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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

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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

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a head shrinker--We call 
him a... a nose counter.

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The expressions we would use if
you were very psychological,

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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

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the development of our retail chains.

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Lester Wunderman deserves 
credit as exemplifying the use

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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.

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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

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100 suggestions on how to improve 
the layout, the size of the aisles,

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and make a difference in the 
voulme of business.

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99:59:59,999 --> 99:59:59,999
Edward Bernays is the father of
public relations in the United States.

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His name has sort of become 
obscure, but he really was

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a very important person.
The word propaganda

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99:59:59,999 --> 99:59:59,999
was often used in connection with his 
work, because people thought it was

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a model to motivate you to feel 
a certain way about anything,

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regardless of the standards involved.
And then there's Dale Carnegie.

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In any case, how did 
marketing get its start?

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99:59:59,999 --> 99:59:59,999
Marketing got its start 
in sales departments.

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Every company has a sales group.
And the sales people really want

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to be in the office of a customer,
because that's the only way

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something happens. So they don't
want to do a lot of homework.

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99:59:59,999 --> 99:59:59,999
For example, three things they
didn't want to do.

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They didn't want to do consumer
research in a systematic way,

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because that's taking their time
away from selling to customers.

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99:59:59,999 --> 99:59:59,999
Secondly, they would've liked 
someone else to find leads.

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Now a lead means a prospect.
In fact, we distinguish between

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a hot lead: "Oh boy, he's ready
to buy. He even called us to buy."

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a warm lead, a cold lead, so on.
Someone else should do that

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for the sales people, so they don't
waste their time making calls.

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And the third thing was 
someone had to prepare

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brochures and ads. And the 
salesman is not skilled.

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The salesperson isn't skilled at
communicating through advertising

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99:59:59,999 --> 99:59:59,999
and brochures. So sales departments
added three people, or hired them

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from time to time.
Later on, it exploded

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99:59:59,999 --> 99:59:59,999
to the day today, when we have
multinationals running--

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with marketing--
In other words, marketing--

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Those three people split from sales
and became big enough to become

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its own department.
And so, some people

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in the audience here may be 
a chief marketing officer.

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The old name was Vice President
of marketing, but I like the name

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chief marketing officer because
that person now is part of

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the chief officers. Chief information
officer, chief financial officer,

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chief innovation officer, 
and the status has moved up.

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Some of you may be brand managers,
may have been in your past experience.

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Category managers, market 
segment managers,

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managing distribution channels,
like retail or wholesale things,

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pricing manager, communication
manager, database manager,

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direct marketers, internet
people, and so on.

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So, marketing is well-established.

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Now, the character of a marketing
department depends very much

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on what the CEO thinks of marketing.

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So, the 1P CEO is a person
who took over a company,

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and he says, "I don't like 
marketing, but I know I need it,

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and all I want from marketing is
some communications.

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I just want someone to broadcast
and promote us."

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So, that person is missing 
a lot of other things

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made up by other CEOs,
who are 4P CEOs.

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Now a 4P CEO says,
"I need a marketing plan."

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And the plan has to mention 
product--that's the first P.

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What about our product? What's good
about it? What are the features?

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Price: what should it be priced at?
Place: where should it be

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made accessible? Online,
offline, in stores?

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And finally promotion.

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So that's a more educated view
of the potential of marketing.

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But there's even a better view,
and that's called the CEO who says,

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"No! I don't want to start with 4 Ps,
I want to start with the fact

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the market is complex." 
There's a lot of segments.

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Each segment deserves its own plan.
In fact, one thing we've learned

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that if you just have one value
proposition for the whole market,

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it really doesn't trigger anything
in many parts of the market.

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So that CEO says, "What
segment should we go after?

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And what position should we 
take with each segment?

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What should we say about ourselves,
in how we can satisfy their needs?"

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Now there's even a higher type CEO,
which is exemplified by A.G. Lafley,

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who ran Procter & Gamble,
who recently retired.

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When you ask A.G. Lafley what's
marketing, what's your picture,

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he says, "Well, what do you mean?
Marketing is everything."

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[laughter]

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Now, marketing is everything.
What he means is

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everything starts with the customer.
No customers, no business.

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And I think he's making 
that point very much.

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Now, moving on, there's a lot of things 
that a chief marketing officer does,

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and I won't go into any detail,
but there's a lot of tasks,

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and the sad fact is that sometimes
the chief marketing officer only lasts

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99:59:59,999 --> 99:59:59,999
on the average of two years.
In other words, does a job,

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and maybe the CEO is not feeling that 
it really brought in enough new business

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that the cost of the CMO exceeds 
what the value of the CMO is.

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There's a lot to go into about
why CMOs on the average

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99:59:59,999 --> 99:59:59,999
hold on to their job for two years.
By the way, some of them

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get a better job after two years.
They become something higher

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than the chief marketing officer.
Some of them actually are pirated away

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because they're so good, they go 
to another company to be the CEO.

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But in any case, marketing--
commercial marketing,

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which I've been talking about,
could've stayed only commercial,

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and then I got involved in--
with Professor Sid Levy at Northwestern

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We started the idea of 
broadening marketing,

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because the set of tools that we use
to address consumers could be used

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in other areas.
So we have a thing

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called place marketing.
I will get a call from a city, let's say,

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and a city says, "We're not getting
enough tourists. We don't have

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any attractions for them to come 
and see. I would like to get a factory

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located here. We would like some digital
people to move here, who know digital--

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99:59:59,999 --> 99:59:59,999
We want to start a Silicon Valley."
So that's place marketing.

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The marketing of a place. How do you
dress it up and make it attractive?

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Against all of the other 
competitive places.

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The second--
Person marketing.

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99:59:59,999 --> 99:59:59,999
There's an agency called William Morris,
and a young singer might go to

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William Morris and say, "look, I want 
to get ahead. I want to appear

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99:59:59,999 --> 99:59:59,999
on Jay Leno's show. I want to--
I want to move up to being noticed.

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I want high visibility."
I wrote a book with the title

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"High Visibility." How do you 
get that visibility.

