Writing it that way reminds us that marketing is about dealing with the ever-changing market, and that to understand cutting-edge marketing, we should understand how the market has been evolving in recent years.

The clues and trends are there for us to see. A new breed of customer, the one that will be the majority in the near future, is emerging globally—young, urban, middle-class with strong mobility and connectivity. While the mature markets are dealing with an aging population, the emerging market is enjoying the demographic dividend of a younger, more productive population. They are not only young, they are also rapidly migrating to urban areas and embracing a big-city lifestyle. The majority of them are in the middle class or above and thus have a sizable income to spend. Moving up from a lower socioeconomic status, they aspire to accomplish greater goals, experience finer things, and emulate behaviors of people in higher classes. These traits make them a compelling market for marketers to pursue.

But what distinguishes this new type of customer from other markets we have seen before is their tendency to be mobile. They move around a lot, often commute, and live life at a faster pace. Everything should be instant and time-efficient. When they are interested in things they see on television, they search for them on their mobile devices. When they are deciding whether to buy something in-store, they research price and quality online. Being digital natives, they can make purchase decisions anywhere and anytime, involving a wide range of devices. Despite their Internet savvy, they love to experience things physically. They value high-touch engagement when interacting with brands. They are also very social; they communicate with and trust one another. In fact, they trust their network of friends and family more than they trust corporations and brands. In short, they are highly connected.

Breaking The Myths Of Connectivity

Connectivity is arguably the most important game changer in the history of marketing. Granted, it can no longer be considered a new buzzword, but it has been changing many facets of marketing and is not showing signs of slowing down.

Connectivity has made us question many mainstream theories and major assumptions that we have learned about customer, product, and brand management. Connectivity significantly reduces the costs of interaction among companies, employees, channel partners, customers, and other relevant parties. This in turn lowers the barriers to entering new markets, enables concurrent product development, and shortens the time frame for brand building.

There have been various cases of how connectivity quickly disrupted long-established industries with seemingly high entry barriers. Amazon has disrupted the brick-and-mortar bookstores and later the publishing industry. Likewise, Netflix has disturbed the brick-and- mortar video rental stores and, along with the likes of Hulu, has shaken up the satellite and cable TV services. In a similar fashion, Spotify and Apple Music have changed the way music distribution works.

Connectivity also changes the way we see the competition and customers. Today, collaboration with competitors and co-creation with customers are central. Competition is no longer a zero-sum game. Customers are no longer the passive receivers of a company’s segmentation, targeting, and positioning moves. Connectivity accelerates market dynamics to the point where it is virtually impossible for a company to stand alone and rely on internal resources to win. A company must face the reality that to win it must collaborate with external parties and even involve customer participation.

The success of Procter and Gamble’s (P&G’s) Connect + Develop program exemplifies this. Instead of protecting the brand equity of Febreze as its own competitive advantage, P&G licenses the trademark for new categories. Partner companies such as Kaz and Bissell launched Honeywell scented fans and odor-removing vacuum bag filters that carry the Febreze brand.

Despite the obvious influence, connectivity is often underrated as a mere application of technology that marketers need to deal with. Seeing connectivity from a technological viewpoint alone would often be misleading. In the context of strategy, many marketers view connectivity simply as an enabling platform and infrastructure that support the overall direction. A bigger-picture view of connectivity allows marketers to avoid this trap. While it is true that connectivity has been driven by technology—namely “screen technology and the internet”—its importance is far more strategic.

A survey by Google reveals that 90 percent of our interactions with media are now facilitated by screens: smartphone, tablet, laptop, and television screens. Screens are becoming so important in our lives that we spend more than four hours of our leisure time daily to use multiple screens sequentially and simultaneously. And behind these screen- based interactions, the internet has been the backbone. Global internet traffic has grown by a factor of 30 from 2000 to 2014, connecting four out of ten people in the world. According to a Cisco forecast, we will see another ten-fold jump of global internet traffic by 2019, powered by more than 11 billion connected mobile devices.

