0:00:07.416,0:00:10.768 On behalf of our President [br]and CEO, Greg Case, 0:00:10.768,0:00:13.695 and our chief marketing[br]officer, Phil Clement, 0:00:13.695,0:00:19.723 it's a real honor for Aon to be [br]the sponsor of this event today. 0:00:19.723,0:00:22.625 And for many of you, [br]you might know that Aon 0:00:22.625,0:00:28.239 is now a UK-based company,[br]but it's also important for you to know 0:00:28.239,0:00:32.556 that the Aon Foundation, [br]for the past 25 years, 0:00:32.556,0:00:36.290 has made it a priority to support[br]educational activities and 0:00:36.290,0:00:39.963 cultural institutions like [br]the Chicago Humanities Festival 0:00:39.963,0:00:43.841 and the Charter Humanist Circle,[br]that does so much to enrich 0:00:43.841,0:00:48.775 the lives of all of us in this room[br]and everybody in Chicago. 0:00:48.775,0:00:53.174 And even though we're now in the UK,[br]I want everybody in this room to know 0:00:53.174,0:00:57.919 that we intend to continue [br]this commitment, 0:00:57.919,0:01:00.845 and it will remain high on our[br]priority list for the things we do 0:01:00.845,0:01:03.682 to support the community of [br]Chicago for many years to come. 0:01:05.534,0:01:11.113 [applause] 0:01:11.123,0:01:14.504 On behalf of my colleagues [br]at Aon, I want to thank 0:01:14.504,0:01:18.810 the Charter Humanist Circle[br]and its members 0:01:18.810,0:01:22.485 for their very valuable support,[br]and I also want to thank 0:01:22.485,0:01:26.442 Northwestern University Law [br]School for allowing us to use 0:01:26.442,0:01:29.505 the auditorium today. 0:01:30.645,0:01:34.797 At Aon, we believe in the mantra[br]"If we can't measure it, 0:01:34.797,0:01:37.145 we don't do it." 0:01:37.145,0:01:40.334 And because of that, [br]it's a real honor for us 0:01:40.334,0:01:46.401 to be here supporting and[br]introducing Dr. Philip Kotler. 0:01:46.401,0:01:51.524 Dr. Kotler has defined marketing[br]as "the science and art 0:01:51.524,0:01:57.793 of exploring, creating, and [br]delivering value to satisfy 0:01:57.793,0:02:02.743 the needs of a target [br]market at a profit." 0:02:02.743,0:02:06.667 He is recognized around the world[br]as one of the foremost experts 0:02:06.667,0:02:10.905 on business, of marketing,[br]and for his insights on 0:02:10.905,0:02:16.574 how exemplary marketing has[br]the creativity and the power 0:02:16.574,0:02:20.944 to influence global [br]consumers every day. 0:02:22.124,0:02:26.908 In that spirit, I hope you'll join [br]me in welcoming Dr. Philip Kotler. 0:02:26.908,0:02:39.671 [applause] 0:02:39.671,0:02:44.025 Now before I turn the[br]microphone over to Dr. Kotler, 0:02:44.025,0:02:48.732 in the spirit of marketing, maybe[br]many of you in this room know 0:02:48.732,0:02:52.486 that Aon does a great many[br]things globally, but one of the things 0:02:52.486,0:02:55.564 that we've done that has created [br]tremendous brand awareness 0:02:55.564,0:03:01.123 for our firm is our sponsorship[br]of Manchester United football team, 0:03:01.123,0:03:03.746 which by today won 2 to 1 [br]versus Arsenal 0:03:03.746,0:03:05.190 [applause] 0:03:05.190,0:03:07.112 We're at--[br]Right now we're 0:03:07.112,0:03:08.774 at the top of the [br]premiere league. 0:03:08.774,0:03:12.675 So in that spirit,[br][laughter] 0:03:12.675,0:03:20.145 I would like to present Dr. Kotler[br]with his very own, personalized 0:03:20.145,0:03:25.967 Manchester United shirt.[br][applause] 0:03:25.967,0:03:30.679 [Kolter]: Thank you. 0:03:30.679,0:03:33.560 David, thank you very much. 0:03:33.560,0:03:37.095 And I will wear this,[br]in a fantasy way. 0:03:37.095,0:03:38.636 [laughter] 0:03:38.636,0:03:41.758 May I say, I really appreciate[br]your introduction. 0:03:41.758,0:03:45.348 Of all the introductions I've received,[br]yours is the most recent. 0:03:45.348,0:03:49.601 [laughter] 0:03:50.591,0:03:53.968 Nation, nation... 0:03:53.968,0:03:56.017 Oh, you may know of[br]Steven Colbert, 0:03:56.017,0:03:59.056 so I can't pull it off the same way. 0:03:59.056,0:04:04.113 There will be two groups, [br]with respect to marketing. 0:04:04.113,0:04:08.039 There will be a group that[br]doesn't like marketing, 0:04:08.039,0:04:11.330 and I'm going to give you[br]why they don't like marketing 0:04:11.330,0:04:15.036 and the justifications.[br]I will also tell you 0:04:15.036,0:04:19.661 there's another group who loves[br]marketing, so before we're through, 0:04:19.661,0:04:25.138 you will be totally confused,[br]or at least opinionated. 0:04:25.138,0:04:31.272 So, what I want to do is[br]tell you that-- 0:04:31.272,0:04:34.019 These are called [br]confessions of a marketer. 0:04:34.019,0:04:36.883 That's, by the way, borrowed[br]from David Ogilvy, 0:04:36.883,0:04:41.038 who wrote a wonderful book called[br]"Confessions of an Advertising Man." 0:04:41.038,0:04:45.109 And let me move on and say[br]why is marketing a topic 0:04:45.109,0:04:47.676 for the humanities? 0:04:47.676,0:04:52.163 And we would say that[br]there's a couple of reasons. 0:04:52.163,0:04:56.619 One: I regard marketing[br]as a humanistic subject 0:04:56.619,0:05:01.147 because marketing has [br]affected our lifestyles; 0:05:01.147,0:05:06.296 has created, not only affected[br]a lifestyle, but created lifestyles, 0:05:06.296,0:05:09.212 and we should be, from a point[br]of view of popular interest, 0:05:09.212,0:05:11.257 interested in that. 0:05:11.257,0:05:14.324 And it really-- 0:05:14.324,0:05:18.067 I want to say that marketing[br]is very American, 0:05:18.067,0:05:21.201 that it's beginnings are [br]very American. 0:05:21.201,0:05:25.297 That doesn't mean there weren't[br]manifestations of marketing earlier, 0:05:25.297,0:05:28.438 and as a matter of fact, I'd like[br]to give you a very short history 0:05:28.438,0:05:32.972 of marketing, so that you understand[br]what we mean by the word. 0:05:32.972,0:05:37.951 As a matter of fact, if you took a[br]dictionary, a Webster's dictionary, 0:05:37.951,0:05:41.732 in the year 1900, and looked up[br]the word marketing, 0:05:41.732,0:05:44.570 you would not find it in the dictionary. 0:05:44.570,0:05:48.888 Yes, you would find the word market,[br]but not the word marketing. 0:05:48.888,0:05:54.736 If you then picked a dictionary...[br]1910. You would find the word 0:05:54.736,0:05:59.374 marketing in it, because marketing[br]is about 100 years old. 0:05:59.374,0:06:03.868 And it's much more than selling.[br]So let me show you... 0:06:05.658,0:06:08.917 Let's start...[br]Let's start biblically. 0:06:08.917,0:06:12.796 [laughter][br]Let's start biblically. 0:06:12.796,0:06:16.724 Who is the marketer[br]in this picture? 0:06:16.724,0:06:24.137 This is the biblical narrative.[br]Who was the first marketer in the world? 0:06:24.137,0:06:27.045 I hear Eve... 0:06:27.045,0:06:29.068 The snake. 0:06:29.068,0:06:32.911 I hate to admit it, because snake [br]sounds like sneaky, and so on 0:06:32.911,0:06:34.140 and so forth. 0:06:34.140,0:06:38.783 But the fact is that it was [br]the snake who sold Eve 0:06:38.783,0:06:43.165 on getting Adam to eat an apple.[br]So it goes way back. 0:06:43.165,0:06:47.917 At least selling goes way back.[br]Now let's go further. 0:06:47.917,0:06:51.861 Here is the father of marketing. 0:06:51.861,0:06:55.292 Wow, what an insult to him![br][laughter] 0:06:55.292,0:06:57.742 I mean, that's Aristotle. 0:06:57.742,0:07:01.704 Recently I was at a group,[br]little party, and we were speculating 0:07:01.704,0:07:05.902 who we would like to meet most[br]if we had an hour with such a person, 0:07:05.902,0:07:11.371 and it boiled down to Plato,[br]Socrates, or Aristotle. 0:07:11.371,0:07:13.132 That's a hard one. 0:07:13.132,0:07:17.669 It turns out that my vote [br]went for Aristotle. 0:07:17.669,0:07:24.358 Aristotle was Google, at the time.[br]He knew more about everything 0:07:24.358,0:07:29.231 than anyone in the world.[br]He wrote on science, politics, 0:07:29.231,0:07:35.099 economics, rhetoric, art,[br]and everything. 0:07:35.099,0:07:40.768 Now, why do I say that he had[br]some marketing impact? 0:07:40.768,0:07:48.120 Let me read the definition of rhetoric.