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99:59:59,999 --> 99:59:59,999
So, William Morris will look
at her and her performance

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and maybe say, "You know,
maybe in a sense--

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99:59:59,999 --> 99:59:59,999
Don't be offended, but we can 
make you into a better product."

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99:59:59,999 --> 99:59:59,999
That's sort of the language.
You know, do your hair differently,

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99:59:59,999 --> 99:59:59,999
walk a little-- dress differently.
Actually, we're going to use you to

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99:59:59,999 --> 99:59:59,999
reignite the archetype of Joan Baez.
You know, Joan Baez, the folk singer.

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99:59:59,999 --> 99:59:59,999
Well, we need a new Joan Baez.
And so, we can recast you

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and form you into the kind of 
person we all miss, and so on.

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99:59:59,999 --> 99:59:59,999
Now, social marketing is
another branch.

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99:59:59,999 --> 99:59:59,999
Today there are 2,000 social marketers
around the world, trying to help people

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eat better, exercise more, say no
to drugs, stop smoking cigar--

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99:59:59,999 --> 99:59:59,999
get off of tobacco, say no to
a number of things.

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Positive behaviors and 
negative behaviors.

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99:59:59,999 --> 99:59:59,999
By the way, my memory is that
Sweden was one of the first countries

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to want to raise a nation of nonsmokers,
non-drinkers, all the vices.

323
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And it starts at the primary school level,
that you could technically raise people

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99:59:59,999 --> 99:59:59,999
to avoid those vices, if that was 
thought to be good public policy.

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99:59:59,999 --> 99:59:59,999
So that's social marketing.
Now, political marketing,

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99:59:59,999 --> 99:59:59,999
we're saturated with. 
And I think it's degenerated,

327
99:59:59,999 --> 99:59:59,999
but that's another thing.
Fundraising is part of marketing.

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99:59:59,999 --> 99:59:59,999
I mean, fundraising is an odd form,
because you're not exchanging.

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99:59:59,999 --> 99:59:59,999
Everything else is sort of an exchange
of values. Fundraising seems to be

330
99:59:59,999 --> 99:59:59,999
a one-way transfer.
Here's some money

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99:59:59,999 --> 99:59:59,999
for the museum. 
But any fundraiser knows

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99:59:59,999 --> 99:59:59,999
there's something that should come
back to the person who is the donor

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99:59:59,999 --> 99:59:59,999
and supporter of a museum,
and working that way is important.

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So these are offshoots. 
Now all of us do marketing.

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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

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you knew there were other applicants?
Didn't you dress up as well as you could

337
99:59:59,999 --> 99:59:59,999
and even prepare what you're 
going to say, and so on?

338
99:59:59,999 --> 99:59:59,999
Did you compete for a desirable
apartment which was scarce?

339
99:59:59,999 --> 99:59:59,999
Or a member of the opposite sex,
if you wanted to court someone.

340
99:59:59,999 --> 99:59:59,999
So, in a sense, we're human animals
who know how to make an impression

341
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and market ourselves, to some extent.

342
99:59:59,999 --> 99:59:59,999
What do we dislike about marketing?

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99:59:59,999 --> 99:59:59,999
Well, there's a long list.
It's a rather long list.

344
99:59:59,999 --> 99:59:59,999
Intrusion, interruption, exaggeration,
and so on and so forth.

345
99:59:59,999 --> 99:59:59,999
And I really made a list that's 
a little separate from that.

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99:59:59,999 --> 99:59:59,999
Here are some of the criticisms.
Marketers get consumers to want

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and spend more than they can afford.

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99:59:59,999 --> 99:59:59,999
And we know that from the financial
disaster that people were buying homes

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99:59:59,999 --> 99:59:59,999
with maybe nothing down.
Marketers are skilled at

350
99:59:59,999 --> 99:59:59,999
creating grand differentiation 
where it shouldn't exist.

351
99:59:59,999 --> 99:59:59,999
Like with commodities, you know, a
chicken is a chicken, cement is cement.

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So they spend a lot of time trying to
tell you their cement is really better,

353
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their salt is really better, and so on.
Marketers want to produce and sell

354
99:59:59,999 --> 99:59:59,999
more goods without considering
the resource and environmental costs

355
99:59:59,999 --> 99:59:59,999
of producing the goods.
The planet Earth is affected

356
99:59:59,999 --> 99:59:59,999
by the amount of production
and the care with which it's done.

357
99:59:59,999 --> 99:59:59,999
Marketers had not paid enough
attention to product safety.

358
99:59:59,999 --> 99:59:59,999
We know that because Ralph Nader
made his career, basically, car--

359
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the unsafety in cars, and then 
we got lead poisoning,

360
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we got asbestos problems,
and so on.

361
99:59:59,999 --> 99:59:59,999
Here's a serious criticism. Marketers--
and this is not all marketers--

362
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these are some particular 
companies, and so on.

363
99:59:59,999 --> 99:59:59,999
Marketers favor giving the public what it
wants, whether its good or not for them.

364
99:59:59,999 --> 99:59:59,999
Sure, I'll sell you cigarettes. I'll sell 
you anything that will make money.

365
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Therefore marketing promotes 
a materialistic mindset,

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that-- we get turned on to
more of a materialistic world,

367
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a world of ever-changing products and
services and keeping up with the Jones

368
99:59:59,999 --> 99:59:59,999
and some of that.

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Marketers rarely talk about
sane consumption.

370
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Yeah, some beer companies say,
"Please enjoy our beer, but don't

371
99:59:59,999 --> 99:59:59,999
drink too much." That's nice that they--
No one listens to that, and you still

372
99:59:59,999 --> 99:59:59,999
have binge-drinking, but they're
trying to do what they can

373
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and so on and so forth.
Now, let me just say

374
99:59:59,999 --> 99:59:59,999
there's another side.
This is important too,

375
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because it's not a simple picture.
The other side of it is

376
99:59:59,999 --> 99:59:59,999
Marketing has undoubtedly 
raised the standard of living

377
99:59:59,999 --> 99:59:59,999
in the United States.
People don't naturally

378
99:59:59,999 --> 99:59:59,999
buy new things. In other words,
do you know, people used to keep

379
99:59:59,999 --> 99:59:59,999
their refrigerators, which
weren't refrigerators at the time,

380
99:59:59,999 --> 99:59:59,999
they were ice boxes and they would
keep going out and getting some ice

381
99:59:59,999 --> 99:59:59,999
and putting it in the box, and so on.
And even the washing machines

382
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were very slow to take--
In other words, people--

383
99:59:59,999 --> 99:59:59,999
It would be very expensive to
buy a new appliance,

384
99:59:59,999 --> 99:59:59,999
but marketers persisted in saying
your life will be better with

385
99:59:59,999 --> 99:59:59,999
new appliances, and 
that's one of its jobs.

