WEBVTT

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On behalf of our President 
and CEO, Greg Case,

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and chief marketing officer,
Phil Clement,

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it's a real honor for Aon to be 
the sponsor of this event today.

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And for many of you, 
you might know that Aon

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is now a UK-based company,
but it's also important for you to know

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that the Aon Foundation, 
for the past 25 years,

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has made it a priority to support
educational activities and

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cultural institutions like 
the Chicago Humanities Festival

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and the Charter Humanist Circle,
that does so much to enrich

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the lives of all of us in this room
and everybody in Chicago.

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And even though we're now in the UK,
I want everybody in this room to know

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that we intend to continue 
this commitment,

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and it will remain high on our
priority list for the things we do

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to support the community of 
Chicago for many years to come.

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[applause]

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On behalf of my colleagues 
at Aon, I want to thank

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the Charter Humanist Circle
and its members

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for their very valuable support,
and I also want to thank

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Northwestern University Law 
School for allowing us to use

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the auditorium today.

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At Aon, we believe in the mantra
"If we can't measure it,

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we don't do it."

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And because of that, 
it's a real honor for us

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to be here supporting and
introducing Dr. Philip Kotler.

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Dr. Kotler has defined marketing
as "the science and art

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of exploring, creating, and 
delivering value to satisfy

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the needs of a target 
market at a profit."

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He is recognized around the world
as one of the foremost experts

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on business, of marketing,
and for his insights on

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how exemplary marketing has
the creativity and the power

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to influence global 
consumers every day.

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In that spirit, I hope you'll join 
me in welcoming Dr. Philip Kotler.

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[applause]

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Now before I turn the
microphone over to Dr. Kotler,

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in the spirit of marketing, maybe
many of you in this room know

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that Aon does a great many
things globally, but one of the things

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that we've done that has created 
tremendous brand awareness

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for our firm is our sponsorship
of Manchester United football team,

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which by today won 2 to 1 
versus Arsenal

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[applause]

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We're at--
Right now we're

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at the top of the 
premiere league.

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So in that spirit,
I would like to present

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Dr. Kotler with his very own,
personalized Manchester United shirt.

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[Kolter]: Thank you.

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David, thank you very much.

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And I will wear this,
in a fantasy way.

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[laughter]

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May I say, I really appreciate
your introduction.

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Of all the introductions I've received,
yours is the most recent.

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[laughter]

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Nation, nation...

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Oh, you may know of
Steven Colbert,

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so I can't pull it off the same way.

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There will be two groups, 
with respect to marketing.

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There will be a group that
doesn't like marketing,

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and I'm going to give you
why they don't like marketing

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and the justifications.
I will also tell you

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there's another group who loves
marketing, so before we're through,

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you will be totally confused,
or at least opinionated.

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So, what I want to do is
tell you that--

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These are called 
confessions of a marketer.

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That's, by the way, borrowed
from David Ogilvy,

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who wrote a wonderful book called
"Confessions of an Advertising Man."

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And let me move on and say
why is marketing a topic

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for the humanities?

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And we would say that
there's a couple of reasons.

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One: I regard marketing
as a humanistic subject

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because marketing has 
affected our lifestyles;

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has created, not only affected
a lifestyle, but created lifestyles,

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and we should be, from a point
of view of popular interest,

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interested in that.

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And it really--

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I want to say that marketing
is very American,

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that it's beginnings are 
very American.

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That doesn't mean there weren't
manifestations of marketing earlier,

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and as a matter of fact, I'd like
to give you a very short history

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of marketing, so that you understand
what we mean by the word.

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As a matter of fact, if you took a
dictionary, a Webster's dictionary,

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in the year 1900, and looked up
the word marketing,

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you would not find it in the dictionary.

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Yes, you would find the word market,
but not the word marketing.

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If you then picked a dictionary...
1910. You would find the word

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marketing in it, because marketing
is about 100 years old.

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And it's much more than selling.
So let me show you...

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Let's start...
Let's start biblically.

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[laughter]
Let's start biblically.

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Who is the marketer
in this picture?

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This is the biblical narrative.
Who was the first marketer in the world?

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I hear Eve...
The snake.

