-
On behalf of our President
and CEO, Greg Case,
-
and our chief marketing
officer, Phil Clement,
-
it's a real honor for Aon to be
the sponsor of this event today.
-
And for many of you,
you might know that Aon
-
is now a UK-based company,
but it's also important for you to know
-
that the Aon Foundation,
for the past 25 years,
-
has made it a priority to support
educational activities and
-
cultural institutions like
the Chicago Humanities Festival
-
and the Charter Humanist Circle,
that does so much to enrich
-
the lives of all of us in this room
and everybody in Chicago.
-
And even though we're now in the UK,
I want everybody in this room to know
-
that we intend to continue
this commitment,
-
and it will remain high on our
priority list for the things we do
-
to support the community of
Chicago for many years to come.
-
[applause]
-
On behalf of my colleagues
at Aon, I want to thank
-
the Charter Humanist Circle
and its members
-
for their very valuable support,
and I also want to thank
-
Northwestern University Law
School for allowing us to use
-
the auditorium today.
-
At Aon, we believe in the mantra
"If we can't measure it,
-
we don't do it."
-
And because of that,
it's a real honor for us
-
to be here supporting and
introducing Dr. Philip Kotler.
-
Dr. Kotler has defined marketing
as "the science and art
-
of exploring, creating, and
delivering value to satisfy
-
the needs of a target
market at a profit."
-
He is recognized around the world
as one of the foremost experts
-
on business, of marketing,
and for his insights on
-
how exemplary marketing has
the creativity and the power
-
to influence global
consumers every day.
-
In that spirit, I hope you'll join
me in welcoming Dr. Philip Kotler.
-
[applause]
-
Now before I turn the
microphone over to Dr. Kotler,
-
in the spirit of marketing, maybe
many of you in this room know
-
that Aon does a great many
things globally, but one of the things
-
that we've done that has created
tremendous brand awareness
-
for our firm is our sponsorship
of Manchester United football team,
-
which by today won 2 to 1
versus Arsenal
-
[applause]
-
We're at--
Right now we're
-
at the top of the
premiere league.
-
So in that spirit,
[laughter]
-
I would like to present Dr. Kotler
with his very own, personalized
-
Manchester United shirt.
[applause]
-
[Kolter]: Thank you.
-
David, thank you very much.
-
And I will wear this,
in a fantasy way.
-
[laughter]
-
May I say, I really appreciate
your introduction.
-
Of all the introductions I've received,
yours is the most recent.
-
[laughter]
-
Nation, nation...
-
Oh, you may know of
Steven Colbert,
-
so I can't pull it off the same way.
-
There will be two groups,
with respect to marketing.
-
There will be a group that
doesn't like marketing,
-
and I'm going to give you
why they don't like marketing
-
and the justifications.
I will also tell you
-
there's another group who loves
marketing, so before we're through,
-
you will be totally confused,
or at least opinionated.
-
So, what I want to do is
tell you that--
-
These are called
confessions of a marketer.
-
That's, by the way, borrowed
from David Ogilvy,
-
who wrote a wonderful book called
"Confessions of an Advertising Man."
-
And let me move on and say
why is marketing a topic
-
for the humanities?
-
And we would say that
there's a couple of reasons.
-
One: I regard marketing
as a humanistic subject
-
because marketing has
affected our lifestyles;
-
has created, not only affected
a lifestyle, but created lifestyles,
-
and we should be, from a point
of view of popular interest,
-
interested in that.
-
And it really--
-
I want to say that marketing
is very American,
-
that it's beginnings are
very American.
-
That doesn't mean there weren't
manifestations of marketing earlier,
-
and as a matter of fact, I'd like
to give you a very short history
-
of marketing, so that you understand
what we mean by the word.
-
As a matter of fact, if you took a
dictionary, a Webster's dictionary,
-
in the year 1900, and looked up
the word marketing,
-
you would not find it in the dictionary.
-
Yes, you would find the word market,
but not the word marketing.
-
If you then picked a dictionary...
1910. You would find the word
-
marketing in it, because marketing
is about 100 years old.
-
And it's much more than selling.
So let me show you...
-
Let's start...
Let's start biblically.
-
[laughter]
Let's start biblically.
-
Who is the marketer
in this picture?
-
This is the biblical narrative.
Who was the first marketer in the world?
-
I hear Eve...
-
The snake.
-
I hate to admit it, because snake
sounds like sneaky, and so on
-
and so forth.
-
But the fact is that it was
the snake who sold Eve
-
on getting Adam to eat an apple.
So it goes way back.
-
At least selling goes way back.
Now let's go further.
-
Here is the father of marketing.
-
Wow, what an insult to him!
[laughter]
-
I mean, that's Aristotle.
-
Recently I was at a group,
little party, and we were speculating
-
who we would like to meet most
if we had an hour with such a person,
-
and it boiled down to Plato,
Socrates, or Aristotle.
-
That's a hard one.
-
It turns out that my vote
went for Aristotle.
-
Aristotle was Google, at the time.
He knew more about everything
-
than anyone in the world.
He wrote on science, politics,
-
economics, rhetoric, art,
and everything.
-
Now, why do I say that he had
some marketing impact?
-
Let me read the definition of rhetoric.
