Quantum Marketing

Mastering the New Marketing Mindset for Tomorrow's Consumers

Raja Rajamannar

• Publisher: HarperCollins Leadership
• Year: 2021
• ISBN:
  9781400224036
• Topic: Commerce
• Subtopic: Publicité

Raja Rajamannar, Chief Marketing Officer of Mastercard, shares breakthrough, frontier strategies to navigate the challenges that result from today's unprecedented disruption.

As technology has continually evolved in the last several decades, marketing has had to change with it, evolving through four significant stages that build on the strategies and tools of the previous era. What happens next in the fifth stage, or Fifth Paradigm, will not be an evolution, but a revolution.

Almost everything about how marketing is done today, including the very notion of a brand itself, will require a complete re-imagination.

As Chief Marketing Officer of Mastercard, one of the world's most recognizable and decorated brands, Raja Rajamannar shares the forward-thinking ways all businesses must rethink their entire marketing landscape to remain relevant and be successful.

In Quantum Marketing, readers will:

• Understand the evolution of marketing and how to be at the forefront of future change.
• Get clarity on the right marketing strategies and tactics to pursue amidst an ever-evolving industry.
• Achieve breakthroughs in innovative thinking to compete in modern business.
• Gain perspective from top marketers across industries.

Quantum Marketing is for all business people who seek to understand how rapidly marketing is evolving, what marketers are doing to get ready for this shift, and what the new world will look like for companies, consumers, and society as the race to develop revolutionary marketing strategies reaches a whole new level.

CHAPTER 1

Marketing’s Journey

From Antiquity to Algorithms

Before we begin to understand Quantum Marketing, it is useful to know a bit of history. Because, while we think we’ve invented everything as modern marketers, the fundamentals of marketing and advertising are thousands of years old. Here’s what I mean. Say the name Pompeii and images of people frozen in ash, spouting volcanoes, and ancient treasures come to mind. It is, of course, the site of Mount Vesuvius’s eruption in AD 79, and it continues to keep archeologists in work. But these archeologists also discovered something else in the ruins: advertising!

In 2013, a Finnish archeologist found messages about politicians—their personal qualities and policies—written on the houses of wealthy Pompeii citizens.¹ That’s advertising, media planning, and location-based targeting at one go!

You will read in future chapters about sonic branding innovations, where brand identities are created using sound. Documents from ancient China detail a practice of candymakers playing a bamboo flute to attract customers.² And while we look at banner ads as a clever invention, an ad for needles, dating to the Song dynasty (960–1279 CE), says, “We buy high quality steel rods and make fine quality needles that are ready for use at home in no time.” The advertisement also contained the image of a rabbit holding a needle, a mascot for the brand or a precursor to a logo.³

From those simple beginnings, marketing has never stopped evolving. From antiquity, the biggest leap in marketing was with the advent of the printing press in the fifteenth century. Ads started appearing in magazines and posters. Product packaging advanced to convey quality and benefits. The nineteenth century saw the birth of ad agencies and ads for soaps. Then came along radio, newspapers, TV, cable, internet, and the torrent of digital marketing. Even in the very early forms of marketing, it is fascinating to see the modern concepts of location-based ads, social media, and marketing measurement, in whatever rudimentary form, baked into the human instinct to influence the thinking, emotions, and behaviors of people and societies. There has always been a dominant approach in each phase, but the phases are not exclusively linear. For example, you will find defining features of Pompeii’s approach (such as using high-traffic locations) in Burger King’s app and its geolocation-based marketing in 2020, in which it cheekily feeds special offers when a customer is in the proximity of a McDonald’s.⁴ And you will find the basic product logic that defined the early days of print advertising prevalent even today across multiple brands.

THE FIRST PARADIGM: THE PREMISE OF LOGIC AND RATIONALE

The First Paradigm of marketing was literal, rational, and almost entirely product centric. The presumption was that consumers made their purchase decisions rationally and logically. If you produced the best product, the thinking was that consumers would flock to it. So, marketers had a defined purpose and a simple strategy: Make your product better than your competitors’. And let the consumers know about it. Marketing connected the product to the consumer by creating and leveraging a product’s feature set that was different from and better than the competition or by offering the product at a lower price. Tide “got clothes cleaner.” Dodge cars had a “smoother ride.”⁵ And for vacuum cleaners, “Nothing Sucks Like Electrolux.”

