Marketing 5.0 - Philip Kotler, Hermawan Kartajaya, Iwan Setiawan

You’ve probably heard of fourth industrial revolution technologies like artificial intelligence, augmented reality, advanced robotics, blockchain, neural networks…

But have you ever thought about how marketing can be worked in the "Age of Data"?

In yet another iteration of their work, the trio of Kotler, Kartajaya and Setiawan presents their vision of how the combination of these resources will transform marketing in companies.

In addition, they explain how the generation gap, resistance to digitalization and the worsening of inequality present themselves as challenges for advertising professionals.

You don't want to miss out on so much information, do you? So read this summary to learn more!

The book “Marketing 5.0”

Published in 2021, the book is another evolution of the authors' work, which began in 2010 with “Marketing 3.0”.

After presenting digital trends for the industry in the sequel “Marketing 4.0”, in the newest book the authors explain how these transformations have been accelerated by the COVID-19 pandemic.

The book has 224 pages and is divided into 12 chapters, which present the main themes in the understanding of the trio of experts.

Who are Philip Kotler, Hermawan Kartajaya and Iwan Setiawan?

Philip Kotler is Emeritus Professor of Marketing at the Kellogg School of Management. The Wall Street Journal named him one of the 6 most influential thinkers in the business world.

Kotler has great reach and worldwide recognition. His work “Marketing Management”, originally published in 1967, is considered one of the leading business books of all time and is adopted by colleges and universities around the world.

Hermawan Kartajaya is the founder of one of the most famous marketing consultancies, MarkPlus Inc. He is already considered one of the 50 gurus who shaped the future of marketing.

He has also been the recipient of numerous awards, and is a co-founder of the Asia Marketing Federation.

Iwan Setiawan is CEO of MarkPlus Inc. A writer and speaker, Iwan holds a BA in Engineering from the University of Indonesia and an MBA from the Kellogg School of Management.

To whom is this book indicated?

The ideas presented in the book are essential for entrepreneurs, professionals and marketing students who want to keep up to date with the frontiers of the field.

Considering that content marketing is the currency of the 21st century, the book presents interesting reflections for those looking to grow their business along this path.

In addition, technology enthusiasts may also be interested in knowing how advances are used in different areas, such as marketing.

Main ideas of the book “Marketing 5.0”

• Marketing 5.0 is the result of the combination of the focus on people of Marketing 3.0 and the technological empowerment present in Marketing 4.0;
• The idea arises in face of 3 major challenges: polarization of prosperity, generation gap and digital divide;
• Professionals are still in the process of transition and adaptation to the digital world;
• The COVID-19 pandemic has greatly accelerated the digitalization of companies and, consequently, of marketing;
• Technology must serve as a strategic tool for business.

In the following summary, the authors' views and perceptions on the topic will be presented in more detail, through the highlighted points within each chapter.

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What is Marketing 5.0?

Marketing 5.0 leverages the use of technologies that mimic human beings to create, communicate, deliver and increase the value offered throughout the customer experience.

The authors define the two main disciplines of the concept:

• Data-driven marketing: every decision must be made based on relevant information. With big data, it is possible to build an ecosystem based on data and optimize choices.
• Agile marketing: use of decentralized, multidisciplinary and functional teams to create, develop and validate strategies quickly, aiming to keep up with constantly changing trends.

From these two ideas, it is possible to verify the possible applications for Marketing 5.0, which are predictive, contextual and augmented marketing. Throughout the book, the authors delve deeper into each of these applications.

The trio of experts also list the ways in which technology can improve advertising practices:

• Make decisions based on more information;
• Predict the results of marketing strategies and actions, which allows you to focus investments on what has the greatest potential;
• Bring the digital context experience to the real world;
• Develop the ability to deliver value to the customer;
• Increase execution speed.

How to use the generation gap?

Kotler, Kartajaya and Setiawan point out that, as new generations emerged, advertising ideas and proposals evolved to adapt to new trends and public needs.

Therefore, it is clear that it is essential to understand the stage of life in which each generation finds itself in order to develop the best tactic.

The baby boomer generation (born between 1946 and 1964) is the only one that has lived with all schools of marketing thought since 1.0. They are currently in the final stage of life, seeking comfort and tranquility.

People born between 1965 and 1980 (Generation X) are active in society, occupy leadership positions at work, and aim for the best for their children.

Generation Y (1981 to 1996) is made up of daring individuals, who take risks to achieve their goals, and are willing to give up many things to build their careers.

Finally, the most recent generations, Z (1997 to 2010) and Alpha (2010 onwards), are the most important for the next decade, as the authors explain that these people tend to spend less time at each stage of life.