He's not the founder of rhetoric,
-
by the way. The founders were
the sophists, around 600 B.C.
-
They were a group who wanted to use
selling and speech and persuasion
-
for their own devious ends.
But Aristotle put the i--
-
the discipline of rhetoric on its feet.
-
Rhetoric is the art that aims to improve
the facility of speakers or writers
-
who attempt to inform, persuade,
or motivate particular audiences
-
in specific situations.
It is the faculty of the observing,
-
in any given case, the available
means of persuasion.
-
So, in a sense, he could be
the father of selling.
-
The idea of getting someone
to do something that they might
-
not have done otherwise.
So, let's move on, about other
-
early manifestations of marketing.
I know many of you cannot necessarily
-
read this, so I will read it,
but the first department store
-
opened when, and in what country?
Normally if you're in France
-
and you ask the question,
they would say of course
-
we invented the department store.
It was about 1845.
-
The same time we invented
paperweights and some other things.
-
But it turns out that the first
department store was in Japan.
-
Mitsui company, which is still
alive and well.
-
So that's where one of our
retailing forms started.
-
The next one is the first
newspaper that carried an ad.
-
There were newspapers early,
but the first ad appeared in England,
-
in 1652, and it advertised coffee.
And then, the first ad agency
-
started a little later.
Well, much later.
-
N.W. Ayer, which is still a
prosperous advertising agency.
-
First time a brand was put on a
commodity, the commodity being soap,
-
the brand name was Pear's soap.
-
And then the first packaging
appeared a little later,
-
and finally we had a marketing
research department formed.
-
So, now the word markets
has been around all these years.
-
The Middle Ages had markets.
In fact, whenever--
-
I would even say the agora,
in ancient Greece--
-
that means the marketplace--
In ancient Greece,
-
people would come on a particular
day to sell things.
-
In the Middle Ages,
there were market days.
-
The word marketing wasn't there.
It was just market.
-
And trade was always there,
because trade, through history,
-
has taken place between people
and regions and countries.
-
So all that is there, and it was
in the decade of the 1900s
-
that marketing books first appeared.
And the interesting thing is
-
who wrote those first marketing books.
Were they sociologists?
-
What was the discipline of the people
who wrote the first marketing books?
-
Any guesses?
-
They weren't physicists or chemists.
-
They were economists.
-
So why would economists start
a subject called marketing?
-
And the answer is: they were
disillusioned economists.
-
[laughter]
-
They couldn't find any mention
of advertising in the discourse
-
of economists. In other words,
never did Adam Smith,
-
Thomas Malthus, David Ricardo,
even Alfred Marshall, and so on,
-
they rarely talked about other
forces that shaped demand.
-
The only force that shaped demand
in their mind was price.
-
You know the famous curve.
Raise the price, demand will go down,
-
lower the price, you can sell more.
Price was the only thing
-
that affected demand.
So these economists,
-
or institutional economists, said "Hey,
you've got to factor in advertising."
-
You've got to factor in retail stores,
whole sales, jobbers, agents.
-
And it was the neglect of
the classical economists
-
to not really texture the marketplace
and the way an economy worked
-
that led to marketing.
So marketing is technically
-
a branch of economics.
-
Now who helped developed
this field of marketing?
-
Now, probably you don't
recognize maybe anyone here.
-
There's one person you
might recognize.
-
I don't know if you can see
some of these faces,
-
but someone recognize anyone there?
-
Yeah.
-
Dale Carnegie.
Dale Carnegie is here,
-
and his book was "How to
Win Friends and Influence People,"
-
because in doing this,
I wanted to find out
-
who was the exemplar
of the selling method.
-
"How to Win Friends
and Influence People"
-
But let me give you the whole picture.
-
Ernest Dichter. Some of
you may know of.
-
He was a motivational psychologist,
and he could explain why people
-
didn't like to eat prunes, why cigars
were offending some people,
-
and all kinds of things.
And his book called
-
"The Study of Desire."
He apparently studied with
-
Sigmund Freud, and he brought
that kind of mind to marketing.
-
But he had an opponent named
Alfred Pollitz, who was not
-
a head shrinker--We call
him a... a nose counter.
-
The expressions we would use if
you were very psychological,
-
you were a head shrinker, and
otherwise, you were a nose counter.
-
Namely, a surveyor. You surveyed--
You found out what percentage
-
of people were of a certain age and
why did they buy a particular product.
-
Julius Rosenwald was very much
behind the formation of
-
the Sears company, which was
a important episode in
-
the development of our retail chains.
-
Lester Wunderman deserves
credit as exemplifying the use
-
of direct mail and catalogs.
That you can sell more directly.
-
You don't have to be in the store.
You can get people to order goods
-
by mail and phone.
-
David Ogilvy is the exemplar
advertising person,
-
then Stanley Marcus,
of Neiman Marcus,
-
was a fella who could walk into
any retail store and give them
-
100 suggestions on how to improve
the layout, the size of the aisles,
-
and make a difference in the
voulme of business.
-
Edward Bernays is the father of
public relations in the United States.
-
His name has sort of become
obscure, but he really was
-
a very important person.
The word propaganda
-
was often used in connection with his
work, because people thought it was
-
a model to motivate you to feel
a certain way about anything,
-
regardless of the standards involved.