[br]He's not the founder of rhetoric, 0:07:48.120,0:07:53.489 by the way. The founders were [br]the sophists, around 600 B.C. 0:07:53.489,0:07:59.009 They were a group who wanted to use[br]selling and speech and persuasion 0:07:59.009,0:08:04.609 for their own devious ends.[br]But Aristotle put the i-- 0:08:04.609,0:08:08.422 the discipline of rhetoric on its feet. 0:08:08.422,0:08:13.728 Rhetoric is the art that aims to improve[br]the facility of speakers or writers 0:08:13.728,0:08:19.100 who attempt to inform, persuade, [br]or motivate particular audiences 0:08:19.100,0:08:24.368 in specific situations.[br]It is the faculty of the observing, 0:08:24.368,0:08:28.471 in any given case, the available [br]means of persuasion. 0:08:28.471,0:08:34.592 So, in a sense, he could be[br]the father of selling. 0:08:34.592,0:08:40.070 The idea of getting someone [br]to do something that they might 0:08:40.070,0:08:44.431 not have done otherwise.[br]So, let's move on, about other 0:08:44.431,0:08:50.049 early manifestations of marketing.[br]I know many of you cannot necessarily 0:08:50.049,0:08:54.987 read this, so I will read it,[br]but the first department store 0:08:54.987,0:08:59.295 opened when, and in what country?[br]Normally if you're in France 0:08:59.295,0:09:01.695 and you ask the question,[br]they would say of course 0:09:01.695,0:09:06.777 we invented the department store.[br]It was about 1845. 0:09:06.777,0:09:09.826 The same time we invented [br]paperweights and some other things. 0:09:09.826,0:09:15.848 But it turns out that the first [br]department store was in Japan. 0:09:15.848,0:09:19.786 Mitsui company, which is still[br]alive and well. 0:09:19.786,0:09:24.246 So that's where one of our [br]retailing forms started. 0:09:24.246,0:09:29.715 The next one is the first [br]newspaper that carried an ad. 0:09:29.715,0:09:34.277 There were newspapers early,[br]but the first ad appeared in England, 0:09:34.277,0:09:41.877 in 1652, and it advertised coffee.[br]And then, the first ad agency 0:09:41.877,0:09:47.876 started a little later.[br]Well, much later. 0:09:47.876,0:09:53.386 N.W. Ayer, which is still a [br]prosperous advertising agency. 0:09:53.386,0:09:59.127 First time a brand was put on a [br]commodity, the commodity being soap, 0:09:59.127,0:10:03.677 the brand name was Pear's soap.[br] 0:10:03.677,0:10:06.774 And then the first packaging[br]appeared a little later, 0:10:06.774,0:10:11.106 and finally we had a marketing[br]research department formed. 0:10:11.106,0:10:17.147 So, now the word markets[br]has been around all these years. 0:10:17.147,0:10:19.707 The Middle Ages had markets.[br]In fact, whenever-- 0:10:19.707,0:10:23.658 I would even say the agora,[br]in ancient Greece-- 0:10:23.658,0:10:28.015 that means the marketplace--[br]In ancient Greece, 0:10:28.015,0:10:32.217 people would come on a particular [br]day to sell things. 0:10:32.217,0:10:35.705 In the Middle Ages, [br]there were market days. 0:10:35.705,0:10:39.006 The word marketing wasn't there.[br]It was just market. 0:10:39.006,0:10:42.707 And trade was always there,[br]because trade, through history, 0:10:42.707,0:10:48.047 has taken place between people[br]and regions and countries. 0:10:48.047,0:10:55.976 So all that is there, and it was[br]in the decade of the 1900s 0:10:55.976,0:11:01.081 that marketing books first appeared.[br]And the interesting thing is 0:11:01.081,0:11:05.080 who wrote those first marketing books.[br]Were they sociologists? 0:11:05.080,0:11:10.662 What was the discipline of the people[br]who wrote the first marketing books? 0:11:10.662,0:11:13.067 Any guesses? 0:11:13.067,0:11:16.224 They weren't physicists or chemists. 0:11:16.224,0:11:17.726 They were economists. 0:11:17.726,0:11:22.005 So why would economists start[br]a subject called marketing? 0:11:22.005,0:11:25.356 And the answer is: they were[br]disillusioned economists. 0:11:25.356,0:11:27.726 [laughter] 0:11:27.726,0:11:32.517 They couldn't find any mention[br]of advertising in the discourse 0:11:32.517,0:11:36.226 of economists. In other words,[br]never did Adam Smith, 0:11:36.226,0:11:44.356 Thomas Malthus, David Ricardo,[br]even Alfred Marshall, and so on, 0:11:44.356,0:11:48.610 they rarely talked about other[br]forces that shaped demand. 0:11:48.610,0:11:52.778 The only force that shaped demand[br]in their mind was price. 0:11:52.778,0:11:56.800 You know the famous curve.[br]Raise the price, demand will go down, 0:11:56.800,0:12:00.108 lower the price, you can sell more.[br]Price was the only thing 0:12:00.108,0:12:02.924 that affected demand.[br]So these economists, 0:12:02.924,0:12:07.936 or institutional economists, said "Hey,[br]you've got to factor in advertising." 0:12:07.936,0:12:14.106 You've got to factor in retail stores,[br]whole sales, jobbers, agents. 0:12:14.106,0:12:17.784 And it was the neglect of [br]the classical economists 0:12:17.784,0:12:22.416 to not really texture the marketplace[br]and the way an economy worked 0:12:22.416,0:12:24.945 that led to marketing.[br]So marketing is technically 0:12:24.945,0:12:27.324 a branch of economics. 0:12:27.324,0:12:32.696 Now who helped developed [br]this field of marketing? 0:12:32.696,0:12:37.396 Now, probably you don't [br]recognize maybe anyone here. 0:12:37.396,0:12:39.710 There's one person you [br]might recognize. 0:12:39.710,0:12:42.726 I don't know if you can see[br]some of these faces, 0:12:42.726,0:12:45.635 but someone recognize anyone there? 0:12:45.635,0:12:47.064 Yeah. 0:12:47.064,0:12:50.635 Dale Carnegie.[br]Dale Carnegie is here, 0:12:50.635,0:12:54.536 and his book was "How to [br]Win Friends and Influence People," 0:12:54.536,0:12:57.076 because in doing this, [br]I wanted to find out 0:12:57.076,0:13:00.364 who was the exemplar [br]of the selling method. 0:13:00.364,0:13:02.466 "How to Win Friends[br]and Influence People" 0:13:02.466,0:13:06.255 But let me give you the whole picture. 0:13:06.255,0:13:09.325 Ernest Dichter. Some of [br]you may know of. 0:13:09.325,0:13:14.965 He was a motivational psychologist,[br]and he could explain why people 0:13:14.965,0:13:22.626 didn't like to eat prunes, why cigars [br]were offending some people, 0:13:22.626,0:13:26.057 and all kinds of things.[br]And his book called 0:13:26.057,0:13:29.286 "The Study of Desire."[br]He apparently studied with 0:13:29.286,0:13:35.115 Sigmund Freud, and he brought [br]that kind of mind to marketing. 0:13:35.115,0:13:38.937 But he had an opponent named[br]Alfred Pollitz, who was not 0:13:38.937,0:13:46.948 a head shrinker--We call [br]him a... a nose counter. 0:13:46.948,0:13:51.106 The expressions we would use if[br]you were very psychological, 0:13:51.106,0:13:55.642 you were a head shrinker, and[br]otherwise, you were a nose counter. 0:13:55.642,0:14:00.188 Namely, a surveyor. You surveyed--[br]You found out what percentage 0:14:00.188,0:14:05.415 of people were of a certain age and [br]why did they buy a particular product. 0:14:05.415,0:14:10.976 Julius Rosenwald was very much [br]behind the formation of 0:14:10.976,0:14:13.877 the Sears company, which was[br]a important episode in 0:14:13.877,0:14:17.331 the development of our retail chains. 0:14:17.331,0:14:21.099 Lester Wunderman deserves [br]credit as exemplifying the use 0:14:21.099,0:14:25.980 of direct mail and catalogs.[br]That you can sell more directly. 0:14:25.980,0:14:30.066 You don't have to be in the store.[br]You can get people to order goods 0:14:30.066,0:14:33.077 by mail and phone. 0:14:33.077,0:14:37.727 David Ogilvy is the exemplar[br]advertising person, 0:14:37.727,0:14:41.016 then Stanley Marcus,[br]of Neiman Marcus, 0:14:41.016,0:14:45.679 was a fella who could walk into[br]any retail store and give them 0:14:45.679,0:14:49.836 100 suggestions on how to improve [br]the layout, the size of the aisles, 0:14:49.836,0:14:55.208 and make a difference in the [br]voulme of business. 0:14:55.208,0:14:59.846 Edward Bernays is the father of[br]public relations in the United States. 0:14:59.846,0:15:03.087 His name has sort of become [br]obscure, but he really was 0:15:03.087,0:15:06.235 a very important person.