Neill Duffy interviews marketing maverick Professor Philip Kotler who has consulted to some of the world’s leading brands, helping them plan and strategize to increase their market share. He explains how to adopt an audience and plan a path of action to improve quality of life
Tell us a little bit about yourself and why marketing became such a big factor in your life.
I am an economist trained at the University of Chicago (M.A.) and MIT (Ph.D.). Three of my professors were Nobel Prize economists–Milton Friedman, Paul Samuelson, and Robert Solow. I had hoped to move along the same path of researching and teaching economics. However, I felt that classical economists neglected several of the major forces shaping demand. Classical economists mainly discussed the role of price in shaping and being shaped by demand and supply. I kept asking: what about the role of Product (features, quality, reliability), Place (wholesalers, retailers, agents), and Promotion (advertising, sales promotion, public relations) in shaping demand and supply.
When I participated in a year-long Ford Foundation program at Harvard in advanced mathematics, I met some marketing professors and realized that the discipline of marketing was the missing link in economic theory and practice. In 1967, I wrote my first edition of Marketing Management (now in the 14th edition) that was the first marketing textbook to incorporate economic theory, mathematics, social psychology and organization theory in the same book. After describing how markets work and how consumers, middlemen and producers make decisions, I began to recognize that the tools of marketing apply to more than commercial transactions.
I led a movement called the Broadening of the Marketing Concept. I realized that an art museum needs marketing skills if it is to attract visitors, members, private donors, and government grants; a blood bank needs marketing skills if it is to attract enough blood donors; Friends of the Earth needs marketing skills to convince consumers and businesses to protect the fragile environment and planet, a city needs marketing skills if it is to attract tourists, new residents, factories and company headquarters, and a gifted singer who want to be recognized nationally needs to hire a marketer to help her reach new audiences and delight them. I had researched these challenging areas and published on them in such books as Museum Strategy and Marketing, Social Marketing, Marketing of Places, High Visibility, Good Works, and other books. I find marketing endlessly interesting and challenging. A market is never stationary.
Companies like Kodak, Sears, Nokia, Research in Motion (RIM), and others failed to identify the disruptive forces swirling around them and manage to react in time. Marketers can never sleep at the steering wheel without crashing.
What are the biggest shifts you see happening among consumer attitudes and behaviors right now and how is technology influencing this?
There has been a tectonic shift from the days of Mass Marketing to today’s days of Target Marketing. Mass marketers had it easy: they would develop a 30-second TV commercial, blast it out at prime time, and reach 30 million viewers. The fact that a lot of viewers weren’t interested in the product or had moved to the kitchen or the bathroom at that moment didn’t matter because the metrics showed a low cost per thousand intended exposures. During this time, most consumers knew little about companies or competitors except for what they heard from the advertisers. It was easy to buy a brand that spent a lot of money advertising itself rather than to investigate the category and find the best value. The Target Marketing world is different, thanks to the emergence of the Internet, Google, Wikipedia, social media, YouTube and the like. Both consumers and producers are better off.
Consumers now get information not only from advertisers but from their friends and acquaintances, from ranking and rating services on the Internet, and from their mobile phones where they can check the price being quoted in the store and check whether the product is cheaper elsewhere. The producers are better off because they are in a better position to gather Big Data about consumers and mine the data to discover those specific consumers who are more likely to want their product.
In addition, producers can learn the media consumption profiles of consumers so that they can reach the right prospects more efficiently. The bottom line is that the influence of brand advertising is growing smaller in relation to the influence of word-of-mouth communications and Internet information in shaping consumer decision making. The Internet makes it ever more important for producers to promise carefully what they will deliver and to meet that promise. Consumers will hear increasingly about producers who fail to satisfy, and more importantly, will hear from their friends and acquaintances the names of brands that satisfy and delight. A company will not be free to be just so-so in the marketplace and this will drive companies to think more innovatively about adding new benefits and values to attract customers.
What do you believe marketing’s role should be, and by extension that of the CMO, in the 21st century and why?
Many marketing departments are basically communication and persuasion arms of the company. Their role is to persuade prospects that the company’s brand offers the best value. In many cases, the marketing department doesn’t even manage the 4Ps. The Chief Marketing Officer of an airline that I interviewed said that his job is basically to handle advertising and the sales force (the P of Promotion) while the P of Price was handled by the finance department, the P of Product was handled by engineers and designers and the P of Place was largely handled by the CIO (chief information officer).