The advent of mass production created a level of product parity and commoditization. Every brand’s research and development focused on superiority in product quality, which resulted in marginal differentiation and minimal competitive advantage at best. At this point marketing started to highlight, and even exaggerate, feature sets that mattered to the consumers. And to top it off, marketers had credible or credible-looking people endorse the brands to make consumers believe the claims. Doctors endorsed the health safety of Lucky Strikes.⁶ This, of course, was the beginning of the erosion of trust between consumers and brands, and advertisements slowly began losing credibility. This also marked the beginning of advertisements affecting and shaping culture, including, unfortunately, the stereotyping of gender.

THE SECOND PARADIGM: IT IS ALL ABOUT EMOTIONS

Marketers, over time, realized something very powerful: people make decisions emotionally, more than rationally or logically. In fact, in many cases, entirely emotionally! Therefore, they began incorporating emotions into their ad campaigns. When TV came on the scene, it brought visual and audio together into a powerful new medium through which stories could be told very compellingly. Interestingly, emotional claims needed no scientific or data-backed proof. This, when stretched a bit, was euphemistically referred to as creative freedom or flexibility. With the trend toward engaging emotions, marketing became an invitation to an experience, more than just a push to buy the product.

Companies and brands took their focus on product appeal to a whole new level. The focus on ingredients and product performance in the First Paradigm was supplemented, or even replaced, by an emotional promise. Relationships, affinity, status, attractiveness, happiness, joy, success—all of these became mythical qualities that the consumer could attain like the membership benefits in a secret club. Think Coca-Cola and their promise that “Things go better with Coke,” or Pepsi as the soft drink for a New Generation.

Marketing mined emotions. Brands and companies began creating emotional spaces and then occupying those spaces. While a product feature set could be matched or bettered, and therefore the product could be dislodged from its market position, emotions were much tougher to compete against. Once a brand occupied an emotional territory, it pretty much owned that territory for good. Almost.

But how do you market on emotion? Associating your brand with esoteric qualities, whether luxury, indulgence, freedom, or status, became a competitive strategy. Understanding and improving the product was still necessary. But now companies and brands set out to understand consumer mind-sets, motivations, attitudes, and behavior. Companies launched attitudinal metrics, usage and habits studies, focus groups, and psychographic research.

As marketers learned more about what consumers aspired to, who their role models were, and so on, they started to lean more on celebrities as a way to create emotional connections and aspirational pathways. The stars of the Second Paradigm were not just an anonymous Coppertone Girl or the generic doctor who endorsed cigarettes. The stars of the Second Paradigm became the face of the product. Brooke Shields was Calvin Klein’s. Madonna was Pepsi’s. Michael Jordan was Nike’s. Advertising had a clear task. Marketing had a clear approach.

THE THIRD PARADIGM: THE INTERNET, DIGITAL MEDIA, AND DATA

Marketers were coasting along leveraging emotion and identity to reach consumers who were becoming obsessed with both of those things. But something was sneaking up on them. On August 6, 1991, an arcane information retrieval system known only to scientists was shared with the general public by Tim Berners-Lee. It was called WorldWideWeb. There was no press release. To paraphrase W. B. Yeats, a “terrible beauty” was born.

Four years later, this terrible beauty started to be monetized. On October 12, 1994, a digital trade information website called HotWired simultaneously published ads from twelve different brands, including AT&T, MCI, Volvo, Club Med, 1-800-Collect, Sprint, and IBM. Banner ads were created.⁷ Digital marketing was born, and everything about marketing, advertising, and media changed in an instant. It was the exact moment at which speed, scale, and impact was born and nothing about marketing has been the same since.

This was the entry into the Third Paradigm: the rise of the internet and data-based marketing. After TV, it was the next major technological disruption of marketing. Data, which was previously restricted to the techies, geeks, economists, researchers, and the like, found a new patron. Marketers discovered the power of data, and they saw the jump in effectiveness it could produce. The new focus became using data to create more targeted marketing, which minimized waste, stretched the dollar, and vastly improved a company’s ROI. This paradigm saw the rise of data scientists and data savvy marketers in the commercial world. With the internet, marketers now had an extraordinary ability to reach, communicate to, and impress their prospects and customers as never before—at scale, with economy and precision.