[br]The word propaganda 0:15:06.235,0:15:11.085 was often used in connection with his [br]work, because people thought it was 0:15:11.085,0:15:17.196 a model to motivate you to feel [br]a certain way about anything, 0:15:17.196,0:15:21.924 regardless of the standards involved.[br]And then there's Dale Carnegie. 0:15:21.924,0:15:26.409 In any case, how did [br]marketing get its start? 0:15:26.409,0:15:29.686 Marketing got its start [br]in sales departments. 0:15:29.686,0:15:36.091 Every company has a sales group.[br]And the sales people really want 0:15:36.091,0:15:39.664 to be in the office of a customer,[br]because that's the only way 0:15:39.664,0:15:43.875 something happens. So they don't[br]want to do a lot of homework. 0:15:43.875,0:15:46.166 For example, three things they[br]didn't want to do. 0:15:46.166,0:15:49.727 They didn't want to do consumer[br]research in a systematic way, 0:15:49.727,0:15:53.534 because that's taking their time[br]away from selling to customers. 0:15:53.534,0:15:58.611 Secondly, they would've liked [br]someone else to find leads. 0:15:58.611,0:16:02.084 Now a lead means a prospect.[br]In fact, we distinguish between 0:16:02.084,0:16:07.056 a hot lead: "Oh boy, he's ready[br]to buy. He even called us to buy." 0:16:07.056,0:16:11.418 a warm lead, a cold lead, so on.[br]Someone else should do that 0:16:11.418,0:16:15.726 for the sales people, so they don't[br]waste their time making calls. 0:16:15.726,0:16:19.089 And the third thing was [br]someone had to prepare 0:16:19.089,0:16:23.568 brochures and ads. And the [br]salesman is not skilled. 0:16:23.568,0:16:27.425 The salesperson isn't skilled at[br]communicating through advertising 0:16:27.425,0:16:32.495 and brochures. So sales departments[br]added three people, or hired them 0:16:32.495,0:16:37.454 from time to time.[br]Later on, it exploded 0:16:37.454,0:16:42.949 to the day today, when we have[br]multinationals running-- 0:16:42.949,0:16:46.466 with marketing--[br]In other words, marketing-- 0:16:46.466,0:16:50.616 Those three people split from sales[br]and became big enough to become 0:16:50.616,0:16:53.296 its own department.[br]And so, some people 0:16:53.296,0:16:57.798 in the audience here may be [br]a chief marketing officer. 0:16:57.798,0:17:01.246 The old name was Vice President[br]of marketing, but I like the name 0:17:01.246,0:17:06.148 chief marketing officer because[br]that person now is part of 0:17:06.148,0:17:09.740 the chief officers. Chief information[br]officer, chief financial officer, 0:17:09.740,0:17:15.797 chief innovation officer, [br]and the status has moved up. 0:17:15.797,0:17:20.997 Some of you may be brand managers,[br]may have been in your past experience. 0:17:20.997,0:17:24.366 Category managers, market [br]segment managers, 0:17:24.366,0:17:29.336 managing distribution channels,[br]like retail or wholesale things, 0:17:29.336,0:17:34.369 pricing manager, communication[br]manager, database manager, 0:17:34.369,0:17:36.996 direct marketers, internet[br]people, and so on. 0:17:36.996,0:17:41.097 So, marketing is well-established. 0:17:41.097,0:17:46.205 Now, the character of a marketing[br]department depends very much 0:17:46.205,0:17:50.829 on what the CEO thinks of marketing. 0:17:50.829,0:17:57.770 So, the 1P CEO is a person[br]who took over a company, 0:17:57.770,0:18:03.566 and he says, "I don't like [br]marketing, but I know I need it, 0:18:03.566,0:18:06.984 and all I want from marketing is[br]some communications. 0:18:06.984,0:18:12.068 I just want someone to broadcast[br]and promote us." 0:18:12.068,0:18:15.515 So, that person is missing [br]a lot of other things 0:18:15.515,0:18:20.858 made up by other CEOs,[br]who are 4P CEOs. 0:18:20.858,0:18:25.365 Now a 4P CEO says,[br]"I need a marketing plan." 0:18:25.365,0:18:29.636 And the plan has to mention [br]product--that's the first P. 0:18:29.636,0:18:32.926 What about our product? What's good[br]about it? What are the features? 0:18:32.926,0:18:37.395 Price: what should it be priced at?[br]Place: where should it be 0:18:37.395,0:18:41.137 made accessible? Online,[br]offline, in stores? 0:18:41.137,0:18:43.166 And finally promotion. 0:18:43.166,0:18:47.642 So that's a more educated view[br]of the potential of marketing. 0:18:47.642,0:18:52.287 But there's even a better view,[br]and that's called the CEO who says, 0:18:52.287,0:18:56.497 "No! I don't want to start with 4 Ps,[br]I want to start with the fact 0:18:56.497,0:19:00.437 the market is complex." [br]There's a lot of segments. 0:19:00.437,0:19:06.415 Each segment deserves its own plan.[br]In fact, one thing we've learned 0:19:06.415,0:19:09.764 that if you just have one value[br]proposition for the whole market, 0:19:09.764,0:19:14.621 it really doesn't trigger anything[br]in many parts of the market. 0:19:14.621,0:19:19.918 So that CEO says, "What[br]segment should we go after? 0:19:19.918,0:19:23.488 And what position should we [br]take with each segment? 0:19:23.488,0:19:27.369 What should we say about ourselves,[br]in how we can satisfy their needs?" 0:19:27.369,0:19:34.100 Now there's even a higher type CEO,[br]which is exemplified by A.G. Lafley, 0:19:34.100,0:19:37.824 who ran Procter & Gamble,[br]who recently retired. 0:19:37.824,0:19:42.648 When you ask A.G. Lafley what's[br]marketing, what's your picture, 0:19:42.648,0:19:46.719 he says, "Well, what do you mean?[br]Marketing is everything." 0:19:46.719,0:19:47.980 [laughter] 0:19:47.980,0:19:50.139 Now, marketing is everything.[br]What he means is 0:19:50.139,0:19:53.710 everything starts with the customer.[br]No customers, no business. 0:19:53.710,0:19:58.346 And I think he's making [br]that point very much. 0:19:58.346,0:20:04.157 Now, moving on, there's a lot of things [br]that a chief marketing officer does, 0:20:04.157,0:20:08.828 and I won't go into any detail,[br]but there's a lot of tasks, 0:20:08.828,0:20:14.365 and the sad fact is that sometimes[br]the chief marketing officer only lasts 0:20:14.365,0:20:18.507 on the average of two years.[br]In other words, does a job, 0:20:18.507,0:20:24.942 and maybe the CEO is not feeling that [br]it really brought in enough new business 0:20:24.942,0:20:31.518 that the cost of the CMO exceeds [br]what the value of the CMO is. 0:20:31.518,0:20:36.498 There's a lot to go into about[br]why CMOs on the average 0:20:36.498,0:20:40.088 hold on to their job for two years.[br]By the way, some of them 0:20:40.088,0:20:43.718 get a better job after two years.[br]They become something higher 0:20:43.718,0:20:47.329 than the chief marketing officer.[br]Some of them actually are pirated away 0:20:47.329,0:20:52.006 because they're so good, they go [br]to another company to be the CEO. 0:20:52.006,0:20:55.996 But in any case, marketing--[br]commercial marketing, 0:20:55.996,0:21:01.148 which I've been talking about,[br]could've stayed only commercial, 0:21:01.148,0:21:05.947 and then I got involved in--[br]with Professor Sid Levy at Northwestern 0:21:05.947,0:21:09.716 We started the idea of [br]broadening marketing, 0:21:09.716,0:21:15.499 because the set of tools that we use[br]to address consumers could be used 0:21:15.499,0:21:18.496 in other areas.[br]So we have a thing 0:21:18.496,0:21:22.676 called place marketing.[br]I will get a call from a city, let's say, 0:21:22.676,0:21:27.037 and a city says, "We're not getting[br]enough tourists. We don't have 0:21:27.037,0:21:32.048 any attractions for them to come [br]and see. I would like to get a factory 0:21:32.048,0:21:38.969 located here. We would like some digital[br]people to move here, who know digital-- 0:21:38.969,0:21:42.016 We want to start a Silicon Valley."[br]So that's place marketing. 0:21:42.016,0:21:45.936 The marketing of a place. How do you[br]dress it up and make it attractive? 0:21:45.936,0:21:48.952 Against all of the other [br]competitive places. 0:21:48.952,0:21:53.433 The second--[br]Person marketing. 