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From Products to

Customers to

the Human

Spirit

PHILIP KOTLERHERMAWAN KARTAJAYA IWAN SETIAWAN

marketing3.0

Today’s customers are choosing products and companies that satisfy deeper needs for creativity, community, and idealism. Leading companies realize they must reach these highly aware, technology-enabled customers, and that the old rules of marketing won’t help them do this. Instead, they must create products, services, and corpo-rate cultures that inspire, include, and refl ect their cus-tomers’ values.

Legendary marketing sage Philip Kotler and his col-leagues Hermawan Kartajaya and Iwan Setiawan have identifi ed this defi nitive break with earlier models as Marketing 3.0. Moving beyond product-based (Mar-keting 1.0) and consumer-based (Marketing 2.0) ap-proaches, Marketing 3.0 takes a holistic approach to customers as multidimensional, values-driven people, even as potential collaborators.

Marketing 3.0 clearly lays out the authors’ key ideas and gives you real-world examples so you can implement Marketing 3.0 practices at your organization. Custom-ers have realized that their purchasing power has a global impact, and they are acting accordingly and talking to each other about the choices they make. Marketing 3.0 explains how you can engage this conversation, position your brand as a positive force in the world, and collabo-rate successfully with customer-advocates.

Marketing 3.0 also goes beyond “messaging” custom-ers to encompass how a company defi nes and embodies its values for a variety of stakeholders. It explores how brands have an impact on issues such as poverty, socio-cultural change, and environmental sustainability. It also looks at how values-driven marketing affects employees, channel partners, and shareholders.

Customers are more aware, more active, and more pow-erful than ever before. Marketing 3.0 shows you how to demonstrate your relevance to this interconnected, global community, giving you an unmatched guide to winning in this new age of marketing.

PHILIP KOTLER is the S.C. Johnson & Son Distin-guished Professor of International Marketing at North-western University’s Kellogg School of Management, and one of the world’s leading authorities on marketing. His writing has defi ned marketing around the world for the past forty years. The recipient of numerous awards and honorary degrees from schools all over the world, he holds an MA from the University of Chicago and a PhD from MIT, both in economics. Kotler has an incredible international presence—his books have been translated into approximately twenty-fi ve languages, and he regu-larly speaks on the international circuit.

HERMAWAN KARTAJAYA is the founder and CEO of MarkPlus, Inc. and is one of the “50 Gurus Who Have Shaped the Future of Marketing” according to the Char-tered Institute of Marketing, United Kingdom.

IWAN SETIAWAN is a senior consultant at MarkPlus, Inc. where he consults for clients on marketing strategies.

$24.95 USA / $29.95 CAN

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arketing 3.0

Jacket Images: iStockphoto

Author Photographs: (Philip Kotler) © Nathan Mandell,(Hermawan Kartajaya) © Darwis Triadi

“Marketing has lost some of its sway in recent years. This provocative book tells how marketing can regain trust and infl uence inside and outside the organization.”

— Leonard L. BerryDistinguished Professor of Marketing, Texas A&M University, coauthor of Management Lessons from Mayo Clinic

“Philip Kotler is again leading the way in strategic marketing with timely insight into a transformational period. Marketing 3.0 makes a compelling case for the competi-tive benefi ts of tapping into the human spirit to engage consumers.”

— Dennis Dunlap CEO, American Marketing Association

“Marketing 3.0 has important ideas for all senior managers. It clearly points the path to the values-driven human-centric fi rm. The innovative ‘ten credos’ integrate market-ing and values and provide personality and purpose to companies that practice them.”

“For too long, marketers thought customer satisfaction was the goal of marketing activities. Marketing 3.0 makes the persuasive case that customer and societal welfare is the next frontier for companies. Consumers are demanding more from themselves and so should smart companies.”

— Stephen A. GreyserRichard P. Chapman Professor of Business Administration, Emeritus, Harvard Business School

— Nirmalya Kumar Professor of Marketing and Co-Director of the Aditya Birla India Centre at London Business School

MATTE FINISH

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marketing3.0

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marketing3.0

From Products toCustomers to

the HumanSpirit

PHILIP KOTLERHERMAWAN KARTAJAYA IWAN SETIAWAN

JOHN WILEY & SONS, INC.

