Marketing has come a long way over the years, evolving through ten distinct eras that have each left their mark on the industry. From the earliest days of the production economy to today's cutting-edge phygital economy, the way in which companies reach out to customers has undergone a remarkable transformation. Understanding this evolution is essential for any business that wants to stay ahead of the curve and connect with customers in meaningful ways.
Master the evolution of marketing in 10 eras to connect and thrive
Because copyright matters. How to cite this article: American Institute of Business Experience Design (2023). Marketing through the ages: Tracing the evolution to the phygital economy. Retrieved [date you accessed the article], from [copy and paste the URL of the article page].
As businesses plan for the future, understanding the evolution of marketing and how it has adapted to the changing market landscape over time is crucial. This article explores the ten eras of marketing evolution, ranging from the early days of trade and barter to the present phygital age. Each era is shaped by key trends and examples, including the production economy, distribution economy, market economy, global economy, hyperconsumption economy, responsible economy, sharing economy, content creator economy, experience economy, and the future of marketing in the phygital economy.
Understanding the evolution of marketing allows businesses to create successful marketing strategies by adapting to current market trends and anticipating future changes.
1) Production Economy
The production economy, which emerged in the early 1900s, emphasized the creation of a unique selling proposition (USP) or point that sets a product apart from its competitors. A USP is a characteristic or feature that distinguishes a product from other similar products in the market. It is essential for companies to identify their USP and communicate it effectively to their target audience to gain a competitive edge.
To make a product stand out, companies need to focus on its unique features and benefits that are not offered by other products in the market. In the early days of the production economy, companies focused on creating high-quality products that were durable and long-lasting.
For instance, in the 1950s, General Motors (GM) used the USP of "longer, lower, and wider" to differentiate its cars from other brands. This USP emphasized the spaciousness and comfort of the cars, which were crucial features for consumers at the time. In contrast, Volvo's USP was "safety," which emphasized the safety features of its cars, such as seat belts, padded dashboards, and shatterproof glass. This USP focused on the functional benefits of the car, such as protection in the event of an accident.
In the 1980s, Sony's Walkman had a USP of "portability," which emphasized the lightweight and compact design of the product. This USP focused on the functional benefit of being able to take music with you wherever you go.
In the 2010s, GoPro's USP was "versatility," which emphasized the features of its action cameras, such as waterproofing, shockproofing, and different mounting options. This USP focused on the functional benefit of being able to use the camera in different environments and situations.
Therefore, by focusing on the functional benefits of their products and highlighting their unique features, these companies were able to create a USP that set them apart from their competitors and appealed to their target audience's needs and desires.
2) Distribution Economy
The economy of distribution has become increasingly important over the years in terms of getting products from the manufacturer to the end consumer. With the rise of globalization and the internet, distribution channels have become an essential aspect of a company's operations. The importance of efficient distribution channels cannot be overstated as it sets a company apart from its competitors.
A company with a well-developed distribution system can ensure that their products reach the end consumer quickly and efficiently. This not only ensures customer satisfaction but can also lead to increased revenue for the company. In contrast, a company with poor distribution channels may face delays in getting their products to the consumer, which can lead to negative reviews and decreased revenue.
Marketing is also an essential aspect of a company's operations, particularly when it comes to distribution channels. A company needs to focus on marketing efforts that promote the efficiency and effectiveness of their distribution channels. This can include targeted advertising campaigns, promotional discounts, and customer loyalty programs.
One of the earliest examples of the importance of distribution channels is the case of Sears, Roebuck and Company. In the early 1900s, Sears revolutionized the retail industry with its mail-order catalog, which allowed customers to purchase products from the comfort of their own homes. By developing an efficient distribution system that could deliver products across the country, Sears was able to reach a wider audience and increase its revenue.
Another recent example is the rise of online retailers such as Amazon in the 1990s. Amazon's focus on efficient distribution channels, including its innovative use of warehouses and logistics, allowed the company to dominate the online retail industry. By investing in its distribution system, Amazon was able to offer customers a wide range of products and fast delivery times, which set it apart from its competitors. Today, companies like Zara are setting themselves apart from their competitors by focusing on fast fashion and efficient distribution channels. Zara's unique approach to distribution, which involves manufacturing its products in-house and using a just-in-time inventory system, allows the company to respond quickly to changing fashion trends and deliver products to customers in a timely manner. This has helped Zara become one of the most successful fashion retailers in the world.
In conclusion, an effective distribution system can help companies reduce costs, increase revenue, and improve customer satisfaction. To fully capitalize on its benefits, companies need to focus on marketing efforts that promote the efficiency of their distribution channels. An efficient distribution system gives companies a competitive advantage by enabling them to respond quickly to changing customer demands, deliver products faster, and stay ahead of competitors. Therefore, investing in distribution channels and marketing efforts is essential for long-term success.