386
99:59:59,999 --> 99:59:59,999
I would even go so far as to say
that marketing is so connected

387
99:59:59,999 --> 99:59:59,999
to the idea of the middle class.
We're talking about preserving

388
99:59:59,999 --> 99:59:59,999
and building the middle class,
and the lifestyle that goes with it,

389
99:59:59,999 --> 99:59:59,999
and marketing is an essential
definer of what it is to be--and want--

390
99:59:59,999 --> 99:59:59,999
what it is to want, as a member
of the middle class.

391
99:59:59,999 --> 99:59:59,999
Marketing in the form of social
marketing has helped improve

392
99:59:59,999 --> 99:59:59,999
a lot of things. You know,
one of the first causes

393
99:59:59,999 --> 99:59:59,999
that marketing turned to was 
the environment and waste

394
99:59:59,999 --> 99:59:59,999
and the ill-effects of some 
products, and so on.

395
99:59:59,999 --> 99:59:59,999
Preserving the environment
was one of the first things that

396
99:59:59,999 --> 99:59:59,999
social marketers got into.

397
99:59:59,999 --> 99:59:59,999
Now they're into obesity as a problem,
littering as a problem,

398
99:59:59,999 --> 99:59:59,999
and other problems.

399
99:59:59,999 --> 99:59:59,999
Marketing is very important
to the cultural world.

400
99:59:59,999 --> 99:59:59,999
Museums, performing arts,
and one of the big problems

401
99:59:59,999 --> 99:59:59,999
that cultural institutions are facing,
especially in the performing arts,

402
99:59:59,999 --> 99:59:59,999
is the aging of audiences.
How do you get people

403
99:59:59,999 --> 99:59:59,999
who are in their forties to go to opera,
to go to ballet, and so on.

404
99:59:59,999 --> 99:59:59,999
It's called the graying of the audiences,
and maybe that problem has

405
99:59:59,999 --> 99:59:59,999
been with us for a long time,
but marketers are at work

406
99:59:59,999 --> 99:59:59,999
doing segmentation, targeting,
positioning, in order to

407
99:59:59,999 --> 99:59:59,999
make sure that all seats are filled
in the theater, and also the museums

408
99:59:59,999 --> 99:59:59,999
are very busy, as marketing institutions,
because they have to get visitors,

409
99:59:59,999 --> 99:59:59,999
they have to get donors, they have to
get government grants,

410
99:59:59,999 --> 99:59:59,999
so marketing is almost an intrinsic
function today that's going on.

411
99:59:59,999 --> 99:59:59,999
But let me--

412
99:59:59,999 --> 99:59:59,999
This is not time to take a vote.
Do you like marketing

413
99:59:59,999 --> 99:59:59,999
or you don't like marketing. 
But let me show you that

414
99:59:59,999 --> 99:59:59,999
the feeling-- the negative feelings about
marketing came up from these people.

415
99:59:59,999 --> 99:59:59,999
The attackers. They attacked marketing.
Do you recognize anyone?

416
99:59:59,999 --> 99:59:59,999
You see Ralph Nader? I don't...
There he is. Yeah.

417
99:59:59,999 --> 99:59:59,999
Who else?

418
99:59:59,999 --> 99:59:59,999
Well, it is Ralph Nader.
"Unsafe at Any Speed."

419
99:59:59,999 --> 99:59:59,999
Rachel Carson, by the way,
deserves so much more credit

420
99:59:59,999 --> 99:59:59,999
than we've given to her for her book
on the Silent Spring, which was about

421
99:59:59,999 --> 99:59:59,999
the chemical pollution, the pesticides
that were getting into our spring water,

422
99:59:59,999 --> 99:59:59,999
and so on. Vance Packard,
who popularized the idea

423
99:59:59,999 --> 99:59:59,999
that we are hidden persuaders. 
That when you go into a movie theater,

424
99:59:59,999 --> 99:59:59,999
you don't know this but an ad is sort of
flashing to go and get some popcorn

425
99:59:59,999 --> 99:59:59,999
before you sit down. 
Subliminal advertising,

426
99:59:59,999 --> 99:59:59,999
which never did happen, 
but the hidden persuaders.

427
99:59:59,999 --> 99:59:59,999
And then John Kenneth Galbraith,
who pointed out that while we spend

428
99:59:59,999 --> 99:59:59,999
so much money in making enough
deodorants for any type of interest

429
99:59:59,999 --> 99:59:59,999
you have in deodorants,
in the public sector--

430
99:59:59,999 --> 99:59:59,999
In the public sector, you've got
streets that are littered,

431
99:59:59,999 --> 99:59:59,999
and there's some garbage, 
and there's slow traffic, and--

432
99:59:59,999 --> 99:59:59,999
And so we have a good private sector,
but we can't enjoy it because

433
99:59:59,999 --> 99:59:59,999
the public sector doesn't have the
public good that would facilitate things.

434
99:59:59,999 --> 99:59:59,999
You've got Naomi Klein,
who's probably the prototype

435
99:59:59,999 --> 99:59:59,999
person now for attacking branding.
Brands, brands, they're awful.

436
99:59:59,999 --> 99:59:59,999
You're paying more than 
you need to pay.

437
99:59:59,999 --> 99:59:59,999
The book is called "No Logo,"
logo being another name for brand.

