On behalf of our President and CEO, Greg Case,
and chief marketing officer, Phil Clement,
it's a real honor for Aon to be the sponsor of this event today.
And for many of you, you might know that Aon
is now a UK-based company, but it's also important for you to know
that the Aon Foundation, for the past 25 years,
has made it a priority to support educational activities and
cultural institutions like the Chicago Humanities Festival
and the Charter Humanist Circle, that does so much to enrich
the lives of all of us in this room and everybody in Chicago.
And even though we're now in the UK, I want everybody in this room to know
that we intend to continue this commitment,
and it will remain high on our priority list for the things we do
to support the community of Chicago for many years to come.
[applause]
On behalf of my colleagues at Aon, I want to thank
the Charter Humanist Circle and its members
for their very valuable support, and I also want to thank
Northwestern University Law School for allowing us to use
the auditorium today.
At Aon, we believe in the mantra "If we can't measure it,
we don't do it."
And because of that, it's a real honor for us
to be here supporting and introducing Dr. Philip Kotler.
Dr. Kotler has defined marketing as "the science and art
of exploring, creating, and delivering value to satisfy
the needs of a target market at a profit."
He is recognized around the world as one of the foremost experts
on business, of marketing, and for his insights on
how exemplary marketing has the creativity and the power
to influence global consumers every day.
In that spirit, I hope you'll join me in welcoming Dr. Philip Kotler.
[applause]
Now before I turn the microphone over to Dr. Kotler,
in the spirit of marketing, maybe many of you in this room know
that Aon does a great many things globally, but one of the things
that we've done that has created tremendous brand awareness
for our firm is our sponsorship of Manchester United football team,
which by today won 2 to 1 versus Arsenal
[applause]
We're at-- Right now we're
at the top of the premiere league.
So in that spirit, I would like to present
Dr. Kotler with his very own, personalized Manchester United shirt.
[Kolter]: Thank you.
David, thank you very much.
And I will wear this, in a fantasy way.
[laughter]
May I say, I really appreciate your introduction.
Of all the introductions I've received, yours is the most recent.
[laughter]
Nation, nation...
Oh, you may know of Steven Colbert,
so I can't pull it off the same way.
There will be two groups, with respect to marketing.
There will be a group that doesn't like marketing,
and I'm going to give you why they don't like marketing
and the justifications. I will also tell you
there's another group who loves marketing, so before we're through,
you will be totally confused, or at least opinionated.
So, what I want to do is tell you that--
These are called confessions of a marketer.
That's, by the way, borrowed from David Ogilvy,
who wrote a wonderful book called "Confessions of an Advertising Man."
And let me move on and say why is marketing a topic
for the humanities?
And we would say that there's a couple of reasons.
One: I regard marketing as a humanistic subject
because marketing has affected our lifestyles;
has created, not only affected a lifestyle, but created lifestyles,
and we should be, from a point of view of popular interest,
interested in that.
And it really--
I want to say that marketing is very American,
that it's beginnings are very American.
That doesn't mean there weren't manifestations of marketing earlier,
and as a matter of fact, I'd like to give you a very short history
of marketing, so that you understand what we mean by the word.
As a matter of fact, if you took a dictionary, a Webster's dictionary,
in the year 1900, and looked up the word marketing,
you would not find it in the dictionary.
Yes, you would find the word market, but not the word marketing.
If you then picked a dictionary... 1910. You would find the word
marketing in it, because marketing is about 100 years old.
And it's much more than selling. So let me show you...
Let's start... Let's start biblically.
[laughter] Let's start biblically.
Who is the marketer in this picture?
This is the biblical narrative. Who was the first marketer in the world?
I hear Eve... The snake.
I hate to admit it, because snake sounds like sneaky, and so on
and so forth.
But the fact is that it was the snake who sold Eve
on getting Adam to eat an apple. So it goes way back.
At least selling goes way back. Now let's go further.
Here is the father of marketing.
What an insult to him! [laughter]
I mean, that's Aristotle.
Recently I was at a group, little party, and we were speculating
who we would like to meet most if we had an hour with such a person,
and it boiled down to Plato, Socrates, or Aristotle.