3) Market Economy
The market economy has been in existence for centuries. However, it took its modern form when the supply exceeded the demand, leading to cut-throat competition among companies. To succeed in such a market, companies must differentiate themselves from their competitors. This is where branding, communication, and marketing mix come into play, as they help companies to stand out.
Today's market is highly competitive with a surplus of supply, making it even more crucial for companies to create a unique identity. Branding plays an equally significant role in this process, as it helps build a lasting impression of the company in the minds of the target audience. A strong brand image can foster customer loyalty, increase brand awareness, and create a positive reputation for the company.
Two companies that have successfully differentiated themselves from their competitors through marketing and branding are Coca-Cola and Nike. Coca-Cola has used its brand name and unique advertising campaigns to create a strong customer base worldwide. By focusing on building its brand image and marketing strategy, Coca-Cola has become a leading soft drink manufacturer.
Similarly, Nike has built a strong brand identity by focusing on its "Just Do It" slogan, which has become synonymous with the brand. Nike's marketing strategy has always been centered around promoting its products as a symbol of motivation and inspiration. Furthermore, Nike's branding is easily recognizable worldwide, thanks to its iconic logo, the Swoosh. By leveraging its brand identity, Nike has successfully created a loyal customer base that associates the brand with high-quality sports apparel, shoes, and accessories.
For companies to succeed in the market economy, it's crucial for them to create a unique brand image that sets them apart from their competitors. By focusing on the needs and preferences of their target audience, developing a unique product or service, and establishing a strong brand identity, companies can differentiate themselves and achieve success.
4) Global Economy
The global economy refers to a situation where supply significantly exceeds demand, and the market becomes globalized. This era has both positive and negative aspects. On the one hand, consumers worldwide can access products from different countries, even when they are out of season. However, this also creates a butterfly effect, meaning that events such as wars and shortages in one country can significantly affect the actual consumption of a product by consumers in other countries.
In this context, marketing professionals must integrate strategic thinking and start analyzing the global macroenvironment, rather than focusing solely on the sector or industry. Companies can be disrupted by global actors or indirect competitors, and therefore, it is essential to have a holistic view of the market.
For example, the COVID-19 pandemic has had a significant impact on the global economy, leading to significant changes in consumer behavior. Many companies have struggled to adapt to these changes, while others have been able to pivot their business models quickly. The success of companies in this situation depends on their ability to analyze the macroeconomic environment and identify potential disruptions and opportunities.
In conclusion, it is crucial for marketing professionals to take a strategic approach at the macro-level in this era. They must analyze the global macroenvironment, identify potential disruptions and opportunities, and be prepared to pivot the company's business model when necessary. By doing so, companies can stay ahead of the competition and continue to grow in this rapidly changing economic landscape.
5) Hyperconsumption Economy
The hyperconsumption economy began with the advent of low-cost, all-inclusive offerings, which aimed to provide consumers with more for less. The idea was to increase consumption by making products more affordable and accessible to a wider audience, which in turn would drive economic growth. Today, hyperconsumption is still prevalent, with consumers constantly being bombarded with messages to buy more, and companies always looking for ways to innovate and offer new and exciting products. This has resulted in an abundance of choices for consumers, which can sometimes lead to confusion and indecision.
One example of a low-cost, all-inclusive offering is the all-you-can-eat buffet. This concept originated in the United States in the 1940s, where restaurants began offering unlimited servings of food for a flat fee. This idea was a huge success, and it quickly spread to other parts of the world. Today, all-you-can-eat buffets are a common sight in many countries and are popular among people of all ages.
Another example of a low-cost, all-inclusive offering is the budget airline. These airlines offer low-cost flights to destinations all over the world and have revolutionized the travel industry. They have made air travel accessible to people who may not have been able to afford it otherwise, and have also increased competition in the industry, which has led to lower prices for consumers.
Therefore, the hyperconsumption economy has been driven by the desire to offer more for less. Marketing has played a vital role in the development of low-cost offerings, which have helped to set companies apart from their competitors. However, it is important to remember that hyperconsumption can also have negative consequences, such as environmental degradation and social inequality. Therefore, it is important for companies to strike a balance between profitability and sustainability, and to consider the impact of their actions on society as a whole.
6) Responsible Economy
The responsible economy has gained significant importance in recent times by incorporating social responsibility in products and services. As consumers become more aware, it has become essential for businesses to adopt a responsible approach towards society and the environment. Marketing has played a critical role in promoting social responsibility by raising awareness about social and environmental issues and encouraging action towards creating positive change. This has led to increased consumer demand for socially responsible products and services, encouraging businesses to adopt more sustainable practices.
For example, Ben & Jerry's commitment to social responsibility is not just a marketing strategy, but a core value that runs throughout the company. In addition to using fair trade ingredients and supporting local farmers, the company also advocates for climate justice and works to promote social and economic equity. Ben & Jerry's has been a vocal supporter of the Black Lives Matter movement, and has used its platform to raise awareness about racial justice and police brutality. By prioritizing social responsibility, Ben & Jerry's has not only built a loyal customer base, but has also become a leader in corporate social responsibility, inspiring other companies to follow suit.