438
99:59:59,999 --> 99:59:59,999
And Michael Sandel is-- has this 
new book out, which is really interesting

439
99:59:59,999 --> 99:59:59,999
and worth reading. He's the fella
who ran a course on justice,

440
99:59:59,999 --> 99:59:59,999
and would ask groups about this size
at Harvard, "What is the just thing to do

441
99:59:59,999 --> 99:59:59,999
in each situation?" 
But his new book is called

442
99:59:59,999 --> 99:59:59,999
"What Money Can't Buy: 
The Moral Limits of Marketing"

443
99:59:59,999 --> 99:59:59,999
where he points out that 
if you're in jail in California

444
99:59:59,999 --> 99:59:59,999
and you don't like the cell,
you can pay for a better cell.

445
99:59:59,999 --> 99:59:59,999
You know, maybe one with a computer
if you want a computer, and so on.

446
99:59:59,999 --> 99:59:59,999
But he's also-- he thinks today
our culture divides people

447
99:59:59,999 --> 99:59:59,999
in social classes more clearly.
We used to go to ball games;

448
99:59:59,999 --> 99:59:59,999
I would sit next to someone who was
rich and someone who was poor.

449
99:59:59,999 --> 99:59:59,999
We'd all stand in the 
same line for hot dogs.

450
99:59:59,999 --> 99:59:59,999
Today, the guys who are rich
are up in the sky box,

451
99:59:59,999 --> 99:59:59,999
and he calls it the sky box-ification of 
the United States. The sky box-ification.

452
99:59:59,999 --> 99:59:59,999
They're eating filet mignon and
we peasants are down there having--

453
99:59:59,999 --> 99:59:59,999
standing in line for our hot dog.
So we are not meeting each other

454
99:59:59,999 --> 99:59:59,999
as we used to, in the older days.
It's a very interesting treatment.

455
99:59:59,999 --> 99:59:59,999
I like to quote Will Rogers with this
remark: "If advertisers spent

456
99:59:59,999 --> 99:59:59,999
the same amount of money that they--
on improving the product

457
99:59:59,999 --> 99:59:59,999
as they do on advertising, they wouldn't
have to advertise it. And that's--

458
99:59:59,999 --> 99:59:59,999
By the way, that's a very profound 
observation, because in the age

459
99:59:59,999 --> 99:59:59,999
of the internet, it's so much easier
to talk about a product you like

460
99:59:59,999 --> 99:59:59,999
to others and also about
a product you don't like.

461
99:59:59,999 --> 99:59:59,999
And in a sense, if this goes far enough,
there will be no bad companies

462
99:59:59,999 --> 99:59:59,999
anymore. It would be not possible
for a company to be a bad company,

463
99:59:59,999 --> 99:59:59,999
because the word 
of mouth will sink it.

464
99:59:59,999 --> 99:59:59,999
So he's sort of touching on that point.
Make-- Do a good job, and don't--

465
99:59:59,999 --> 99:59:59,999
and others will advertise 
the good job you did.

466
99:59:59,999 --> 99:59:59,999
Now, I want to add another group,
and this is a group of visionaries,

467
99:59:59,999 --> 99:59:59,999
and I'd like to call them 
our best marketers.

468
99:59:59,999 --> 99:59:59,999
But they're not necessarily the 
chief marketing officer,

469
99:59:59,999 --> 99:59:59,999
they're CEOs. But what--
Their contribution has been

470
99:59:59,999 --> 99:59:59,999
the kind you want from your 
chief marketing officers.

471
99:59:59,999 --> 99:59:59,999
So who do you see here? 
Do you know any of those people?

472
99:59:59,999 --> 99:59:59,999
[audience murmuring]

473
99:59:59,999 --> 99:59:59,999
Yeah. You've got to know some of 
them. But you probably don't know

474
99:59:59,999 --> 99:59:59,999
the first one. Ingvar Kamprad.
It's very even hard to remember

475
99:59:59,999 --> 99:59:59,999
his name, but he's that Swedish 
person who invented IKEA,

476
99:59:59,999 --> 99:59:59,999
who said, "I must bring down the cost
of furniture, and I can do that by

477
99:59:59,999 --> 99:59:59,999
taking the air out of it and just 
selling knocked down furniture,

478
99:59:59,999 --> 99:59:59,999
and now people can afford to have
some nice things in their home.

479
99:59:59,999 --> 99:59:59,999
Richard Branson is phenomenal.
He's a-- not only in self-promotion.

480
99:59:59,999 --> 99:59:59,999
He's one of the best self-promoters
possible. I don't know if you know

481
99:59:59,999 --> 99:59:59,999
that he was in Times Square 
some years ago

482
99:59:59,999 --> 99:59:59,999
to introduce his new cell phone,
the Virgin cell phone,

483
99:59:59,999 --> 99:59:59,999
and he said he was going to drop off 
of a building, a 30-story building,

484
99:59:59,999 --> 99:59:59,999
and-- not wearing any clothes or
something, so everyone showed up.

485
99:59:59,999 --> 99:59:59,999
I don't know why they would want to
show up, but they showed up

486
99:59:59,999 --> 99:59:59,999
in Times Square, and sure, he did 
jump down, but it was on a rope

487
99:59:59,999 --> 99:59:59,999
and he's carrying a huge version
of his new cell phone.

488
99:59:59,999 --> 99:59:59,999
And so everyone--not just in
Times Square--the reporters

489
99:59:59,999 --> 99:59:59,999
were covering it. All of New York 
knew about the new-- there was

490
99:59:59,999 --> 99:59:59,999
a new Virgin cell phone.
So he's very good at that.

491
99:59:59,999 --> 99:59:59,999
But right now, he told me something
I couldn't believe. I was in Dubai,

492
99:59:59,999 --> 99:59:59,999
and he gave a speech, and we 
were just chatting, and he said,

493
99:59:59,999 --> 99:59:59,999
"Where are you from?" I said Chicago,
and he says, "You know, there will be

494
99:59:59,999 --> 99:59:59,999
a time when you can go from
Dubai to Chicago in half an hour."

495
99:59:59,999 --> 99:59:59,999
What is it-- Is this a time
machine you're inventing?

496
99:59:59,999 --> 99:59:59,999
He says, "No, it's just a rocket ship."
So the rocket ship takes off from

497
99:59:59,999 --> 99:59:59,999
Dubai, it just goes right up in the 
air and lands in Chicago.

