SESSION 1

DEFINING MARKETING FOR THE NEW REALITIES

Like most other disciplines these days, Marketing is also evolving. Unfortunately, it does not evolve at
the pace it took for chimps to evolve into ‘Neanderthals’, and for ‘Neanderthals’ to evolve into modern
humans. It evolves at a very rapid pace!

For this particular course the prescribed textbook is the Global Edition of Marketing Management by
Philip Kotler. But I may extract material from other sources, including the South Asian Edition of Kotler’s
Marketing Management.

Talking about the evolution of Marketing, you may like to read Kotler’s new book Marketing 4.0,
published in 2017, which is co-authored by Hermawan Kartajaya and Iwan Satiawan. The book, not
exactly on the pattern of Kotler’s standard textbooks, takes Marketing into a totally new dimension, and
is quite interesting to read. A few copies of Marketing 4.0 are available in the Library and it is also
available in pdf format online.

Introducing Marketing 4.0, the authors state that: “In this transitional era, a new marketing approach is
required. Thus, we introduce Marketing 4.0 as the natural outgrowth of Marketing 3.0.”

“We believe that the technology convergence will ultimately lead to the convergence between digital
marketing and traditional marketing.”

“The major premise of this book is that marketing should adapt to the changing nature of customer
paths in the digital economy. The role of marketers is to guide customers throughout their journey from
awareness and ultimately to advocacy.”

Our topic today is “Defining Marketing for the New Realities. But before we get to Kotler & Keller’s
Marketing Management Global Edition, but let us start by asking a simple question: IS MARKETING AN
ART OR A SCIENCE?”

The debate on the question actually began in the Journal of Marketing, published by the American
Marketing Association in 1945. The fact is that during the 20 th century Marketing was seen as ART and
“creativity” mattered the most.

TODAY, Marketing is sees as “part ART & part SCIENCE”! As Philip Kotler reaffirms: “It is both an art and
a science, and it results from careful planning and execution, using state-of-the-art tools and
techniques.”

Meanwhile, the understanding as well as scope of Marketing has also evolved with time. In 2012,
Kotler’s definition read as follows: “Marketing is about identifying and meeting human and social
needs.” The idea of “social needs” therefore put Marketing in a slightly broader context. However, as is
evident from Kotler’s definition Marketing in 2016, Marketing started to be seen as “the process of
creating, delivering, and communicating superior customer value”.
Successful marketing, as Kotler explains, builds demand for products and services, which, in turn,
creates jobs. Also, by contributing to the bottom line, successful marketing allows firms to engage more
effectively in socially responsible activities.

Recognizing its responsibility IBM, the global technology company, launched a major initiative in 2008, in
the midst of a global economic crisis, called “Smarter Planet” aimed at reviving economic progress and
growth. As part of that initiative IBM launched its Smarter Cities campaign, a comprehensive approach
to harness technology to help cities across the world run more efficiently, save money and resources,
and improve the quality of life of its residents. 

As Kotler also refers to the example of Unilever, stating that the company’s “new marketing model
called ‘Crafting Brands for Life’ establishes social, economic, and product missions for each brand,
including Dove, Ben & Jerry’s, Lifebuoy, and Knorr.”

Today we live in a technology driven world, where companies big and small have been experiencing
drastic changes. Some of the biggest brands that dominated their categories are no more. Brands that
dominate the world today are less than 30 years old - their years of establishment being as follows:

1. Amazon 1994
2. Google 1998
3. Apple 1996
Internet become commercially available in 1990. Today it brings connectivity and transparency to the
lives of most human beings living in the developed and developing world. Nearly 60% of the world’s
population (i.e.4.7 billion), has access to the internet and is impacted by it.

The internet is also largely responsible, in this age of technology, for bringing about major power shifts
in Marketing. The balance of power, that for many years had remained within the control of large
marketing companies has moved away, in the direction of consumers. Marketing therefore, like other
disciplines, strives to change & adjust to the realities of a changing world.

The fact is that much has changed in the world today, and in our understanding of the world as well. By
the same token our understanding of Marketing must also change & adjust to what are the new realities
of our world.

Much has changed in the world today, and so has our understanding of the world. Every passing day
throws a new light on how the world works. So the understanding of Marketing must also change in the
same way and adjust to the new realities of our world. It is true that many of Marketing’s core concepts
continue to remain in action, but their interpretation may differ depending on who they refer to.

For instance, we recognize needs as a basic human requirement. We all have needs and they are our
basic human requirements. When the need becomes directed towards a specific product or service, like
I am thirsty and want Coke, it really becomes a want, and when I have buying power or money to pay for
the Coke I want, it becomes a demand that the company must address and make it available to me.

For marketers, the target market has been the object of attention in the past, but today customers are
not seen primarily on the basis of demographics, but as persons “presenting the best opportunities for a
business to succeed”.

In the very same way several other Marketing concepts now are being redefined.
If I ask you to define “positioning” in the context of Marketing, many of you would probably describe
that as “the place a brand occupies in the mind of the customer”. Does it not sound very dull and
obscure? How does a brand get to that place in the consumer’s mind? By drilling a hole in his head?

So, today we define Positioning as a unique value offered by a brand that is distinct from competition. Of
course, if you go to Wikipedia or Google for the definition of Positioning, or to a Blog, you will find a
variety of definitions, including obviously reflecting the writer’s thinking. But that is best avoided!