And then there's Dale Carnegie.
-
In any case, how did
marketing get its start?
-
Marketing got its start
in sales departments.
-
Every company has a sales group.
And the sales people really want
-
to be in the office of a customer,
because that's the only way
-
something happens. So they don't
want to do a lot of homework.
-
For example, three things they
didn't want to do.
-
They didn't want to do consumer
research in a systematic way,
-
because that's taking their time
away from selling to customers.
-
Secondly, they would've liked
someone else to find leads.
-
Now a lead means a prospect.
In fact, we distinguish between
-
a hot lead: "Oh boy, he's ready
to buy. He even called us to buy."
-
a warm lead, a cold lead, so on.
Someone else should do that
-
for the sales people, so they don't
waste their time making calls.
-
And the third thing was
someone had to prepare
-
brochures and ads. And the
salesman is not skilled.
-
The salesperson isn't skilled at
communicating through advertising
-
and brochures. So sales departments
added three people, or hired them
-
from time to time.
Later on, it exploded
-
to the day today, when we have
multinationals running--
-
with marketing--
In other words, marketing--
-
Those three people split from sales
and became big enough to become
-
its own department.
And so, some people
-
in the audience here may be
a chief marketing officer.
-
The old name was Vice President
of marketing, but I like the name
-
chief marketing officer because
that person now is part of
-
the chief officers. Chief information
officer, chief financial officer,
-
chief innovation officer,
and the status has moved up.
-
Some of you may be brand managers,
may have been in your past experience.
-
Category managers, market
segment managers,
-
managing distribution channels,
like retail or wholesale things,
-
pricing manager, communication
manager, database manager,
-
direct marketers, internet
people, and so on.
-
So, marketing is well-established.
-
Now, the character of a marketing
department depends very much
-
on what the CEO thinks of marketing.
-
So, the 1P CEO is a person
who took over a company,
-
and he says, "I don't like
marketing, but I know I need it,
-
and all I want from marketing is
some communications.
-
I just want someone to broadcast
and promote us."
-
So, that person is missing
a lot of other things
-
made up by other CEOs,
who are 4P CEOs.
-
Now a 4P CEO says,
"I need a marketing plan."
-
And the plan has to mention
product--that's the first P.
-
What about our product? What's good
about it? What are the features?
-
Price: what should it be priced at?
Place: where should it be
-
made accessible? Online,
offline, in stores?
-
And finally promotion.
-
So that's a more educated view
of the potential of marketing.
-
But there's even a better view,
and that's called the CEO who says,
-
"No! I don't want to start with 4 Ps,
I want to start with the fact
-
the market is complex."
There's a lot of segments.
-
Each segment deserves its own plan.
In fact, one thing we've learned
-
that if you just have one value
proposition for the whole market,
-
it really doesn't trigger anything
in many parts of the market.
-
So that CEO says, "What
segment should we go after?
-
And what position should we
take with each segment?
-
What should we say about ourselves,
in how we can satisfy their needs?"
-
Now there's even a higher type CEO,
which is exemplified by A.G. Lafley,
-
who ran Procter & Gamble,
who recently retired.
-
When you ask A.G. Lafley what's
marketing, what's your picture,
-
he says, "Well, what do you mean?
Marketing is everything."
-
[laughter]
-
Now, marketing is everything.
What he means is
-
everything starts with the customer.
No customers, no business.
-
And I think he's making
that point very much.
-
Now, moving on, there's a lot of things
that a chief marketing officer does,
-
and I won't go into any detail,
but there's a lot of tasks,
-
and the sad fact is that sometimes
the chief marketing officer only lasts
-
on the average of two years.
In other words, does a job,
-
and maybe the CEO is not feeling that
it really brought in enough new business
-
that the cost of the CMO exceeds
what the value of the CMO is.
-
There's a lot to go into about
why CMOs on the average
-
hold on to their job for two years.
By the way, some of them
-
get a better job after two years.
They become something higher
-
than the chief marketing officer.
Some of them actually are pirated away
-
because they're so good, they go
to another company to be the CEO.
-
But in any case, marketing--
commercial marketing,
-
which I've been talking about,
could've stayed only commercial,
-
and then I got involved in--
with Professor Sid Levy at Northwestern
-
We started the idea of
broadening marketing,
-
because the set of tools that we use
to address consumers could be used
-
in other areas.
So we have a thing
-
called place marketing.
I will get a call from a city, let's say,
-
and a city says, "We're not getting
enough tourists. We don't have
-
any attractions for them to come
and see. I would like to get a factory
-
located here. We would like some digital
people to move here, who know digital--
-
We want to start a Silicon Valley."
So that's place marketing.
-
The marketing of a place. How do you
dress it up and make it attractive?
-
Against all of the other
competitive places.
-
The second--
Person marketing.
-
There's an agency called William Morris,
and a young singer might go to
-
William Morris and say, "look, I want
to get ahead. I want to appear
-
on Jay Leno's show. I want to--
I want to move up to being noticed.
-
I want high visibility."
I wrote a book with the title
-
"High Visibility." How do you
get that visibility.
-
So, William Morris will look
at her and her performance
-
and maybe say,
"You know, in a sense--
-
Don't be offended, but we can
make you into a better product."