498
99:59:59,999 --> 99:59:59,999
So he's working with some people
on the new spaceships, basically.

499
99:59:59,999 --> 99:59:59,999
And you want to watch him.
Of course, Walt Disney.

500
99:59:59,999 --> 99:59:59,999
Great, great visionary.

501
99:59:59,999 --> 99:59:59,999
Herb Kelleher. Thanks to him,
we have Southwest Airlines,

502
99:59:59,999 --> 99:59:59,999
which started a whole class
of low-cost airlines.

503
99:59:59,999 --> 99:59:59,999
And then we've got Anita Roddick,
who ran The Body Shop, where she said

504
99:59:59,999 --> 99:59:59,999
"I'm not selling hope, I'm selling good
skin lotion. All the others sell hope."

505
99:59:59,999 --> 99:59:59,999
That was a famous remark by Revlon,
"In the factory we make lipstick,

506
99:59:59,999 --> 99:59:59,999
in the store we sell hope."
But she wrestled with that one.

507
99:59:59,999 --> 99:59:59,999
Then you've got Bill Gates, 
Steve Jobs, and Jeff Bezos.

508
99:59:59,999 --> 99:59:59,999
And Jeff-- Let's see, we've gotta
make sure he gets in there.

509
99:59:59,999 --> 99:59:59,999
[laughter]
Jeff is extraordinary.

510
99:59:59,999 --> 99:59:59,999
If there's anyone who has 
consumer thinking in his mind,

511
99:59:59,999 --> 99:59:59,999
wanting to facilitate the consumer
to really order or re-order or return

512
99:59:59,999 --> 99:59:59,999
or anything like that. And then to buy
more than books, to buy electronics,

513
99:59:59,999 --> 99:59:59,999
to buy clothes. He's done a marvelous
job. He's very exemplary in that sense.

514
99:59:59,999 --> 99:59:59,999
We're running out of time and I'm going
to want some questions from you,

515
99:59:59,999 --> 99:59:59,999
but let me just refer to 
a few more things.

516
99:59:59,999 --> 99:59:59,999
This is a chart I use in
the book, "Marketing 3.0,"

517
99:59:59,999 --> 99:59:59,999
basically to say that every company
should define its mission, it's vision

518
99:59:59,999 --> 99:59:59,999
for the future, and its values--
what it really cares about,

519
99:59:59,999 --> 99:59:59,999
and if you're a 1.0 marketer,
it's a good job you're doing.

520
99:59:59,999 --> 99:59:59,999
I mean, of course you're trying
to deliver satisfaction, make a profit,

521
99:59:59,999 --> 99:59:59,999
and make a good product. Be better.
If you're a 2.0 marketer, you want to

522
99:59:59,999 --> 99:59:59,999
help people realize their aspirations.
You want to deliver things that

523
99:59:59,999 --> 99:59:59,999
they might aspire to have.
They will return frequently to buy more,

524
99:59:59,999 --> 99:59:59,999
and your product is different than the
others. Not only better, but different.

525
99:59:59,999 --> 99:59:59,999
And suddenly, you move 
from mind to heart to spirit.

526
99:59:59,999 --> 99:59:59,999
What's spirit? It's that small
set of companies that say

527
99:59:59,999 --> 99:59:59,999
"We're compassionate. We have
compassion for the state of the world.

528
99:59:59,999 --> 99:59:59,999
We want to get involved. We want 
the companies to be a machine

529
99:59:59,999 --> 99:59:59,999
for improving the lives of people."
You could say-- you could reduce that

530
99:59:59,999 --> 99:59:59,999
to just some charity work they're doing.
Or it could be a real, fundamental

531
99:59:59,999 --> 99:59:59,999
strain in the way they do their business.
We can name some companies that

532
99:59:59,999 --> 99:59:59,999
really have felt that they want 
to help reshape the world

533
99:59:59,999 --> 99:59:59,999
into being a better world.
So that is--

534
99:59:59,999 --> 99:59:59,999
Here's one of my favorite companies
that illustrate the cells in that picture.

535
99:59:59,999 --> 99:59:59,999
The SC Johnson company in 
Racine, Wisconsin

536
99:59:59,999 --> 99:59:59,999
whose products are shown over here.
You probably have purchased some

537
99:59:59,999 --> 99:59:59,999
of their waxes or some of their
insect repellent or other things,

538
99:59:59,999 --> 99:59:59,999
but they're just winning awards
for being a very caring company.

539
99:59:59,999 --> 99:59:59,999
Incidentally, a book that you
might want to read is called

540
99:59:59,999 --> 99:59:59,999
"Firms of Endearment,"
which is a fancy way to say

541
99:59:59,999 --> 99:59:59,999
companies we love.
Firms of Endearment.

542
99:59:59,999 --> 99:59:59,999
And I love the subtitle,
"How World-Class Companies

543
99:59:59,999 --> 99:59:59,999
Profit from Passion and Purpose."
And it's based on asking audiences--

544
99:59:59,999 --> 99:59:59,999
random meeting of people--is there 
any company that you like?

545
99:59:59,999 --> 99:59:59,999
That you like a lot?
Now, let me ask that question.

546
99:59:59,999 --> 99:59:59,999
Name a company that you would
dearly miss if it disappeared, vanished.

547
99:59:59,999 --> 99:59:59,999
[audience murmurs]
Apple! See, always Apple.

548
99:59:59,999 --> 99:59:59,999
I thought you were going to say
Harley Davidson, but that's

549
99:59:59,999 --> 99:59:59,999
another one. Amazon.
I would miss Amazon.

550
99:59:59,999 --> 99:59:59,999
I really would. I would even 
subsidize it to continue.

551
99:59:59,999 --> 99:59:59,999
[laughter]
Which one?

552
99:59:59,999 --> 99:59:59,999
Costco. Of course.
I'm with you on Costco.

553
99:59:59,999 --> 99:59:59,999
Nike. Okay, well you see
what happens is,

554
99:59:59,999 --> 99:59:59,999
these are the names of the companies
that came up again and again.

555
99:59:59,999 --> 99:59:59,999
I don't think there's any surprises there.
I've asked other countries to do this too.

