WEBVTT 00:00:08.256 --> 00:00:10.998 On behalf of our President and CEO, Greg Case, 00:00:10.998 --> 00:00:13.797 and our chief marketing officer, Phil Clement, 00:00:14.115 --> 00:00:19.723 it's a real honor for Aon to be the sponsor of this event today. 00:00:19.723 --> 00:00:22.705 And for many of you, you might know that Aon 00:00:22.705 --> 00:00:28.509 is now a UK-based company, but it's also important for you to know 00:00:28.509 --> 00:00:32.556 that the Aon Foundation, for the past 25 years, 00:00:32.556 --> 00:00:36.290 has made it a priority to support educational activities and 00:00:36.290 --> 00:00:39.963 cultural institutions like the Chicago Humanities Festival 00:00:39.963 --> 00:00:43.841 and the Charter Humanist Circle, that does so much to enrich 00:00:43.841 --> 00:00:48.775 the lives of all of us in this room and everybody in Chicago. 00:00:48.775 --> 00:00:53.174 And even though we're now in the UK, I want everybody in this room to know 00:00:53.174 --> 00:00:57.919 that we intend to continue this commitment, 00:00:57.919 --> 00:01:00.845 and it will remain high on our priority list for the things we do 00:01:00.845 --> 00:01:03.682 to support the community of Chicago for many years to come. 00:01:05.534 --> 00:01:09.613 [applause] 00:01:11.123 --> 00:01:14.504 On behalf of my colleagues at Aon, I want to thank 00:01:14.504 --> 00:01:18.810 the Charter Humanist Circle and its members 00:01:18.810 --> 00:01:22.485 for their very valuable support, and I also want to thank 00:01:22.485 --> 00:01:26.442 Northwestern University Law School for allowing us to use 00:01:26.442 --> 00:01:30.645 the auditorium today. 00:01:30.645 --> 00:01:34.797 At Aon, we believe in the mantra "If we can't measure it, 00:01:34.797 --> 00:01:37.145 we don't do it." 00:01:37.145 --> 00:01:40.334 And because of that, it's a real honor for us 00:01:40.334 --> 00:01:45.611 to be here supporting and introducing Dr. Philip Kotler. 00:01:45.611 --> 00:01:51.524 Dr. Kotler has defined marketing as "the science and art 00:01:51.524 --> 00:01:57.793 of exploring, creating, and delivering value to satisfy 00:01:57.793 --> 00:02:02.743 the needs of a target market at a profit." 00:02:02.743 --> 00:02:06.667 He is recognized around the world as one of the foremost experts 00:02:06.667 --> 00:02:10.905 on business, of marketing, and for his insights on 00:02:10.905 --> 00:02:16.574 how exemplary marketing has the creativity and the power 00:02:16.574 --> 00:02:22.124 to influence global consumers every day. 00:02:22.124 --> 00:02:26.908 In that spirit, I hope you'll join me in welcoming Dr. Philip Kotler. 00:02:26.908 --> 00:02:38.951 [applause] 00:02:38.951 --> 00:02:44.025 Now before I turn the microphone over to Dr. Kotler, 00:02:44.025 --> 00:02:48.732 in the spirit of marketing, maybe many of you in this room know 00:02:48.732 --> 00:02:52.486 that Aon does a great many things globally, but one of the things 00:02:52.486 --> 00:02:55.564 that we've done that has created tremendous brand awareness 00:02:55.564 --> 00:03:01.123 for our firm is our sponsorship of Manchester United football team, 00:03:01.123 --> 00:03:03.746 which by today won 2 to 1 versus Arsenal 00:03:03.746 --> 00:03:05.240 [applause] 00:03:05.240 --> 00:03:07.312 We're at-- Right now we're 00:03:07.312 --> 00:03:08.774 at the top of the premiere league. 