Marketing has been radically transformed over the past decade or so as a result of the internet and other technological factors.
In fact, marketing has always has, and still is, evolving – but the pace of that evolution has accelerated rapidly.
This had led to traditional models of sales and marketing being drastically revised, or thrown out altogether, and any business that doesn’t acknowledge and adapt to these momentous changes is destined to be at a distinct and potentially ruinous disadvantage.
Many companies, particularly those whose marketing is B2B, are somewhere along this evolutionary path. Because of the nature of B2B compared to B2C, it may actually be appropriate for some businesses to be on an earlier part of this path, but if they get this wrong, then they could be missing out.
You need to look at how marketing has changed in order to consider whether the way that your sales and marketing teams are currently working is actually giving you the best possible results – the best chance of survival in today’s increasingly competitive environment.
Evolution of Marketing Theory
The classic model for looking at how companies have changed the way they produce, sell and market their products or services is the Evolution of Marketing Theory and it comprises five stages – which roughly equate to historical periods. However, even the earliest of these approaches still exists – and can be successful – in certain markets.
- Production orientation
- Product orientation
- Sales orientation
- Marketing orientation
- Societal Marketing
The Industrial Revolution saw the creation of the first companies that mass-produced products.
During this period, a company’s main goal was to drive production costs down so that they could reduce their prices and increase profits. Producing vast numbers of identical, one-size-fits-all, basic products was seen as the key to this. Given that many of these products were available at an affordable price for the very first time, customers would put up with a generic product that didn’t exactly meet their needs as it was so much cheaper than a hand-crafted, tailor-made product.
Marketing mainly consisted of letting the customers know that the product exists, and how cheap it was. Of course, this approach only really works if there are no alternative products available that would suit the needs of the customer better. In this approach, the business makes money and the customer is moderately happy.
The next stage was a realisation that many customers were unhappy with the products they were using as they didn’t quite meet their needs. So manufacturers added additional features to products to meet these needs. This increased the price of the products, which led to products being sold with some extravagant claims for their features, and an emphasis on quality being added to the advertising. The higher price of products, coupled with the addition of many features that an individual customer didn't necessarily want, eventually drove the need for a different approach, as businesses were failing to make money and customers still weren’t overly happy.
Once competition reached a certain level, and markets had been saturated, companies tried moving to a sales model. Companies were producing more products than customers actually needed or wanted, so hard-sell techniques were used to persuade people to buy products.
Once locked into this model, companies started to believe you could sell anything if you were aggressive enough and pushed the right buttons. With this model, businesses were making money, but many customers were ending up unhappy.
This approach is still seen today – particularly with products that people would not otherwise buy, such as double glazing, insurance or used cars. If it works at all, it only tends to be successful for one-off product sales as it is unlikely to generate repeat business. In today’s world of the Internet, product review sites and social media, it even struggles to make one-off sales as customers are more aware of a product’s shortcomings and more cynical of these approaches.
As forward-thinking companies realised that selling a poor or inappropriate product was not optimal, they realised that they had to focus on the customer and take a more marketing-led approach.
This led not only to a revolution in sales but to a fundamental change in a company's business strategy. Research was undertaken to ascertain customer's needs. Product lines were differentiated to suit different types of customers and their needs. Several levels of product were created for customers with a wide range of budgets.
Companies were no longer creating any old product and then selling it – they were starting to create products that there was a genuine need for, that customers found useful. This has the potential to be a win-win situation, where businesses can make money and the customer is happy.
This is the most recent evolution of marketing according to the model. Companies are seen to have a responsibility to society as a whole. Their business strategy should look at sustainability of the business, its environmental impact and how their operations effect all members of society – whether potential customers or not. This becomes more and more important as customers become increasingly concerned about the environment and the state of the planet we all live on.
Another useful way of looking at the development of marketing is provided by Dr Philip Kotler, widely regarded as the 'Father of Modern Marketing', and the author of many seminal works on the subject.
He talks about three versions of marketing in his book Marketing 3.0:
- Marketing 1.0 – product centred marketing
- Marketing 2.0 – customer-centred marketing
- Marketing 3.0 – value centred marketing
When it was published he wrote:
My colleagues and I believe that Marketing 1.0 represented an effort to establish the superior performance of a product ("Tide cleans better," "Volvo is safety,").
In Marketing 2.0, marketing added an emotional dimension to strengthen its appeal to prospective customers.
We are entering Marketing 3.0 where marketers are adding a human spirit dimension.
Mktg 1.0 and 2.0 is how about a product or offering will serve you. Mktg 3.0 is how a product and its company are sensitive to social and economic issues that are a concern to everyone. Companies that conduct themselves ecologically and create real value that aligns with the social good will be competitively favoured. The new media will increasingly carry more favourable statements about "caring" companies" and this will influence the buying choices of more consumers.