0:21:53.433,0:21:58.005 There's an agency called William Morris,[br]and a young singer might go to 0:21:58.005,0:22:02.516 William Morris and say, "look, I want [br]to get ahead. I want to appear 0:22:02.523,0:22:10.423 on Jay Leno's show. I want to--[br]I want to move up to being noticed. 0:22:10.423,0:22:14.541 I want high visibility."[br]I wrote a book with the title 0:22:14.541,0:22:17.619 "High Visibility." How do you [br]get that visibility. 0:22:17.619,0:22:21.921 So, William Morris will look[br]at her and her performance 0:22:21.921,0:22:24.721 and maybe say, [br]"You know, in a sense-- 0:22:24.721,0:22:30.044 Don't be offended, but we can [br]make you into a better product." 0:22:30.044,0:22:33.996 That's sort of the language.[br]You know, do your hair differently, 0:22:33.996,0:22:42.318 walk a little-- dress differently.[br]Actually, we're going to use you to 0:22:42.318,0:22:49.035 reignite the archetype of Joan Baez.[br]You know, Joan Baez, the folk singer. 0:22:49.035,0:22:52.981 Well, we need a new Joan Baez.[br]And so, we can recast you 0:22:52.981,0:22:59.678 and form you into the kind of [br]person we all miss, and so on. 0:22:59.678,0:23:04.358 Now, social marketing is[br]another branch. 0:23:04.358,0:23:10.386 Today there are 2,000 social marketers[br]around the world, trying to help people 0:23:10.386,0:23:17.593 eat better, exercise more, say no[br]to drugs, stop smoking cigar-- 0:23:17.593,0:23:22.235 get off of tobacco, say no to[br]a number of things. 0:23:22.235,0:23:26.305 Positive behaviors and [br]negative behaviors. 0:23:26.305,0:23:30.677 By the way, my memory is that[br]Sweden was one of the first countries 0:23:30.677,0:23:39.167 to want to raise a nation of nonsmokers,[br]non-drinkers, all the vices. 0:23:39.167,0:23:45.124 And it starts at the primary school level,[br]that you could technically raise people 0:23:45.124,0:23:51.753 to avoid those vices, if that was [br]thought to be good public policy. 0:23:51.753,0:23:54.375 So that's social marketing.[br]Now, political marketing, 0:23:54.375,0:24:00.502 we're saturated with. [br]And I think it's degenerated, 0:24:00.502,0:24:05.502 but that's another thing.[br]Fundraising is part of marketing. 0:24:05.502,0:24:10.825 I mean, fundraising is an odd form,[br]because you're not exchanging. 0:24:10.825,0:24:16.294 Everything else is sort of an exchange[br]of values. Fundraising seems to be 0:24:16.294,0:24:19.076 a one-way transfer.[br]Here's some money 0:24:19.076,0:24:22.746 for the museum. [br]But any fundraiser knows 0:24:22.746,0:24:27.199 there's something that should come[br]back to the person who is the donor 0:24:27.199,0:24:31.139 and supporter of a museum,[br]and working that way is important. 0:24:31.139,0:24:37.545 So these are offshoots. [br]Now all of us do marketing. 0:24:37.545,0:24:42.226 If you read the list, we all do marketing.[br]Did you ever compete for a job when 0:24:42.226,0:24:45.944 you knew there were other applicants?[br]Didn't you dress up as well as you could 0:24:45.944,0:24:50.380 and even prepare what you're [br]going to say, and so on? 0:24:50.380,0:24:54.060 Did you compete for a desirable[br]apartment which was scarce? 0:24:54.060,0:24:58.893 Or a member of the opposite sex,[br]if you wanted to court someone. 0:24:58.893,0:25:05.910 So, in a sense, we're human animals[br]who know how to make an impression 0:25:05.910,0:25:10.898 and market ourselves, to some extent. 0:25:10.898,0:25:14.818 What do we dislike about marketing? 0:25:14.818,0:25:19.262 Well, there's a long list.[br]It's a rather long list. 0:25:19.262,0:25:26.166 Intrusion, interruption, exaggeration,[br]and so on and so forth. 0:25:26.166,0:25:32.067 And I really made a list that's [br]a little separate from that. 0:25:32.067,0:25:37.262 Here are some of the criticisms.[br]Marketers get consumers to want 0:25:37.262,0:25:40.636 and spend more than they can afford. 0:25:40.636,0:25:46.856 And we know that from the financial[br]disaster that people were buying homes 0:25:46.856,0:25:51.707 with maybe nothing down.[br]Marketers are skilled at 0:25:51.707,0:25:55.389 creating grand differentiation [br]where it shouldn't exist. 0:25:55.389,0:25:59.000 Like with commodities, you know, a[br]chicken is a chicken, cement is cement. 0:25:59.000,0:26:02.632 So they spend a lot of time trying to[br]tell you their cement is really better, 0:26:02.632,0:26:06.967 their salt is really better, and so on.[br]Marketers want to produce and sell 0:26:06.967,0:26:12.091 more goods without considering[br]the resource and environmental costs 0:26:12.091,0:26:16.472 of producing the goods.[br]The planet Earth is affected 0:26:16.472,0:26:21.720 by the amount of production[br]and the care with which it's done. 0:26:21.720,0:26:26.391 Marketers had not paid sufficient[br]attention to product safety. 0:26:26.391,0:26:31.403 We know that because Ralph Nader[br]made his career, basically, car-- 0:26:31.403,0:26:35.671 the unsafety in cars, and then [br]we got lead poisoning, 0:26:35.671,0:26:38.804 we got asbestos problems,[br]and so on. 0:26:38.804,0:26:43.003 Here's a serious criticism. Marketers--[br]and this is not all marketers-- 0:26:43.003,0:26:46.963 these are some particular [br]companies, and so on. 0:26:46.963,0:26:51.423 Marketers favor giving the public what it[br]wants, whether its good or not for them. 0:26:51.423,0:26:58.011 Sure, I'll sell you cigarettes. I'll sell [br]you anything that will make money. 0:26:58.011,0:27:03.422 Therefore marketing promotes [br]a materialistic mindset, 0:27:03.422,0:27:09.923 that-- we get turned on to[br]more of a materialistic world, 0:27:09.923,0:27:14.811 a world of ever-changing products and[br]services and keeping up with the Jones 0:27:14.811,0:27:16.792 and some of that. 0:27:16.792,0:27:22.231 Marketers rarely talk about[br]sane consumption. 0:27:22.231,0:27:26.945 Yeah, some beer companies say,[br]"Please enjoy our beer, but don't 0:27:26.945,0:27:33.961 drink too much." That's nice that they--[br]No one listens to that, and you still 0:27:33.961,0:27:39.014 have binge-drinking, but they're[br]trying to do what they can 0:27:39.014,0:27:43.175 and so on and so forth.[br]Now, let me just say 0:27:43.175,0:27:46.537 there's another side.[br]This is important too, 0:27:46.537,0:27:53.488 because it's not a simple picture.[br]The other side of it is 0:27:53.488,0:27:58.635 Marketing has undoubtedly [br]raised the standard of living 0:27:58.635,0:28:02.241 in the United States.[br]People don't naturally 0:28:02.241,0:28:07.423 buy new things. In other words,[br]do you know, people used to keep 0:28:07.423,0:28:10.433 their refrigerators, which[br]weren't refrigerators at the time, 0:28:10.433,0:28:15.412 they were ice boxes and they would[br]keep going out and getting some ice 0:28:15.412,0:28:20.483 and putting it in the box, and so on.[br]And even the washing machines 0:28:20.483,0:28:24.364 were very slow to take--[br]In other words, people-- 0:28:24.364,0:28:26.922 It would be very expensive to[br]buy a new appliance, 0:28:26.922,0:28:30.231 but marketers persisted in saying[br]your life will be better with 0:28:30.231,0:28:33.701 new appliances, and [br]that's one of its jobs. 0:28:33.701,0:28:39.015 I would even go so far as to say[br]that marketing is so connected 0:28:39.015,0:28:43.924 to the idea of the middle class.[br]We're talking about preserving 0:28:43.924,0:28:48.211 and building the middle class,[br]and the lifestyle that goes with it, 0:28:48.211,0:28:53.733 and marketing is an essential[br]definer of what it is to be--and want-- 0:28:53.733,0:28:58.021 what it is to want, as a member[br]of the middle class. 0:28:58.021,0:29:03.213 Marketing in the form of social[br]marketing has helped improve 0:29:03.213,0:29:06.082 a lot of things. You know,[br]one of the first causes 0:29:06.082,0:29:09.722 that marketing turned to was [br]the environment and waste 0:29:09.722,0:29:15.412 and the ill-effects of some [br]products, and so on. 0:29:15.412,0:29:18.303 Preserving the environment[br]was one of the first things that 0:29:18.303,0:29:21.201 social marketers got into. 0:29:21.201,0:29:25.741 Now they're into obesity as a problem,[br]littering as a problem, 0:29:25.741,0:29:29.465 and other problems. 