556
99:59:59,999 --> 99:59:59,999
Because it would be a different mix
of companies that would come up.

557
99:59:59,999 --> 99:59:59,999
But the main thing is, firms of
endearment are so much

558
99:59:59,999 --> 99:59:59,999
more profitable than the ones
that have not been dear to us.

559
99:59:59,999 --> 99:59:59,999
One of the things is that they--
They're either 9 or 10 times

560
99:59:59,999 --> 99:59:59,999
as profitable, but let's see why,
and without going through

561
99:59:59,999 --> 99:59:59,999
everything here, look at the last
one. These are the attributes

562
99:59:59,999 --> 99:59:59,999
of that set of companies.
And the last attribute is that

563
99:59:59,999 --> 99:59:59,999
they spend less on marketing
than rather more.

564
99:59:59,999 --> 99:59:59,999
I bet you thought that the companies
that were going to be dear to us

565
99:59:59,999 --> 99:59:59,999
are the ones who are just 
advertising all the time.

566
99:59:59,999 --> 99:59:59,999
They're so familiar.
We see Coca-Cola

567
99:59:59,999 --> 99:59:59,999
all the time. All the time.
No! They spend less on advertising,

568
99:59:59,999 --> 99:59:59,999
so who's doing the advertising?
The customer. You guys are.

569
99:59:59,999 --> 99:59:59,999
So that's where you should
put your money.

570
99:59:59,999 --> 99:59:59,999
Create a love affair.
Create fans with others.

571
99:59:59,999 --> 99:59:59,999
Now I'm going to end with two slides.
This is on a downer, a little bit.

572
99:59:59,999 --> 99:59:59,999
"The End of Work"
This is Jeremy Rifkin's book.

573
99:59:59,999 --> 99:59:59,999
It's now about 9 or 10 years old.
And he says because of the slow down

574
99:59:59,999 --> 99:59:59,999
in population growth, automation
of factories and computers, robotics,

575
99:59:59,999 --> 99:59:59,999
3D printing, can the nation create
enough jobs? Can the world create

576
99:59:59,999 --> 99:59:59,999
enough jobs for the 
population, and so on.

577
99:59:59,999 --> 99:59:59,999
And it raises a question about
marketing's role.

578
99:59:59,999 --> 99:59:59,999
Marketing's role normally is seen
as to sell you some things.

579
99:59:59,999 --> 99:59:59,999
The basic role of marketing
is to create jobs.

580
99:59:59,999 --> 99:59:59,999
It is the job creator. Namely, it 
gets you to want something

581
99:59:59,999 --> 99:59:59,999
that someone has to produce.
So there's a basic question:

582
99:59:59,999 --> 99:59:59,999
Does marketing really create
new jobs or does it only

583
99:59:59,999 --> 99:59:59,999
create shifts in the shares?
Like if I switch from brand X

584
99:59:59,999 --> 99:59:59,999
to brand Y, that's not creating--
Brand X loses a job and brand Y

585
99:59:59,999 --> 99:59:59,999
gets a job. So, but it is true
that if we're talking a new product,

586
99:59:59,999 --> 99:59:59,999
marketing will help accelerate 
it's recognition, the awareness of it,

587
99:59:59,999 --> 99:59:59,999
and intensify the drive to purchase it.
In other words, we buy our iPads

588
99:59:59,999 --> 99:59:59,999
and other things that come along
partly because they're wanted,

589
99:59:59,999 --> 99:59:59,999
they are desired objects,
and marketing accelerates

590
99:59:59,999 --> 99:59:59,999
the rate at which growth takes place
with those new products.

591
99:59:59,999 --> 99:59:59,999
The other book, and I'll end 
with this, is another downer.

592
99:59:59,999 --> 99:59:59,999
"The Death of Demand"

593
99:59:59,999 --> 99:59:59,999
And what is the relationship between
marketing and demand?

594
99:59:59,999 --> 99:59:59,999
And is-- he uses a term saturated--
finding growth in a saturated

595
99:59:59,999 --> 99:59:59,999
global economy.

596
99:59:59,999 --> 99:59:59,999
I've been wrestling with that problem,
and growth is the issue today.

597
99:59:59,999 --> 99:59:59,999
Growth is the issue.
Growth means jobs, and so on.

598
99:59:59,999 --> 99:59:59,999
And the fact is, there are 
8 ways to grow a business.

599
99:59:59,999 --> 99:59:59,999
So the title of the book is
"Market Your Way to Grow:

600
99:59:59,999 --> 99:59:59,999
8 Ways to Win."
And you know all of them.

601
99:59:59,999 --> 99:59:59,999
You know that we can go to
places where there is growth.

602
99:59:59,999 --> 99:59:59,999
We can sell in China,
even if it's a low growth here.

603
99:59:59,999 --> 99:59:59,999
Or Brazil. We know we can grow
by acquiring other firms.

604
99:59:59,999 --> 99:59:59,999
We know we can grow by innovating.
Inventing something new.

605
99:59:59,999 --> 99:59:59,999
We know we can grow by taking 
business away from someone else,

606
99:59:59,999 --> 99:59:59,999
and so on and so forth.
So one of the things

607
99:59:59,999 --> 99:59:59,999
we're wrestling with is how 
do you, as a firm, grow?

608
99:59:59,999 --> 99:59:59,999
And by coincidence, another 
colleague of mine at

609
99:59:59,999 --> 99:59:59,999
the Kelogg School of Management,
Tim-- He just wrote a book called

610
99:59:59,999 --> 99:59:59,999
"Defending Your Business," and it's
so nice that his book came out

611
99:59:59,999 --> 99:59:59,999
with mine, because the first job 
is always defend what you've got.

612
99:59:59,999 --> 99:59:59,999
Hold on to the customer you have,
then you start worrying about

613
99:59:59,999 --> 99:59:59,999
some more growth.
So we both, as members

614
99:59:59,999 --> 99:59:59,999
of the department, are wrestling with
how to ignore these books

615
99:59:59,999 --> 99:59:59,999
and say they're wrong, and that
there is a bright future ahead.

