Hermawan Kartajaya is the founder and Executive Chairman of MarkPlus, Inc., and is one of the “50 Gurus Who Have Shaped the Future of Marketing,” according to the Chartered Institute of Marketing, United Kingdom. Hermawan is also a recipient of the Distinguished Global Leadership Award from the Pan-Pacific Business Association at the University of Nebraska–Lincoln. He is also Chairman of the Asia Council for Small Business and a co-founder of the Asia Marketing Federation.
Iwan Setiawan is Chief Executive Officer of MarkPlus, Inc., where he helps businesses design their corporate and marketing strategies. A frequent writer and speaker, Iwan is also Editor-in-Chief of Marketeers. Iwan holds an MBA from the Kellogg School of Management at Northwestern University and a BEng from the University of Indonesia.
Along with Philip Kotler, the father of modern marketing, they are the authors of Marketing 5.0: Technology for Humanity, the latest in the Marketing X.0 series of books from John Wiley & Sons, Inc.
Let’s start by asking the obvious: What is Marketing 5.0?
Hermawan Kartajaya (HK): We feel it is time for companies to unleash the full power of advanced technologies in their marketing strategies, tactics, and operations. This book is partly inspired by Society 5.0—a high-level initiative of Japan—which contains a roadmap to create a sustainable society supported by smart technologies. Technology can and must be leveraged for the good of humanity. Marketing 5.0, by definition, is the application of human-mimicking technologies to create, communicate, deliver, and enhance value across the customer journey. One of the critical themes in Marketing 5.0 is what we call the next tech, which is a group of technologies that aim to emulate the capabilities of human marketers. It includes AI, NLP, sensors, robotics, augmented reality (AR), virtual reality (VR), IoT, and blockchain. A combination of these technologies is the enabler of Marketing 5.0.
Iwan Setiawan (IS): Marketing 5.0 materializes against the backdrop of three major
challenges: generation gap, prosperity polarization, and the digital divide. It is the first time in history that five generations living together on Earth have contrasting attitudes, preferences, and behaviors. The Baby Boomers and Generation X still hold most of the leadership positions in businesses and the highest relative buying power. But the digital-savvy Generations Y and Z now form the largest workforce as well as the biggest consumer markets. The disconnect between the older corporate executives who make most decisions and their younger managers and customers will prove to be a significant stumbling block.
Marketers will also face chronic inequality and imbalanced wealth distribution, which causes the markets to polarize. The upper class with high-paying jobs is growing and fueling the luxury markets. At the other end, the bottom of the pyramid is also expanding and becomes a large mass market for low-priced, value products. The middle market, however, is contracting and even vanishing, forcing industry players to move up or down to survive. Moreover, marketers must solve the digital divide between people who believe in the potential that digitalization brings and those who do not. Digitalization brings fear of the unknown with the threats of job losses and concerns of privacy violations. On the other hand, it brings the promise of exponential growth and better living for humanity. Businesses must break the divide to ensure that technological advancement will move forward and not held back by resentment.
So this is why you emphasize “Technology for Humanity”…
HK: Despite our in-depth focus on technology, it is important to note that humanity must remain the central focus of Marketing 5.0. The next tech is applied to help marketers to create, communicate, deliver, and enhance value across the customer journey.
The Next Tech Across the New Customer Experience (CX)
The objective is to create a new customer experience (CX) that is frictionless and compelling. In achieving it, companies must leverage a balanced symbiosis between human and computer intelligence.
IS: And since we cannot teach computers the things we do not know how to learn, the role of human marketers is still critical in Marketing 5.0. The central discussion in Marketing 5.0, hence, is around selecting where machines and people might fit and deliver the most value across the customer journey.
You describe five ways technology can boost marketing practices. Can you summarize them for our readers?
IS: Of course. For starters, technology helps us make more informed decisions based on big data. The greatest side product of digitalization is big data. In the digital context, every customer touchpoint—transaction, call center inquiry, and email exchange—is recorded. Moreover, customers leave footprints every time they browse the Internet and post something on social media. Privacy concerns aside, those are mountains of insights to extract. With such a rich source of information, marketers can now profile the customers at a granular and individual level, allowing one-to-one marketing at scale.
Second, we can predict outcomes of marketing strategies and tactics.
No marketing investment is a sure bet. But the idea of calculating the return on every marketing action makes marketing more accountable. With artificial intelligence–powered analytics, it is now possible for marketers to predict the outcome before launching new products or releasing new campaigns. The predictive model aims to discover patterns from previous marketing endeavors and understand what works, and based on the learning, recommend the optimized design for future campaigns. It allows marketers to stay ahead of the curve without jeopardizing the brands from possible failures.