0:29:29.465,0:29:33.469 Marketing is very important[br]to the cultural world. 0:29:33.469,0:29:37.600 Museums, performing arts,[br]and one of the big problems 0:29:37.600,0:29:43.971 that cultural institutions are facing,[br]especially in the performing arts, 0:29:43.971,0:29:50.079 is the aging of audiences.[br]How do you get people 0:29:50.079,0:29:56.131 who are in their forties to go to opera,[br]to go to ballet, and so on. 0:29:56.131,0:29:59.770 It's called the graying of the audiences,[br]and maybe that problem has 0:29:59.770,0:30:04.272 been with us for a long time,[br]but marketers are at work 0:30:04.272,0:30:07.862 doing segmentation, targeting,[br]positioning, in order to 0:30:07.862,0:30:14.217 make sure that all seats are filled[br]in the theater, and also the museums 0:30:14.217,0:30:19.998 are very busy, as marketing institutions,[br]because they have to get visitors, 0:30:19.998,0:30:23.750 they have to get donors, they have to[br]get government grants, 0:30:23.750,0:30:30.362 so marketing is almost an intrinsic[br]function today that's going on. 0:30:30.362,0:30:33.410 But let me-- 0:30:33.410,0:30:37.619 This is not time to take a vote.[br]Do you like marketing 0:30:37.619,0:30:41.960 or you don't like marketing. [br]But let me show you that 0:30:41.960,0:30:48.621 the feeling-- the negative feelings about[br]marketing came up from these people. 0:30:48.621,0:30:54.612 The attackers. They attacked marketing.[br]Do you recognize anyone? 0:30:54.612,0:31:00.110 You see Ralph Nader? I don't...[br]There he is. Yeah. 0:31:00.110,0:31:03.418 Who else? 0:31:07.158,0:31:11.150 Well, it is Ralph Nader.[br]"Unsafe at Any Speed." 0:31:11.150,0:31:14.588 Rachel Carson, by the way,[br]deserves so much more credit 0:31:14.588,0:31:18.566 than we've given to her for her book[br]on the Silent Spring, which was about 0:31:18.566,0:31:23.399 the chemical pollution, the pesticides[br]that were getting into our spring water, 0:31:23.399,0:31:26.780 and so on. Vance Packard,[br]who popularized the idea 0:31:26.780,0:31:30.797 that we are hidden persuaders. [br]That when you go into a movie theater, 0:31:30.797,0:31:35.396 you don't know this but an ad is sort of[br]flashing to go and get some popcorn 0:31:35.396,0:31:38.623 before you sit down. [br]Subliminal advertising, 0:31:38.623,0:31:42.068 which never did happen, [br]but the hidden persuaders. 0:31:42.068,0:31:46.878 And then John Kenneth Galbraith,[br]who pointed out that while we spend 0:31:46.878,0:31:51.818 so much money in making enough[br]deodorants for any type of interest 0:31:51.818,0:31:56.003 you have in deodorants,[br]in the public sector-- 0:31:56.003,0:31:58.876 In the public sector, you've got[br]streets that are littered, 0:31:58.876,0:32:01.686 and there's some garbage, [br]and there's slow traffic, and-- 0:32:01.686,0:32:07.143 And so we have a good private sector,[br]but we can't enjoy it because 0:32:07.143,0:32:12.944 the public sector doesn't have the[br]public good that would facilitate things. 0:32:12.944,0:32:16.898 You've got Naomi Klein,[br]who's probably the prototype 0:32:16.898,0:32:22.070 person now for attacking branding.[br]Brands, brands, they're awful. 0:32:22.070,0:32:26.037 You're paying more than [br]you need to pay. 0:32:26.037,0:32:30.508 The book is called "No Logo,"[br]logo being another name for brand. 0:32:30.508,0:32:35.878 And Michael Sandel is-- has this [br]new book out, which is really interesting 0:32:35.878,0:32:39.997 and worth reading. He's the fella[br]who ran a course on justice, 0:32:39.997,0:32:47.437 and would ask groups about this size[br]at Harvard, "What is the just thing to do 0:32:47.437,0:32:50.301 in each situation?" [br]But his new book is called 0:32:50.301,0:32:53.668 "What Money Can't Buy: [br]The Moral Limits of Marketing" 0:32:53.668,0:32:57.049 where he points out that [br]if you're in jail in California 0:32:57.049,0:33:02.407 and you don't like the cell,[br]you can pay for a better cell. 0:33:02.407,0:33:05.897 You know, maybe one with a computer[br]if you want a computer, and so on. 0:33:05.897,0:33:12.037 But he's also-- he thinks today[br]our culture divides people 0:33:12.037,0:33:16.543 in social classes more clearly.[br]We used to go to ball games; 0:33:16.543,0:33:19.835 I would sit next to someone who was[br]rich and someone who was poor. 0:33:19.835,0:33:22.647 We'd all stand in the [br]same line for hot dogs. 0:33:22.647,0:33:26.726 Today, the guys who are rich[br]are up in the sky box, 0:33:26.726,0:33:31.847 and he calls it the sky box-ification of [br]the United States. The sky box-ification. 0:33:31.847,0:33:37.328 They're eating filet mignon and[br]we peasants are down there having-- 0:33:37.328,0:33:42.028 standing in line for our hot dog.[br]So we are not meeting each other 0:33:42.028,0:33:48.349 as we used to, in the older days.[br]It's a very interesting treatment. 0:33:48.349,0:33:54.812 I like to quote Will Rogers with this[br]remark: "If advertisers spent 0:33:54.812,0:33:59.381 the same amount of money that they--[br]on improving the product 0:33:59.381,0:34:03.563 as they do on advertising, they wouldn't[br]have to advertise it. And that's-- 0:34:03.563,0:34:07.572 By the way, that's a very profound [br]observation, because in the age 0:34:07.572,0:34:15.164 of the internet, it's so much easier[br]to talk about a product you like 0:34:15.164,0:34:19.552 to others and also about[br]a product you don't like. 0:34:19.552,0:34:24.383 And in a sense, if this goes far enough,[br]there will be no bad companies 0:34:24.383,0:34:30.645 anymore. It would be not possible[br]for a company to be a bad company, 0:34:30.645,0:34:35.724 because the word [br]of mouth will sink it. 0:34:35.724,0:34:43.583 So he's sort of touching on that point.[br]Make-- Do a good job, and don't-- 0:34:43.583,0:34:47.652 and others will advertise [br]the good job you did. 0:34:47.652,0:34:53.091 Now, I want to add another group,[br]and this is a group of visionaries, 0:34:53.091,0:34:56.452 and I'd like to call them [br]our best marketers. 0:34:56.452,0:35:01.654 But they're not necessarily the [br]chief marketing officer, 0:35:01.654,0:35:06.253 they're CEOs. But what--[br]Their contribution has been 0:35:06.253,0:35:10.290 the kind you want from your [br]chief marketing officers. 0:35:10.290,0:35:13.179 So who do you see here? [br]Do you know any of those people? 0:35:13.179,0:35:15.683 [audience murmuring] 0:35:15.683,0:35:18.903 Yeah. You've got to know some of [br]them. But you probably don't know 0:35:18.903,0:35:27.879 the first one. Ingvar Kamprad.[br]It's very even hard to remember 0:35:27.879,0:35:34.731 his name, but he's that Swedish [br]person who invented IKEA, 0:35:34.731,0:35:39.011 who said, "I must bring down the cost[br]of furniture, and I can do that by 0:35:39.011,0:35:43.612 taking the air out of it and just [br]selling knocked down furniture, 0:35:43.612,0:35:48.819 and now people can afford to have[br]some nice things in their home. 0:35:48.819,0:35:54.658 Richard Branson is phenomenal.[br]He's a-- not only in self-promotion. 0:35:54.658,0:35:58.058 He's one of the best self-promoters[br]possible. I don't know if you know 0:35:58.058,0:36:00.970 that he was in Times Square [br]some years ago 0:36:00.970,0:36:04.993 to introduce his new cell phone,[br]the Virgin cell phone, 0:36:04.993,0:36:10.314 and he said he was going to drop off [br]of a building, a 30-story building, 0:36:10.314,0:36:14.202 and-- not wearing any clothes or[br]something, so everyone showed up. 0:36:14.202,0:36:17.282 I don't know why they would want to[br]show up, but they showed up 0:36:17.282,0:36:22.073 in Times Square, and sure, he did [br]jump down, but it was on a rope 0:36:22.073,0:36:26.221 and he's carrying a huge version[br]of his new cell phone. 0:36:26.221,0:36:31.591 And so everyone--not just in[br]Times Square--the reporters 0:36:31.591,0:36:35.714 were covering it. All of New York [br]knew about the new-- there was 0:36:35.714,0:36:39.972 a new Virgin cell phone.