-
That's sort of the language.
You know, do your hair differently,
-
walk a little-- dress differently.
Actually, we're going to use you to
-
reignite the archetype of Joan Baez.
You know, Joan Baez, the folk singer.
-
Well, we need a new Joan Baez.
And so, we can recast you
-
and form you into the kind of
person we all miss, and so on.
-
Now, social marketing is
another branch.
-
Today there are 2,000 social marketers
around the world, trying to help people
-
eat better, exercise more, say no
to drugs, stop smoking cigar--
-
get off of tobacco, say no to
a number of things.
-
Positive behaviors and
negative behaviors.
-
By the way, my memory is that
Sweden was one of the first countries
-
to want to raise a nation of nonsmokers,
non-drinkers, all the vices.
-
And it starts at the primary school level,
that you could technically raise people
-
to avoid those vices, if that was
thought to be good public policy.
-
So that's social marketing.
Now, political marketing,
-
we're saturated with.
And I think it's degenerated,
-
but that's another thing.
Fundraising is part of marketing.
-
I mean, fundraising is an odd form,
because you're not exchanging.
-
Everything else is sort of an exchange
of values. Fundraising seems to be
-
a one-way transfer.
Here's some money
-
for the museum.
But any fundraiser knows
-
there's something that should come
back to the person who is the donor
-
and supporter of a museum,
and working that way is important.
-
So these are offshoots.
Now all of us do marketing.
-
If you read the list, we all do marketing.
Did you ever compete for a job when
-
you knew there were other applicants?
Didn't you dress up as well as you could
-
and even prepare what you're
going to say, and so on?
-
Did you compete for a desirable
apartment which was scarce?
-
Or a member of the opposite sex,
if you wanted to court someone.
-
So, in a sense, we're human animals
who know how to make an impression
-
and market ourselves, to some extent.
-
What do we dislike about marketing?
-
Well, there's a long list.
It's a rather long list.
-
Intrusion, interruption, exaggeration,
and so on and so forth.
-
And I really made a list that's
a little separate from that.
-
Here are some of the criticisms.
Marketers get consumers to want
-
and spend more than they can afford.
-
And we know that from the financial
disaster that people were buying homes
-
with maybe nothing down.
Marketers are skilled at
-
creating grand differentiation
where it shouldn't exist.
-
Like with commodities, you know, a
chicken is a chicken, cement is cement.
-
So they spend a lot of time trying to
tell you their cement is really better,
-
their salt is really better, and so on.
Marketers want to produce and sell
-
more goods without considering
the resource and environmental costs
-
of producing the goods.
The planet Earth is affected
-
by the amount of production
and the care with which it's done.
-
Marketers had not paid sufficient
attention to product safety.
-
We know that because Ralph Nader
made his career, basically, car--
-
the unsafety in cars, and then
we got lead poisoning,
-
we got asbestos problems,
and so on.
-
Here's a serious criticism. Marketers--
and this is not all marketers--
-
these are some particular
companies, and so on.
-
Marketers favor giving the public what it
wants, whether its good or not for them.
-
Sure, I'll sell you cigarettes. I'll sell
you anything that will make money.
-
Therefore marketing promotes
a materialistic mindset,
-
that-- we get turned on to
more of a materialistic world,
-
a world of ever-changing products and
services and keeping up with the Jones
-
and some of that.
-
Marketers rarely talk about
sane consumption.
-
Yeah, some beer companies say,
"Please enjoy our beer, but don't
-
drink too much." That's nice that they--
No one listens to that, and you still
-
have binge-drinking, but they're
trying to do what they can
-
and so on and so forth.
Now, let me just say
-
there's another side.
This is important too,
-
because it's not a simple picture.
The other side of it is
-
Marketing has undoubtedly
raised the standard of living
-
in the United States.
People don't naturally
-
buy new things. In other words,
do you know, people used to keep
-
their refrigerators, which
weren't refrigerators at the time,
-
they were ice boxes and they would
keep going out and getting some ice
-
and putting it in the box, and so on.
And even the washing machines
-
were very slow to take--
In other words, people--
-
It would be very expensive to
buy a new appliance,
-
but marketers persisted in saying
your life will be better with
-
new appliances, and
that's one of its jobs.
-
I would even go so far as to say
that marketing is so connected
-
to the idea of the middle class.
We're talking about preserving
-
and building the middle class,
and the lifestyle that goes with it,
-
and marketing is an essential
definer of what it is to be--and want--
-
what it is to want, as a member
of the middle class.
-
Marketing in the form of social
marketing has helped improve
-
a lot of things. You know,
one of the first causes
-
that marketing turned to was
the environment and waste
-
and the ill-effects of some
products, and so on.
-
Preserving the environment
was one of the first things that
-
social marketers got into.
-
Now they're into obesity as a problem,
littering as a problem,
-
and other problems.
-
Marketing is very important
to the cultural world.
-
Museums, performing arts,
and one of the big problems
-
that cultural institutions are facing,
especially in the performing arts,
-
is the aging of audiences.
How do you get people
-
who are in their forties to go to opera,
to go to ballet, and so on.
