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The Future of Marketing

2013 October 27
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It’s been nearly half a century since Philip Kotler first published his Principles of Marketing, which has defined the practice of millions of professionals worldwide ever since.  It’s no stretch to say that before Kotler, there was no true marketing profession.

What made Kotler different than what came before is that he took insights from other fields, such as economics, social science and analytics and applied them to the marketing arena.  Although that may seem basic now, it was groundbreaking then.

Today technology is transforming marketing once again.  Although up to this point, most of the impact has been tactical, over the next decade or so there will be a major strategic transformation.  This, of course, will be a much harder task because we will not only have to change what we do, but how we think.  Here’s a short guide to the change:

From Messages to Experiences

In the 20th century, promotion dominated the field of marketing.  While evaluating opportunities was important, advertising, especially on TV, was what drove budgets and, as a result, strategic thinking.  Not surprisingly, coming up with the right message and broadcasting to the right people at the right time was of paramount importance.

Today, however, digital technology has enabled us to retarget consumers when they respond to a message and that has changed marketing forever.  In effect, we must make the shift from grabbing attention to holding attention.

That means that brands will have to learn to be more like publishers and develop content skills.  It also means that marketers will have to create a genuine value exchange rather than just coming up with catchy ad slogans and price promotions.  Like it or not, we’ve entered a post-promotional paradigm.

From Rational Benefits to The Passion Economy

In the past, we focused on rational benefits to entice consumers to support our brands. Show that you are better in a clear, rational way and, so the thinking went, you could build a loyal following.

However, we’re not rational, calculating machines, but emotional driven creatures who are subject to an whole array of cognitive biases and new research has changed the psychology of marketing.  For example, research shows that while a price promotion may spurs sales, it lessens enjoyment and can hurt the brand long-term.

In effect, it’s become clear that we are not operating in a rational economy, but a passion economy, where a sense of purpose determines how people will act and brand associations, rather than brand attributes, determine marketing success.  So, we’ll have to learn to focus on  share of synapse as well as share of market.

From Strategic Planning to Adaptive Strategy

Marketing strategy has always been numbers driven.  We survey a small selection of the population and then scale up those samples to make decisions.  Unfortunately, our numbers are always wrong.  They are backward looking, fraught with error and based on confidence intervals that virtual guarantee that they’ll be wildly off one time in twenty.

However, big data is enabling an entirely different approach.  Rather than wait for the results of controlled studies and then analyze them to glean insights, we can collect massive amounts of data in real time.  Instead of fooling ourselves into thinking we have it right, we can become less wrong over time.

What we need then is a more Bayesian approach to strategy that takes uncertainty into account, allows us to manage complex interactions that we have so far ignored but always knew existed and enable us to prepare multiple approaches rather than building a consensus around the lowest common denominator.

From Hunches to Simulations

Big ideas have always been prized by marketers.  The problem is that once you have a big meeting amongst a bunch of big egos, each of which has his own big idea, the ideas tend to get progressively smaller until ultimately the next marketing plan ends up being a tweaked version of the last one.

The reason this has always been the case is that big ideas are risky.  Sure, by coming up with a new way of thinking you could end up a hero, but you could also end up fired. Marketers, much like everybody else, are motivated less by the sublime and more by the mundane aspects of life, like paying the mortgage, braces for the kids and so on.

Now machine learning technology is enabling a new approach in the form of marketing simulations.  Rather than argue the merits of a new approach in stale conference rooms, we can test them in simulated environments built from real world data.  As the Web of Things becomes more pervasive, this will allow us to truly co-create with our consumers.

In effect, by increasing our failures in the virtual world, we can improve our performance in the real one.

From Brands to Platforms

For most of the 20th century, businesses focused on developing proprietary value chains. As they became more successful and added scale, their competitive advantage would grow in terms of quality, efficiency and brand equity.  Brands were, in effect, just another asset to be accounted for and then leveraged.

Digital technology is forcing marketers to rethink their historical approach to marketing. We are no longer operating in a scale economy, but in a semantic economy where the connectivity drives value and brands are becoming open platforms and ecosystems rather than assets to be closed off and protected.

This has already become clear in technology products, where API’s and SDK’s have become standard, but as the world of bits invades the world of atoms, all marketers will need to connect in order to survive.

So, while Kotler reconciled marketing with the standards of business, over the next decade we will have to reconcile marketing with the standards of technology and, as Martin Heidegger once argued, technology isn’t important because of what it builds, but because of what it uncovers.

- Greg
 

10 Responses leave one →
  1. October 27, 2013

    Thank you and this is the money shot on this:

    “Today technology is transforming marketing once again. Although up to this point, most of the impact has been tactical, over the next decade or so there will be a major strategic transformation. This, of course, will be a much harder task because we will not only have to change what we do, but how we think. ”

    Tactical vs. strategic.

    [Reply]

    Greg Reply:

    Thx Mark!

    Have a great week!

    - Greg

    [Reply]

  2. October 27, 2013

    Greg

    In light of this post on marketing I saw the following “What the ad box needs is to exorcize direct marketing” at Doc Searls Weblog.

    http://blogs.law.harvard.edu/doc/2013/10/06/what-the-ad-biz-needs-is-to-evict-direct-marketing/

    “Operating within the soul of every marketer is the ridiculous assumption that people want or need to be bombarded by advertising, and that any invasion of their time or experience to “pass along” an attempt to influence is justified. If this were true, there would be no looming fight over DVRs, which allow viewers to skip ads. You have no inherent right to my eyeballs, and it is precisely this axiom that makes today’s instruments and gadgets so powerfully disruptive to the culture.”

    I hope you find this of value?

    [Reply]

    Marcus Osborne Reply:

    Great read Greg.

    In the social economy, customers not companies define brands. Whilst the company can develop elements of the narrative, the consumer, who is also the author, determines its direction and success.

    I also completely agree with what Mark said. Marketers still believe it is possible to develop a position, communicate it and find a space in the consumers mind and relentlessly carpet bomb them with corporate driven messages until that message sticks in the poor sods mind. They still think the consumer will then go out and search for the product, buy it and become a customer for life. Ludicrous.

    [Reply]

    Greg Reply:

    True. Nobody likes to be sold, but everyone likes to buy:-)

    - Greg

    [Reply]

    Greg Reply:

    Thanks Mark. Great quote!

    - Greg

    [Reply]

  3. October 28, 2013

    I couldn’t have said it better – and believe me – I’ve tried. I clicked for the headline and stayed for the content. I think this trust-based relationship economy is better for both sides. I like to think things are improving not just for marketers, but for those who are marketed to (which is all of us).
    Andrew´s last blog post ..The future of language: I second that emoji

    [Reply]

    Greg Reply:

    Thanks Andrew! Hope to see you back!

    - Greg

    [Reply]

  4. November 1, 2013

    Greg I saw this and thought about your post here.

    http://healthandpharmainsight.tumblr.com/post/63737803219/social-media-and-emotional-marketing

    [Reply]

    Greg Reply:

    Cool! Thanks for pointing it out.

    - Greg

    [Reply]

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