It is essential to know how to use technology to create an approach that enables people-focused solutions. For this, leaders (mostly generation X) need to accept and value the ideas brought by the workforce (generations Y and Z).

How can I use polarization in my favor?

The book points out that the current society suffers from different types of polarization:

• Of work: both high-value, high-wage and low-value, low-wage jobs are expanding, while everything between these two extremes is shrinking;
• Of ideologies: people with different worldviews split up and go in opposite directions;
• Of lifestyles: both minimalist and consumerist styles are growing, while balanced styles are being contracted;
• Of markets: growth of high luxury markets and very cheap and low quality products.

When everything is so polarized, there are only two options for positioning your brand, which limits the market and business possibilities.

To combat this, the authors emphasize the importance of inclusive and sustainable growth, as they believe that investing in society, in addition to the benefits for people, can bring new market opportunities.

They show that consumers are increasingly attentive to the ethical conduct of companies, and this is likely to increase. Therefore, it is important that there are leaders in favor of corporate activism within organizations.

In this sense, the use of technologies is essential to accelerate progress and expand the opportunities available to all, increasing the social impacts generated by the business.

What changes with the digital?

In 2020, the internet had almost 5 billion users. With the current trend, 90% of the population is expected to have access to the internet by 2030. In this sense, the digital divide refers to the gap between those who have immediate access to computers and the internet and those who do not.

Kotler, Kartajaya and Setiawan explain that the main barrier is no longer availability, given that almost the entire population lives in places with cellular network coverage.

What proves to be a challenge to acquire new users is the ease of access and simplicity of use. That's why cheap mobile devices, lightweight operating systems, affordable data plans and free Wi-Fi hotspots are key.

They also highlight the fears that part of the population has about digitization:

• Automation and job loss;
• Privacy and safety concerns;
• Filtering information by search engine algorithms;
• Addiction to games and social media.

On the other hand, they list the promises of digitization:

• Wealth creation;
• Ease of teaching and learning;
• Smart, connected devices;
• Improvement in the quality of life and health;
• Sustainability and social inclusion.

In this way, the authors conclude that the role of marketing 5.0 is to show people that the correct applications of technology can increase human happiness.

What changed in the digital organization?

The global pandemic has forced companies to migrate to the digital world, being forced to work remotely due to the need for social distancing. However, many transformations are yet to come.

For this, the authors suggest evaluating the digital readiness of your consumer base, that is, if they have the habit of using digital interfaces to communicate with the company, if the customer journey has digital elements, etc.

It is also essential to carry out an internal analysis of the company, understanding points such as: if the digital structure is well made, if there is a strong digital culture or if the employees are well trained to work with technology, for example.

Depending on the situation, different strategies can be used, such as the total digital transformation of the company or the migration of the customer journey to the digital environment.

What is the next tech?

Kotler and his collaborators believe that the next technological frontier will take off in the next decade. The foundation for this has been built for many years: powerful computing, open source software, high speed internet, mobile devices and big data.

They explain that the next step is to emulate human learning, which works in a contextual way. From an early age, we are trained to analyze our environment and communicate with each other. In addition, our life experience increases our understanding of the world.

Computers are being trained following the same principles, through sensors and NLP (natural language processing). To simulate life experience, the large volume of information present in big data is used.

Human imagination is emulated by virtual and augmented reality, while social relationships are replicated through the use of the internet of things and blockchain.

Finally, the book shows how these technological advances are applicable in marketing. As an example, artificial intelligence allows for real-time market research, favoring rapid and large-scale personalization, as well as creating an adaptive customer experience.

How important is the new CX?

Considering the increasingly competitive markets, customer experience is the way to differentiate and win. In some cases, immersive and interactive activities are even more important than the products and services offered.

The authors show that technology is critical to developing an attractive customer experience throughout the entire purchase journey, from awareness to brand loyalty and advocacy.

The large volume of information allows discovering specific ideas of market targets, and acting on them. Finding the optimal point in paid media and in the pricing of products are also activities carried out with technological support.

In addition, experts exemplify the possibilities of forecasting sales, recommending products, detecting the churn rate and quickly customizing products and services according to customer needs.

However, they say the human side cannot be overlooked in customer service, as it will counterbalance the cold efficiency of technology with wisdom, flexibility and empathy. It's impossible to replace people when it comes to building deep connections.

How to work with data-driven marketing?

Market segmentation has been completely transformed with the emergence and advancement of big data. The immense volume of information about consumers makes it possible to create “individual segments”, that is, campaigns, products and services totally focused on one person.

In the book, it is said that the problem now is to identify the information that is most interesting. For this reason, marketing should always start with defining specific goals.

From there, professionals can define the most relevant databases and integrate them into a data management platform that works with machine learning. The insights provided can be used to create more efficient campaigns.