616
99:59:59,999 --> 99:59:59,999
[laughter]
So let me stop here

617
99:59:59,999 --> 99:59:59,999
and take any questions you might have.

618
99:59:59,999 --> 99:59:59,999
[applause]

619
99:59:59,999 --> 99:59:59,999
Thank you.

620
99:59:59,999 --> 99:59:59,999
[Moderator]: Okay, we have time for 
a few questions for Professor Kotler.

621
99:59:59,999 --> 99:59:59,999
Is there anyone on this side of
the auditorium that would like

622
99:59:59,999 --> 99:59:59,999
to ask a question?

623
99:59:59,999 --> 99:59:59,999
[Kotler]: Yes. I see--
I see you over there.

624
99:59:59,999 --> 99:59:59,999
Now a microphone will
magically come down here.

625
99:59:59,999 --> 99:59:59,999
[Moderator]: Susan will
bring you a microphone.

626
99:59:59,999 --> 99:59:59,999
[Kotler]: And if there's any other
people-- and there's a person over there

627
99:59:59,999 --> 99:59:59,999
Would you introduce yourself, please?

628
99:59:59,999 --> 99:59:59,999
[Audience member]: My name is
Iris Witkowski and I've been

629
99:59:59,999 --> 99:59:59,999
coming to the Humanities Festival
as long as it exists, and I very much

630
99:59:59,999 --> 99:59:59,999
appreciate your talk today.
[Kotler]: Thank you.

631
99:59:59,999 --> 99:59:59,999
[Audience member]: My--
I'm making a statement.

632
99:59:59,999 --> 99:59:59,999
What really drives me nuts,
as far as saturation is concerned,

633
99:59:59,999 --> 99:59:59,999
is the placement of products
on television programs.

634
99:59:59,999 --> 99:59:59,999
It used to be that in a movie
you'd say "Oh, I saw that brand."

635
99:59:59,999 --> 99:59:59,999
It seemed to be accidental.
Now it's all over.

636
99:59:59,999 --> 99:59:59,999
Even the anchormen have 
L.L. Bean jackets on.

637
99:59:59,999 --> 99:59:59,999
[Kotler]: You know, that's the field
called product placement,

638
99:59:59,999 --> 99:59:59,999
and we first got conscious of it
with the James Bond films,

639
99:59:59,999 --> 99:59:59,999
where each time there was a different
car, he drove an Audi or he drove

640
99:59:59,999 --> 99:59:59,999
something else, because it was a 
matter of what car company would pay

641
99:59:59,999 --> 99:59:59,999
the most for the next film to 
feature that car, and now,

642
99:59:59,999 --> 99:59:59,999
does the person speaking pick up
a Coke bottle or a Pepsi bottle?

643
99:59:59,999 --> 99:59:59,999
And things like that. Most of us don't
notice it. It's not yet that intrusive,

644
99:59:59,999 --> 99:59:59,999
but it has been discovered as a way to 
get some visibility for certain products.

645
99:59:59,999 --> 99:59:59,999
Product placement.

646
99:59:59,999 --> 99:59:59,999
[Audience member]: I'm Cody Hagle.
I'm a Charter Humanist.

647
99:59:59,999 --> 99:59:59,999
Again, thank you. On the evening
national news, 75 to 80 percent

648
99:59:59,999 --> 99:59:59,999
of the ads are for pharmaceuticals.
[Kotler]: And they say awful things

649
99:59:59,999 --> 99:59:59,999
about each one!
[laughter]

650
99:59:59,999 --> 99:59:59,999
[Audience member]: And I believe
there was a change in legal

651
99:59:59,999 --> 99:59:59,999
requirements some years ago. 
What are your thoughts about that,

652
99:59:59,999 --> 99:59:59,999
because clearly that advertising 
is driving demand, which is driving

653
99:59:59,999 --> 99:59:59,999
costs, etcetera, etcetera.
[Koterl]: Yeah.

654
99:59:59,999 --> 99:59:59,999
It's called over-the-counter 
advertising, too.

655
99:59:59,999 --> 99:59:59,999
But maybe it's also prescription.
But basically, you can make a case

656
99:59:59,999 --> 99:59:59,999
for it by saying consumers should know
what they might think would be

657
99:59:59,999 --> 99:59:59,999
the right thing for them, otherwise
the only one who could tell them

658
99:59:59,999 --> 99:59:59,999
what's right is the doctor. And the 
doctors don't like it, of course.

659
99:59:59,999 --> 99:59:59,999
The doctors in some cases
are offended by--

660
99:59:59,999 --> 99:59:59,999
by the patient saying what he 
wants as a prescription.

661
99:59:59,999 --> 99:59:59,999
But, you know, this has happened
with lawyers who are advertising now.

662
99:59:59,999 --> 99:59:59,999
Doctors are advertising themselves,
even if they don't like that.

663
99:59:59,999 --> 99:59:59,999
The expert is Prabha Sinha,
who runs a firm called ZS

664
99:59:59,999 --> 99:59:59,999
and he's always working with the 
doctors and pharmaceutical people,

665
99:59:59,999 --> 99:59:59,999
and could help answer that.

666
99:59:59,999 --> 99:59:59,999
Any other things that bother 
you about advertising?

667
99:59:59,999 --> 99:59:59,999
[Audience member]: Hi, my name
is Bob Michaelson.

668
99:59:59,999 --> 99:59:59,999
Thank you, Professor Kotler. It is
a pleasure to hear you in person.

669
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You've been a big influence to so
many people, myself in particular,

670
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for so many years. My question--
[Kotler]: One second.

671
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How many of you have read
any of my books? Any hands?

672
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Thank you-- I owe thanks to you!

673
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[laughter]
Please proceed.

674
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[Audience member]: My question
is in regards to social media,

675
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and you started off your presentation
talking about so much of marketing

676
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was defined at the beginning of the
20th century. We're 100 years into it.

677
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As you look at social media, do you see
across a continuum of marketing

678
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this thing a short-term phenomena 
or radical change in as we do marketing

679
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for the next century. That's part 1.
And part 2: Do you see the ability

680
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to apply an ROI to social media?

681
99:59:59,999 --> 99:59:59,999
[Kotler]: Yeah. Those are 
excellent questions.

