford: “Any customer can have a car painted any color that he wants so long as it is black.” This was Marketing 1.0 or the product-centric era.

Marketing 2.0 came out in today’s information age—where the core is information technology. The job of marketing is no longer that simple. Today’s consumers are well informed and can easily compare several similar product offerings. The product value is defined by the consumer. Consumers differ greatly in their preferences. The marketer must segment the market and develop a superior product for a specific target market. The golden rule of “customer is king” works well for most companies. Consumers are better off because their needs and wants are well addressed. They can choose from a wide range of functional characteristics and alternatives. Today’s marketers try to touch the consumer’s mind and heart. Unfortunately, the consumer-centric approach implicitly assumes the view that consumers are passive targets of marketing campaigns. This is the view in Marketing 2.0 or the customer-oriented era.

Now, we are witnessing the rise of Marketing 3.0 or the values-driven era. Instead of treating people simply as consumers, marketers approach them as whole human beings with minds, hearts, and spirits. Increasingly, consumers are looking for solutions to their anxieties about making the globalized world a better place. In a world full of confusion, they search for companies that address their deepest needs for social, economic, and environmental justice in their mission, vision, and values. They look for not only functional and emotional fulfillment but also human spirit fulfillment in the products and services they choose.

Like consumer-oriented Marketing 2.0, Marketing 3.0 also aims to satisfy the consumer. However, companies practicing Marketing 3.0 have bigger missions, visions, and values to contribute to the world; they aim to provide solutions to address problems in the society. Marketing 3.0 lifts the concept of marketing into the arena of human aspirations, values, and spirit. Marketing 3.0 believes that consumers are complete human beings whose other needs and hopes should never be neglected. Therefore, Marketing 3.0 complements emotional marketing with human spirit marketing.

In times of global economic crisis, Marketing 3.0 gains more relevance to the lives of the consumers as they are impacted more by rapid social, economic, and environmental change and turbulence. Diseases become pandemics, poverty increases, and environmental destruction is under way. Companies practicing Marketing 3.0 provide answers and hope to people confronting such issues and, therefore, touch consumers at a higher level. In Marketing 3.0, companies differentiate themselves by their values. In turbulent times, this differentiation is arguably a strong one.

Table 1.1 summarizes the comparison of Marketing 1.0, 2.0, and 3.0 from comprehensive viewpoints.

To understand Marketing 3.0 better, let us examine the rise of three major forces that shape the business landscape toward Marketing 3.0: the age of participation, the age of globalization paradox, and the age of creative society. Observe how these three major forces transform consumers to be more collaborative, cultural, and human spirit-driven. Understanding this transformation will lead to a better understanding of Marketing 3.0 as a nexus of collaborative, cultural, and spiritual marketing.

THE AGE OF PARTICIPATION AND COLLABORATIVE MARKETING

Technological advances have brought about huge changes in consumers, markets, and marketing over the past century. Marketing 1.0 was initiated by production technology development during the Industrial Revolution. Marketing 2.0 came into being as a result of information technology and the Internet. Now, new wave technology becomes the major driver for the birth of Marketing 3.0.

Since early 2000, information technology has penetrated the mainstream market and further developed into what is considered the new wave technology. New wave technology is technology that enables connectivity and interactivity of individuals and groups. New wave technology consists of three major forces: cheap computers and mobile phones, low-cost Internet, and open source.¹ The technology allows individuals to express themselves and collaborate with others. The emergence of new wave technology marks the era that Scott McNealy, Chairman of Sun Microsystems, declared as the age of participation. In the age of participation, people create news, ideas, and entertainment as well as consume them. New wave technology enables people to turn from being consumers into prosumers.

Table 1.1 Comparison of Marketing 1.0, 2.0 and 3.0

One of the enablers of new wave technology is the rise of social media. We classify social media in two broad categories. One is the expressive social media, which includes blogs, Twitter, YouTube, Facebook, photo sharing sites like Flickr, and other social networking sites. The other category is the collaborative media, which includes sites such as Wikipedia, Rotten Tomatoes, and Craigslist.