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Copyright C© by 2010 by Philip Kotler, Hermawan Kartajaya,and Iwan Setiawan. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system,or transmitted in any form or by any means, electronic, mechanical,photocopying, recording, scanning, or otherwise, except as permittedunder Section 107 or 108 of the 1976 United States Copyright Act, withouteither the prior written permission of the Publisher, or authorizationthrough payment of the appropriate per-copy fee to the CopyrightClearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923,(978) 750-8400, fax (978) 646-8600, or on the web at www.copyright.com.Requests to the Publisher for permission should be addressed to thePermissions Department, John Wiley & Sons, Inc., 111 River Street,Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online athttp://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and authorhave used their best efforts in preparing this book, they make norepresentations or warranties with respect to the accuracy or completenessof the contents of this book and specifically disclaim any impliedwarranties of merchantability or fitness for a particular purpose. Nowarranty may be created or extended by sales representatives or writtensales materials. The advice and strategies contained herein may not besuitable for your situation. You should consult with a professional whereappropriate. Neither the publisher nor author shall be liable for any loss ofprofit or any other commercial damages, including but not limited tospecial, incidental, consequential, or other damages.

For general information on our other products and services or for technicalsupport, please contact our Customer Care Department within theUnited States at (800) 762-2974, outside the United States at(317) 572-3993 or fax (317) 572-4002.

Wiley also publishes its books in a variety of electronic formats. Somecontent that appears in print may not be available in electronic books. Formore information about Wiley products, visit our web site atwww.wiley.com.

ISBN 978-0-470-59882-5

Printed in the United States of America.

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“To the next generation of Marketers who will enhancethe social and environmental contributions of the

marketing discipline.”Philip Kotler

“To my first grandson, Darren Hermawan, The NextGreat Marketer.”

Hermawan Kartajaya

“To Louise for her endless support.”Iwan Setiawan

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CONTENTS

Foreword ix

Preface xi

About the Authors xv

PART ITrends

Chapter OneWelcome to Marketing 3.0 3

Chapter TwoFuture Model for Marketing 3.0 25

PART IIStrategy

Chapter ThreeMarketing the Mission to the Consumers 51

Chapter FourMarketing the Values to the Employees 69

Chapter FiveMarketing the Values to the Channel Partners 87

Chapter SixMarketing the Vision to the Shareholders 101

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viii CONTENTS

PART IIIApplication

Chapter SevenDelivering Socio-Cultural Transformation 121

Chapter EightCreating Emerging Market Entrepreneurs 137

Chapter NineStriving for Environmental Sustainability 153

Chapter TenPutting It All Together 169

Index 181

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FOREWORD

According to Alvin Toffler, human civilization can be dividedinto three waves of the economy. The first wave is the Agri-culture Age, in which the most important capital is the landfor agriculture. My country, Indonesia, is undoubtedly rich inthis type of capital. The second is the Industrial Age followingthe Industrial Revolution in England and the rest of Europe.The essential kinds of capital in this age are machines and thefactory. The third era is the Information Age, where mind, in-formation, and high tech are the imperative types of capital tosucceed. Today, as humanity embraces the challenge of globalwarming, we are moving toward the fourth wave, which is ori-ented to creativity, culture, heritage, and the environment. Inleading Indonesia, this is my future direction.

When I read this book, I could see that marketing is alsomoving toward the same direction. Marketing 3.0 relies heav-ily on the marketers’ ability to sense human anxieties anddesires, which are rooted in creativity, culture, heritage, andthe environment. This is even more relevant for Indonesia be-cause the country is known for its diversity in culture andheritage. Indonesia is also a very values-driven country. Spir-ituality has always been the central part of our lives.

I am happy with the examples in the book of success-ful multinational companies that support Millenium Devel-opment Goals for reducing poverty and unemployment in de-veloping countries. I believe that public-private partnershiphas always been a strong fundamental for economic growth,especially in a developing country. This book is also very

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x FOREWORD

supportive for my mission to shift poor people at the bottomof the pyramid in Indonesia to the middle of the pyramid. Italso supports the nation’s efforts to preserve the environmentas our strongest asset.

In summary, I am proud to have two renowned marketinggurus putting their energy and effort into writing a book fora better world. Congratulations for Philip Kotler, HermawanKartajaya, and Iwan Setiawan for this mind-stimulating book.I hope that anyone who reads this book will be encouraged tomake a difference in the world we are living in.

—Susilo Bambang YudhoyonoPresident of the Republic of Indonesia

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PREFACE

The world is going through a period of rapid and wrenchingchanges. The recent financial meltdown has unfortunately in-creased the level of poverty and unemployment, developmentsthat are now being fought with stimulus packages around theworld to restore confidence and economic growth. In addition,climate change and rising pollution are challenging countriesto limit the release of carbon dioxide into the atmosphere, butat the cost of imposing a higher burden on business. Further-more, the rich countries of the West are now experiencing amuch slower rate of growth, and economic power is rapidlyshifting to countries in the East that are experiencing higherrates of growth. And finally, technology is shifting from themechanical world to the digital world—the Internet, comput-ers, cell phones, and social media—which is having a pro-found impact on the behavior of producers and consumers.

