Marketing 4.0 is a concept created by Philip Kotler. It talks about the ever-changing tendencies and latest developments in the field of marketing. Considered as one of the most important marketing theoreticians, Mr. Kotler explains in his book, Marketing 4.0 Moving from Traditional to Digital, the interactive approach to communicating with customers. In this blog, we will talk about Marketing 4.0 and its main arguments as outlined by the author. We will also discuss the evolution of the original Marketing Mix and how the four Ps converted into the four Cs.
How is Marketing 4.0 different than its predecessors?
Let’s look back at the Marketing 1.0 and Marketing 2.0 concepts. Marketing 1.0 is focused mostly on the products and services offered by companies. It follows what we today call the traditional approach to promoting features and functionalities of products, which is simply to create attractive selling points. This notion was born in the Industrial Era and was used until the late 60’s. Marketing 2.0 that uses Information Technology and its tools and methods of manipulating and distributing the information succeeded the Marketing 1.0. This concept is focused on the customers, identifying and satisfying their needs, and establishing loyalty. It implies the positioning of the products and services offered by companies, thus creating the specific aims of marketing efforts and targeted markets. This notion enabled the replacement of mass marketing with audience segmentation.
Marketing 3.0 is based on new wave technologies, and relies on four essential tools: computers, mobile phones, the Internet, and social media. These four elements are the base of Social Media Marketing (SMM), the process of reaching customers and promoting products and services through the use of social media channels. Instead of relying on statistics and looking back on trends, real-time data and indicators are available through direct communication with the client base. Decision-making processes take into account knowledge generated through interactions and shape the focus of actions on results while analyzing the extent to which objectives are met.
Closer look into the Marketing 3.0
The Marketing 3.0 concept was created as a response to various changing factors in the environment of the field including globalization, new emerging technologies, increased interest in creativity, as well as people’s values and focus on spirituality. It encourages social behavior in the world of business and fulfills the need of satisfying the spiritual side of customers. The book “Marketing 3.0: From Products to Customers to the Human Spirit” stresses out the importance of listening to the voice of the customers and meeting their ‘Complex Needs’. It explains the importance of developing frameworks for understanding the multiple, interlocking needs of customers that span health and social issues reflecting on mind, soul, emotions, and body. Marketing 3.0 encourages businesses to act responsibly towards the environment, not only for promotional purposes with the final aim of increasing profits, but also for the benefit of the society in which they operate. Moreover, the focus is on providing an excellent customer experience through which the customer identifies himself with the company.
Mr. Philip Kotler talks about the ever-changing market conditions that need to be followed by regular reviews of marketing strategies, making sure that contingency plans are in place to ‘avoid surprises’. The planning process should not be rushed and should ensure that a solid marketing plan and strategy exist. The application of Marketing 3.0 allows companies to market their products or services as part of a greater mission with a social impact. By putting this concept in practice, companies differentiate themselves, achieve greater recognition and establish long lasting relationships with their clients, marked by loyalty and respect.
Finally, Marketing 4.0
The marketing guru, Mr. Philip Kotler, in his book, Marketing 4.0: Moving from Traditional to Digital, introduces the concept of combining online and offline interaction between companies and customers. Though he describes it as ‘digital’, Kotler explains that today’s economy online interaction alone is NOT enough. An interesting mechanism emerges within Marketing 4.0, whereby digital and traditional marketing coexist in a mutually beneficial balance: digital marketing and its tech instruments are meant to keep brands flexible and adaptive to customer needs and feedback, while offline, orthodox modes of interaction and marketing are meant to maintain brand originality in character. The goal, it seems, of marketing, has always been to stand out. In an increasingly, transparent and digital world, balance becomes key. Marketing 4.0 is an era where capitalizing on the utility of technology without sacrificing authenticity and character will be the key challenge for companies. According to Kotler, this challenge will become even more important as technological advances are made in concepts such as AI, Machine Learning, and the Internet of Things over the coming years.
Marketing 4.0 also focuses heavily on customer interactions and the increasing need for companies to improve their channels and way of downstream communication. The book suggests that in order to reach higher levels of interaction, companies should practice creativity. Moreover, it talks about the three levels of interaction from the customers’ standpoint: enjoyment, experience, and engagement. Product superiority will assure customer enjoyment by focusing on developing a product that is aligned with customers’ needs and wants; to reach even higher levels of interaction, companies need to focus on delivering compelling customer experiences that complement the main product or service purchased by the customer; the companies that reach the highest level of ‘engaged customers’ do so by impacting the self-actualization of their customer, in some or another offering life-transforming personalization.
The evolution of Marketing Mix
Mr. Philip Kotler was first recognized in the field of marketing as he popularized the idea of Marketing Mix, also known as the four P’s of Marketing. The concept of Marketing Mix was developed in the 1960’s and stands as the pillar of the field of marketing. The four P’s stand for Product, Price, Place, Promotion and look into each element as a crucial one for creating a holistic picture that helps companies develop their unique selling points and brand image.
The original Marketing mix representing four 4 P’s was redefined by its creator Philip Kotler as the four C’s, placing a greater focus on customer participation. Such a change was needed in today’s interconnected world. In the new concept, the four C’s stand for co-creation, currency, communal activation, and conversation. We will look into each element, aiming to highlight the ways in which evolution of the original Marketing mix took place.
PRODUCT to CO-CREATION - Digital economy suggests the co-creation as the new product development strategy. It represents the method of involving customers early, in the ideation stages. By doing so, the market testing of products takes place prior to product launching, ultimately improving success rates. Moreover, customization and personalization of products and services offer superior value propositions to customers.
PRICE to CURRENCY - the new approach takes into account fluctuations in prices, depending on market demand. It involves dynamic pricing, which is the method of optimizing profitability by charging different customers differently based on historical purchase patterns, proximity to store locations, and other profile aspects. This practice has its roots in the hospitality and airline industries, and is now expending into other industries such as online retailing.
PLACE to COMMUNAL ACTIVATION - The concept of distribution channels and physical stores are also changing. In the sharing economy, which is built on the idea of collaborative consumption, the concept of peer-to-peer distribution is emerging. Companies such as Airbnb and Uber are great examples of the change, reshaping hotel and taxi industries without owning a single hotel or taxi. In the connected world we live in, customers expect rapid purchases and the rise of 3D printing will allow for making these processes even quicker.
PROMOTION to CONVERSATION - The one-way communication typical of traditional promotional methods is replaced by two-way interaction with the customer base. Social media is a prime tool that enabled complete customer interaction and allowing feedback collection as well as the sharing of experiences between customers. Platforms such as TripAdvisor have become a staple of travellers’ mobiles, producing opinions in the form of reviews and ratings that influence customers’ choices.
Whether you are just starting out in the field of marketing or you are an entrepreneur looking to develop a marketing strategy, we recommend you reading Marketing 4.0: Moving from Traditional to Digital, by Philip Kotler and discover all the interesting insights this book has to offer!