With such a massive reach, connectivity transforms the way customers behave. When shopping in-store, most customers would search for price comparison and product reviews. Google research shows that eight out of ten smartphone users in the United States do mobile research in-store. Even when watching television advertising, more than half of the TV audience in Indonesia conducts mobile search. This is a trend affecting customers globally.

Derivative products of the internet also enable transparency. Social media such as Twitter and Instagram enable customers to show and share their customer experience, which further inspires other customers from the same or a lower class to emulate and pursue a similar experience. Communal rating sites such as TripAdvisor and Yelp empower customers to make informed choices based on the wisdom of the crowd.

Thus, to fully embrace connectivity we need to view it holistically. While mobile connectivity—through mobile devices—is important, it is the most basic level of connectivity, in which the internet serves only as a communications infrastructure. The next level is experiential connectivity, in which the internet is used to deliver a superior customer experience in touchpoints between customers and brands. In this stage, we are no longer concerned only about the width but also about the depth of the connectivity. The ultimate level is social connectivity, which is about the strength of connection in communities of customers.

Since connectivity is closely related to the youth segment, it is also often considered relevant only for the younger generation of customers. As a result, many marketers implement “connected” marketing as a separate youth strategy without fully understanding how it fits with the overall marketing strategy. It is true that being digital natives, younger customers are the first to adopt connectivity, but they inspire their seniors to adopt connectivity as well. Moreover, as the world population ages over time, digital natives will become the majority and connectivity eventually will become the new normal.

The importance of connectivity will transcend technology and demographic segment. Connectivity changes the key foundation of marketing: the market itself.

Contributed to Branding Strategy Insider by: Philip Kotler, excerpted from his book, Marketing 4.0 with permission from Wiley Publishing.

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On the other hand, there are certainly enough examples of companies that draw criticism for their indifference. Walmart periodically gets into the news when its employees loudly complain about low pay and the lack of benefits. Nike had a public relations disaster when it was discovered that its overseas manufacturers were using child labor.

One needs to look at five questions when rating a company’s overall reputation:

1. Does the company produce good or excellent-quality products and services? If the answer is no, there’s no need to ask any of the other questions.
2. Does the company show good profits over the long term? If not, people aren’t likely to trust it.
3. Does the company have good management or visionary management, or are its leaders asleep at the wheel?
4. Does the company have dedicated employees, suppliers and distributors? This will come across in good teamwork and satisfied stakeholders.
5. Does the company exhibit social responsibility in a meaningful way? This last question adds another level to the company’s overall reputation.

Contributed to Branding Strategy Insider by: Philip and Milton Kotler, excerpted from their book, Market Your Way To Growth with permission from Wiley Publishing.

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A strong brand helps a company grow in three specific ways. First, companies can charge a higher price — which hopefully leads to higher profits, thereby resulting in more cash to expand the business further. For instance, since Caterpillar has a very strong name in the construction equipment category, it can charge more—because buyers know of Caterpillar’s great product and service quality. In earning more, it can grow faster.

Secondly, a company with a strong name has an easier time getting into distribution channels. You can find Coca-Cola in supermarkets, vending machines, gas stations, restaurants, and many other venues. Imagine, however, whether a new drink with an unknown name would have much of a chance to be carried in most venues. A brand name’s strength determines how quickly and successfully a company can expand its business.

Third, once the brand gains trust and respect, companies can put that same brand name on—and then launch—more new items. This is why Campbell Soup Company doesn’t need to invent a new brand name for each new soup that it launches. The fact that the distinct, recognizable Campbell’s name is on the soup gives both the buyer and the distribution channels confidence in the product. Not needing to develop a new brand name saves the company a considerable amount of money. And because it is easier to launch new products under the same name, the company can achieve much faster market penetration.

Contributed to Branding Strategy Insider by: Philip and Milton Kotler, excerpted from their book, Market Your Way To Growth with permission from Wiley Publishing.

