The Evolution of Marketing

Marketing is commonly believed to have progressed through five distinct phases of evolution since the beginning of time: the simple trade era, the production era, the sales era, the marketing department era and the marketing company era. This is the classical progression taught in business schools today to tomorrow’s marketing leaders. But is it an accurate and complete representation of the different eras of marketing? In my opinion, the answer is no.

The premise of this blog is that since post-World War II, marketing is evolving in twenty year cycles, more or less. Thus, while the classical five era progression is taught in business schools, seven distinct eras are apparent. Why is this important to marketers? It may not be. Or it may represent the difference between success and failure. Knowing the game and how it is played is a necessary and critical component of winning the game. Let’s review the five classical eras before making the case for the two new eras.

The first is known as the simple trade era, where everything available was made or harvested by hand and available in limited supply. Exploration (some contend exploitation) and trade in resources was the focus of the economic activity. Commodities ruled the day. Because we’re somewhat lazy as theorists, this era is described as having lasted from the beginning of time through the mid-19th century. The simple trade era was replaced by the production era at the time of the industrial revolution. Mass production increased the availability of product options in the marketplace. This is the era of the field of dreams business philosophy of “if you build it, they will come”, successful only because there were few alternative product options available. This marketing era lasted approximately 60 years from the 1860’s until the 1920’s.

The sales era (1920’s – 1940’s) followed the production era once pent-up consumer demand became saturated. No longer could businesses easily and readily sell everything they produced. Competition for market share increased. Companies had to work harder to sell their product to consumers. Commoditization emerged: products became commodities and price became the distinguishing competitive advantage. The archetype representing the end of this era is Willy Loman. The post-WW II economic boom fostered the emergence of the marketing department era where manufacturing firms realized that the sales orientation of the past was not resonating with consumers. New levels of affluence provided consumers with more power in the marketplace. Businesses consolidated marketing-related activities (advertising, sales, promotion, public relations, etc.) into a single department. In my opinion, this is the period of “the great awakening” in western business: the time when the realization that marketing is the reason that business exists emerged. This period lasted from the 1940’s through the 1960’s and is typified by my favorite brand repositioning phrase: new, improved and lemon-scented.

The marketing company era emerged once the premise of the marketing concept became widely accepted. The marketing concept, in brief, contends that businesses exist to address customer needs. That is, the customer is the focus of our business endeavors. No longer was marketing compartmentalized – it became the goal of the business. All employees became part of the marketing effort, either directly or indirectly, and the customer became king. In the classical theory of marketing evolution, this is the final phase. It began in the 1960’s and is still in play.

But is it? Obviously not. In an article entitled “Marketing: Historical Perspectives”, a sixth era is identified: the relationship marketing era. The goal is to build a long-term, mutually beneficial, relationship with the customer. The focus changed to lifetime customer value and customer loyalty. Peppers and Rogers ushered in this era with their 1993 book “The One-to-One Future: Building Relationships One Customer at a Time” (disclosure: Martha Rogers was my advertising professor). Customer relationship management (CRM) and data-mining became the buzzwords in marketing. Getting all systems in sync to capture information about each customer’s behavior is still, at best, a work in progress. The key to building relationships is trust, thus its importance as the central tenet of relationship marketing. Clearly the relationship marketing era exists and is in play today, from the 1990’s to 2010. But is it the end of the evolutionary process?

In April 2009, Forrester released “The Future of the Social Web” in which they identified the five eras of the social web. As with each previous change in marketing eras, this report serves to announce the paradigm shift from the relationship marketing era to what is identified here as the social/mobile marketing era. It subsumes the knowledge and theories of its predecessor era, as did each before, but focuses on real-time connections and social exchanges based on relationships driven by the consumers (permission-based or opt-in relationships). In this era, businesses are connected 24/7 to current, future and potential consumers in real-time. Communication and exchange of information is a critical success factor. But much like the predecessor eras, trust and maintaining a positive image are just as important.

From a marketing standpoint, two lessons are apparent. First, in the past the diffusion of innovation in marketing was unidirectional, from the academy (business schools) to business. Marketing theory drove business implementation of marketing practices. Today, this is no longer the case. Business schools lag businesses in the adoption and implementation of best practices in marketing to the point where current marketing education is out of touch with reality. A new game has developed and we’re barely aware that it exists. Thus, lesson one is to get your marketing education via sources from outside of traditional business schools. And second, as we transition from the relationship marketing era to the social/mobile marketing era, opportunities exist to grab market share, or share of voice, in the new era. Lesson two is that the time is now.