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I hate to admit it, because snake 
sounds like sneaky, and so on

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and so forth.

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But the fact is that it was 
the snake who sold Eve

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on getting Adam to eat an apple.
So it goes way back.

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At least selling goes way back.
Now let's go further.

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Here is the father of marketing.

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What an insult to him!
[laughter]

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I mean, that's Aristotle.

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Recently I was at a group,
little party, and we were speculating

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who we would like to meet most
if we had an hour with such a person,

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and it boiled down to Plato,
Socrates, or Aristotle.

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That's a hard one.

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It turns out that my vote 
went for Aristotle.

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Aristotle was Google, at the time.
He knew more about everything

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than anyone in the world.
He wrote on science, politics,

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economics, rhetoric, art,
and everything.

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Now, why do I say that he had
some marketing impact?

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Let me read the definition of rhetoric.
He's not the founder of rhetoric,

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by the way. The founders were 
the sophists, around 600 B.C.

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They were a group who wanted to use
selling and speech and persuasion

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for their own devious ends.
But Aristotle put the i--

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the discipline of rhetoric on its feet.

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Rhetoric is the art that aims to improve
the facility of speakers or writers

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who attempt to inform, persuade, 
or motivate particular audiences

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in specific situations.
It is the faculty of the observing,

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in any given case, the available 
means of persuasion.

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So, in a sense, he could be
the father of selling.

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The idea of getting someone 
to do something that they might

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not have done otherwise.
So, let's move on,

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about other manifestations of marketing.
I know many of you cannot necessarily

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read this, so I will read it,
but the first department store

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opened when, and in what country?
Normally if you're in France

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and you ask the question,
they would say of course

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we invented the department store.
It was about 1845.

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The same time we invented 
paperweights and some other things.

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But it turns out that the first 
department store was in Japan.

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Mitsui company, which is still
alive and well.

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So that's where one of our 
retailing forms started.

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The next one is the first 
newspaper that carried an ad.

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There were newspapers early,
but the first ad appeared in England,

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in 1652, and it advertised coffee.
And then, the first ad agency

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started a little later.
Well, much later.

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N.W. Ayer, which is still a 
prosperous advertising agency.

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First time a brand was put on a 
commodity, the commodity being soap,

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the brand name was Pear's soap.


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And then the first packaging
appeared a little later,

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and finally we had a marketing
research department formed.

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So, now the word markets
has been around all these years.

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The Middle Ages had markets.
In fact, whenever--

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I would even say the agora,
in ancient Greece--

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that means the marketplace--
In ancient Greece,

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people would come on a particular 
day to sell things.

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In the Middle Ages, 
there were market days.

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The word marketing wasn't there.
It was just market.

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And trade was always there,
because trade, through history,

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has taken place between people
and regions and countries.

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So all that is there, and it was
in the decade of the 1900s

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that marketing books first appeared.
And the interesting thing is

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who wrote those first marketing books.
Were they sociologists?

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What was the discipline of the people
who wrote the first marketing books?

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Any guesses?

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They weren't physicists or chemists.

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They were economists.

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So why would economists start
a subject called marketing?

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And the answer is: they were
disillusioned economists.

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[laughter]

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They couldn't find any mention
of advertising in the discourse

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of economists. In other words,
never did Adam Smith,

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Thomas Malthus, David Ricardo,
even Alfred Marshall, and so on,

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they rarely talked about other
forces that shaped demand.

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The only force that shaped demand
in their mind was price.

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You know the famous curve.
Raise the price, demand will go down,

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lower the price, you can sell more.
Price was the only thing

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that affected demand.
So these economists,

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or institutional economists, said "Hey,
you've got to factor in advertising."

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You've got to factor in retail stores,
whole sales, jobbers, agents.

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And it was the neglect of 
the classical economists

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to not really texture the marketplace
and the way an economy worked

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that led to marketing.
So marketing is technically

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a branch of economics.

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Now who helped developed 
this field of marketing?

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Now, probably you don't 
recognize maybe anyone here.

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There's one person you 
might recognize.

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I don't know if you can see
some of these faces,

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but someone recognize anyone there?