Therefore, adopting marketing for social responsibility is not only vital for addressing societal and environmental issues but is also crucial for setting a company apart in an increasingly competitive market.
7) Sharing Economy
The sharing economy has revolutionized the way we consume resources by promoting the idea of collaborative consumption. It enables individuals to save money and reduce waste by sharing resources with each other. The marketing efforts have played a critical role in promoting the sharing economy by raising awareness about the benefits of collaborative consumption. This has led to increased consumer demand for sharing economy platforms, which in turn has encouraged businesses to adopt more sustainable practices.
A great example of the sharing economy is Airbnb. Airbnb allows individuals to rent out their homes or apartments to travelers, providing a cost-effective alternative to traditional hotels. This not only benefits the travelers by providing affordable accommodation but also benefits the hosts by allowing them to earn extra income. Similarly, ride-sharing services like Uber and Lyft allow individuals to share rides and reduce traffic congestion, while also providing an affordable transportation option.
By raising awareness about the benefits of collaborative consumption and encouraging individuals and organizations to participate, marketing has been instrumental in promoting the sharing economy. As the sharing economy continues to grow, marketing will remain a critical tool for companies looking to differentiate themselves and establish a strong foothold in this space.
8) Content Creator Economy
Content creator economy (CCE) refers to the growing industry that has emerged around the creation and distribution of digital content across various online platforms. This includes everything from YouTube videos and podcast episodes to blog posts and social media updates. With the rise of social media platforms, CCE has exploded over the last decade, allowing ordinary individuals to turn their passions into profitable careers.
Marketing has played a crucial role in fueling the growth of CCE. Companies are increasingly turning to content creators to promote their products and services to their audiences. Influencer marketing is a perfect example of this, where brands collaborate with social media influencers to reach their target audience and promote their products.
For instance, Glossier is a beauty brand that has leveraged the CCE and influencer marketing to promote their products. They partner with influencers who align with their brand values to create engaging content that showcases their products to a wider audience. This has helped them to stand out in the competitive beauty market and become one of the most successful beauty brands in the content creator economy.
To sum up, marketing has become an essential tool for companies looking to set themselves apart in the CCE era. By partnering with popular content creators, brands can reach new audiences and promote their products in a more authentic and engaging way. As the CCE continues to grow, marketing will remain a critical component for companies looking to stay relevant and competitive in this space.
9) Experience Economy
The experience economy describes the shift in the way businesses operate, where the focus is on creating memorable experiences for customers rather than just selling products or services. In this era, marketing plays a crucial role in attracting customers by creating an emotional connection and providing a unique experience.
Peloton is an example of a brand that has successfully capitalized on the experience economy. The company offers live and on-demand fitness classes through their stationary bikes and treadmills, creating an immersive and engaging experience for users. Additionally, Peloton has a strong community aspect, with users able to connect with each other through the Peloton app and social media. By creating a unique and immersive experience for their customers, Peloton has differentiated itself from other fitness brands and created a strong emotional connection with its users.
Hence, marketing is crucial in the experience economy, as it helps companies to differentiate themselves and create a unique experience for customers. By creating an emotional connection with customers, companies can build strong relationships and brand loyalty. In today's market, customers are looking for more than just a product or service. They want an experience that they will remember and cherish, and companies that focus on delivering that experience will be the most successful.
10) Phygital Economy
The phygital economy is a relatively new economic concept that combines the characteristics of both physical and digital domains. This economy started to emerge in the early 21st century and is still evolving. With the rise of the third hybrid realm, phygital, consumption and purchase behaviors are becoming more integrated. In this era, marketing is used to create a seamless transition between the digital and physical worlds and to provide consumers with an enhanced shopping experience.
One example of the phygital economy is Nike, which offers both an online and in-store shopping experience, along with personalized digital services that enhance the shopping experience.
Nike's recent efforts towards implementing phygital experiences are praiseworthy. However, it's important to acknowledge that developing an effective phygital strategy requires a lot of effort and expertise. Companies need to learn and master the necessary skills to implement phygital marketing and distinguish themselves from their competitors. The goal of phygital marketing is to create a holistic approach that combines the benefits of online shopping and the personalized experience of in-store shopping. By doing so, businesses can create a unique and memorable experience for their customers that will keep them coming back for more.
In conclusion, it is crucial for businesses and marketers to adapt to the current phygital economy by utilizing adequate marketing knowledge, tools, and strategic frameworks. This adaptation can enable companies to create exceptional phygital brand experiences that engage customers across physical and digital platforms. Such a shift is vital since it helps companies develop effective strategies that cater to the new economy, which is both experiential and phygital. By doing so, businesses can create unique experiences that go beyond traditional products and services.
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Cite this article as: American Institute of Business Experience Design (2023). Marketing through the ages: Tracing the evolution to the phygital economy. Retrieved [date you accessed the article], from [copy and paste the URL of the article page].