That's a hard one.
It turns out that my vote went for Aristotle.
Aristotle was Google, at the time. He knew more about everything
than anyone in the world. He wrote on science, politics,
economics, rhetoric, art, and everything.
Now, why do I say that he had some marketing impact?
Let me read the definition of rhetoric. He's not the founder of rhetoric,
by the way. The founders were the sophists, around 600 B.C.
They were a group who wanted to use selling and speech and persuasion
for their own devious ends. But Aristotle put the i--
the discipline of rhetoric on its feet.
Rhetoric is the art that aims to improve the facility of speakers or writers
who attempt to inform, persuade, or motivate particular audiences
in specific situations. It is the faculty of the observing,
in any given case, the available means of persuasion.
So, in a sense, he could be the father of selling.
The idea of getting someone to do something that they might
not have done otherwise. So, let's move on,
about other manifestations of marketing. I know many of you cannot necessarily
read this, so I will read it, but the first department store
opened when, and in what country? Normally if you're in France
and you ask the question, they would say of course
we invented the department store. It was about 1845.
The same time we invented paperweights and some other things.
But it turns out that the first department store was in Japan.
Mitsui company, which is still alive and well.
So that's where one of our retailing forms started.
The next one is the first newspaper that carried an ad.
There were newspapers early, but the first ad appeared in England,
in 1652, and it advertised coffee. And then, the first ad agency
started a little later. Well, much later.
N.W. Ayer, which is still a prosperous advertising agency.
First time a brand was put on a commodity, the commodity being soap,
the brand name was Pear's soap.
And then the first packaging appeared a little later,
and finally we had a marketing research department formed.
So, now the word markets has been around all these years.
The Middle Ages had markets. In fact, whenever--
I would even say the agora, in ancient Greece--
that means the marketplace-- In ancient Greece,
people would come on a particular day to sell things.
In the Middle Ages, there were market days.
The word marketing wasn't there. It was just market.
And trade was always there, because trade, through history,
has taken place between people and regions and countries.
So all that is there, and it was in the decade of the 1900s
that marketing books first appeared. And the interesting thing is
who wrote those first marketing books. Were they sociologists?
What was the discipline of the people who wrote the first marketing books?
Any guesses?
They weren't physicists or chemists.
They were economists.
So why would economists start a subject called marketing?
And the answer is: they were disillusioned economists.
[laughter]
They couldn't find any mention of advertising in the discourse
of economists. In other words, never did Adam Smith,
Thomas Malthus, David Ricardo, even Alfred Marshall, and so on,
they rarely talked about other forces that shaped demand.
The only force that shaped demand in their mind was price.
You know the famous curve. Raise the price, demand will go down,
lower the price, you can sell more. Price was the only thing
that affected demand. So these economists,
or institutional economists, said "Hey, you've got to factor in advertising."
You've got to factor in retail stores, whole sales, jobbers, agents.
And it was the neglect of the classical economists
to not really texture the marketplace and the way an economy worked
that led to marketing. So marketing is technically
a branch of economics.
Now who helped developed this field of marketing?
Now, probably you don't recognize maybe anyone here.
There's one person you might recognize.
I don't know if you can see some of these faces,
but someone recognize anyone there?
Yeah?
Dale Carnegie. Dale Carnegie is here,
and his book was "How to Win Friends and Influence People,"
because in doing this, I wanted to find out
who was the exemplar of the selling method.
"How to Win Friends and Influence People"
But let me give you the whole picture.
Ernest Dichter. Some of you may know of.
He was a motivational psychologist, and he could explain why people
didn't like to eat prunes, why cigars were offending some people,
and all kinds of things. And his book called
"The Study of Desire." He apparently studied with
Sigmund Freud, and he brought that kind of mind to marketing.
But he had an opponent named Alfred Pollitz, who was not
a head shrinker--We call him a... a nose counter.
The expressions we would use if you were very psychological,
you were a head shrinker, and otherwise, you were a nose counter.
Namely, a surveyor. You surveyed-- You found out what percentage
of people were of a certain age and why did they buy a particular product.
Julius Rosenwald was very much behind the formation of
the Sears company, which was a important episode in
the development of our retail chains.