Another Marketing concept that you must have studied in your Principles of Marketing class is
Segmentation. There is no denying the fact that Segmentation or creating segments has sound business
reasoning. It is built on the idea that companies’ resources are not unlimited – hence segmentation has
to be done. But the problem is how should segmentation be done. The traditional approach of dividing
the market from the top is questionable. Why do I say that? It is because the basic assumption for
dividing the market into smaller segments, based on physical characteristics such as demographics and
geographics or even psychographics is questionable. Put yourself in the consumer’s shoes and ask
yourself if it works for you or for your friends. From your own experiences you will agree that two
people with the same amount of money in their pocket, or with the same income, and living in the same
locality may not choose the same product or service, or go for the same brand. The reality is that there
are lots of other factors that come into play when a consumer makes a buying decision. Don’t you
agree?

The solution therefore that I call the Contemporary Approach, proposes a bottom-up approach where
you actually observe a customer’s past purchasing behavior over time, to decide what they are likely to
buy next when a need arises. We will talk more about this in a later session dedicated to Positioning.

The other aspect of Marketing that has changed relates to Media.

Until very recently Media simply meant Paid Media. You bought 27 by 4 column space in a newspaper,
or a 15 or 30 to 60 second time slot on TV for advertising, and you paid for it – often in advance. It that
how all media works today? Do companies pay the media every time they want their brand to be
promoted? Yes, they pay for advertising on traditional media, they pay a much lesser amount to create
their own media vehicle in the shape of a website, but there is a lot more media time or space that
comes to them for free – you and I provide them media for free by promoting their brands online. That
is Earned Media that companies get if their customers are happy with them. Customers become brand
advocates.

“Marketers now think of ‘three screens’ or means to reach consumers: TV, Internet, and mobile.”
Surprisingly, the rise of digital options did not initially depress the amount of TV viewing, in part
because, as one Nielsen study found, three of five consumers use two screens at once.

Companies still spend more on TV or Print or Outdoor rather than Social Media “to conform to market
practice”. Nothing could be more wasteful than that if the target is younger in age. Traditional mass
media does have wider reach, but does it get you more conversion? Do more people convert to a brand
because of the advertising they see on TV? That is the question worth asking.

On the internet ‘Impressions’ count, but Engagement counts more.

Careem, headquartered in Dubai – UAE, is another example of a brand that riding on the wave of social
media, became an overnight success in markets including Pakistan. The ownership of Careem changed in
January 2020, when Uber bought the company in January 2020 for $3.1 billion. It is believed that the
acquisition turned hundreds of Careem employees into millionaires.

There are three market forces that get credit for the change in the market today and consequently in
Marketing. Technology is one such driver that allows data access to consumers and companies for more
agile and informed decision making. There was a time when holding on to information was power – now
sharing information is power. The rapid rise of ecommerce is another game-changer.

Globalization is another market driver, facilitating the flow of ideas, and the scaling of businesses.
Globalization offers new opportunities & challenges for businesses. It is believed that by 2025, expected
consumption of goods & services to reach $30 trillion. We call our world a global village. Companies now
gather innovation ideas from multiple sources across the world – from our global village.

The third market driver is social responsibility that is instrumental in making businesses more
accountable. Most businesses today are answerable to consumers who expect them to be ethical,
environment friendly, legally and morally - morally answerable, and socially responsible. Most of you
would know how big brands like Nike, Starbucks, Gucci, Prada have been under fire from consumers.

Consumers today have capabilities they never had before and they do not shy from using it. They can
use the Internet to search, communicate, purchase on the move, freely share opinions and express
loyalty or otherwise, actively interact with companies, talk to them directly, or even reject a company’s
‘marketing’ if they find to be inappropriate.

Technology has been a blessing for companies as well. They now have the means to collect richer
information understand customers better, reach out to them more quickly and effectively, and enhance
their profits as technology costs go down. How much does it cost to buy a fairly decent cellphone or
computer now? Much less than a few years ago – right?

Despite all this this is no time for business to go easy. The face of competition for instance has changed.
Markets have opened up and competition can come from not just another company but from another
country, not just from your industry but from another industry. In fact, many companies have started to
partner with competitors as a means or survival and growth. IBM has been working with Oracle in some
market and competing with them in others. Cross-industry competition is a reality. Phone companies
now do not just transfer money – they own banks.

Retail too is undergoing major transformation. Competition has also become intense. Many retailers
create multiple ways of serving customers – they have become multichannel. Traditional brick and
mortar retailers saw their store, as the destination location for buyers. Not so today as customers are
going online. Most major stores in Karachi and in other major cities either have adopted or are in the
process of adopting a multichannel approach making it easier for customers to buy gods and services.
Textile brands for instance now sell in store and online - they also deliver goods at home. To complicate
the world of retail “Brick-and-mortar” & “Brick-and-click” services are also being offered side by side.
Isn’t that what is happening with Amazon & Amazon Go? Retail is truly transforming in unpredictable
ways.

Ultimately, however, as Marketing people we must understand that consumers truly are the genesis of
success in business – they determine the success or failure of a brand or a business. Business must
accept the reality and adapt to consumers’ whims. Consumers know that they have more power and
more say in business than they have ever had. Global brands like Dove have learnt their lesson and
moved from their narrow and contrived definition of beauty.

Another challenge for practitioners of Marketing today is that they have become more accountable than
before. Companies expect Marketing to not just spend money but be accountable for the money they
spend. Companies now calculate ROI/ ROMI targets against budgets.

Successful businesses are also moving towards greater interdepartmental collaboration. Whether it is
product-innovation or new business development, collaboration is key. Logistics, Sales and Marketing
need to work together to not just ensure customer acquisition, but also customer retention & of course
order fulfillment.

Starbucks now buys coffee above market price and also provides technical support to growers. Because
consumers want it done that way.

Even in Pakistan customers are realizing their power. So businesses need to become more and more
conscious of the fact that they have to listen to, and respect their customers. Otherwise someone sitting
in a remote part of the world could become major competition for them.

January 17, 2021