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What can a brand do to stay profitable during a recession? Here are some realistic possibilities:

• Add a lower-price item with fewer features to your product line. You might even launch it under a different brand name. Most companies should produce a line of products at different price points.

• Add some additional value to the offer, such as free shipping or installation.

• Maintain the current price but advertise heavily as to why customers should pay more for this brand. Procter & Gamble (P&G) uses this strategy with Tide, instead of cutting the price.

• Change the brand’s image through a new campaign. Dove introduced its “Real Beauty” campaign in China in 2011 based on the notion that most women have real beauty—and Dove can help them realize it.

• Innovate something new. Apple introduced its iPhone just before the Great Recession and caused Nokia’s market share to decline from 50 percent to 10 percent in five years.

• Shift to win the low price position but maintain the brand value and promise. Insurance provider Geico sells auto insurance mainly online and, as a well-known brand, owns the low-cost position.

Contributed to Branding Strategy Insider by: Philip and Milton Kotler, excerpted from their book, Market Your Way To Growth with permission from Wiley Publishing.

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More recently, companies see their reputation as having to possess an additional layer drawing customer respect for the company. As Professor Kash Rangan of Harvard observed: “It is no longer sufficient to compete on quality, price or product innovation alone,” to which Dr. Joseph Plummer of the Advertising Research Foundation added: “The brand is what you buy. The corporate reputation is what you believe in and trust. It’s not an either/or. You need both.”

Though unreported on most balance sheets, brand value and reputation still remain two of a company’s most important assets in today’s hypercompetitive globalized marketplace. In this Marketing 3.0 world, successful modern brands need to reach out not only to the customers’ own hearts and minds, but also to their concern for the hearts and minds of others—and for the sustainability of the planet. We talk increasingly about companies striving to achieve a Triple Bottom Line: People, Planet, and Profits.

Now we have to ask: What benefits and growth come to companies that improve their reputation? We list the following:

•The company is better able to attract and retain world-class talent.

•The company has created an additional level of customer-valued differentiation.

•The company may benefit by attracting more socially concerned suppliers and distributors who are aligned with the company’s values.

•The company has mitigated its risk of being criticized or slandered.

•The company has attracted an additional class of customers who care about the planet.

As wealth and education increase, customers are becoming increasingly aware that their own well-being is tied to the environment’s sustainability and societal harmony.

Business for Social Responsibility is a leading nonprofit global organization that provides businesses with information, tools, training, and advisory services that help integrate corporate social responsibility into business operations and strategies. Their research and experience concludes that socially responsible companies have experienced a range of bottom-line benefits, including several of the following:

•Increased sales and market share

•Strengthened brand positioning

•Enhanced corporate image and clout

•Increased ability to attract, motivate, and retain employees

•Decreased operating costs

•Increased appeal to investors and financial analysts

Here is one interesting story of how a company wishing to grow its business also did some social good:

With 1,200 stores, PetSmart is North America’s largest specialty retailer of pet products and services. But instead of selling dogs and cats, as many pet stores do, PetSmart decided to donate space for in-store adoption centers for homeless pets. Local animal welfare organizations maintain the highly visible in-store centers in coordination with PetSmart employees and keep 100 percent of their adoption fees. The adoption centers generate store traffic on a daily basis from consumers looking for a pet to add to their families. After all, every adopted pet needs pet food and accessories—and customers can immediately buy these at the same location.

Every adopted pet creates a new customer for PetSmart. More than 403,000 pets were adopted in PetSmart stores in 2010. Sales revenue far exceeds the estimated $13 million of contributed real estate floor space. In this way, the company has grown its business revenue by doing good works—and has exhibited real out-of-the box thinking. The company is earning more revenues at a lower cost by facilitating nonprofit adoption than they could ever have made by selling pets and pet products and accessories. And PetSmart helped save the lives of more than 5 million animals between 1994 and 2012.

Contributed to Branding Strategy Insider by: Philip and Milton Kotler, excerpted from their book, Market Your Way To Growth with permission from Wiley Publishing.

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