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The Importance of Branding

Think of any product category (e.g., beer). Think of your favorite beer. If your favorite beer isn’t available, what are the one or two acceptable substitutes? How many acceptable substitutes can you name? Congratulations – you’ve successfully completed a branding exercise designed to illustrate the concept of evoked set (aka, consideration set): a set of acceptable brands of which the consumer is aware when seeking to satisfy a need. Such is the power of branding and the reason that branding is so important in marketing. Our goal as marketers is to position our brand, vis-a-vis the competition, in your mindscape as part of your evoked set.

The perfect analogy for branding, in my opinion, is building an in-ground swimming pool and filling it with water poured from a shot glass. First, you need to establish a strong foundation. Don’t forget to include the supporting functions required to make the foundation operative. Next, branding requires consistency of effort over a long period of time (shot after shot poured into the swimming pool). In the beginning, you may feel discouraged and may not see measurable results from your efforts. If you’re confident that the foundation is solid, keep working. As you get closer to your objective, you’ll notice and enjoy some of the benefits of your work. And after you finish your initial task (filling the pool, shot by shot), it’s easier to maintain your branding efforts (top off the pool) than it is to drain the pool and start over.

What are the critical success factors for branding? Start with a solid foundation including the establishment of ancillary support functions, build on that foundation with consistent effort over time and maintain position/pertinence in the consumers’ mind-space through intermittent reinforcement.

Since 7 June, Dr. Angela Hausman, has posted a series of blogs about branding on her site. Click here to join in the discussion.

And finally, when you think of marketing professors, please don’t forget to include me in your evoked set. My goal is to become your preference for “All Things Marketing”.

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Locate This!

Location-based marketing is fostering a lot of buzz in the B2C marketing community. Being able to reach potential customers who are in close proximity of your business in order to provide them with an incentive to visit is something that has business owners salivating.

An article written by John Arnold and published today on the Business Insider War Room provides an excellent overview of the methods currently in use to foster location-based marketing exchanges. Read the Beginner’s Guide to Location-Based Marketing by clicking on this link.

While most of the services highlighted (referred to as location-based services – LBS) in the 16 slide presentation require active participation from the customer (e.g., logging in), a couple highlight passive approaches to location-based marketing such as bluetooth connections (e.g., ProximityMedia in the USA, Bluetooth Proximity Marketing Solutions in the UK). The UK seems to be ahead of the USA in developing and implementing this technology, including the use of Blue Onboard – a transit delivery system of bluetooth marketing messages. For location-based marketing to “catch fire”, after the initial active opt-in (permanent, temporary by location, or ad hoc), the services need to provide consumers with the capability of passively receiving information from local businesses. For instance, if I check in using a location-based service once I arrive in the Faneuil Hall Marketplace in Boston, notices of offers from the Black Rose Pub or Comedy Club at Cheers should arrive on my mobile phone over the course of the evening. Even better, if I enable my bluetooth connection once I arrive in the Quincy Market Colonnade, offers should arrive automatically based on my proximity to the business who is advertising.

One can envision a time (but it’s probably already happening!) that after you walk into one restaurant, an ad from a competing restaurant is sent to your mobile phone highlighting reasons to frequent them instead and offering an incentive to do so.

Regardless of how location-based social networking and marketing evolves, it is clearly the future of B2C marketing, including via GPS systems used for driving assistance (similar to mobile phones, another potential advertising venue and ordering system – imagine entering and paying for your Dunkin Donuts order from your GPS as you pull up to the store).

Limitations today include technology and an overwhelming public concern for privacy. I, for one, am not as concerned about publicly divulging my location as I am excited about finding deals or hidden gems in the places that I frequent. And at some point, as more businesses utilize location-based marketing, it has the potential to become overwhelming – resulting in too many offers deluging an individual and thus becoming a turn-off.

For marketers, it will be exciting to see how the LBS landscape shakes out over the next three years. Although the list of location-based social networking links provided here is extensive, it doesn’t include some important ancillary contenders such as Groupon. Astute marketers will be proactive in their embrace of LBS.

Location-Based Marketing: coming soon to a location near you……

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