00:03:08.774 --> 00:03:13.275 So in that spirit, [laughter] 00:03:13.275 --> 00:03:20.255 I would like to present Dr. Kotler with his very own, personalized 00:03:20.255 --> 00:03:24.327 Manchester United shirt. [applause 00:03:25.947 --> 00:03:30.796 [Kolter]: Thank you. 00:03:30.989 --> 00:03:33.560 David, thank you very much. 00:03:33.560 --> 00:03:37.095 And I will wear this, in a fantasy way. 00:03:37.095 --> 00:03:38.636 [laughter] 00:03:38.636 --> 00:03:41.758 May I say, I really appreciate your introduction. 00:03:41.758 --> 00:03:45.348 Of all the introductions I've received, yours is the most recent. 00:03:45.348 --> 00:03:50.591 [laughter] 00:03:50.591 --> 00:03:53.968 Nation, nation... 00:03:53.968 --> 00:03:56.017 Oh, you may know of Steven Colbert, 00:03:56.017 --> 00:03:59.056 so I can't pull it off the same way. 00:03:59.056 --> 00:04:04.113 There will be two groups, with respect to marketing. 00:04:04.113 --> 00:04:08.068 There will be a group that doesn't like marketing, 00:04:08.579 --> 00:04:11.330 and I'm going to give you why they don't like marketing 00:04:11.330 --> 00:04:15.036 and the justifications. I will also tell you 00:04:15.036 --> 00:04:19.661 there's another group who loves marketing, so before we're through, 00:04:19.661 --> 00:04:25.138 you will be totally confused, or at least opinionated. 00:04:25.138 --> 00:04:31.272 So, what I want to do is tell you that-- 00:04:31.272 --> 00:04:34.019 These are called confessions of a marketer. 00:04:34.019 --> 00:04:36.883 That's, by the way, borrowed from David Ogilvy, 00:04:36.883 --> 00:04:41.038 who wrote a wonderful book called "Confessions of an Advertising Man." 00:04:41.038 --> 00:04:45.109 And let me move on and say why is marketing a topic 00:04:45.109 --> 00:04:47.676 for the humanities? 00:04:47.676 --> 00:04:52.163 And we would say that there's a couple of reasons. 00:04:52.163 --> 00:04:56.619 One: I regard marketing as a humanistic subject 00:04:56.619 --> 00:05:01.147 because marketing has affected our lifestyles; 00:05:01.147 --> 00:05:06.556 has created, not only affected a lifestyle, but created lifestyles, 00:05:06.556 --> 00:05:09.212 and we should be, from a point of view of popular interest, 00:05:09.212 --> 00:05:11.257 interested in that. 00:05:11.257 --> 00:05:14.324 And it really-- 00:05:14.324 --> 00:05:18.067 I want to say that marketing is very American, 00:05:18.067 --> 00:05:21.201 that it's beginnings are very American. 00:05:21.201 --> 00:05:25.297 That doesn't mean there weren't manifestations of marketing earlier, 00:05:25.297 --> 00:05:28.438 and as a matter of fact, I'd like to give you a very short history 00:05:28.438 --> 00:05:32.972 of marketing, so that you understand what we mean by the word. 00:05:32.972 --> 00:05:37.951 As a matter of fact, if you took a dictionary, a Webster's dictionary, 00:05:37.951 --> 00:05:41.732 in the year 1900, and looked up the word marketing, 00:05:41.732 --> 00:05:44.570 you would not find it in the dictionary. 00:05:44.570 --> 00:05:48.888 Yes, you would find the word market, but not the word marketing. 00:05:48.888 --> 00:05:54.736 If you then picked a dictionary... 1910. You would find the word 00:05:54.736 --> 00:05:59.374 marketing in it, because marketing is about 100 years old. 00:05:59.374 --> 00:06:03.868 And it's much more than selling. So let me show you... 00:06:03.868 --> 00:06:08.917 Let's start... Let's start biblically. 00:06:08.917 --> 00:06:12.796 [laughter] Let's start biblically. 00:06:12.796 --> 00:06:16.724 Who is the marketer in this picture? 00:06:16.724 --> 00:06:24.487 This is the biblical narrative. Who was the first marketer in the world? 00:06:24.487 --> 00:06:27.532 I hear Eve... 00:06:29.045 --> 00:06:29.295 The snake. 00:06:30.008 --> 00:06:33.031 I hate to admit it, because snake sounds like sneaky, and so on 00:06:33.031 --> 00:06:34.140 and so forth. 