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Yeah?

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Dale Carnegie.
Dale Carnegie is here,

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and his book was "How to 
Win Friends and Influence People,"

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because in doing this, 
I wanted to find out

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who was the exemplar 
of the selling method.

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"How to Win Friends
and Influence People"

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But let me give you the whole picture.

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Ernest Dichter. Some of 
you may know of.

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He was a motivational psychologist,
and he could explain why people

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didn't like to eat prunes, why cigars 
were offending some people,

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and all kinds of things.
And his book called

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"The Study of Desire."
He apparently studied with

99:59:59.999 --> 99:59:59.999
Sigmund Freud, and he brought 
that kind of mind to marketing.

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But he had an opponent named
Alfred Pollitz, who was not

99:59:59.999 --> 99:59:59.999
a head shrinker--We call 
him a... a nose counter.

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The expressions we would use if
you were very psychological,

99:59:59.999 --> 99:59:59.999
you were a head shrinker, and
otherwise, you were a nose counter.

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Namely, a surveyor. You surveyed--
You found out what percentage

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of people were of a certain age and 
why did they buy a particular product.

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Julius Rosenwald was very much 
behind the formation of

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the Sears company, which was
a important episode in

99:59:59.999 --> 99:59:59.999
the development of our retail chains.

99:59:59.999 --> 99:59:59.999
Lester Wunderman deserves 
credit as exemplifying the use

99:59:59.999 --> 99:59:59.999
of direct mail and catalogs.
That you can sell more directly.

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You don't have to be in the store.
You can get people to order goods

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by mail and phone.

99:59:59.999 --> 99:59:59.999
David Ogilvy is the exemplar
advertising person,

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then Stanley Marcus,
of Neiman Marcus,

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was a fella who could walk into
any retail store and give them

99:59:59.999 --> 99:59:59.999
100 suggestions on how to improve 
the layout, the size of the aisles,

99:59:59.999 --> 99:59:59.999
and make a difference in the 
voulme of business.

99:59:59.999 --> 99:59:59.999
Edward Bernays is the father of
public relations in the United States.

99:59:59.999 --> 99:59:59.999
His name has sort of become 
obscure, but he really was

99:59:59.999 --> 99:59:59.999
a very important person.
The word propaganda

99:59:59.999 --> 99:59:59.999
was often used in connection with his 
work, because people thought it was

99:59:59.999 --> 99:59:59.999
a model to motivate you to feel 
a certain way about anything,

99:59:59.999 --> 99:59:59.999
regardless of the standards involved.
And then there's Dale Carnegie.

99:59:59.999 --> 99:59:59.999
In any case, how did 
marketing get its start?

99:59:59.999 --> 99:59:59.999
Marketing got its start 
in sales departments.

99:59:59.999 --> 99:59:59.999
Every company has a sales group.
And the sales people really want

99:59:59.999 --> 99:59:59.999
to be in the office of a customer,
because that's the only way

99:59:59.999 --> 99:59:59.999
something happens. So they don't
want to do a lot of homework.

99:59:59.999 --> 99:59:59.999
For example, three things they
didn't want to do.

99:59:59.999 --> 99:59:59.999
They didn't want to do consumer
research in a systematic way,

99:59:59.999 --> 99:59:59.999
because that's taking their time
away from selling to customers.

99:59:59.999 --> 99:59:59.999
Secondly, they would've liked 
someone else to find leads.

99:59:59.999 --> 99:59:59.999
Now a lead means a prospect.
In fact, we distinguish between

99:59:59.999 --> 99:59:59.999
a hot lead: "Oh boy, he's ready
to buy. He even called us to buy."

99:59:59.999 --> 99:59:59.999
a warm lead, a cold lead, so on.
Someone else should do that

99:59:59.999 --> 99:59:59.999
for the sales people, so they don't
waste their time making calls.

99:59:59.999 --> 99:59:59.999
And the third thing was 
someone had to prepare

99:59:59.999 --> 99:59:59.999
brochures and ads. And the 
salesman is not skilled.