These and other changes will require a major rethink-ing of marketing. The concept of marketing can be seen asthe balancing concept to that of macroeconomics. Wheneverthe macroeconomic environment changes, so will consumerbehavior change, and this will lead marketing to change.Over the past 60 years, marketing has moved from beingproduct-centric (Marketing 1.0) to being consumer-centric(Marketing 2.0). Today we see marketing as transforming onceagain in response to the new dynamics in the environment.We see companies expanding their focus from products toconsumers to humankind issues. Marketing 3.0 is thestage when companies shift from consumer-centricity to

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xii PREFACE

human-centricity and where profitability is balanced with cor-porate responsibility.

We see a company not as a sole and self-sustaining oper-ator in a competitive world but as a company that operateswith a loyal network of partners—employees, distributors,dealers, and suppliers. If the company chooses its networkpartners carefully, and their goals are aligned and the re-wards are equitable and motivating, the company and its part-ners combined will become a powerful competitor. To achievethis, the company must share its mission, vision, and valueswith its team members so that they act in unison to achievetheir goals.

We describe in this book how a company can market itsmission, vision, and values to each of its major stakeholders.The company gets its profits by creating superior value for itscustomers and stakeholder partners. We hope that the com-pany views its customers as its strategic starting point andwants to address them in their full humanity and with atten-tion to their needs and concerns.

The book is structured into three key parts. In Part I, wesummarize the key business trends that shape the human-centric marketing imperative and lay the foundation for Mar-keting 3.0. In Part II, we show how the company can marketits corporate vision, mission, and values to each of its keystakeholders—consumers, employees, channel partners, andshareholders. In Part III, we share their thoughts on severalkey implementations of Marketing 3.0 for solving global is-sues such as wellness, poverty, and environmental sustain-ability and how corporations can contribute by implement-ing the human-centric business model. Finally, the Epiloguechapter summarizes the 10 key ideas of Marketing 3.0 withselect examples of companies that embrace the concept intheir business model.

NOTE ON THE ORIGIN OF THIS BOOK

The idea of Marketing 3.0 was first conceptualized in Asiaback in November 2005 by a group of consultants at

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Preface xiii

MarkPlus, a Southeast Asian–based marketing services firmled by Hermawan Kartajaya. After two years of co-creation toenhance the concept, Philip Kotler and Hermawan Kartajayalaunched the draft manuscript at the 40th anniversary of theAssociation of Southeast Asian Nations (ASEAN) in Jakarta.The only G-20 member in Southeast Asia, Indonesia is a na-tion where human centricity and the character of spiritual-ity overcome the challenges of diversity. The president of theUnited States, Barack Obama, spent four years of his earlyeducation in Indonesia to learn about the human centricityof the East. Marketing 3.0 was born and shaped in the East,and we are honored to have a Foreword by Susilo BambangYudhoyono, President of the Republic of Indonesia.

Iwan Setiawan, one of the MarkPlus consultants who initi-ated the concept, collaborated with Philip Kotler at Northwest-ern University’s Kellogg School of Management—one of theworld’s top business schools in the West—to enhance the rel-evance of Marketing 3.0 with the emergence of the new worldeconomic order and the rise of the digital world.

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ABOUT THE AUTHORS

Philip Kotler, the S.C. Johnson & Son Distinguished Profes-sor of International Marketing at the Kellogg School of Man-agement, Northwestern University, is also widely regardedas the Father of Modern Marketing. He is ranked by theWall Street Journal as one of the top six most influentialbusiness thinkers.

Hermawan Kartajaya is the founder and CEO of MarkPlus,Inc., and is one of the “50 Gurus Who Have Shaped the Futureof Marketing,” according to the Chartered Institute of Market-ing, United Kingdom.

Iwan Setiawan (Kellogg School of Management 2010) is asenior consultant at MarkPlus, Inc.

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PART I

TRENDS

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CHAPTER ONE

Welcome toMarketing 3.0

WHY MARKETING 3.0?

Over the years, marketing has evolved through three stagesthat we call Marketing 1.0, 2.0, and 3.0. Many of today’s mar-keters still practice Marketing 1.0, some practice Marketing2.0, and a few are moving into Marketing 3.0. The greatestopportunities will come to marketers practicing 3.0.

Long ago, during the industrial age—when the core tech-nology was industrial machinery—marketing was about sell-ing the factory’s output of products to all who would buythem. The products were fairly basic and were designed toserve a mass market. The goal was to standardize and scaleup to bring about the lowest possible costs of production sothat these goods could be priced lower and made more afford-able to more buyers. Henry Ford’s Model T automobile epito-mized this strategy; said Ford: “Any customer can have a carpainted any color that he wants so long as it is black.” Thiswas Marketing 1.0 or the product-centric era.

Marketing 2.0 came out in today’s information age—wherethe core is information technology. The job of marketing isno longer that simple. Today’s consumers are well informedand can easily compare several similar product offerings. The

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