00:06:34.140 --> 00:06:38.783 But the fact is that it was the snake who sold Eve 00:06:38.783 --> 00:06:43.165 on getting Adam to eat an apple. So it goes way back. 00:06:43.165 --> 00:06:47.917 At least selling goes way back. Now let's go further. 00:06:47.917 --> 00:06:52.091 Here is the father of marketing. 00:06:52.091 --> 00:06:55.814 Wow, what an insult to him! [laughter] 00:06:59.822 --> 00:07:00.132 I mean, that's Aristotle. 00:07:00.132 --> 00:07:01.884 Recently I was at a group, little party, and we were speculating 00:07:01.884 --> 00:07:05.902 who we would like to meet most if we had an hour with such a person, 00:07:05.902 --> 00:07:11.471 and it boiled down to Plato, Socrates, or Aristotle. 00:07:11.471 --> 00:07:13.132 That's a hard one. 00:07:13.132 --> 00:07:17.669 It turns out that my vote went for Aristotle. 00:07:17.669 --> 00:07:24.358 Aristotle was Google, at the time. He knew more about everything 00:07:24.358 --> 00:07:29.231 than anyone in the world. He wrote on science, politics, 00:07:29.231 --> 00:07:35.099 economics, rhetoric, art, and everything. 00:07:35.099 --> 00:07:40.768 Now, why do I say that he had some marketing impact? 00:07:40.768 --> 00:07:48.340 Let me read the definition of rhetoric. He's not the founder of rhetoric, 00:07:48.340 --> 00:07:53.489 by the way. The founders were the sophists, around 600 B.C. 00:07:53.489 --> 00:07:59.009 They were a group who wanted to use selling and speech and persuasion 00:07:59.009 --> 00:08:05.319 for their own devious ends. But Aristotle put the i-- 00:08:05.319 --> 00:08:08.422 the discipline of rhetoric on its feet. 00:08:08.422 --> 00:08:13.728 Rhetoric is the art that aims to improve the facility of speakers or writers 00:08:13.728 --> 00:08:19.100 who attempt to inform, persuade, or motivate particular audiences 00:08:19.100 --> 00:08:24.368 in specific situations. It is the faculty of the observing, 00:08:24.368 --> 00:08:28.471 in any given case, the available means of persuasion. 00:08:28.471 --> 00:08:34.592 So, in a sense, he could be the father of selling. 00:08:34.592 --> 00:08:40.070 The idea of getting someone to do something that they might 00:08:40.070 --> 00:08:44.431 not have done otherwise. So, let's move on, about other 00:08:44.431 --> 00:08:46.939 early manifestations of marketing. I know many of you cannot necessarily 00:08:50.101 --> 00:08:54.987 read this, so I will read it, but the first department store 00:08:54.987 --> 00:08:56.705 opened when, and in what country? Normally if you're in France 00:08:57.745 --> 00:09:01.545 and you ask the question, they would say of course 00:09:01.545 --> 00:09:06.777 we invented the department store. It was about 1845. 00:09:06.777 --> 00:09:09.826 The same time we invented paperweights and some other things. 00:09:09.826 --> 00:09:15.848 But it turns out that the first department store was in Japan. 00:09:15.848 --> 00:09:19.786 Mitsui company, which is still alive and well. 00:09:19.786 --> 00:09:24.246 So that's where one of our retailing forms started. 00:09:24.246 --> 00:09:29.715 The next one is the first newspaper that carried an ad. 00:09:29.715 --> 00:09:34.277 There were newspapers early, but the first ad appeared in England, 00:09:34.277 --> 00:09:41.877 in 1652, and it advertised coffee. And then, the first ad agency 00:09:41.877 --> 00:09:47.876 started a little later. Well, much later. 00:09:47.876 --> 00:09:53.386 N.W. Ayer, which is still a prosperous advertising agency. 