Lester Wunderman deserves credit as exemplifying the use
of direct mail and catalogs. That you can sell more directly.
You don't have to be in the store. You can get people to order goods
by mail and phone.
David Ogilvy is the exemplar advertising person,
then Stanley Marcus, of Neiman Marcus,
was a fella who could walk into any retail store and give them
100 suggestions on how to improve the layout, the size of the aisles,
and make a difference in the voulme of business.
Edward Bernays is the father of public relations in the United States.
His name has sort of become obscure, but he really was
a very important person. The word propaganda
was often used in connection with his work, because people thought it was
a model to motivate you to feel a certain way about anything,
regardless of the standards involved. And then there's Dale Carnegie.
In any case, how did marketing get its start?
Marketing got its start in sales departments.
Every company has a sales group. And the sales people really want
to be in the office of a customer, because that's the only way
something happens. So they don't want to do a lot of homework.
For example, three things they didn't want to do.
They didn't want to do consumer research in a systematic way,
because that's taking their time away from selling to customers.
Secondly, they would've liked someone else to find leads.
Now a lead means a prospect. In fact, we distinguish between
a hot lead: "Oh boy, he's ready to buy. He even called us to buy."
a warm lead, a cold lead, so on. Someone else should do that
for the sales people, so they don't waste their time making calls.
And the third thing was someone had to prepare
brochures and ads. And the salesman is not skilled.
The salesperson isn't skilled at communicating through advertising
and brochures. So sales departments added three people, or hired them
from time to time. Later on, it exploded
to the day today, when we have multinationals running--
with marketing-- In other words, marketing--
Those three people split from sales and became big enough to become
its own department. And so, some people
in the audience here may be a chief marketing officer.
The old name was Vice President of marketing, but I like the name
chief marketing officer because that person now is part of
the chief officers. Chief information officer, chief financial officer,
chief innovation officer, and the status has moved up.
Some of you may be brand managers, may have been in your past experience.
Category managers, market segment managers,
managing distribution channels, like retail or wholesale things,
pricing manager, communication manager, database manager,
direct marketers, internet people, and so on.
So, marketing is well-established.
Now, the character of a marketing department depends very much
on what the CEO thinks of marketing.
So, the 1P CEO is a person who took over a company,
and he says, "I don't like marketing, but I know I need it,
and all I want from marketing is some communications.
I just want someone to broadcast and promote us."
So, that person is missing a lot of other things
made up by other CEOs, who are 4P CEOs.
Now a 4P CEO says, "I need a marketing plan."
And the plan has to mention product--that's the first P.
What about our product? What's good about it? What are the features?
Price: what should it be priced at? Place: where should it be
made accessible? Online, offline, in stores?
And finally promotion.
So that's a more educated view of the potential of marketing.
But there's even a better view, and that's called the CEO who says,
"No! I don't want to start with 4 Ps, I want to start with the fact
the market is complex." There's a lot of segments.
Each segment deserves its own plan. In fact, one thing we've learned
that if you just have one value proposition for the whole market,
it really doesn't trigger anything in many parts of the market.
So that CEO says, "What segment should we go after?
And what position should we take with each segment?
What should we say about ourselves, in how we can satisfy their needs?"
Now there's even a higher type CEO, which is exemplified by A.G. Lafley,
who ran Procter & Gamble, who recently retired.
When you ask A.G. Lafley what's marketing, what's your picture,
he says, "Well, what do you mean? Marketing is everything."
[laughter]
Now, marketing is everything. What he means is
everything starts with the customer. No customers, no business.
And I think he's making that point very much.
Now, moving on, there's a lot of things that a chief marketing officer does,
and I won't go into any detail, but there's a lot of tasks,
and the sad fact is that sometimes the chief marketing officer only lasts
on the average of two years. In other words, does a job,
and maybe the CEO is not feeling that it really brought in enough new business
that the cost of the CMO exceeds what the value of the CMO is.
There's a lot to go into about why CMOs on the average
hold on to their job for two years. By the way, some of them
get a better job after two years. They become something higher
than the chief marketing officer. Some of them actually are pirated away
because they're so good, they go to another company to be the CEO.
