Kotler's 'Marketing 4.0' Argues the Marketplace Has Changed, and the Customer Is In Charge

Michael Krauss
Marketing News
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Key Takeaways

​What? Marketing must evolve as the marketplace and consumers change.

So what? Phil Kotler argues marketing's fourth evolution must turn customers into brand advocates.

Now what? Brands can't talk at customers, they must engage with them to create brand advocates.

​April 4, 2017

The fourth iteration of Phil Kotler’s landmark work emphasizes the convergence of new and traditional marketing to lead consumers to brand advocacy

Social media is revolutionizing the marketing world. Digital marketing and technology are transforming the way we do business.

Is anyone providing an assessment of the changes marketers face and a roadmap or set of frameworks and guiding principles for addressing the transformation that’s occurring in marketing?

Marketing 4.0 Moving from Traditional to Digital is the guide that marketers should read.

At age 85, author, researcher and the S.C. Johnson & Sons Distinguished Professor of International Marketing at the Kellogg School of Management at Northwestern University, Philip Kotler, is leading the way.

Kotler, who initially codified the academic principles of the marketing profession in his groundbreaking 1967 opus, Marketing Management, continues to guide marketers in the realm of social media and digital marketing. 

In 2010, Kotler published Marketing 3.0, describing how marketing has evolved from product-driven marketing (1.0) to customer-centric marketing (2.0) to human-centric marketing (3.0).

Marketing 4.0 is an effort to look at marketing along a different dimension,” said Kotler in a recent interview. “Marketing traditionally was oriented with communication being key, a one-way communication, just labeled traditional marketing. Good fortunes were built on brands that hit us continuously with Campbell’s and Kellogg’s.” But connectivity and technology have altered the way we approach marketing.

“A lot of the message of the book is that any company that wants to survive has to turn to these new tools of social media and use digital media to facilitate their management of their business,” but it will still be a blend of old and new, he said. “We’re not dropping traditional marketing. We’re blending traditional and digital.”

“A lot has happened since we wrote Marketing 3.0,” Kotler writes in Marketing 4.0, “especially in terms of technological advancements.” While the technologies are not necessarily new, Kotler writes, “They have been converging in recent years, and the collective impact of that convergence has greatly affected marketing practices around the world.” Clearly the buyer has more power than ever before.

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Kotler believes that this technological convergence will ultimately lead to the convergence between digital marketing and traditional marketing. The purpose of the new book, Kotler says, is “that marketing should adapt to the changing nature of the customer and the customer’s paths in the digital economy. The role of marketers is to guide customers throughout their journey from awareness to ultimately advocacy.”

Whether you are a marketer trained on the Hierarchy of Effects model or the newest “digital native” marketing graduate, Kotler is signaling to all marketers that there are unique paradoxes occurring in today’s marketplace.

“While online businesses have taken up a significant portion of the marketplace in recent years, we do not believe they will completely replace offline businesses,” Kotler says. Similarly, today’s customer is more informed than ever before but also more distracted.

Finally, brands face positive and negative advocacy and must learn to navigate this paradox. “In the context of connectivity, negative advocacy might not be a bad thing. Sometimes a brand needs negative advocacy to trigger positive advocacy from others,” Kotler says.

There are major power shifts taking place in the world. We are moving to a more horizontal, inclusive and social market landscape. Kotler explores major digital subcultures of youth, women and netizens.

At the core of Marketing 4.0, Kotler provides a new set of marketing metrics and new ways of looking at the practice of marketing with an eye on improving marketing productivity.

Finally, Kotler describes how marketers can implement effective tactical programs in this converging world of traditional and digital marketing. In a recent interview, Kotler said two key principles he wanted to get across to readers in Marketing 4.0 were recognizing the alternative paths to purchase that customers take and having clear metrics at each stage.

Kotler describes one of the earliest customer paths and marketing frameworks, AIDA, coined by E. St. Elmo Lewis around the need for attention, interest, desire and action.

In today’s hyper-connected marketing environment, Kotler says the customer journey is to move from aware (I know about the product), to appeal (I like the product), to ask (I’m convinced about the product), to act (I’m buying the product) to, finally, advocate (I recommend the product).

Kotler argues a new set of metrics must be managed: “In line with the 5 A’s, two metrics are valuable to measure: the purchase action ratio (PAR) and brand advocacy ratio (BAR). PAR measures how well companies ‘convert’ brand awareness into brand purchase. BAR measures how effectively companies ‘convert’ brand awareness into brand advocacy.”

What’s different today is that the customer is in control, not the company. Where we might have assessed awareness, trial, usage and repeat purchase in the past, today’s marketplace is more dynamic. Buyers are constantly communicating with one another. We need to manage through a more complex environment and enable, enlist and empower customers to communicate and advocate for the brand.

There’s much to be gleaned from an in-depth study of Marketing 4.0, and marketing veterans and marketing novices will find it an important read. I asked Kotler for his advice to young marketers just starting out.

“If you focus only on your expertise in digital,” Kotler says, “you might come across as dismissive of management’s prior accomplishments. Play it carefully. As a young marketer, recognize your digital skills will be valuable and recognize you want to be balanced. If you focus too heavily on digital, you might end up being a specialist and never being the CMO.”

Lastly, Kotler points out that business leadership is a team sport. C-suite executives are beginning to think they know marketing pretty well. Kotler encourages marketers to focus both externally on the customer and the competition and internally on the enterprise.

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Author Bio:

Michael Krauss
Krauss is president of Market Strategy Group based in Chicago.
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