00:09:53.386 --> 00:09:59.127 First time a brand was put on a commodity, the commodity being soap, 00:09:59.127 --> 00:10:03.677 the brand name was Pear's soap. 00:10:03.677 --> 00:10:06.774 And then the first packaging appeared a little later, 00:10:06.774 --> 00:10:11.106 and finally we had a marketing research department formed. 00:10:11.106 --> 00:10:17.147 So, now the word markets has been around all these years. 00:10:17.147 --> 00:10:19.707 The Middle Ages had markets. In fact, whenever-- 00:10:19.707 --> 00:10:23.858 I would even say the agora, in ancient Greece-- 00:10:23.858 --> 00:10:28.015 that means the marketplace-- In ancient Greece, 00:10:28.015 --> 00:10:32.217 people would come on a particular day to sell things. 00:10:32.217 --> 00:10:35.705 In the Middle Ages, there were market days. 00:10:35.705 --> 00:10:42.646 The word marketing wasn't there. It was just market. 00:10:42.646 --> 00:10:45.637 And trade was always there, because trade, through history, 00:10:45.637 --> 00:10:48.047 has taken place between people and regions and countries. 00:10:48.047 --> 00:10:55.976 So all that is there, and it was in the decade of the 1900s 00:10:55.976 --> 00:11:01.081 that marketing books first appeared. And the interesting thing is 00:11:01.081 --> 00:11:05.080 who wrote those first marketing books. Were they sociologists? 00:11:05.080 --> 00:11:10.662 What was the discipline of the people who wrote the first marketing books? 00:11:10.662 --> 00:11:13.067 Any guesses? 00:11:13.067 --> 00:11:16.224 They weren't physicists or chemists. 00:11:16.224 --> 00:11:17.726 They were economists. 00:11:17.726 --> 00:11:22.005 So why would economists start a subject called marketing? 00:11:22.005 --> 00:11:25.036 And the answer is: they were disillusioned economists. 00:11:25.036 --> 00:11:27.726 [laughter] 00:11:27.726 --> 00:11:32.517 They couldn't find any mention of advertising in the discourse 00:11:32.517 --> 00:11:36.226 of economists. In other words, never did Adam Smith, 00:11:36.226 --> 00:11:44.356 Thomas Malthus, David Ricardo, even Alfred Marshall, and so on, 00:11:44.356 --> 00:11:48.610 they rarely talked about other forces that shaped demand. 00:11:48.610 --> 00:11:52.778 The only force that shaped demand in their mind was price. 00:11:52.778 --> 00:11:56.800 You know the famous curve. Raise the price, demand will go down, 00:11:56.800 --> 00:12:00.108 lower the price, you can sell more. Price was the only thing 00:12:00.108 --> 00:12:02.924 that affected demand. So these economists, 00:12:02.924 --> 00:12:07.936 or institutional economists, said "Hey, you've got to factor in advertising." 00:12:07.936 --> 00:12:14.106 You've got to factor in retail stores, whole sales, jobbers, agents. 00:12:14.106 --> 00:12:17.784 And it was the neglect of the classical economists 00:12:17.784 --> 00:12:22.646 to not really texture the marketplace and the way an economy worked 00:12:22.646 --> 00:12:24.775 that led to marketing. So marketing is technically 00:12:24.775 --> 00:12:27.324 a branch of economics. 00:12:27.324 --> 00:12:32.696 Now who helped developed this field of marketing? 00:12:32.696 --> 00:12:37.396 Now, probably you don't recognize maybe anyone here. 00:12:37.396 --> 00:12:39.710 There's one person you might recognize. 00:12:39.710 --> 00:12:42.726 I don't know if you can see some of these faces, 00:12:42.726 --> 00:12:45.635 but someone recognize anyone there? 00:12:45.635 --> 00:12:47.064 Yeah? 00:12:47.064 --> 00:12:50.635 Dale Carnegie. Dale Carnegie is here, 00:12:50.635 --> 00:12:54.536 and his book was "How to Win Friends and Influence People," 00:12:54.536 --> 00:12:57.076 because in doing this, I wanted to find out 00:12:57.076 --> 00:13:00.364 who was the exemplar of the selling method. 