[br]So he's very good at that. 0:36:39.972,0:36:44.970 But right now, he told me something[br]I couldn't believe. I was in Dubai, 0:36:44.970,0:36:48.714 and he gave a speech, and we [br]were just chatting, and he said, 0:36:48.714,0:36:52.281 "Where are you from?" I said Chicago,[br]and he says, "You know, there will be 0:36:52.281,0:36:57.894 a time when you can go from[br]Dubai to Chicago in half an hour." 0:36:57.894,0:37:00.855 What is it-- Is this a time[br]machine you're inventing? 0:37:00.855,0:37:04.821 He says, "No, it's just a rocket ship."[br]So the rocket ship takes off from 0:37:04.821,0:37:08.183 Dubai, it just goes right up in the [br]air and lands in Chicago. 0:37:08.183,0:37:13.982 So he's working with some people[br]on the new spaceships, basically. 0:37:13.982,0:37:18.532 And you want to watch him.[br]Of course, Walt Disney. 0:37:18.532,0:37:21.950 Great, great visionary. 0:37:21.950,0:37:25.920 Herb Kelleher. Thanks to him,[br]we have Southwest Airlines, 0:37:25.920,0:37:29.791 which started a whole class[br]of low-cost airlines. 0:37:29.791,0:37:37.092 And then we've got Anita Roddick,[br]who ran The Body Shop, where she said 0:37:37.092,0:37:41.130 "I'm not selling hope, I'm selling good[br]skin lotion. All the others sell hope." 0:37:41.130,0:37:45.051 That was a famous remark by Revlon,[br]"In the factory we make lipstick, 0:37:45.051,0:37:51.184 in the store we sell hope."[br]But she wrestled with that one. 0:37:51.184,0:37:55.690 Then you've got Bill Gates, [br]Steve Jobs, and Jeff Bezos. 0:37:55.690,0:37:59.346 And Jeff-- Let's see, we've gotta[br]make sure he gets in there. 0:37:59.346,0:38:01.932 [laughter][br]Jeff is extraordinary. 0:38:01.932,0:38:02.561 If there's anyone who has [br]consumer thinking in his mind, 0:38:05.643,0:38:12.354 wanting to facilitate the consumer[br]to really order or re-order or return 0:38:12.354,0:38:16.659 or anything like that. And then to buy[br]more than books, to buy electronics, 0:38:16.659,0:38:21.376 to buy clothes. He's done a marvelous[br]job. He's very exemplary in that sense. 0:38:24.236,0:38:29.212 We're running out of time and I'm going[br]to want some questions from you, 0:38:29.212,0:38:30.979 but let me just refer to [br]a few more things. 0:38:30.979,0:38:34.084 This is a chart I use in[br]the book, "Marketing 3.0," 0:38:34.084,0:38:39.572 basically to say that every company[br]should define its mission, it's vision 0:38:39.572,0:38:43.414 for the future, and its values--[br]what it really cares about, 0:38:43.414,0:38:48.273 and if you're a 1.0 marketer,[br]it's a good job you're doing. 0:38:48.273,0:38:53.640 I mean, of course you're trying[br]to deliver satisfaction, make a profit, 0:38:53.640,0:38:58.921 and make a good product. Be better.[br]If you're a 2.0 marketer, you want to 0:38:58.921,0:39:03.441 help people realize their aspirations.[br]You want to deliver things that 0:39:03.441,0:39:08.650 they might aspire to have.[br]They will return frequently to buy more, 0:39:08.650,0:39:12.630 and your product is different than the[br]others. Not only better, but different. 0:39:12.630,0:39:17.449 And suddenly, you move [br]from mind to heart to spirit. 0:39:17.449,0:39:20.726 What's spirit? It's that small[br]set of companies that say 0:39:20.726,0:39:24.433 "We're compassionate. We have[br]compassion for the state of the world. 0:39:24.433,0:39:28.304 We want to get involved. We want [br]the companies to be a machine 0:39:28.304,0:39:33.052 for improving the lives of people."[br]You could say-- you could reduce that 0:39:33.052,0:39:37.366 to just some charity work they're doing.[br]Or it could be a real, fundamental 0:39:37.366,0:39:42.370 strain in the way they do their business.[br]We can name some companies that 0:39:42.370,0:39:46.476 really have felt that they want [br]to help reshape the world 0:39:46.476,0:39:50.551 into being a better world.[br]So that is-- 0:39:50.551,0:39:55.588 Here's one of my favorite companies[br]that illustrate the cells in that picture. 0:39:55.588,0:39:58.591 The SC Johnson company in [br]Racine, Wisconsin 0:39:58.591,0:40:03.953 whose products are shown over here.[br]You probably have purchased some 0:40:03.953,0:40:08.038 of their waxes or some of their[br]insect repellent or other things, 0:40:08.038,0:40:14.653 but they're just winning awards[br]for being a very caring company. 0:40:14.653,0:40:18.832 Incidentally, a book that you[br]might want to read is called 0:40:18.832,0:40:23.884 "Firms of Endearment,"[br]which is a fancy way to say 0:40:23.884,0:40:27.255 companies we love.[br]Firms of Endearment. 0:40:27.255,0:40:30.451 And I love the subtitle,[br]"How World-Class Companies 0:40:30.451,0:40:39.952 Profit from Passion and Purpose."[br]And it's based on asking audiences-- 0:40:39.952,0:40:45.242 random meeting of people--is there [br]any company that you like? 0:40:45.242,0:40:49.201 That you like a lot?[br]Now, let me ask that question. 0:40:49.201,0:40:53.662 Name a company that you would[br]dearly miss if it disappeared, vanished. 0:40:53.662,0:40:57.452 [audience murmurs][br]Apple! See, always Apple. 0:40:57.452,0:40:59.852 I thought you were going to say[br]Harley Davidson, but that's 0:40:59.852,0:41:04.086 another one. Amazon.[br]I would miss Amazon. 0:41:04.086,0:41:07.184 I really would. I would even [br]subsidize it to continue. 0:41:07.184,0:41:09.880 [laughter][br]Which one? 0:41:09.880,0:41:13.942 Costco. Of course.[br]I'm with you on Costco. 0:41:13.942,0:41:17.711 Nike. Okay, well you see[br]what happens is, 0:41:17.711,0:41:22.784 these are the names of the companies[br]that came up again and again. 0:41:22.784,0:41:28.250 I don't think there's any surprises there.[br]I've asked other countries to do this too. 0:41:28.250,0:41:32.032 Because it would be a different mix[br]of companies that would come up. 0:41:32.032,0:41:35.592 But the main thing is, these firms of[br]endearment are so much 0:41:36.061,0:41:41.962 more profitable than the ones[br]that have not been dear to us. 0:41:41.962,0:41:43.720 One of the things is that they--[br]They're either 9 or 10 times 0:41:48.603,0:41:52.703 as profitable, but let's see why,[br]and without going through 0:41:52.703,0:41:58.453 everything here, look at the last[br]one. These are the attributes 0:41:58.453,0:42:03.565 of that set of companies.[br]And the last attribute is that 0:42:03.565,0:42:07.424 they spend less on marketing[br]than rather more. 0:42:07.424,0:42:16.252 I bet you thought that the companies[br]that were going to be dear to us 0:42:16.252,0:42:17.481 are the ones who are just [br]advertising all the time. 0:42:17.481,0:42:18.265 They're so familiar.[br]We see Coca-Cola 0:42:18.265,0:42:21.762 all the time. All the time.[br]No! They spend less on advertising, 0:42:21.762,0:42:26.192 so who's doing the advertising?[br]The customer. You guys are. 0:42:26.192,0:42:29.502 So that's where you should[br]put your money. 0:42:29.502,0:42:34.069 Create a love affair.[br]Create fans with others. 0:42:34.069,0:42:40.321 Now I'm going to end with two slides.[br]This is on a downer, a little bit. 0:42:40.321,0:42:46.052 "The End of Work"[br]This is Jeremy Rifkin's book. 0:42:46.052,0:42:50.349 It's now about 9 or 10 years old.[br]And he says because of the slow down 0:42:50.349,0:42:57.862 in population growth, automation[br]of factories and computers, robotics, 0:42:57.862,0:43:02.921 3D printing, can the nation create[br]enough jobs? Can the world create 0:43:02.921,0:43:06.995 enough jobs for the [br]population, and so on. 0:43:06.995,0:43:11.382 And it raises a question about[br]marketing's role. 0:43:11.382,0:43:15.605 Marketing's role normally is seen[br]as to sell you some things. 0:43:15.605,0:43:20.062 The basic role of marketing[br]is to create jobs. 0:43:20.062,0:43:26.593 It is the job creator. Namely, it [br]gets you to want something 0:43:26.593,0:43:32.901 that someone has to produce.[br]So there's a basic question: 0:43:32.901,0:43:38.037 Does marketing really create[br]new jobs or does it only 0:43:38.037,0:43:44.022 create shifts in the shares?