-
It's called the graying of the audiences,
and maybe that problem has
-
been with us for a long time,
but marketers are at work
-
doing segmentation, targeting,
positioning, in order to
-
make sure that all seats are filled
in the theater, and also the museums
-
are very busy, as marketing institutions,
because they have to get visitors,
-
they have to get donors, they have to
get government grants,
-
so marketing is almost an intrinsic
function today that's going on.
-
But let me--
-
This is not time to take a vote.
Do you like marketing
-
or you don't like marketing.
But let me show you that
-
the feeling-- the negative feelings about
marketing came up from these people.
-
The attackers. They attacked marketing.
Do you recognize anyone?
-
You see Ralph Nader? I don't...
There he is. Yeah.
-
Who else?
-
Well, it is Ralph Nader.
"Unsafe at Any Speed."
-
Rachel Carson, by the way,
deserves so much more credit
-
than we've given to her for her book
on the Silent Spring, which was about
-
the chemical pollution, the pesticides
that were getting into our spring water,
-
and so on. Vance Packard,
who popularized the idea
-
that we are hidden persuaders.
That when you go into a movie theater,
-
you don't know this but an ad is sort of
flashing to go and get some popcorn
-
before you sit down.
Subliminal advertising,
-
which never did happen,
but the hidden persuaders.
-
And then John Kenneth Galbraith,
who pointed out that while we spend
-
so much money in making enough
deodorants for any type of interest
-
you have in deodorants,
in the public sector--
-
In the public sector, you've got
streets that are littered,
-
and there's some garbage,
and there's slow traffic, and--
-
And so we have a good private sector,
but we can't enjoy it because
-
the public sector doesn't have the
public good that would facilitate things.
-
You've got Naomi Klein,
who's probably the prototype
-
person now for attacking branding.
Brands, brands, they're awful.
-
You're paying more than
you need to pay.
-
The book is called "No Logo,"
logo being another name for brand.
-
And Michael Sandel is-- has this
new book out, which is really interesting
-
and worth reading. He's the fella
who ran a course on justice,
-
and would ask groups about this size
at Harvard, "What is the just thing to do
-
in each situation?"
But his new book is called
-
"What Money Can't Buy:
The Moral Limits of Marketing"
-
where he points out that
if you're in jail in California
-
and you don't like the cell,
you can pay for a better cell.
-
You know, maybe one with a computer
if you want a computer, and so on.
-
But he's also-- he thinks today
our culture divides people
-
in social classes more clearly.
We used to go to ball games;
-
I would sit next to someone who was
rich and someone who was poor.
-
We'd all stand in the
same line for hot dogs.
-
Today, the guys who are rich
are up in the sky box,
-
and he calls it the sky box-ification of
the United States. The sky box-ification.
-
They're eating filet mignon and
we peasants are down there having--
-
standing in line for our hot dog.
So we are not meeting each other
-
as we used to, in the older days.
It's a very interesting treatment.
-
I like to quote Will Rogers with this
remark: "If advertisers spent
-
the same amount of money that they--
on improving the product
-
as they do on advertising, they wouldn't
have to advertise it. And that's--
-
By the way, that's a very profound
observation, because in the age
-
of the internet, it's so much easier
to talk about a product you like
-
to others and also about
a product you don't like.
-
And in a sense, if this goes far enough,
there will be no bad companies
-
anymore. It would be not possible
for a company to be a bad company,
-
because the word
of mouth will sink it.
-
So he's sort of touching on that point.
Make-- Do a good job, and don't--
-
and others will advertise
the good job you did.
-
Now, I want to add another group,
and this is a group of visionaries,
-
and I'd like to call them
our best marketers.
-
But they're not necessarily the
chief marketing officer,
-
they're CEOs. But what--
Their contribution has been
-
the kind you want from your
chief marketing officers.
-
So who do you see here?
Do you know any of those people?
-
[audience murmuring]
-
Yeah. You've got to know some of
them. But you probably don't know
-
the first one. Ingvar Kamprad.
It's very even hard to remember
-
his name, but he's that Swedish
person who invented IKEA,
-
who said, "I must bring down the cost
of furniture, and I can do that by
-
taking the air out of it and just
selling knocked down furniture,
-
and now people can afford to have
some nice things in their home.
-
Richard Branson is phenomenal.
He's a-- not only in self-promotion.
-
He's one of the best self-promoters
possible. I don't know if you know
-
that he was in Times Square
some years ago
-
to introduce his new cell phone,
the Virgin cell phone,
-
and he said he was going to drop off
of a building, a 30-story building,
-
and-- not wearing any clothes or
something, so everyone showed up.
-
I don't know why they would want to
show up, but they showed up
-
in Times Square, and sure, he did
jump down, but it was on a rope
-
and he's carrying a huge version
of his new cell phone.
-
And so everyone--not just in
Times Square--the reporters
-
were covering it. All of New York
knew about the new-- there was
-
a new Virgin cell phone.
So he's very good at that.
-
But right now, he told me something
I couldn't believe. I was in Dubai,
-
and he gave a speech, and we
were just chatting, and he said,
-
"Where are you from?" I said Chicago,
and he says, "You know, there will be
-
a time when you can go from
Dubai to Chicago in half an hour."
-
What is it-- Is this a time
machine you're inventing?