00:13:00.364 --> 00:13:02.466 "How to Win Friends and Influence People" 00:13:02.466 --> 00:13:06.255 But let me give you the whole picture. 00:13:06.255 --> 00:13:08.955 Ernest Dichter. Some of you may know of. 00:13:08.955 --> 00:13:14.965 He was a motivational psychologist, and he could explain why people 00:13:14.965 --> 00:13:22.626 didn't like to eat prunes, why cigars were offending some people, 00:13:22.626 --> 00:13:26.057 and all kinds of things. And his book called 00:13:26.057 --> 00:13:29.286 "The Study of Desire." He apparently studied with 00:13:29.286 --> 00:13:35.115 Sigmund Freud, and he brought that kind of mind to marketing. 00:13:35.115 --> 00:13:38.937 But he had an opponent named Alfred Pollitz, who was not 00:13:38.937 --> 00:13:46.948 a head shrinker--We call him a... a nose counter. 00:13:46.948 --> 00:13:51.106 The expressions we would use if you were very psychological, 00:13:51.106 --> 00:13:55.642 you were a head shrinker, and otherwise, you were a nose counter. 00:13:55.642 --> 00:14:00.188 Namely, a surveyor. You surveyed-- You found out what percentage 00:14:00.188 --> 00:14:05.415 of people were of a certain age and why did they buy a particular product. 00:14:05.415 --> 00:14:10.976 Julius Rosenwald was very much behind the formation of 00:14:10.976 --> 00:14:13.877 the Sears company, which was a important episode in 00:14:13.877 --> 00:14:17.331 the development of our retail chains. 00:14:17.331 --> 00:14:21.099 Lester Wunderman deserves credit as exemplifying the use 00:14:21.099 --> 00:14:25.980 of direct mail and catalogs. That you can sell more directly. 00:14:25.980 --> 00:14:30.066 You don't have to be in the store. You can get people to order goods 00:14:30.066 --> 00:14:33.077 by mail and phone. 00:14:33.077 --> 00:14:37.727 David Ogilvy is the exemplar advertising person, 00:14:37.727 --> 00:14:41.016 then Stanley Marcus, of Neiman Marcus, 00:14:41.016 --> 00:14:45.679 was a fella who could walk into any retail store and give them 00:14:45.679 --> 00:14:49.836 100 suggestions on how to improve the layout, the size of the aisles, 00:14:49.836 --> 00:14:55.208 and make a difference in the voulme of business. 00:14:55.208 --> 00:14:59.846 Edward Bernays is the father of public relations in the United States. 00:14:59.846 --> 00:15:03.087 His name has sort of become obscure, but he really was 00:15:03.087 --> 00:15:06.235 a very important person. The word propaganda 00:15:06.235 --> 00:15:10.035 was often used in connection with his work, because people thought it was 00:15:10.035 --> 00:15:17.196 a model to motivate you to feel a certain way about anything, 00:15:17.196 --> 00:15:21.944 regardless of the standards involved. And then there's Dale Carnegie. 00:15:22.324 --> 00:15:26.409 In any case, how did marketing get its start? 00:15:26.409 --> 00:15:29.686 Marketing got its start in sales departments. 00:15:29.686 --> 00:15:36.091 Every company has a sales group. And the sales people really want 00:15:36.091 --> 00:15:39.664 to be in the office of a customer, because that's the only way 00:15:39.664 --> 00:15:43.875 something happens. So they don't want to do a lot of homework. 00:15:43.875 --> 00:15:46.166 For example, three things they didn't want to do. 00:15:46.166 --> 00:15:49.727 They didn't want to do consumer research in a systematic way, 00:15:49.727 --> 00:15:53.534 because that's taking their time away from selling to customers. 00:15:53.534 --> 00:15:58.611 Secondly, they would've liked someone else to find leads. 