But not everything was digital. The Third Paradigm also saw a dramatic increase in direct mail, direct response advertising, and the promise of the “segment of one.” In other words, every consumer was recognized and treated as unique, and highly individualized marketing messages could be conveyed to them in customized, memorable, and impactful ways. Direct mail offers by companies like Citibank, which started as a tool to drive customers to consolidate their credit card balances, were advanced into the data-driven era of personalization. Marketers improved their targeting in the Third Paradigm so much so that consumers warned marketers about getting too close and too invasive. This resulted in consumer advocates calling for regulators to pass rules in 2003 that mandated companies to abide by the Do Not Call or Do Not Mail lists in the US.

If direct marketing got close to consumers, the internet entered their DNA, figuratively speaking. Marketers’ email or messaging prowess brought them within arm’s reach of the consumer. When a consumer searched for a product, the internet came back with that information, which in turn gave the marketer insight into consumer behavior as never before—and the chance, therefore, to get even closer. And marketers were willing to pay for these opportunities. For this reason, web browsers like Netscape, Excite, and Yahoo were the first profitable internet businesses. It was only when Google came in with AdWords that profitability took on a whole new meaning. In fact, as early as 2000, Harvard Business School professor John Deighton described the internet as a multidimensional “total environment for doing marketing.”⁸

Consumers, too, were empowered by the internet. They searched for products, searched for one another, and found they wanted more of everything. The internet and the data it generated was the combination of technology and platform that gave the Third Paradigm a stage. And yes, it was a huge inflection point. Every visit, click, and page view generated precious data on consumer behavior, preferences, and spending patterns. The explosion of internet advertising very quickly showed how attractive data was. The first year that marketers began to think of the web as an advertising medium was 1997, when internet advertisers in the United States spent $940 million, and it spiked to $4 billion in 1999.⁹

The comfort level marketers (sort of) had with not being held accountable for ad effectiveness changed, for the most part, with the advent of data. Data transformed advertising measurement, removing guesswork and audience estimates. Did an ad work? TV ratings were no longer the answer. Did a newspaper ad drive sales? Circulation statements were no longer relevant. An advertisement was successful if people saw it and acted on it. Both these actions were suddenly measurable in the new internet era and were measured to fractional detail. Was a particular media worth advertising on? That answer was defined by the number of viewers who matched the target profile and interacted with it every day. Data so defined the business media that placements were surgical.

Then enters the phrase real time. Real-time activity—a consumer’s immediate past actions or current location—could lead to a customized offer or communication with that person. It moved true one-to-one marketing toward reality. Marketing ROI was now defined with precision. For the first time, marketers could reliably measure responses driven by different marketing strategies and tactics. The traditional purchase funnel (Awareness => Interest => Desire => Action) was now being reevaluated as marketers developed more sophisticated purchase models. Traditional goals like raising brand awareness and establishing competitive superiority were matched with driving purchase consideration and purchase intent. The art of marketing melded with the science of marketing. These changes also created demand for a new kind of marketing executive. The “Mad Men” who lived on big personalities and big perks had to change or change jobs. Data savvy became a prerequisite for a marketing executive.

In the Third Paradigm, data evolved into an enabling engine. Data provided the consumer with utility, dynamic frames of reference, and a sense of overall personalization. For the marketer, it provided ways to calculate and understand the value of the consumer over his/her lifetime to the company, i.e., lifetime values. They were also able to arrive at more accurate retention models. Data became a competitive advantage. The competitive drive from the 4 Ps of marketing famously postulated by Philip Kotler had come full circle. Now data could join the 4 Ps as a key pillar of the competitive strategy.

THE FOURTH PARADIGM: ALWAYS ON

The internet was hardly being digested when two new dimensions were being created, both of which would come to define the Fourth Paradigm. From October 2007 to August 2008, a college-based variation on message boards called Facebook spiked from fifty to a hundred million users, and social media was born. Alongside this, the iPhone was released on June 29, 2007. Mobile phones and mobile devices totally altered the consumer landscape once and for all. The mobile phone virtually be...