-
He says, "No, it's just a rocket ship."
So the rocket ship takes off from
-
Dubai, it just goes right up in the
air and lands in Chicago.
-
So he's working with some people
on the new spaceships, basically.
-
And you want to watch him.
Of course, Walt Disney.
-
Great, great visionary.
-
Herb Kelleher. Thanks to him,
we have Southwest Airlines,
-
which started a whole class
of low-cost airlines.
-
And then we've got Anita Roddick,
who ran The Body Shop, where she said
-
"I'm not selling hope, I'm selling good
skin lotion. All the others sell hope."
-
That was a famous remark by Revlon,
"In the factory we make lipstick,
-
in the store we sell hope."
But she wrestled with that one.
-
Then you've got Bill Gates,
Steve Jobs, and Jeff Bezos.
-
And Jeff-- Let's see, we've gotta
make sure he gets in there.
-
[laughter]
Jeff is extraordinary.
-
If there's anyone who has
consumer thinking in his mind,
-
wanting to facilitate the consumer
to really order or re-order or return
-
or anything like that. And then to buy
more than books, to buy electronics,
-
to buy clothes. He's done a marvelous
job. He's very exemplary in that sense.
-
We're running out of time and I'm going
to want some questions from you,
-
but let me just refer to
a few more things.
-
This is a chart I use in
the book, "Marketing 3.0,"
-
basically to say that every company
should define its mission, it's vision
-
for the future, and its values--
what it really cares about,
-
and if you're a 1.0 marketer,
it's a good job you're doing.
-
I mean, of course you're trying
to deliver satisfaction, make a profit,
-
and make a good product. Be better.
If you're a 2.0 marketer, you want to
-
help people realize their aspirations.
You want to deliver things that
-
they might aspire to have.
They will return frequently to buy more,
-
and your product is different than the
others. Not only better, but different.
-
And suddenly, you move
from mind to heart to spirit.
-
What's spirit? It's that small
set of companies that say
-
"We're compassionate. We have
compassion for the state of the world.
-
We want to get involved. We want
the companies to be a machine
-
for improving the lives of people."
You could say-- you could reduce that
-
to just some charity work they're doing.
Or it could be a real, fundamental
-
strain in the way they do their business.
We can name some companies that
-
really have felt that they want
to help reshape the world
-
into being a better world.
So that is--
-
Here's one of my favorite companies
that illustrate the cells in that picture.
-
The SC Johnson company in
Racine, Wisconsin
-
whose products are shown over here.
You probably have purchased some
-
of their waxes or some of their
insect repellent or other things,
-
but they're just winning awards
for being a very caring company.
-
Incidentally, a book that you
might want to read is called
-
"Firms of Endearment,"
which is a fancy way to say
-
companies we love.
Firms of Endearment.
-
And I love the subtitle,
"How World-Class Companies
-
Profit from Passion and Purpose."
And it's based on asking audiences--
-
random meeting of people--is there
any company that you like?
-
That you like a lot?
Now, let me ask that question.
-
Name a company that you would
dearly miss if it disappeared, vanished.
-
[audience murmurs]
Apple! See, always Apple.
-
I thought you were going to say
Harley Davidson, but that's
-
another one. Amazon.
I would miss Amazon.
-
I really would. I would even
subsidize it to continue.
-
[laughter]
Which one?
-
Costco. Of course.
I'm with you on Costco.
-
Nike. Okay, well you see
what happens is,
-
these are the names of the companies
that came up again and again.
-
I don't think there's any surprises there.
I've asked other countries to do this too.
-
Because it would be a different mix
of companies that would come up.
-
But the main thing is, these firms of
endearment are so much
-
more profitable than the ones
that have not been dear to us.
-
One of the things is that they--
They're either 9 or 10 times
-
as profitable, but let's see why,
and without going through
-
everything here, look at the last
one. These are the attributes
-
of that set of companies.
And the last attribute is that
-
they spend less on marketing
than rather more.
-
I bet you thought that the companies
that were going to be dear to us
-
are the ones who are just
advertising all the time.
-
They're so familiar.
We see Coca-Cola
-
all the time. All the time.
No! They spend less on advertising,
-
so who's doing the advertising?
The customer. You guys are.
-
So that's where you should
put your money.
-
Create a love affair.
Create fans with others.
-
Now I'm going to end with two slides.
This is on a downer, a little bit.
-
"The End of Work"
This is Jeremy Rifkin's book.
-
It's now about 9 or 10 years old.
And he says because of the slow down
-
in population growth, automation
of factories and computers, robotics,
-
3D printing, can the nation create
enough jobs? Can the world create
-
enough jobs for the
population, and so on.
-
And it raises a question about
marketing's role.
-
Marketing's role normally is seen
as to sell you some things.
-
The basic role of marketing
is to create jobs.
-
It is the job creator. Namely, it
gets you to want something
-
that someone has to produce.
So there's a basic question:
-
Does marketing really create
new jobs or does it only
-
create shifts in the shares?
Like if I switch from brand X
-
to brand Y, that's not creating--
Brand X loses a job and brand Y
-
gets a job. So, but it is true
that if we're talking a new product,
-
marketing will help accelerate
it's recognition, the awareness of it,
-
and intensify the drive to purchase it.