682
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I-- This is not a fad. We are in the
digital age. We've passed analog,

683
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and there's no turning back.
That means that--

684
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I see the following happening.
Every company I talk to says

685
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"We're gonna go digital too, 
but slowly. We're gonna rely

686
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on our tradition," which is newspapers--
which are disappearing, by the way--

687
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radio, TV, billboards, and magazines.

688
99:59:59,999 --> 99:59:59,999
So, at best, they will say this,
"Let's turn 10% of our next budget

689
99:59:59,999 --> 99:59:59,999
over to digital," which means
Facebook, Twitter, and YouTube

690
99:59:59,999 --> 99:59:59,999
and so on. And let's see what happens.
Let's hire a 12-year-old

691
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[laughter]
--give them a budget,

692
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and hope they come back saying,
"Look what I did with Facebook!

693
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Look at how many mentions!"
And so on.

694
99:59:59,999 --> 99:59:59,999
Now, that goes to your second question.
How do we measure the impact

695
99:59:59,999 --> 99:59:59,999
of using Facebook or 
something like that?

696
99:59:59,999 --> 99:59:59,999
Progress is being made.
But remember, we never

697
99:59:59,999 --> 99:59:59,999
measured advertising right either!
I mean, traditional advertising was a--

698
99:59:59,999 --> 99:59:59,999
was-- first of all, the basic notion
of traditional advertising is

699
99:59:59,999 --> 99:59:59,999
you know that half the people will never
see the-- what did Wanamaker say?

700
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I know that half of the money I 
spent on advertising is wasted,

701
99:59:59,999 --> 99:59:59,999
it's just that I don't know which half!
[laughter]

702
99:59:59,999 --> 99:59:59,999
Basically, we judge things by
how many people were, in principle,

703
99:59:59,999 --> 99:59:59,999
exposed--cost per 
thousand people exposed--

704
99:59:59,999 --> 99:59:59,999
when we make an advertising budget,
and frankly many of them were

705
99:59:59,999 --> 99:59:59,999
in the bathroom or the kitchen 
when the ad appeared.

706
99:59:59,999 --> 99:59:59,999
So... and increasingly, people
are more on their TVs--

707
99:59:59,999 --> 99:59:59,999
on their computer screens than they
are necessarily watching ads.

708
99:59:59,999 --> 99:59:59,999
And I think the advertising industry
is making the mistake of sa--

709
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putting too many ads now.
I mean, there's little content left

710
99:59:59,999 --> 99:59:59,999
on some programs, with the
number of ads that flash by.

711
99:59:59,999 --> 99:59:59,999
They're all 30-second things.

712
99:59:59,999 --> 99:59:59,999
So, now about measuring.
If you read Advertising Age,

713
99:59:59,999 --> 99:59:59,999
you'll see a lot of statements
and claims that there is

714
99:59:59,999 --> 99:59:59,999
measurement going on.
One thing I would say is this:

715
99:59:59,999 --> 99:59:59,999
Don't take your ad budget and take
50% and switch it to digital,

716
99:59:59,999 --> 99:59:59,999
which one firm did, and it 
was a terrible result.

717
99:59:59,999 --> 99:59:59,999
Because until you know
what each social medium does,

718
99:59:59,999 --> 99:59:59,999
what you want is 10% of your budget
going that way, and then when there's

719
99:59:59,999 --> 99:59:59,999
some proof, you put in 
another 5 or 10 percent

720
99:59:59,999 --> 99:59:59,999
into that particular use 
of the social media.

721
99:59:59,999 --> 99:59:59,999
[Moderator]: Okay, we've got time
for just one more question.

722
99:59:59,999 --> 99:59:59,999
I know a lot of our attendees are
going to other events,

723
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so we have one right here
[Kotler]: Oh, okay.

724
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[Audience member]: Mark Ruen
is my name. I've been in

725
99:59:59,999 --> 99:59:59,999
direct marketing my entire career,
and so it's interesting that I should

726
99:59:59,999 --> 99:59:59,999
follow up a question about
measurement in advertising

727
99:59:59,999 --> 99:59:59,999
because I've lived by my metrics.
Now, my question is this:

728
99:59:59,999 --> 99:59:59,999
I've always guided my marketing
decisions according to the so-called

729
99:59:59,999 --> 99:59:59,999
4 Ps or 5 Ps, depending on
where you're coming from,

730
99:59:59,999 --> 99:59:59,999
and in terms of the P of the
placement, I mean, the internet

731
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certainly flattened the world,
and our distribution channels

732
99:59:59,999 --> 99:59:59,999
have changed. But how do you
see the other Ps in this digital age?

733
99:59:59,999 --> 99:59:59,999
[Kotler]: Okay. First of all, let me say, 
I'm so glad you're in direct marketing.

734
99:59:59,999 --> 99:59:59,999
Direct marketing people are much 
more accountable for the results.

735
99:59:59,999 --> 99:59:59,999
They could actually experiment 
with trying to release different

736
99:59:59,999 --> 99:59:59,999
direct messages and seeing--
and testing, and then going with the one

737
99:59:59,999 --> 99:59:59,999
and knowing what it costs to do the
campaign, what the sales were,

738
99:59:59,999 --> 99:59:59,999
and it's just a pure P and L
kind of exercise,

739
99:59:59,999 --> 99:59:59,999
which we couldn't do with just
the normal commercials on TV.

740
99:59:59,999 --> 99:59:59,999
Now, are you asking where the 
other three Ps are going, in a sense?

741
99:59:59,999 --> 99:59:59,999
Like, what's happening to product
thinking and pricing and place?

742
99:59:59,999 --> 99:59:59,999
See, there will be new 
distribution channels all the time.

743
99:59:59,999 --> 99:59:59,999
I've been asked this question when
I wrote the book "Marketing 3.0,"

744
99:59:59,999 --> 99:59:59,999
which is really the case that
some companies should be

745
99:59:59,999 --> 99:59:59,999
socially responsible as well.
Someone would ask me,

746
99:59:59,999 --> 99:59:59,999
"When are you gonna 
come up with 4.0?"

747
99:59:59,999 --> 99:59:59,999
And I don't really