But in any case, marketing-- commercial marketing,
which I've been talking about, could've stayed only commercial,
and then I got involved in-- with Professor Sid Levy at Northwestern
We started the idea of broadening marketing,
because the set of tools that we use to address consumers could be used
in other areas. So we have a thing
called place marketing. I will get a call from a city, let's say,
and a city says, "We're not getting enough tourists. We don't have
any attractions for them to come and see. I would like to get a factory
located here. We would like some digital people to move here, who know digital--
We want to start a Silicon Valley." So that's place marketing.
The marketing of a place. How do you dress it up and make it attractive?
Against all of the other competitive places.
The second-- Person marketing.
There's an agency called William Morris, and a young singer might go to
William Morris and say, "look, I want to get ahead. I want to appear
on Jay Leno's show. I want to-- I want to move up to being noticed.
I want high visibility." I wrote a book with the title
"High Visibility." How do you get that visibility.
So, William Morris will look at her and her performance
and maybe say, "You know, maybe in a sense--
Don't be offended, but we can make you into a better product."
That's sort of the language. You know, do your hair differently,
walk a little-- dress differently. Actually, we're going to use you to
reignite the archetype of Joan Baez. You know, Joan Baez, the folk singer.
Well, we need a new Joan Baez. And so, we can recast you
and form you into the kind of person we all miss, and so on.
Now, social marketing is another branch.
Today there are 2,000 social marketers around the world, trying to help people
eat better, exercise more, say no to drugs, stop smoking cigar--
get off of tobacco, say no to a number of things.
Positive behaviors and negative behaviors.
By the way, my memory is that Sweden was one of the first countries
to want to raise a nation of nonsmokers, non-drinkers, all the vices.
And it starts at the primary school level, that you could technically raise people
to avoid those vices, if that was thought to be good public policy.
So that's social marketing. Now, political marketing,
we're saturated with. And I think it's degenerated,
but that's another thing. Fundraising is part of marketing.
I mean, fundraising is an odd form, because you're not exchanging.
Everything else is sort of an exchange of values. Fundraising seems to be
a one-way transfer. Here's some money
for the museum. But any fundraiser knows
there's something that should come back to the person who is the donor
and supporter of a museum, and working that way is important.
So these are offshoots. Now all of us do marketing.
If you read the list, we all do marketing. Did you ever compete for a job when
you knew there were other applicants? Didn't you dress up as well as you could
and even prepare what you're going to say, and so on?
Did you compete for a desirable apartment which was scarce?
Or a member of the opposite sex, if you wanted to court someone.
So, in a sense, we're human animals who know how to make an impression
and market ourselves, to some extent.
What do we dislike about marketing?
Well, there's a long list. It's a rather long list.
Intrusion, interruption, exaggeration, and so on and so forth.
And I really made a list that's a little separate from that.
Here are some of the criticisms. Marketers get consumers to want
and spend more than they can afford.
And we know that from the financial disaster that people were buying homes
with maybe nothing down. Marketers are skilled at
creating grand differentiation where it shouldn't exist.
Like with commodities, you know, a chicken is a chicken, cement is cement.
So they spend a lot of time trying to tell you their cement is really better,
their salt is really better, and so on. Marketers want to produce and sell
more goods without considering the resource and environmental costs
of producing the goods. The planet Earth is affected
by the amount of production and the care with which it's done.
Marketers had not paid enough attention to product safety.
We know that because Ralph Nader made his career, basically, car--
the unsafety in cars, and then we got lead poisoning,
we got asbestos problems, and so on.
Here's a serious criticism. Marketers-- and this is not all marketers--
these are some particular companies, and so on.
Marketers favor giving the public what it wants, whether its good or not for them.
Sure, I'll sell you cigarettes. I'll sell you anything that will make money.
Therefore marketing promotes a materialistic mindset,
that-- we get turned on to more of a materialistic world,
a world of ever-changing products and services and keeping up with the Jones
and some of that.
Marketers rarely talk about sane consumption.