In other words, we buy our iPads
-
and other things that come along
partly because they're wanted,
-
they are desired objects,
and marketing accelerates
-
the rate at which growth takes place
with those new products.
-
The other book, and I'll end
with this, is another downer.
-
"The Death of Demand"
-
And what is the relationship between
marketing and demand?
-
And is-- he uses a term saturated--
finding growth in a saturated
-
global economy.
-
I've been wrestling with that problem,
and growth is the issue today.
-
Growth is the issue.
Growth means jobs, and so on.
-
And the fact is, there are
8 ways to grow a business.
-
So the title of the book is
"Market Your Way to Grow:
-
8 Ways to Win."
And you know all of them.
-
You know that we can go to
places where there is growth.
-
We can sell in China,
even if it's a low growth here.
-
Or Brazil. We know we can grow
by acquiring other firms.
-
We know we can grow by innovating.
Inventing something new.
-
We know we can grow by taking
business away from someone else,
-
and so on and so forth.
So one of the things
-
we're wrestling with is how
do you, as a firm, grow?
-
And by coincidence, another
colleague of mine at
-
the Kelogg School of Management,
Tim-- He just wrote a book called
-
"Defending Your Business," and it's
so nice that his book came out
-
with mine, because the first job
is always defend what you've got.
-
Hold on to the customers you have,
then you start worrying about
-
some more growth.
So we both, as members
-
of the department, are wrestling with
how to ignore these books
-
and say they're wrong, and that
there is a bright future ahead.
-
[laughter]
So let me stop here
-
and take any questions you might have.
-
[applause]
-
Thank you.
-
[Moderator]: Okay, we have time for
a few questions for Professor Kotler.
-
Is there anyone on this side of
the auditorium that would like
-
to ask a question?
-
[Kotler]: Yes. I see--
I see you over there.
-
Now a microphone will
magically come down here.
-
[Moderator]: Susan will
bring you a microphone.
-
[Kotler]: And if there's any other
people-- and there's a person over there
-
Would you introduce yourself, please?
-
[Audience member]: My name is
Iris Witkowski and I've been
-
coming to the Humanities Festival
as long as it exists, and I very much
-
appreciate your talk today.
[Kotler]: Thank you.
-
[Audience member]: My--
I'm making a statement.
-
What really drives me nuts,
as far as saturation is concerned,
-
is the placement of products
on television programs.
-
It used to be that in a movie
you'd say "Oh, I saw that brand."
-
It seemed to be accidental.
Now it's all over.
-
Even the anchormen have
L.L. Bean jackets on.
-
[Kotler]: You know, that's the field
called product placement,
-
and we first got conscious of it
with the James Bond films,
-
where each time there was a different
car, he drove an Audi or he drove
-
something else, because it was a
matter of what car company would pay
-
the most for the next film to
feature that car, and now,
-
does the person speaking pick up
a Coke bottle or a Pepsi bottle?
-
And things like that. Most of us don't
notice it. It's not yet that intrusive,
-
but it has been discovered as a way to
get some visibility for certain products.
-
Product placement.
-
[Audience member]: I'm Cody Hagle.
I'm a Charter Humanist.
-
Again, thank you. On the evening
national news, 75 to 80 percent
-
of the ads are for pharmaceuticals.
[Kotler]: And they say awful things
-
about each one!
[laughter]
-
[Audience member]: And I believe
there was a change in legal
-
requirements some years ago.
What are your thoughts about that,
-
because clearly that advertising
is driving demand, which is driving
-
costs, etcetera, etcetera.
[Koterl]: Yeah.
-
It's called over-the-counter
advertising, too.
-
But maybe it's also prescription.
But basically, you can make a case
-
for it by saying consumers should know
what they might think would be
-
the right thing for them, otherwise
the only one who could tell them
-
what's right is the doctor. And the
doctors don't like it, of course.
-
The doctors in some cases
are offended by--
-
by the patient saying what he
wants as a prescription.
-
But, you know, this has happened
with lawyers who are advertising now.
-
Doctors are advertising themselves,
even if they don't like that.
-
The expert is Prabha Sinha,
who runs a firm called ZS
-
and he's always working with the
doctors and pharmaceutical people,
-
and could help answer that.
-
Any other things that bother
you about advertising?
-
[Audience member]: Hi, my name
is Bob Michaelson.
-
Thank you, Professor Kotler. It is
a pleasure to hear you in person.
-
You've been a big influence to so
many people, myself in particular,
-
for so many years. My question--
[Kotler]: One second.
-
How many of you have read
any of my books? Any hands?
-
Thank you-- I owe thanks to you!
-
[laughter]
Please proceed.
-
[Audience member]: My question
is in regards to social media,
-
and you started off your presentation
talking about so much of marketing
-
was defined at the beginning of the
20th century. We're 100 years into it.
-
As you look at social media, do you see
across a continuum of marketing
-
this thing a short-term phenomena
or radical change in as we do marketing
-
for the next century. That's part 1.
And part 2: Do you see the ability
-
to apply an ROI to social media?
-
[Kotler]: Yeah. Those are
excellent questions.
-
I-- This is not a fad. We are in the
digital age. We've passed analog,
-
and there's no turning back.
