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Social Responsibility

Poverty, pollution, water shortages, climate change, wars, and wealth concentration demand our attention. The private sector is taking some responsibility for improving living conditions, and firms all over the world have elevated the role of corporate social responsibility. Because marketing’s effects extend to society as a whole, marketers must consider the ethical, environmental, legal, and social context of their activities.21 “Marketing Insight: Getting to Marketing 3.0” describes how companies need to change to do that.

A Dramatically Changed Marketplace

These three forces—technology, globalization, and social responsibility—have dramatically changed the marketplace and provided both consumers and companies with new capabilities, as

shown in Table 1.1.

One of the reasons consumers have more choices is that channels of distribution have changed. Store-based retailers face competition from catalog houses; direct-mail firms; newspaper, magazine, and TV direct-to-customer ads; home shopping TV; and e-commerce. In

TABLE 1.1 New Capabilities in the Changed Marketplace

New Consumer Capabilities:

• Can use the Internet as a powerful information and purchasing aid

• Can search, communicate, and purchase on the move

• Can tap into social media to share opinions and express loyalty

• Can actively interact with companies

• Can reject marketing they find inappropriate

New Company Capabilities:

• Can use the Internet as a powerful information and sales channel, including for individually differentiated goods

• Can collect fuller and richer information about markets, customers, prospects, and competitors

• Can reach customers quickly and efficiently via social media and mobile marketing, sending targeted ads, coupons,

and information

• Can improve purchasing, recruiting, training, and internal and external communications

• Can improve cost efficiency

marketing

Getting to Marketing 3.0

insight

Philip Kotler, Hermawan Kartajaya, and Iwan Setiawan believe today’s customers want marketers to treat them as whole human beings and acknowledge that their needs extend beyond pure consumerism. Successful marketing is thus distinguished by its human or emotional element. A third wave of thinking, values-driven and heralded as “Marketing 3.0," has moved us beyond the product-centric and consumer-centric models of the past, these authors say. Its three central trends are increased consumer participation and collaborative marketing, globalization, and the rise of a creative society.

  • • We live with sustained technological development—low-cost Internet, cheap computers and mobile phones, open source services and systems. Expressive and collaborative social media, such as Facebook and Wikipedia, have changed the way marketers operate and interact with consumers.
  • • Culturally relevant brands can have far- reaching effects. A cultural brand might

position itself as a national or local alternative to a global brand with poor environmental standards, for instance.

• Creative people are increasingly the backbone of developed economies. Marketing can now help companies tap into creativity and spirituality by instilling marketing values in corporate culture, vision, and mission.

These authors believe the future of marketing will be consumer-to-consumer. They say the recent economic downturn has not fostered trust in the marketplace and customers are increasingly turning to one another for credible advice and information when selecting products.

Sources: Philip Kotler, Hermawan Kartajaya, and Iwan Setiawan, Marketing 3.0: From Products to Customers to the Human Spirit (Hoboken, NJ: Wiley, 2010); Michael Krauss, “Evolution of an Academic: Kotler on Marketing 3.0,” Marketing News, January 30, 2011; Vivek Kaul, “Beyond Advertising: Philip Kotler Remains One of the Most Influential Marketing Thinkers,” The Economic Times, February 29, 2012. For related ideas, see also Jim Stengel, Grow: How Ideals Power Growth and Profit at the World's Greatest Companies (New York: Crown, 2011).

response, entrepreneurial retailers are building entertainment into their stores with coffee bars, demonstrations, and performances, marketing an “experience" rather than a product assortment. Early dot-coms such as Amazon.com successfully created disintermediation in the delivery of products and services by intervening in the traditional flow of goods. Now traditional companies are engaging in reintermediation and becoming “brick-and-click” retailers, adding online services to their offerings.

While globalization has created intense competition among domestic and foreign brands, the rise of private labels (marketed by powerful retailers) and mega-brands (and brands extended into related product categories) plus a trend toward deregulation and privatization have also increased competition. Many countries have deregulated industries to create greater competition and growth opportunities. In the United States, laws restricting financial services, telecommunications, and electric utilities have all been loosened in the spirit of greater competition. Meanwhile, many countries have converted public companies to private ownership and management to increase efficiency, which also adds to the competitive pressure.

Marketers are increasingly asked to justify their investments in financial and profitability terms as well as in terms of building the brand and growing the customer base. Organizations recognize that much of their market value comes from intangible assets, particularly brands, customer base, employees, distributor and supplier relations, and intellectual capital. They are thus applying more metrics—brand equity, customer lifetime value, return on marketing investment— to understand and measure their marketing and business performance and a broader variety of financial measures to assess the direct and indirect value their marketing efforts create.

 
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