Yeah, some beer companies say, "Please enjoy our beer, but don't
drink too much." That's nice that they-- No one listens to that, and you still
have binge-drinking, but they're trying to do what they can
and so on and so forth. Now, let me just say
there's another side. This is important too,
because it's not a simple picture. The other side of it is
Marketing has undoubtedly raised the standard of living
in the United States. People don't naturally
buy new things. In other words, do you know, people used to keep
their refrigerators, which weren't refrigerators at the time,
they were ice boxes and they would keep going out and getting some ice
and putting it in the box, and so on. And even the washing machines
were very slow to take-- In other words, people--
It would be very expensive to buy a new appliance,
but marketers persisted in saying your life will be better with
new appliances, and that's one of its jobs.
I would even go so far as to say that marketing is so connected
to the idea of the middle class. We're talking about preserving
and building the middle class, and the lifestyle that goes with it,
and marketing is an essential definer of what it is to be--and want--
what it is to want, as a member of the middle class.
Marketing in the form of social marketing has helped improve
a lot of things. You know, one of the first causes
that marketing turned to was the environment and waste
and the ill-effects of some products, and so on.
Preserving the environment was one of the first things that
social marketers got into.
Now they're into obesity as a problem, littering as a problem,
and other problems.
Marketing is very important to the cultural world.
Museums, performing arts, and one of the big problems
that cultural institutions are facing, especially in the performing arts,
is the aging of audiences. How do you get people
who are in their forties to go to opera, to go to ballet, and so on.
It's called the graying of the audiences, and maybe that problem has
been with us for a long time, but marketers are at work
doing segmentation, targeting, positioning, in order to
make sure that all seats are filled in the theater, and also the museums
are very busy, as marketing institutions, because they have to get visitors,
they have to get donors, they have to get government grants,
so marketing is almost an intrinsic function today that's going on.
But let me--
This is not time to take a vote. Do you like marketing
or you don't like marketing. But let me show you that
the feeling-- the negative feelings about marketing came up from these people.
The attackers. They attacked marketing. Do you recognize anyone?
You see Ralph Nader? I don't... There he is. Yeah.
Who else?
Well, it is Ralph Nader. "Unsafe at Any Speed."
Rachel Carson, by the way, deserves so much more credit
than we've given to her for her book on the Silent Spring, which was about
the chemical pollution, the pesticides that were getting into our spring water,
and so on. Vance Packard, who popularized the idea
that we are hidden persuaders. That when you go into a movie theater,
you don't know this but an ad is sort of flashing to go and get some popcorn
before you sit down. Subliminal advertising,
which never did happen, but the hidden persuaders.
And then John Kenneth Galbraith, who pointed out that while we spend
so much money in making enough deodorants for any type of interest
you have in deodorants, in the public sector--
In the public sector, you've got streets that are littered,
and there's some garbage, and there's slow traffic, and--
And so we have a good private sector, but we can't enjoy it because
the public sector doesn't have the public good that would facilitate things.
You've got Naomi Klein, who's probably the prototype
person now for attacking branding. Brands, brands, they're awful.
You're paying more than you need to pay.
The book is called "No Logo," logo being another name for brand.
And Michael Sandel is-- has this new book out, which is really interesting
and worth reading. He's the fella who ran a course on justice,
and would ask groups about this size at Harvard, "What is the just thing to do
in each situation?" But his new book is called
"What Money Can't Buy: The Moral Limits of Marketing"
where he points out that if you're in jail in California
and you don't like the cell, you can pay for a better cell.
You know, maybe one with a computer if you want a computer, and so on.
But he's also-- he thinks today our culture divides people
in social classes more clearly. We used to go to ball games;
I would sit next to someone who was rich and someone who was poor.
We'd all stand in the same line for hot dogs.
Today, the guys who are rich are up in the sky box,
and he calls it the sky box-ification of the United States. The sky box-ification.
They're eating filet mignon and we peasants are down there having--
standing in line for our hot dog. So we are not meeting each other
as we used to, in the older days. It's a very interesting treatment.
I like to quote Will Rogers with this remark: "If advertisers spent
the same amount of money that they-- on improving the product
as they do on advertising, they wouldn't have to advertise it. And that's--
By the way, that's a very profound