However, the authors emphasize that the implementation of data-based activities in the company should not be an initiative of the information technology sector alone. The participation and leadership of the marketing team is essential, as well as alignment with the company's strategies.

The involvement of marketers in the project is essential, as this tactic does not work on “autopilot”, it is necessary to have a keen critical sense to be able to engage customers based on relevant information.

What is predictive marketing?

Predictive analytics is a very powerful tool, which is used in a variety of industries. In the book, the authors cite the example of the signing of Jürgen Klopp by the English club Liverpool FC.

On that occasion, mathematical models were used to identify him as the best coach option for the team, as well as to define the signings of players that would be fundamental to the success achieved by the team.

In the field of marketing, models analyze the past behavior of consumers to assess the possibility of carrying out similar actions in the future.

They identify subtle patterns within big data and suggest the best tactics to use. This allows marketers to prepare quick and appropriate responses.

The book lists some modeling techniques, such as regression analysis, collaborative filtering and neural networks. In this sense, the support of data and statistics experts is necessary.

In addition, they cite some examples of applications of predictive analytics:

• Customer management: estimating the value of potential customers and determining the appropriate investment;
• Product development: marketers can view pre-launch sales results and define the most promising product lines;
• Brand strengthening: analysis of consumer sentiments and definition of strategies to build the brand in this context.

What is contextual marketing?

In 2019, drugstore chain Walgreens began testing a smart cooler, which displays certain products and advertisements according to the customer facing the device.

Using sensors and cameras, artificial intelligence detects the age and gender of the customer and, together with other information (like weather, time of day, etc.), delivers the product most likely to generate consumer interest.

This type of smart device is an example of contextual marketing application, which according to Kotler and his collaborators, is the ability to deliver the right product to the right person at the right time and in the right place.

Furthermore, the authors teach that the personalized experience can happen at 3 different levels:

• Personalized information: customer-tailored offering, geographic location-based advertising and promotions;
• Customized interaction: two-way communication and different types of dialogue with the customer;
• Total immersion: involvement in physical space with the help of sensors, augmented reality and advanced robotics.

What is augmented marketing?

Augmented marketing focuses on highly human-dependent activities, where computers currently serve only as a support system. The authors cite examples from the sales and customer support areas.

The idea is that digital interfaces promote alternative ways for consumers to interact with brands and companies. The projection is that by the end of 2022, 72% of interactions will involve some type of technology, such as AI or chatbot.

In this way, Kotler and his partners believe that the customer service area is ideal for this symbiosis between human and machine to take place. For more basic issues, digital devices are sufficient. If there is any more specific pending, human participation is still necessary.

In the sales process, top and mid funnel activities can be delegated to computers, while the bottom is left to people.

Furthermore, they explain that augmented marketing is also about empowering employees who serve customers with digital technologies. In the same way that consumers are increasingly connected and well informed, it is necessary that the attendants can reach the same level.

What is agile marketing?

Agile culture is widely used in technology companies and is increasingly being adopted in organizations in other industries. Considering the digital transformation of marketing, it is logical to think that agile management elements can also be applied in this area.

Kotler and his partners mention that the product life cycle is getting shorter, due to constantly changing consumer expectations and the high proliferation of new products.

Likewise, the same goes for experiences, which can quickly become obsolete. Therefore, it is critical for companies to be flexible in order to quickly adapt to changes.

In this sense, technologies help to provide the data and tools necessary for decentralized and innovation-focused teams to be able to develop their work in the best possible way.

Other books about marketing

In the book “The Apple Experience”, author Carmine Gallo details the strategies that led the tech giant to be recognized as one of the best customer service providers in the world, involving its consumers as fans of the brand.

In “This is Marketing”, experienced Seth Godin presents his view on marketing in the digital world, pointing out the advantages of using the internet, but emphasizing that it is necessary to differentiate yourself to stand out in such a competitive environment.

Finally, Cláudio Torres brings, in “The Digital Marketing Bible”, a complete guide containing 7 strategies that promise to help you succeed in the world of digital marketing.

How can I apply the ideas from "Marketing 5.0"?

• List which advanced technologies can add value to your organization;
• Evaluate the digital readiness of the company you work for;
• Analyze the public served by your company;
• Identify ways to innovate and meet the needs of digitally native generations;
• Include perspectives of social impacts on the organization's vision, mission and values;
• Produce a 5-year technology roadmap, identifying opportunities and challenges;
• Map the customer journey! Are there points where marketing technology can improve the experience?
• Seek to empower employees technologically to adapt to the consumer market.

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We hope that the content presented has been valuable for you to apply in the different aspects of marketing!

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