Expressive Social Media

Let us examine the impact of expressive social media on marketing. In early 2008, Technorati found 13 million active blogs around the world.² As with readership of print media, readership of blogs varies among countries. Unlike in Japan where 74 percent of Internet users read blogs, only around 27 percent of Internet users in the United States read blogs. Although the readership is low, 34 percent of blog readers in the United States are influencers. As a result, U.S. blogs stimulate follow-up actions by 28 percent of their readers.³ Seth Godin, a well-known marketer, runs a popular web site that offers a new idea every day to influence thousands of people who have elected to receive his feed.

Another popular form of blogging, and one of the fastest growing forms of social media is Twitter. From April 2008 to April 2009, the number of Twitter users has grown 1,298 percent.⁴ The microblogging site allows members to broadcast tweets of 140 characters or fewer to their followers. It is considered much simpler than blogging because users can easily send tweets from handheld devices such as iPhones and Blackberrys. Through Twitter, users can share their thoughts, their activities, and even their moods with friends or fans. Actor Ashton Kutcher reportedly hit the 1 million followers mark on Twitter, beating out even CNN.

Many of the blogs and tweets are personal where a person shares news, opinion, and ideas with chosen others. Another set of blogs and tweets are set up by persons who want to comment on the news or offer opinions and small essays on anything crossing their minds. Other bloggers or twitterers might comment on companies and products, supporting them or criticizing them. An angry blogger or twitterer with a widespread audience has the potential to dissuade many consumers from wanting to do business with a particular company or organization.

The popularity of blogging and twittering has reached the corporate world. IBM, for example, encourages its employees to create their own blogs where they can talk freely about their company as long as they adhere to certain guidelines. Another example is General Electric, which established a Tweet Squad, a group of young employees who train older employees to use social media.

People are also creating short video clips and sending them to YouTube for the world to see. Many are aspiring film-makers who hope their creativity will be recognized and lead to broader opportunities. Other video clips are prepared by organizations to enlist support for or against some cause or activity. Still other video clips are prepared by companies to dramatize their products and service offerings. One high-profile campaign on YouTube was Marc Ecko’s Air Force One hoax. To demonstrate its affinity for graffiti art, the clothing company made a video that showed a couple of youngsters spraying the words “Still Free” on Air Force One. It later admitted that the plane on the video was not Air Force One and it just wanted to create a pop-culture sensation as part of its brand-building efforts on YouTube.

As social media becomes increasingly expressive, consumers will be able to increasingly influence other consumers with their opinions and experiences. The influence that corporate advertising has on shaping buying behavior will diminish accordingly. In addition, consumers are getting more involved in other activities such as video games, watching DVDs, using the computer, and they are watching fewer ads.

Because social media is low-cost and bias-free, it will be the future for marketing communications. Connections between friends on social networking sites such as Facebook and MySpace can also help companies gain insights into the market. Researchers at IBM, Hewlett-Packard, and Microsoft are mining social networking data to do profiling and design better communication approaches for their employees and consumers.⁵

Collaborative Social Media

Consider also collaborative social media that applies open sourcing. A decade ago, people knew that software could be open sourced and developed collaboratively. People knew Linux. However, no one considered that this kind of collaboration could be applied to other industries. Who would have imagined an encyclopedia that anyone can edit like Wikipedia?

Wikipedia’s content is contributed to by vast numbers of people who volunteer their time to create entries on countless topics for this community-built encyclopedia. By mid-2009, Wikipedia had developed 235 active language editions with more than 13 million articles (2.9 million in English).⁶ Compare this with We Are Smarter than Me, a book written by thousands of people. The book is an example of collaboration in traditional book publishing.⁷ Another example is Craigslist, which aggregates and displays millions of classified ads for free, posing a threat to newspapers that sell advertising space. Owned partly by eBay, the site also becomes the marketplace for a large number of communities placing ads to sell and buy various items.

Collaboration can also be the new source of innovation. In Open Business Models, Chesbrough explained how companies can use crowdsourcing to find new ideas and solutions.⁸ A company called InnoCentive broadcasts research and development challenges and solicits the best solutions. It welcomes companies that wish to find solutions to their problems (solution seekers) and also individuals, scientists, and researchers who can propose solutions to the problems (problem solvers). Once the best solution is found, InnoCentive will ask the solution seeker to give a cash incentive to the problem solver. Like Wikipedia ...