[br]Like if I switch from brand X 0:43:44.022,0:43:48.417 to brand Y, that's not creating--[br]Brand X loses a job and brand Y 0:43:49.707,0:43:56.897 gets a job. So, but it is true[br]that if we're talking a new product, 0:43:56.897,0:44:03.419 marketing will help accelerate [br]it's recognition, the awareness of it, 0:44:03.419,0:44:09.878 and intensify the drive to purchase it.[br]In other words, we buy our iPads 0:44:09.878,0:44:15.400 and other things that come along[br]partly because they're wanted, 0:44:15.400,0:44:19.714 they are desired objects,[br]and marketing accelerates 0:44:19.714,0:44:24.490 the rate at which growth takes place[br]with those new products. 0:44:24.490,0:44:30.399 The other book, and I'll end [br]with this, is another downer. 0:44:30.399,0:44:36.929 "The Death of Demand" 0:44:36.929,0:44:40.321 And what is the relationship between[br]marketing and demand? 0:44:40.321,0:44:46.129 And is-- he uses a term saturated--[br]finding growth in a saturated 0:44:46.129,0:44:49.411 global economy. 0:44:49.411,0:44:56.819 I've been wrestling with that problem,[br]and growth is the issue today. 0:44:56.819,0:45:01.823 Growth is the issue.[br]Growth means jobs, and so on. 0:45:01.823,0:45:07.638 And the fact is, there are [br]8 ways to grow a business. 0:45:07.638,0:45:10.740 So the title of the book is[br]"Market Your Way to Grow: 0:45:10.740,0:45:14.181 8 Ways to Win."[br]And you know all of them. 0:45:14.181,0:45:17.548 You know that we can go to[br]places where there is growth. 0:45:17.548,0:45:21.630 We can sell in China,[br]even if it's a low growth here. 0:45:21.630,0:45:26.330 Or Brazil. We know we can grow[br]by acquiring other firms. 0:45:26.330,0:45:31.108 We know we can grow by innovating.[br]Inventing something new. 0:45:31.108,0:45:34.679 We know we can grow by taking [br]business away from someone else, 0:45:34.679,0:45:37.368 and so on and so forth.[br]So one of the things 0:45:37.368,0:45:40.479 we're wrestling with is how [br]do you, as a firm, grow? 0:45:40.479,0:45:45.646 And by coincidence, another [br]colleague of mine at 0:45:45.646,0:45:54.126 the Kelogg School of Management,[br]Tim-- He just wrote a book called 0:45:54.126,0:45:59.327 "Defending Your Business," and it's[br]so nice that his book came out 0:45:59.327,0:46:04.248 with mine, because the first job [br]is always defend what you've got. 0:46:04.248,0:46:07.808 Hold on to the customers you have,[br]then you start worrying about 0:46:09.467,0:46:13.867 some more growth.[br]So we both, as members 0:46:13.867,0:46:19.436 of the department, are wrestling with[br]how to ignore these books 0:46:19.436,0:46:23.088 and say they're wrong, and that[br]there is a bright future ahead. 0:46:23.088,0:46:24.831 [laughter][br]So let me stop here 0:46:24.831,0:46:27.177 and take any questions you might have. 0:46:27.177,0:46:32.926 [applause] 0:46:32.926,0:46:36.827 Thank you. 0:46:36.827,0:46:41.218 [Moderator]: Okay, we have time for [br]a few questions for Professor Kotler. 0:46:41.218,0:46:43.559 Is there anyone on this side of[br]the auditorium that would like 0:46:43.559,0:46:46.763 to ask a question? 0:46:46.763,0:46:50.958 [Kotler]: Yes. I see--[br]I see you over there. 0:46:50.958,0:46:55.058 Now a microphone will[br]magically come down here. 0:46:55.058,0:46:59.138 [Moderator]: Susan will[br]bring you a microphone. 0:46:59.138,0:47:02.833 [Kotler]: And if there's any other[br]people-- and there's a person over there 0:47:02.833,0:47:04.868 Would you introduce yourself, please? 0:47:04.868,0:47:08.477 [Audience member]: My name is[br]Iris Witkowski and I've been 0:47:08.477,0:47:11.489 coming to the Humanities Festival[br]as long as it exists, and I very much 0:47:11.489,0:47:14.018 appreciate your talk today.[br][Kotler]: Thank you. 0:47:14.018,0:47:16.960 [Audience member]: My--[br]I'm making a statement. 0:47:16.960,0:47:21.500 What really drives me nuts,[br]as far as saturation is concerned, 0:47:21.500,0:47:25.346 is the placement of products[br]on television programs. 0:47:25.346,0:47:30.672 It used to be that in a movie[br]you'd say "Oh, I saw that brand." 0:47:30.672,0:47:34.108 It seemed to be accidental.[br]Now it's all over. 0:47:34.108,0:47:37.461 Even the anchormen have [br]L.L. Bean jackets on. 0:47:37.461,0:47:40.866 [Kotler]: You know, that's the field[br]called product placement, 0:47:40.866,0:47:45.026 and we first got conscious of it[br]with the James Bond films, 0:47:45.026,0:47:48.520 where each time there was a different[br]car, he drove an Audi or he drove 0:47:48.520,0:47:53.635 something else, because it was a [br]matter of what car company would pay 0:47:53.635,0:47:56.337 the most for the next film to [br]feature that car, and now, 0:47:56.337,0:48:01.405 does the person speaking pick up[br]a Coke bottle or a Pepsi bottle? 0:48:01.405,0:48:07.167 And things like that. Most of us don't[br]notice it. It's not yet that intrusive, 0:48:07.167,0:48:12.638 but it has been discovered as a way to [br]get some visibility for certain products. 0:48:12.638,0:48:16.548 Product placement. 0:48:16.548,0:48:18.916 [Audience member]: I'm Cody Hagle.[br]I'm a Charter Humanist. 0:48:18.916,0:48:22.558 Again, thank you. On the evening[br]national news, 75 to 80 percent 0:48:22.558,0:48:27.079 of the ads are for pharmaceuticals.[br][Kotler]: And they say awful things 0:48:27.079,0:48:29.549 about each one![br][laughter] 0:48:29.549,0:48:34.157 [Audience member]: And I believe[br]there was a change in legal 0:48:34.157,0:48:37.458 requirements some years ago. [br]What are your thoughts about that, 0:48:37.458,0:48:40.899 because clearly that advertising [br]is driving demand, which is driving 0:48:40.899,0:48:42.818 costs, etcetera, etcetera.[br][Koterl]: Yeah. 0:48:42.818,0:48:47.227 It's called over-the-counter [br]advertising, too. 0:48:47.227,0:48:54.481 But maybe it's also prescription.[br]But basically, you can make a case 0:48:54.481,0:49:00.477 for it by saying consumers should know[br]what they might think would be 0:49:00.477,0:49:03.258 the right thing for them, otherwise[br]the only one who could tell them 0:49:03.258,0:49:10.378 what's right is the doctor. And the [br]doctors don't like it, of course. 0:49:10.378,0:49:13.830 The doctors in some cases[br]are offended by-- 0:49:13.830,0:49:22.479 by the patient saying what he [br]wants as a prescription. 0:49:22.479,0:49:23.468 But, you know, this has happened[br]with lawyers who are advertising now. 0:49:23.468,0:49:26.929 Doctors are advertising themselves,[br]even if they don't like that. 0:49:26.929,0:49:31.155 The expert is Prabha Sinha,[br]who runs a firm called ZS 0:49:31.155,0:49:36.150 and he's always working with the [br]doctors and pharmaceutical people, 0:49:36.150,0:49:36.649 and could help answer that. 0:49:36.649,0:49:36.899 Any other things that bother [br]you about advertising? 0:49:36.899,0:49:44.737 [Audience member]: Hi, my name[br]is Bob Michaelson. 0:49:44.737,0:49:47.526 Thank you, Professor Kotler. It is[br]a pleasure to hear you in person. 0:49:47.526,0:49:51.985 You've been a big influence to so[br]many people, myself in particular, 0:49:51.985,0:49:54.167 for so many years. My question--[br][Kotler]: One second. 0:49:54.167,0:49:58.127 How many of you have read[br]any of my books? Any hands? 0:49:58.127,0:50:00.287 Thank you-- I owe thanks to you! 0:50:00.287,0:50:03.252 [laughter][br]Please proceed. 0:50:03.252,0:50:06.237 [Audience member]: My question[br]is in regards to social media, 0:50:06.237,0:50:09.546 and you started off your presentation[br]talking about so much of marketing 0:50:09.546,0:50:14.067 was defined at the beginning of the[br]20th century. We're 100 years into it. 0:50:14.067,0:50:19.227 As you look at social media, do you see[br]across a continuum of marketing 0:50:19.227,0:50:24.336 this thing a short-term phenomena [br]or radical change in as we do marketing 0:50:24.336,0:50:29.387 for the next century. That's part 1.[br]And part 2: Do you see the ability 0:50:29.387,0:50:32.128 to apply an ROI to social media? 0:50:32.128,0:50:34.096 [Kotler]: Yeah. Those are [br]excellent questions. 0:50:34.096,0:50:39.703 I-- This is not a fad. We are in the[br]digital age. We've passed analog, 0:50:39.703,0:50:43.529 and there's no turning back.