This has similarities to the Evolution of Marketing theory but is perhaps more useful and practical. Every business can look at these phases and see where their approach fits in. The three iterations of marketing can be summarised as follows:
- Product centred
- Sells products
- Consumers are just considered to have physical needs
- Values money
- Uses traditional media
- Is unidirectional – flows from the company to the customer
- Consumer centred
- Satisfies and retains customers
- Consumers are considered to be intelligent with a head and a heart (emotions)
- Values people
- Uses traditional and interactive media
- Is bidirectional – flows between a company and a customer
- Value centred
- Creates a better world
- Consumers are considered to have a spirit too – they care about the world
- Values the environment
- Uses interactive media
- Is multidirectional – flows in all directions (including between customers/prospects)
Looking at where your business currently fits in this model and then considering where it should be, should be an essential task for any business.
More recently, Kotler has published a follow-up book which talks about Marketing 4.0 – this acknowledges the massive changes that the Internet, social media, global issues and more, have triggered in the marketing environment.
The book is subtitled ‘Moving From the Traditional to the Digital’ and it maps out an authoritative approach to taking customers from awareness to advocacy.
About this book Kottler says:
“Marketing 4.0 is a marketing approach that combines online and offline interaction between companies and customers. In the digital economy, digital interaction alone is not sufficient. In fact, in an increasingly online world, offline touch represents a strong differentiation. Marketing 4.0 also blends style with substance. While it is imperative for brands to be more flexible and adaptive due to rapid technological trends, their authentic characters are more important than ever.”
One of the concepts is the importance of Content Marketing as in today's world people are more and more connected. This means you must meet them before they enter the market, and the way to do that is with content. This is a new approach to marketing and it affects the sales process as much as the marketing strategy.
Another key concept is the move away from traditional marketing models such as the 4Ps and AIDA, to a model Kotler refers to as the Five A’s:
Without going into detail (I recommend you read the book) – you can see from just those words alone that this model involves more of a consultancy approach to sales and a greater emphasis on the buyer’s journey and understanding the customer (through research and compiling buyer personas for example).
Here there is also a new emphasis on data-driven strategy, engagement through multi-channel marketing, and a recognition that advocacy is becoming more and more important in this age where the customer is increasingly turning to information, advice and recommendations from friends, family and peers.
Whichever marketing model you feel your business is most aligned with as an approach to business, sales and marketing, the one thing that has definitely changed for all businesses is the marketing environment. This is what Marketing 4.0 is addressing.
For sales and marketing, this has major implications for how they are undertaken and how the two areas interact.
Perhaps one of the biggest changes to the landscape is the effect all this technologically driven change has on one of the oldest sales models – the Sales Funnel.
The Sales Funnel – An Outdated Model?
Believe it or not, the traditional model of the Sales Funnel was developed in 1898 – over 110 years ago. So perhaps it is not really surprising that it has been re-imagined several times in recent years – Jeremiah Owyang suggested an hourglass model with the bottom half expanded to include Support, Loyalty and Advocacy – Lenati has suggested a bunch of circles and wriggly lines to encapsulate the complex nature of the modern sales process, and other models are available, including a Door Knob, Trumpet and Goldfish!
The model that Kotler seems to favour is akin to Owyang’s hourglass model, also known as the Bow Tie Model. With buyers now doing the majority of their research without even contacting a salesperson, and getting their information and advice from family, friends and peers; support of existing customers and the encouragement of advocacy becomes more and more important to the sales process.
The inbound experts HubSpot go further and suggest a continuous Flywheel Model where “…you use the momentum of your happy customers to drive referrals and repeat sales. Basically, your business keeps spinning.”
All of these different perspectives have two things in common – the old sales funnel is outdated and broken, and any new model has to include customer support, loyalty and advocacy as key elements.
Sales and Marketing – the changing position
Let’s summarise in a simple way, the characteristics of the old vs new methods of selling products.
- Tell the customer about the product through advertising
- Customer contacts salesperson
- Salesperson sells product to customer
- Customer purchases product from salesperson
- Company researches market and prospective customers
- Company publishes content aimed at informing, educating and attracting customers
- Customers do their own research and talk to family, friends and peers
- Customer talks to a salesperson or buys online
- Company supports customer so they repeat buy and do not negatively influence other potential customers
- Company encourages advocacy to positively influence potential customers in step 3
Although this is a deliberate simplification, it illustrates the transfer of control from company to customer and the changing roles of the Sales and Marketing departments. In the old setup, Sales is in the driving seat and Marketing is potentially just providing sales materials and arranging advertising. The product is quite literally sold. There is very little co-operation between Sales and Marketing, and it isn’t really needed.
In the new setup, Marketing is doing the research and planning the campaigns, publishing content and encouraging engagement. More attention is paid to customer support and keeping the customer happy and loyal. Sales is playing a more consultative role, assessing the individual customer’s needs, advising and assisting, but doing very little, if any selling. Sales may also be more involved in post-purchase support and repeat sales.
This new approach requires a great deal of co-operation and collaboration between Sales and Marketing.
So for most companies, the revolution in the marketing landscape will mean:
- Sales and Marketing will have to work closely together
- Marketing will have to be more data-driven
- Marketing will have to become publishers of content
- The business will have to focus more resources on customer support
- Sales will have to evolve from a pure sales-driven culture to a more considered, consultancy approach
These changes will bring a unique set of challenges and opportunities and the companies that overcome them by integrating sales and marketing will be more successful in the long run.