99:59:59.999 --> 99:59:59.999
The salesperson isn't skilled at
communicating through advertising

99:59:59.999 --> 99:59:59.999
and brochures. So sales departments
added three people, or hired them

99:59:59.999 --> 99:59:59.999
from time to time.
Later on, it exploded

99:59:59.999 --> 99:59:59.999
to the day today, when we have
multinationals running--

99:59:59.999 --> 99:59:59.999
with marketing--
In other words, marketing--

99:59:59.999 --> 99:59:59.999
Those three people split from sales
and became big enough to become

99:59:59.999 --> 99:59:59.999
its own department.
And so, some people

99:59:59.999 --> 99:59:59.999
in the audience here may be 
a chief marketing officer.

99:59:59.999 --> 99:59:59.999
The old name was Vice President
of marketing, but I like the name

99:59:59.999 --> 99:59:59.999
chief marketing officer because
that person now is part of

99:59:59.999 --> 99:59:59.999
the chief officers. Chief information
officer, chief financial officer,

99:59:59.999 --> 99:59:59.999
chief innovation officer, 
and the status has moved up.

99:59:59.999 --> 99:59:59.999
Some of you may be brand managers,
may have been in your past experience.

99:59:59.999 --> 99:59:59.999
Category managers, market 
segment managers,

99:59:59.999 --> 99:59:59.999
managing distribution channels,
like retail or wholesale things,

99:59:59.999 --> 99:59:59.999
pricing manager, communication
manager, database manager,

99:59:59.999 --> 99:59:59.999
direct marketers, internet
people, and so on.

99:59:59.999 --> 99:59:59.999
So, marketing is well-established.

99:59:59.999 --> 99:59:59.999
Now, the character of a marketing
department depends very much

99:59:59.999 --> 99:59:59.999
on what the CEO thinks of marketing.

99:59:59.999 --> 99:59:59.999
So, the 1P CEO is a person
who took over a company,

99:59:59.999 --> 99:59:59.999
and he says, "I don't like 
marketing, but I know I need it,

99:59:59.999 --> 99:59:59.999
and all I want from marketing is
some communications.

99:59:59.999 --> 99:59:59.999
I just want someone to broadcast
and promote us."

99:59:59.999 --> 99:59:59.999
So, that person is missing 
a lot of other things

99:59:59.999 --> 99:59:59.999
made up by other CEOs,
who are 4P CEOs.

99:59:59.999 --> 99:59:59.999
Now a 4P CEO says,
"I need a marketing plan."

99:59:59.999 --> 99:59:59.999
And the plan has to mention 
product--that's the first P.

99:59:59.999 --> 99:59:59.999
What about our product? What's good
about it? What are the features?

99:59:59.999 --> 99:59:59.999
Price: what should it be priced at?
Place: where should it be

99:59:59.999 --> 99:59:59.999
made accessible? Online,
offline, in stores?

99:59:59.999 --> 99:59:59.999
And finally promotion.

99:59:59.999 --> 99:59:59.999
So that's a more educated view
of the potential of marketing.

99:59:59.999 --> 99:59:59.999
But there's even a better view,
and that's called the CEO who says,

99:59:59.999 --> 99:59:59.999
"No! I don't want to start with 4 Ps,
I want to start with the fact

99:59:59.999 --> 99:59:59.999
the market is complex." 
There's a lot of segments.

99:59:59.999 --> 99:59:59.999
Each segment deserves its own plan.
In fact, one thing we've learned

99:59:59.999 --> 99:59:59.999
that if you just have one value
proposition for the whole market,

99:59:59.999 --> 99:59:59.999
it really doesn't trigger anything
in many parts of the market.

99:59:59.999 --> 99:59:59.999
So that CEO says, "What
segment should we go after?

99:59:59.999 --> 99:59:59.999
And what position should we 
take with each segment?

99:59:59.999 --> 99:59:59.999
What should we say about ourselves,
in how we can satisfy their needs?"

99:59:59.999 --> 99:59:59.999
Now there's even a higher type CEO,
which is exemplified by A.G. Lafley,

99:59:59.999 --> 99:59:59.999
who ran Procter & Gamble,
who recently retired.