[br]That means that-- 0:50:43.529,0:50:50.298 I see the following happening.[br]Every company I talk to says 0:50:50.298,0:50:54.629 "We're gonna go digital too, [br]but slowly. We're gonna rely 0:50:54.629,0:51:00.667 on our tradition," which is newspapers--[br]which are disappearing, by the way-- 0:51:00.667,0:51:04.718 radio, TV, billboards, and magazines. 0:51:04.718,0:51:10.286 So, at best, they will say this,[br]"Let's turn 10% of our next budget 0:51:10.286,0:51:16.358 over to digital," which means[br]Facebook, Twitter, and YouTube 0:51:16.358,0:51:21.568 and so on. And let's see what happens.[br]Let's hire a 12-year-old 0:51:21.568,0:51:25.939 [laughter][br]--give them a budget, 0:51:25.939,0:51:30.480 and hope they come back saying,[br]"Look what I did with Facebook! 0:51:30.480,0:51:32.697 Look at how many mentions!"[br]And so on. 0:51:32.697,0:51:36.690 Now, that goes to your second question.[br]How do we measure the impact 0:51:36.690,0:51:40.369 of using Facebook or [br]something like that? 0:51:40.369,0:51:43.088 Progress is being made.[br]But remember, we never 0:51:43.088,0:51:48.456 measured advertising right either![br]I mean, traditional advertising was a-- 0:51:48.456,0:51:54.839 was-- first of all, the basic notion[br]of traditional advertising is 0:51:54.839,0:51:58.870 you know that half the people will never[br]see the-- what did Wanamaker say? 0:51:58.870,0:52:01.760 I know that half of the money I [br]spent on advertising is wasted, 0:52:01.760,0:52:05.142 it's just that I don't know which half![br][laughter] 0:52:05.142,0:52:12.090 Basically, we judge things by[br]how many people were, in principle, 0:52:12.090,0:52:16.439 exposed--cost per [br]thousand people exposed-- 0:52:16.439,0:52:19.388 when we make an advertising budget,[br]and frankly many of them were 0:52:19.388,0:52:22.679 in the bathroom or the kitchen [br]when the ad appeared. 0:52:22.679,0:52:29.897 So... and increasingly, people[br]are more on their TVs-- 0:52:29.897,0:52:31.278 on their computer screens than they[br]are necessarily watching ads. 0:52:31.278,0:52:34.536 And I think the advertising industry[br]is making the mistake of sa-- 0:52:34.536,0:52:39.804 putting too many ads now.[br]I mean, there's little content left 0:52:39.804,0:52:42.170 on some programs, with the[br]number of ads that flash by. 0:52:42.170,0:52:48.898 They're all 30-second things. 0:52:48.898,0:52:52.138 So, now about measuring.[br]If you read Advertising Age, 0:52:52.138,0:52:53.207 you'll see a lot of statements[br]and claims that there is 0:52:53.207,0:52:59.968 measurement going on.[br]One thing I would say is this: 0:52:59.968,0:53:06.607 Don't take your ad budget and take[br]50% and switch it to digital, 0:53:06.607,0:53:12.107 which one firm did, and it [br]was a terrible result. 0:53:12.107,0:53:18.257 Because until you know[br]what each social medium does, 0:53:18.257,0:53:21.819 what you want is 10% of your budget[br]going that way, and then when there's 0:53:21.819,0:53:23.960 some proof, you put in [br]another 5 or 10 percent 0:53:23.960,0:53:27.647 into that particular use [br]of the social media. 0:53:27.647,0:53:29.999 [Moderator]: Okay, we've got time[br]for just one more question. 0:53:29.999,0:53:32.679 I know a lot of our attendees are[br]going to other events, 0:53:32.679,0:53:35.679 so we have one right here[br][Kotler]: Oh, okay. 0:53:35.679,0:53:39.099 [Audience member]: Mark Ruen[br]is my name. I've been in 0:53:39.099,0:53:42.718 direct marketing my entire career,[br]and so it's interesting that I should 0:53:42.718,0:53:46.828 follow up a question about[br]measurement in advertising 0:53:46.828,0:53:50.768 because I've lived by my metrics.[br]Now, my question is this: 0:53:50.768,0:53:55.260 I've always guided my marketing[br]decisions according to the so-called 0:53:55.260,0:53:58.968 4 Ps or 5 Ps, depending on[br]where you're coming from, 0:53:58.968,0:54:01.989 and in terms of the P of the[br]placement, I mean, the internet 0:54:01.989,0:54:05.477 certainly flattened the world,[br]and our distribution channels 0:54:05.790,0:54:11.790 have changed. But how do you[br]see the other Ps in this digital age? 0:54:11.790,0:54:15.870 [Kotler]: Okay. First of all, let me say, [br]I'm so glad you're in direct marketing. 0:54:15.870,0:54:21.148 Direct marketing people are much [br]more accountable for the results. 0:54:21.148,0:54:24.730 They could actually experiment [br]with trying to release different 0:54:24.730,0:54:29.491 direct messages and seeing--[br]and testing, and then going with the one 0:54:29.491,0:54:34.200 and knowing what it costs to do the[br]campaign, what the sales were, 0:54:34.200,0:54:37.760 and it's just a pure P and L[br]kind of exercise, 0:54:37.760,0:54:42.590 which we couldn't do with just[br]the normal commercials on TV. 0:54:42.590,0:54:47.345 Now, are you asking where the [br]other three Ps are going, in a sense? 0:54:47.345,0:54:49.304 Like, what's happening to product[br]thinking and pricing and place? 0:54:52.148,0:54:55.566 See, there will be new [br]distribution channels all the time. 0:54:55.566,0:55:00.884 I've been asked this question when[br]I wrote the book "Marketing 3.0," 0:55:00.884,0:55:03.401 which is really the case that[br]some companies should be 0:55:03.401,0:55:07.343 socially responsible as well.[br]Someone would ask me, 0:55:07.343,0:55:08.508 "When are you gonna [br]come up with 4.0?" 0:55:10.474,0:55:13.306 And I don't really have[br]an answer, because when 0:55:13.306,0:55:16.711 you go from the mind to[br]the heart to the spirit, 0:55:16.711,0:55:20.385 I don't know how much [br]farther you could go, 0:55:20.385,0:55:24.915 but I am thinking that 4.0's[br]gonna describe companies 0:55:24.915,0:55:29.436 in the future that are building[br]ecosystems and platforms 0:55:29.436,0:55:32.501 where we get involved with [br]them in such a way that 0:55:32.501,0:55:35.951 everything is being supplied [br]that we want, as an individual. 0:55:35.951,0:55:41.460 Think of iTunes, think of the[br]iPhone, iTunes, the whole setup 0:55:41.460,0:55:46.142 of cre-- think of Harley Davidson.[br]If I buy a Harley Davidson, 0:55:46.142,0:55:53.661 I'm a member of-- they call them[br]the Harley... the hogs! I'm a hog. 0:55:53.661,0:55:59.122 Harley owner... owner groupie.[br][laughter] 0:55:59.122,0:56:03.134 and not only that.[br]I can take my motorcycle 0:56:03.134,0:56:07.375 and just go and meet people[br]I don't know. Some have beards. 0:56:07.375,0:56:08.642 Others have beads, but they're fake. 0:56:09.310,0:56:11.301 [laughter][br] 0:56:11.301,0:56:14.589 They're wearing leather jackets.[br]These are business people. 0:56:14.589,0:56:19.878 They may be chief financial officers,[br]but they want to be macho, 0:56:19.878,0:56:25.411 so they supply a whole system to fit into[br]that more and more companies might 0:56:25.411,0:56:29.419 sort of begin to think about that.[br]Now, let's take-- what's the one 0:56:29.419,0:56:32.389 who's making shoes now?[br]Is it Tom's shoes or the other one? 0:56:32.389,0:56:35.899 Zappos? They're creating[br]a system that's going to go 0:56:35.899,0:56:39.708 beyond the shoes that you buy.[br]It's going to go into clothing. 0:56:39.708,0:56:43.692 So some companies, as one[br]evolution for certain companies-- 0:56:43.692,0:56:45.861 by the way, it's not different in[br]business to business, 0:56:45.861,0:56:50.487 where a company that supplies--[br]Boeing supplies 747s and other planes. 0:56:50.487,0:56:54.644 They have to create a whole system[br]so you can't even leave it. 0:56:54.644,0:56:59.189 You know, once you get involved--[br]Once you get with IBM, 0:56:59.189,0:57:02.279 you're not gonna leave for [br]Honeywell or something like that. 0:57:02.279,0:57:05.801 So this is maybe what[br]4.0 thinking will do. 0:57:05.801,0:57:07.870 In other words, it won't be[br]product-centered, it will be 0:57:07.870,0:57:11.870 system-centered. A whole system.[br]I think we're out of time. 0:57:11.870,0:57:17.190 Thank you very much.[br][applause]