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Marketing evolved — from 1.0 to 4.0

Although there are different thoughts on when marketing came to exist as a discipline, the majority of specialists agree that it’s somewhere around the early 1900s. It is quite impressive that as art this practice has been evolving for more than a century already.

There are two main factors that can be considered as the drivers of marketing evolution: marketing technology and consumer needs.

  • The first factor — technology — began developing with the illustrated print advertisements as these were the only effective communication channels at the time. However, the emergence of digital marketing has significantly changed the industry paradigm;
  • The second factor — consumer needs — is a constant and a variable at the same time. Companies create marketing strategies to appeal to consumers and their needs, but those needs can change rapidly.

The intersection of these two factors is also the reason why marketing as a business philosophy has been evolving. Today, it is established that marketing has developed in several stages: 1.0, 2.0, 3.0, and 4.0. While this evolution may sound like some kind of software update, there’s much more to it, with each stage signifying a particular period in marketing science.

To be more specific on the matter:

  • Marketing 1.0 — a practice that is focused on products. The main idea is to highlight the features and benefits of the product and convince a potential consumer to make a purchase decision;
  • Marketing 2.0 — a customer-oriented approach. This stage of marketing evolution is closer to what we perceive as marketing today since it shifts the focus on customer needs;
  • Marketing 3.0 — a human-centric marketing approach. Although it may resemble the previous stage, in fact, there’s a major difference. This stage is more about transforming a company to reflect human values;
  • Marketing 4.0 — the transition from traditional to digital marketing techniques. Brands become closer to their consumers while technologies bring about changes in power dynamics and a new type of customer.

A new paradigm — Marketing 5.0

Definition of Marketing 5.0

According to Kotler, Marketing 5.0 refers to the application of technologies that are shaped in a way to create, communicate, and enhance value throughout the customer journey. Sounds pretty simple but there is much more to it than meets the eye. It is important to note that Marketing 5.0 is dealing with issues that are far beyond what was usually considered as the field of marketing discipline. That is why digital marketing spending has been steadily increasing for the last few years — consumers want more and more features!

What led to it

So, what is Marketing 5.0? It is a rather complex question the answer to which is hidden in the recent global events. The infamous COVID-19 and its global spread led to lockdowns and physical distancing policies around the world. As expected, this inevitably caused considerable transformations within societies and market disruptions.

Naturally, marketers had to react to this change, and COVID-19 basically created conditions for a more rapid digitalization of businesses, as Marketing 5.0 is described by Kotler. The concept itself might be quite confusing compared to Marketing 4.0 because both stages are about technology. However, there are some substantial differences between the two.

To be more specific, Kotler states that Marketing 5.0 entails focusing on consumer experience through interactions via technology. Although consumers are already using technology, marketers are presented with a challenge — how to create a relationship with their consumers through the technology. The challenge is further amplified by the fact that there are currently five generations living together, and their behaviors, preferences and attitudes are quite contrasting or even conflicting. 

This sort of social divide is amplified by the COVID-19 outburst and the way it affects different generations. After all, the pandemic led to an even more unequal distribution of wealth as younger generations, who form the majority of the workforce, are becoming more vulnerable to the external forces that negatively impact their economic stability. According to Kotler, the middle class is slowly vanishing and the markets are becoming polarized — luxury markets are contrasted by low-priced and value-focused products of the mass market. 

There’s even more to note regarding the social implications of COVID-19, its economic effects, and generation conflict. On the one hand, the older generations are usually old-school in their ideas regarding how things should work, and the majority of corporate executives are representatives of these generations. On the other hand, younger generations are presented by the employees who are more invested in modern technologies and concepts. As a result, we get into conflicts. So, marketers are faced with a new challenge — how to use the technology to appease all generations while not creating any divide or resentment. 

The Next Tech — an enabler for Marketing 5.0

The Next Tech is an umbrella term for a number of technologies that are being actively used by marketers today. Basically, the following technologies were considered as science fiction just a few decades ago:

  1. Artificial intelligence;
  2. Natural-language processing;
  3. Augmented reality;
  4. Virtual reality.

Through the prism of marketing 5.0, these technologies have the purpose of emulating the functions and capabilities of human marketers. Although this might sound like something from The Matrix or Bladerunner, some of the most successful enterprises in the world are already actively using AI and related technologies.

The Next Tech is able to learn from multiple sources to replicate human cognitive abilities and uncover connections between pieces of raw data that would otherwise be unusable. For example, it is possible to employ AI for predictive analysis of potential buying and even shopping patterns of the existing consumers to create potential solutions that could be used to acquire new ones. This sort of analysis does not require too much human involvement and leads to cost savings coupled with great results! That is why it is hard to underestimate the impact of Next Tech on marketing practice as a whole. 

5 components of Marketing 5.0

According to Kotler, technology is adding value to marketing through five components:

  • Data-driven marketing;
  • Predictive marketing;
  • Contextual marketing;
  • Augmented marketing;
  • Agile marketing.

Data-driven marketing can be considered as a basis for any sort of decision-making process. It is about collecting big data and analyzing it in order to create optimized marketing solutions, just like the majority of business decisions are made nowadays. 

Predictive marketing is a bit different. This component is more about the use of predictive analytics to make marketing forecasts. Basically, this approach to marketing is quite effective in saving time and costs for the companies as they are able to create a potential market model and act accordingly.

Contextual marketing is one of those things that can be viewed as the backbone of modern marketing. The technologies applied in contextual marketing are all about analyzing the physical and informational surroundings of the consumer through the available interfaces of gadgets.

Augmented marketing is about the use of technologies to provide marketers with instruments that improve interactions with customers. Think of chatbots and virtual assistants. This technology is being employed to provide customers with meaningful support that is generated via the digital interface.

Agile marketing is more of the organizational component of Marketing 5.0. At its core, agile marketing is all about the engagement of highly flexible and functional teams of professionals who are able to react to both internal and external environments to create highly effective marketing campaigns. Organizational agility is one of the staple components of any modern enterprise today.

How the human marketer fits in Marketing 5.0

Although technology seems to be the focal point of Marketing 5.0, it is imperative to understand that humans retain their central role when it comes to final decisions. After all, the technologies and benefits that they yield provide information that can be used in the decision-making process. Although AI can learn from different patterns and data blocks, the final result is only a simulation of what things might turn out to be.

That is why human marketers still stay at the core of Marketing 5.0. The Next Tech’s main purpose is to amplify the capabilities of human marketers to create and deliver value to the customers. For that matter, they are in the same shoes as the consumers, which means that human marketers can create solutions that are more relevant than the ones created by the current-state AI.

Human and tech symbiosis — the future of the new customer experience

Kotler clearly leads to an interesting phenomenon that is akin to the sci-fi books — a symbiosis between humans and technology. From the marketing perspective, this stage of the discipline’s evolution can be described as the peak of human capabilities because we are able to amplify our abilities through the use of technology.

However, modern companies should understand that there should be a balance between human and computer intelligence. These two components complement each other but signs of imbalance can result in ineffective decisions and marketing disasters. It is imperative to understand that Marketing 5.0 provides the instruments and resources to achieve the marketing objectives. 

The final role — execution — falls to humans as they can understand other humans. That is why it is possible to conclude that the future of new customer experience is going to be quite promising. Consumers will receive customized and targeted marketing messages that will be combined with a human approach to delivering these messages.

Oleksiy Kuryliak

Founder of Rioks. Marketing Strategist & Auditor. Advising startups and enterprises on digital transformation, marketing operations and go-to-market strategies.