Kotler’s “Marketing 5.0” In-house Summary Part 5: Organizations with a high degree of readiness for digitalization (12-part series)


Five years have passed since the release of “Marketing 4.0,” which also triggered the birth of transcosmos’ (hereafter referred to as “our company”) “5A Loyalty Diagnosis” service. The latest book in the series, “Marketing 5.0,” was released in Japanese on April 20, 2022. Marketing 5.0 discusses generational and social challenges in the digital society and new tactics for utilizing marketing technology. In this series of articles, we will provide a chapter-by-chapter overview in an easy-to-understand manner.
In Part 5, we summarize the “Organizations with a high degree of readiness for digitalization”.

Factors Accelerating Digitization

With the spread of IoT and SNS, digital transformation has been taking place more than ever since 2010. On the other hand, for many customers and companies, regional and generational differences and the inertia of traditional ways of buying and receiving remained, and digitalization was postponed. We had the freedom to choose to go digital, or not to go digital.

However, the global pandemic of COVID-19 forced most customers and businesses to digitize all their products and services. For customers, as it did for each of us, quarantines, lockdowns, and mobility restrictions for extended periods of time have expanded the range of online activities. Telecommuting, online shopping, food delivery, and even remote medical care were now available. Life was unimaginable before the spread of the new coronavirus, yet people have adapted to all things digital, and there is no guarantee that things will ever fully return to the way they were before.

However, there were differences in the acceptance of digitalization among clients and companies. It is true that some industries were able to proceed smoothly with digitization in the wake of the coronary disaster or had already made the transition to digitization, while others were unprepared. You may remember that in Japan, there were events that were marked by hectic changes and delayed responses in various industries and services at the beginning of the infection spread.

Digital Readiness Assessment

In Marketing 5.0, the following diagram illustrates a four-quadrant matrix that shows the readiness of six industry sectors to go digital.

Source: “Marketing 5.0” by Philip Kotler

While the position of each industry sector is based on the current situation in the U.S. (our publication is dated 2021) and is of course subject to change as the market evolves, mapping to each quadrant allows us to assess the capabilities of our own digitization strategies.

  • The “origin” quadrant: industries hardest hit by the pandemic. Companies in industries that were less prepared for digital
  • the “onward” quadrant: industries that have invested in digitalization but are struggling with the transition on the customer side.
  • The “organic” quadrant: industries that rely heavily on physical touchpoints to provide products and services
  • The “Omni” quadrant: the quadrant that the company ultimately wants to reach.

This chapter provides a detailed description of the characteristics of the industries in each quadrant and the evaluation items to be used when conducting a company evaluation, and we recommend that those who are interested in this topic read the chapter.

Strategies for migrating customers to digital channels

We mentioned that the retail industry in the “onward” quadrant is struggling to transition customers to digital, so what can companies do to get customers to embrace digital? We need to deliver better value through our online CX.

1.Provide incentives for digitization

One way to encourage the transition to digital is to offer positive or negative incentives. A positive incentive might be immediate satisfaction, such as cashback or discounts on online shopping. A negative incentive could be a separate fee for making an offline choice, for example. In recent years, several megabanks in Japan have adopted the practice of charging a fee for issuing paper passbooks. This is a unique response to financial services in the “Omni” quadrant.

2.Digitally address frustration points

Efforts to cover the weaknesses of offline touchpoints – long waiting times and queues – are also important. For customers looking for a quick and easy solution, digital can take care of part of the process. For example, Japanese apparel company Baroque Japan has implemented a next-day delivery system using an app for customers who want to buy items that are not in stock in stores. The company is able to simplify a series of processes that would traditionally take several days: calling other stores to check inventory while the customer waits, having the product delivered, and then delivering the received product to the customer.

3.Digitally reconstruct the desired physical interaction

While person-to-person interactions still bring value, companies can take advantage of digital communications. Examples include video banking for financial services and virtual telemedicine. At our call centers around the country, we use AI technology to listen to the words of the staff member who answers the phone and the customer and automatically display useful information on the staff member’s screen.


In this article, we discussed factors that accelerate digitization, readiness assessments and strategies for transitioning customers to digital channels. However, there is no strategy that works for all companies, and the transition to digital is not necessarily an issue only on the customer side. Determine the level of digital maturity that varies by industry and sector, and assess your company correctly. Then, depending on the results of the readiness assessment, companies will need to develop and implement different strategies.