HK: Also, very importantly – technology brings the contextual digital experience to the physical world. The tracking of Internet users enables digital marketers to provide highly contextual experiences, such as personalized landing pages, relevant ads, and custom-made content. It gives digital-native companies a significant advantage over their brick-and-mortar counterparts. Today, the connected devices and sensors—the Internet of Things—empowers businesses to bring contextual touchpoints to the physical space, leveling the playing field while facilitating seamless omnichannel experience. Sensors enable marketers to identify who is coming to the stores and provide personalized treatment.
It also augments the frontline marketers’ capacity to deliver value. Instead of being drawn into the machine-versus-human debate, marketers can focus on building an optimized symbiosis between themselves and digital technologies. AI, along with NLP, can improve the productivity of customer-facing operations by taking over lower-value tasks and empowering frontline personnel to tailor their approach. Chatbots can handle simple, high-volume conversations with an instant response. AR and VR help companies deliver engaging products with minimum human involvement. Thus, frontline marketers can concentrate on delivering highly coveted social interactions only when they need to.
IS: And finally, speed. Technology accelerates marketing execution. The preferences of always-on customers constantly change, putting pressure on businesses to profit from a shorter window of opportunity. To cope with such a challenge, companies can draw inspiration from the agile practices of lean startups. These startups rely heavily on technology to perform rapid market experiments and real-time validation. Instead of creating products or campaigns from the ground up, businesses can build on open-source platforms and leverage co-creation to accelerate go-to-market. This approach, however, requires not only the backing of technology, but also, the right agile attitude and mindset.
The book also describes the key elements of Marketing 5.0. What are they?
HK: Marketing 5.0 centers around three interrelated applications: predictive marketing, contextual marketing, and augmented marketing.
But those applications are built on two critical organizational disciplines: data-driven marketing and agile marketing.
Data-driven marketing is the activity of collecting and analyzing big data from various internal and external sources as well as building a data ecosystem to drive and optimize marketing decisions. This is the first discipline of Marketing 5.0: every single decision must be made with sufficient data at hand.
Agile marketing is the use of decentralized, cross-functional teams to conceptualize, design, develop, and validate products and marketing campaigns rapidly. The organizational agility to deal with the ever-changing market becomes the second critical discipline companies must master.
IS: As for the three applications, we describe predictive marketing as the process of building and using predictive analytics, sometimes with machine learning, to predict the results of marketing activities before launch. This first application allows businesses to envision how the market will respond and proactively influence it.
Second, contextual marketing is the activity of identifying and profiling as well as providing customers with personalized interactions by utilizing sensors and digital interfaces in the physical space. It is the backbone that allows marketers to perform one-to-one marketing in real-time, depending on the customer context.
And lastly, augmented marketing is the use of digital technology to improve the productivity of customer-facing marketers with human-mimicking technologies such as chatbots and virtual assistants. This third application ensures that marketers combine the speed and convenience of digital interface with the warmth and empathy of people-centric touchpoints.
What stands out to me in addition to the insights into technology is the social perspective you bring to marketing. For instance, you address polarization in society and the threat it poses to the future. Can you tell us why inclusivity and sustainability matter?
HK: The polarization of society, stemming from rising wealth disparity, may have a profound impact on many facets of human lives. The divide between people who are barely surviving and people who are thriving amid globalization and digitalization must not be ignored. Political uncertainty, social instability, and economic collapse are some of the significant risks if it remains unresolved.
Businesses are partly responsible for the unequal distribution of wealth. The markets expect companies to be the ones fixing it with a more inclusive and sustainable approach to pursuing growth.
IS: Businesses used to think that if they reinvested some of their profits for the development of society, they did it at the expense of faster growth. Companies must realize that the opposite is true. In doing business, negative externalities must be taken into account. Decades of aggressive growth strategies have left the environment degraded and society unequal. Companies cannot thrive in a failing and declining society.
When everything is polarized, with a widening gap between the top and bottom socioeconomic classes, there are only two meaningful ways to position your brands and companies. Polarization limits the markets in which businesses can play. But most importantly, it limits growth opportunities, especially amid the slowing economy and the proliferation of players. Inclusive and sustainable marketing—aligned with the Sustainable Development Goals (SDGs)—solves the problem through a better redistribution of wealth, which in turn will return the society to its original shape. Companies must embed the concept in their business model, investing back into the society with purpose. And businesses must utilize technology as it will play a major role by accelerating the progress and opening up opportunities for everyone.
HK: From the future growth point of view, the social activism that companies conduct will prove a good investment. When billions of underserved people are out of poverty, become more educated, and earn a better income, the markets around the world substantially grow. The previously untapped segments become new sources of growth.
Moreover, in a more stable society and a sustainable environment, the costs and risks of doing business are much lower.
Our readers can look forward to learning so much from your latest book. Thanks so much.
INTERVIEW by CHRISTIAN SARKAR