That means that--
-
I see the following happening.
Every company I talk to says
-
"We're gonna go digital too,
but slowly. We're gonna rely
-
on our tradition," which is newspapers--
which are disappearing, by the way--
-
radio, TV, billboards, and magazines.
-
So, at best, they will say this,
"Let's turn 10% of our next budget
-
over to digital," which means
Facebook, Twitter, and YouTube
-
and so on. And let's see what happens.
Let's hire a 12-year-old
-
[laughter]
--give them a budget,
-
and hope they come back saying,
"Look what I did with Facebook!
-
Look at how many mentions!"
And so on.
-
Now, that goes to your second question.
How do we measure the impact
-
of using Facebook or
something like that?
-
Progress is being made.
But remember, we never
-
measured advertising right either!
I mean, traditional advertising was a--
-
was-- first of all, the basic notion
of traditional advertising is
-
you know that half the people will never
see the-- what did Wanamaker say?
-
I know that half of the money I
spent on advertising is wasted,
-
it's just that I don't know which half!
[laughter]
-
Basically, we judge things by
how many people were, in principle,
-
exposed--cost per
thousand people exposed--
-
when we make an advertising budget,
and frankly many of them were
-
in the bathroom or the kitchen
when the ad appeared.
-
So... and increasingly, people
are more on their TVs--
-
on their computer screens than they
are necessarily watching ads.
-
And I think the advertising industry
is making the mistake of sa--
-
putting too many ads now.
I mean, there's little content left
-
on some programs, with the
number of ads that flash by.
-
They're all 30-second things.
-
So, now about measuring.
If you read Advertising Age,
-
you'll see a lot of statements
and claims that there is
-
measurement going on.
One thing I would say is this:
-
Don't take your ad budget and take
50% and switch it to digital,
-
which one firm did, and it
was a terrible result.
-
Because until you know
what each social medium does,
-
what you want is 10% of your budget
going that way, and then when there's
-
some proof, you put in
another 5 or 10 percent
-
into that particular use
of the social media.
-
[Moderator]: Okay, we've got time
for just one more question.
-
I know a lot of our attendees are
going to other events,
-
so we have one right here
[Kotler]: Oh, okay.
-
[Audience member]: Mark Ruen
is my name. I've been in
-
direct marketing my entire career,
and so it's interesting that I should
-
follow up a question about
measurement in advertising
-
because I've lived by my metrics.
Now, my question is this:
-
I've always guided my marketing
decisions according to the so-called
-
4 Ps or 5 Ps, depending on
where you're coming from,
-
and in terms of the P of the
placement, I mean, the internet
-
certainly flattened the world,
and our distribution channels
-
have changed. But how do you
see the other Ps in this digital age?
-
[Kotler]: Okay. First of all, let me say,
I'm so glad you're in direct marketing.
-
Direct marketing people are much
more accountable for the results.
-
They could actually experiment
with trying to release different
-
direct messages and seeing--
and testing, and then going with the one
-
and knowing what it costs to do the
campaign, what the sales were,
-
and it's just a pure P and L
kind of exercise,
-
which we couldn't do with just
the normal commercials on TV.
-
Now, are you asking where the
other three Ps are going, in a sense?
-
Like, what's happening to product
thinking and pricing and place?
-
See, there will be new
distribution channels all the time.
-
I've been asked this question when
I wrote the book "Marketing 3.0,"
-
which is really the case that
some companies should be
-
socially responsible as well.
Someone would ask me,
-
"When are you gonna
come up with 4.0?"
-
And I don't really have
an answer, because when
-
you go from the mind to
the heart to the spirit,
-
I don't know how much
farther you could go,
-
but I am thinking that 4.0's
gonna describe companies
-
in the future that are building
ecosystems and platforms
-
where we get involved with
them in such a way that
-
everything is being supplied
that we want, as an individual.
-
Think of iTunes, think of the
iPhone, iTunes, the whole setup
-
of cre-- think of Harley Davidson.
If I buy a Harley Davidson,
-
I'm a member of-- they call them
the Harley... the hogs! I'm a hog.
-
Harley owner... owner groupie.
[laughter]
-
and not only that.
I can take my motorcycle
-
and just go and meet people
I don't know. Some have beards.
-
Others have beads, but they're fake.
-
[laughter]
-
They're wearing leather jackets.
These are business people.
-
They may be chief financial officers,
but they want to be macho,
-
so they supply a whole system to fit into
that more and more companies might
-
sort of begin to think about that.
Now, let's take-- what's the one
-
who's making shoes now?
Is it Tom's shoes or the other one?
-
Zappos? They're creating
a system that's going to go
-
beyond the shoes that you buy.
It's going to go into clothing.
-
So some companies, as one
evolution for certain companies--
-
by the way, it's not different in
business to business,
-
where a company that supplies--
Boeing supplies 747s and other planes.
-
They have to create a whole system
so you can't even leave it.
-
You know, once you get involved--
Once you get with IBM,
-
you're not gonna leave for
Honeywell or something like that.
-
So this is maybe what
4.0 thinking will do.
-
In other words, it won't be
product-centered, it will be
-
system-centered. A whole system.
I think we're out of time.
-
Thank you very much.
[applause]