00:15:58.611 --> 00:16:02.084 Now a lead means a prospect. In fact, we distinguish between 00:16:02.084 --> 00:16:07.056 a hot lead: "Oh boy, he's ready to buy. He even called us to buy." 00:16:07.056 --> 00:16:11.418 a warm lead, a cold lead, so on. Someone else should do that 00:16:11.418 --> 00:16:15.726 for the sales people, so they don't waste their time making calls. 00:16:15.726 --> 00:16:19.089 And the third thing was someone had to prepare 00:16:19.089 --> 00:16:23.568 brochures and ads. And the salesman is not skilled. 00:16:23.568 --> 00:16:27.425 The salesperson isn't skilled at communicating through advertising 00:16:27.425 --> 00:16:32.495 and brochures. So sales departments added three people, or hired them 00:16:32.495 --> 00:16:38.534 from time to time. Later on, it exploded 00:16:38.534 --> 00:16:42.949 to the day today, when we have multinationals running-- 00:16:42.949 --> 00:16:46.916 with marketing-- In other words, marketing-- 00:16:46.916 --> 00:16:50.616 Those three people split from sales and became big enough to become 00:16:50.616 --> 00:16:53.296 its own department. And so, some people 00:16:53.296 --> 00:16:57.798 in the audience here may be a chief marketing officer. 00:16:57.798 --> 00:17:01.246 The old name was Vice President of marketing, but I like the name 00:17:01.246 --> 00:17:06.148 chief marketing officer because that person now is part of 00:17:06.148 --> 00:17:09.740 the chief officers. Chief information officer, chief financial officer, 00:17:09.740 --> 00:17:15.907 chief innovation officer, and the status has moved up. 00:17:15.907 --> 00:17:20.997 Some of you may be brand managers, may have been in your past experience. 00:17:20.997 --> 00:17:24.366 Category managers, market segment managers, 00:17:24.366 --> 00:17:29.336 managing distribution channels, like retail or wholesale things, 00:17:29.336 --> 00:17:34.369 pricing manager, communication manager, database manager, 00:17:34.369 --> 00:17:36.916 direct marketers, internet people, and so on. 00:17:36.916 --> 00:17:41.287 So, marketing is well-established. 00:17:41.287 --> 00:17:46.205 Now, the character of a marketing department depends very much 00:17:46.205 --> 00:17:50.829 on what the CEO thinks of marketing. 00:17:50.829 --> 00:17:57.770 So, the 1P CEO is a person who took over a company, 00:17:57.770 --> 00:18:03.566 and he says, "I don't like marketing, but I know I need it, 00:18:03.566 --> 00:18:06.984 and all I want from marketing is some communications. 00:18:06.984 --> 00:18:12.068 I just want someone to broadcast and promote us." 00:18:12.068 --> 00:18:15.885 So, that person is missing a lot of other things 00:18:15.885 --> 00:18:20.858 made up by other CEOs, who are 4P CEOs. 00:18:20.858 --> 00:18:25.365 Now a 4P CEO says, "I need a marketing plan." 00:18:25.365 --> 00:18:29.636 And the plan has to mention product--that's the first P. 00:18:29.636 --> 00:18:32.926 What about our product? What's good about it? What are the features? 00:18:32.926 --> 00:18:37.395 Price: what should it be priced at? Place: where should it be 00:18:37.395 --> 00:18:41.267 made accessible? Online, offline, in stores? 00:18:41.267 --> 00:18:43.286 And finally promotion. 00:18:43.286 --> 00:18:44.026 So that's a more educated view of the potential of marketing. 00:18:47.752 --> 00:18:52.287 But there's even a better view, and that's called the CEO who says, 00:18:52.287 --> 00:18:56.497 "No! I don't want to start with 4 Ps, I want to start with the fact 00:18:56.497 --> 00:19:00.437 the market is complex." There's a lot of segments. 