99:59:59.999 --> 99:59:59.999
When you ask A.G. Lafley what's
marketing, what's your picture,

99:59:59.999 --> 99:59:59.999
he says, "Well, what do you mean?
Marketing is everything."

99:59:59.999 --> 99:59:59.999
[laughter]

99:59:59.999 --> 99:59:59.999
Now, marketing is everything.
What he means is

99:59:59.999 --> 99:59:59.999
everything starts with the customer.
No customers, no business.

99:59:59.999 --> 99:59:59.999
And I think he's making 
that point very much.

99:59:59.999 --> 99:59:59.999
Now, moving on, there's a lot of things 
that a chief marketing officer does,

99:59:59.999 --> 99:59:59.999
and I won't go into any detail,
but there's a lot of tasks,

99:59:59.999 --> 99:59:59.999
and the sad fact is that sometimes
the chief marketing officer only lasts

99:59:59.999 --> 99:59:59.999
on the average of two years.
In other words, does a job,

99:59:59.999 --> 99:59:59.999
and maybe the CEO is not feeling that 
it really brought in enough new business

99:59:59.999 --> 99:59:59.999
that the cost of the CMO exceeds 
what the value of the CMO is.

99:59:59.999 --> 99:59:59.999
There's a lot to go into about
why CMOs on the average

99:59:59.999 --> 99:59:59.999
hold on to their job for two years.
By the way, some of them

99:59:59.999 --> 99:59:59.999
get a better job after two years.
They become something higher

99:59:59.999 --> 99:59:59.999
than the chief marketing officer.
Some of them actually are pirated away

99:59:59.999 --> 99:59:59.999
because they're so good, they go 
to another company to be the CEO.

99:59:59.999 --> 99:59:59.999
But in any case, marketing--
commercial marketing,

99:59:59.999 --> 99:59:59.999
which I've been talking about,
could've stayed only commercial,

99:59:59.999 --> 99:59:59.999
and then I got involved in--
with Professor Sid Levy at Northwestern

99:59:59.999 --> 99:59:59.999
We started the idea of 
broadening marketing,

99:59:59.999 --> 99:59:59.999
because the set of tools that we use
to address consumers could be used

99:59:59.999 --> 99:59:59.999
in other areas.
So we have a thing

99:59:59.999 --> 99:59:59.999
called place marketing.
I will get a call from a city, let's say,

99:59:59.999 --> 99:59:59.999
and a city says, "We're not getting
enough tourists. We don't have

99:59:59.999 --> 99:59:59.999
any attractions for them to come 
and see. I would like to get a factory

99:59:59.999 --> 99:59:59.999
located here. We would like some digital
people to move here, who know digital--

99:59:59.999 --> 99:59:59.999
We want to start a Silicon Valley."
So that's place marketing.

99:59:59.999 --> 99:59:59.999
The marketing of a place. How do you
dress it up and make it attractive?

99:59:59.999 --> 99:59:59.999
Against all of the other 
competitive places.

99:59:59.999 --> 99:59:59.999
The second--
Person marketing.

99:59:59.999 --> 99:59:59.999
There's an agency called William Morris,
and a young singer might go to

99:59:59.999 --> 99:59:59.999
William Morris and say, "look, I want 
to get ahead. I want to appear

99:59:59.999 --> 99:59:59.999
on Jay Leno's show. I want to--
I want to move up to being noticed.

99:59:59.999 --> 99:59:59.999
I want high visibility."
I wrote a book with the title

99:59:59.999 --> 99:59:59.999
"High Visibility." How do you 
get that visibility.

99:59:59.999 --> 99:59:59.999
So, William Morris will look
at her and her performance

99:59:59.999 --> 99:59:59.999
and maybe say, "You know,
maybe in a sense--

99:59:59.999 --> 99:59:59.999
Don't be offended, but we can 
make you into a better product."

99:59:59.999 --> 99:59:59.999
That's sort of the language.
You know, do your hair differently,

99:59:59.999 --> 99:59:59.999
walk a little-- dress differently.
Actually, we're going to use you to

99:59:59.999 --> 99:59:59.999
reignite the archetype of Joan Baez.
You know, Joan Baez, the folk singer.