It is true that the marketing department has the responsibility of putting together a plan for each offering that goes further than the promotion plan by inviting the inputs of the other departments. But most of the marketing planning is short-term and tactical. It is my observation that most marketing departments are long on tactics and short on strategy. The challenge for the 21st century is for companies to build up the strategic side of marketing.
A company needs to establish a separate smaller group of strategic marketers who are not responsible for selling more of today’s products. The strategic marketing group has to think about the next three to six years and what the company has to invest in to be a viable player in the next several years. The appointment of Chief Marketing Officers (CMOs) is about moving marketing into the C circle of the company, those senior officers who lead the company’s strategy and policies.
The CMO has to be more than a supplier of communication services and marketing research. The CMO is in an excellent position to know the changing consumer landscape and the emerging new needs and opportunities. The CMO and the strategic marketing group should be a leading force in driving the company’s growth plans. In companies where CMOs are the equal of the CFOs (Chief Financial Officers) and CTOs (Chief Technology Officers) and CIOs (Chief Information Officers), the company will be well-positioned for growth and profitability.
Well known marketers like Yvon Chouinard, the founder of Patagonia, believe that “traditional advertising is dead.” Is he correct or misled, and why?
I would not write off traditional advertising this early. The smartest companies are not those that suddenly shift their promotion budgets into heavy social media. One company shifted 50 percent of its budget to social media and it was a disaster, primarily because its marketers didn’t know which social media work well and how to measure it. The smartest companies are those that actively blend traditional media and the new media in a synergistic way. A traditional print ad should mention that more product information is available on the product’s website and there are product reviews to see on YouTube and Facebook. The company should use traditional advertising to paint the big picture and use the new media as the amplifier.
What do you see the role of technology being in the new marketing mix?
Many marketing departments are strong on the “art” side of marketing and weak on the “science” side of marketing. Yet marketing science is making great strides. My book, Marketing Decision Making describes many technical ways to gather and analyze marketing data and build marketing models. I know companies that use marketing mix models to guide their marketing budget allocation decisions. Companies are increasingly using predictive analysis to estimate the probability of purchase of individual prospects. They are using conjoint analysis to choose the product’s features that will optimize profit returns.
The Marriott hotel organization used conjoint analysis to design the features of the Courtyard hotels, which was one of the most successful new hotel chains launched. We should not forget the technology advances that industry is using to improve new product development. The advantage of 3-D printing allows companies to quickly cast a model of a proposed physical product and test it with prospects. Companies are using virtual reality and simulation to test proposed new marketing services.
What is the role of the annual World Marketing Summit that you and others created?
We realized early that marketing cannot only deliver better products and services but can also help to create a better world through marketing. Marketing can help us understand and attack many social problems – poverty, hunger, disease, gender inequality, environmental degradation, poor nutrition and lack of exercise. We need to help poor families in mosquito-infested areas to obtain bed nets to cover their children and themselves so they don’t contract the dreaded disease of malaria.
We need to convince persons in the developed world about moving from unhealthy food high in sugar and salt that is leading to increasing obesity to a healthful food diet of vegetables and fruits and adequate proteins and carbohydrates. The World Market Summit brings together researchers and experts to share their ideas in public forums about helping achieve the eight Millennium Development Goals of the United Nations.
What do you consider to be the attributes of a Real Leader?
Throughout the world are persons who are contributing to improving the lives of other people. Some do it on a big scale such as the Bill and Melinda Gates Foundation and some do it on a small personal scale in a city neighborhood or a village. The Ashoka Foundation publishes a book describing hundreds of Real Leaders around the world and the work that each is doing to lift up life quality in their sphere of influence. Real Leaders are persons who have adopted an audience and a path of action to improve their life quality, not for personal gain but for the joy of giving service to others.
Philip Kotler, has been cited as the world’s foremost expert on the strategic practice of marketing and is the S.C. Johnson & Son Distinguished Professor of International Marketing at the Northwestern University Kellogg Graduate School of Management near Chicago. Kotler is widely recognized as having written the most authoritative textbook on marketing: Marketing Management.