99:59:59.999 --> 99:59:59.999
Well, we need a new Joan Baez.
And so, we can recast you

99:59:59.999 --> 99:59:59.999
and form you into the kind of 
person we all miss, and so on.

99:59:59.999 --> 99:59:59.999
Now, social marketing is
another branch.

99:59:59.999 --> 99:59:59.999
Today there are 2,000 social marketers
around the world, trying to help people

99:59:59.999 --> 99:59:59.999
eat better, exercise more, say no
to drugs, stop smoking cigar--

99:59:59.999 --> 99:59:59.999
get off of tobacco, say no to
a number of things.

99:59:59.999 --> 99:59:59.999
Positive behaviors and 
negative behaviors.

99:59:59.999 --> 99:59:59.999
By the way, my memory is that
Sweden was one of the first countries

99:59:59.999 --> 99:59:59.999
to want to raise a nation of nonsmokers,
non-drinkers, all the vices.

99:59:59.999 --> 99:59:59.999
And it starts at the primary school level,
that you could technically raise people

99:59:59.999 --> 99:59:59.999
to avoid those vices, if that was 
thought to be good public policy.

99:59:59.999 --> 99:59:59.999
So that's social marketing.
Now, political marketing,

99:59:59.999 --> 99:59:59.999
we're saturated with. 
And I think it's degenerated,

99:59:59.999 --> 99:59:59.999
but that's another thing.
Fundraising is part of marketing.

99:59:59.999 --> 99:59:59.999
I mean, fundraising is an odd form,
because you're not exchanging.

99:59:59.999 --> 99:59:59.999
Everything else is sort of an exchange
of values. Fundraising seems to be

99:59:59.999 --> 99:59:59.999
a one-way transfer.
Here's some money

99:59:59.999 --> 99:59:59.999
for the museum. 
But any fundraiser knows

99:59:59.999 --> 99:59:59.999
there's something that should come
back to the person who is the donor

99:59:59.999 --> 99:59:59.999
and supporter of a museum,
and working that way is important.

99:59:59.999 --> 99:59:59.999
So these are offshoots. 
Now all of us do marketing.

99:59:59.999 --> 99:59:59.999
If you read the list, we all do marketing.
Did you ever compete for a job when

99:59:59.999 --> 99:59:59.999
you knew there were other applicants?
Didn't you dress up as well as you could

99:59:59.999 --> 99:59:59.999
and even prepare what you're 
going to say, and so on?

99:59:59.999 --> 99:59:59.999
Did you compete for a desirable
apartment which was scarce?

99:59:59.999 --> 99:59:59.999
Or a member of the opposite sex,
if you wanted to court someone.

99:59:59.999 --> 99:59:59.999
So, in a sense, we're human animals
who know how to make an impression

99:59:59.999 --> 99:59:59.999
and market ourselves, to some extent.

99:59:59.999 --> 99:59:59.999
What do we dislike about marketing?

99:59:59.999 --> 99:59:59.999
Well, there's a long list.
It's a rather long list.

99:59:59.999 --> 99:59:59.999
Intrusion, interruption, exaggeration,
and so on and so forth.

99:59:59.999 --> 99:59:59.999
And I really made a list that's 
a little separate from that.

99:59:59.999 --> 99:59:59.999
Here are some of the criticisms.
Marketers get consumers to want

99:59:59.999 --> 99:59:59.999
and spend more than they can afford.

99:59:59.999 --> 99:59:59.999
And we know that from the financial
disaster that people were buying homes

99:59:59.999 --> 99:59:59.999
with maybe nothing down.
Marketers are skilled at

99:59:59.999 --> 99:59:59.999
creating grand differentiation 
where it shouldn't exist.

99:59:59.999 --> 99:59:59.999
Like with commodities, you know, a
chicken is a chicken, cement is cement.

99:59:59.999 --> 99:59:59.999
So they spend a lot of time trying to
tell you their cement is really better,

99:59:59.999 --> 99:59:59.999
their salt is really better, and so on.
Marketers want to produce and sell

99:59:59.999 --> 99:59:59.999
more goods without considering
the resource and environmental costs

99:59:59.999 --> 99:59:59.999
of producing the goods.
The planet