00:19:00.437 --> 00:19:06.415 Each segment deserves its own plan. In fact, one thing we've learned 00:19:06.415 --> 00:19:09.764 that if you just have one value proposition for the whole market, 00:19:09.764 --> 00:19:14.621 it really doesn't trigger anything in many parts of the market. 00:19:14.621 --> 00:19:19.918 So that CEO says, "What segment should we go after? 00:19:19.918 --> 00:19:23.488 And what position should we take with each segment? 00:19:23.488 --> 00:19:27.369 What should we say about ourselves, in how we can satisfy their needs?" 00:19:27.369 --> 00:19:34.100 Now there's even a higher type CEO, which is exemplified by A.G. Lafley, 00:19:34.100 --> 00:19:37.824 who ran Procter & Gamble, who recently retired. 00:19:37.824 --> 00:19:42.648 When you ask A.G. Lafley what's marketing, what's your picture, 00:19:42.648 --> 00:19:46.719 he says, "Well, what do you mean? Marketing is everything." 00:19:46.719 --> 00:19:47.980 [laughter] 00:19:47.980 --> 00:19:49.729 Now, marketing is everything. What he means is 00:19:49.729 --> 00:19:53.710 everything starts with the customer. No customers, no business. 00:19:53.710 --> 00:19:58.346 And I think he's making that point very much. 00:19:58.346 --> 00:20:04.157 Now, moving on, there's a lot of things that a chief marketing officer does, 00:20:04.157 --> 00:20:08.828 and I won't go into any detail, but there's a lot of tasks, 00:20:08.828 --> 00:20:14.365 and the sad fact is that sometimes the chief marketing officer only lasts 00:20:14.365 --> 00:20:18.507 on the average of two years. In other words, does a job, 00:20:18.507 --> 00:20:24.942 and maybe the CEO is not feeling that it really brought in enough new business 00:20:24.942 --> 00:20:31.518 that the cost of the CMO exceeds what the value of the CMO is. 00:20:31.518 --> 00:20:36.498 There's a lot to go into about why CMOs on the average 00:20:36.498 --> 00:20:40.088 hold on to their job for two years. By the way, some of them 00:20:40.088 --> 00:20:43.718 get a better job after two years. They become something higher 00:20:43.718 --> 00:20:47.329 than the chief marketing officer. Some of them actually are pirated away 00:20:47.329 --> 00:20:52.006 because they're so good, they go to another company to be the CEO. 00:20:52.006 --> 00:20:55.776 But in any case, marketing-- commercial marketing, 00:20:55.776 --> 00:21:01.148 which I've been talking about, could've stayed only commercial, 00:21:01.148 --> 00:21:05.947 and then I got involved in-- with Professor Sid Levy at Northwestern 00:21:05.947 --> 00:21:09.716 We started the idea of broadening marketing, 00:21:09.716 --> 00:21:15.499 because the set of tools that we use to address consumers could be used 00:21:15.499 --> 00:21:18.496 in other areas. So we have a thing 00:21:18.496 --> 00:21:22.676 called place marketing. I will get a call from a city, let's say, 00:21:22.676 --> 00:21:27.037 and a city says, "We're not getting enough tourists. We don't have 00:21:27.037 --> 00:21:32.048 any attractions for them to come and see. I would like to get a factory 00:21:32.048 --> 00:21:38.969 located here. We would like some digital people to move here, who know digital-- 00:21:38.969 --> 00:21:42.016 We want to start a Silicon Valley." So that's place marketing. 00:21:42.016 --> 00:21:45.966 The marketing of a place. How do you dress it up and make it attractive? 00:21:46.256 --> 00:21:48.952 Against all of the other competitive places. 00:21:48.952 --> 00:21:53.433 The second-- Person marketing. 00:21:53.433 --> 00:21:58.005 There's an agency called William Morris, and a young singer might go to 00:21:58.005 --> 00:21:59.646 William Morris and say, "look, I want to get ahead. I want to appear 00:22:02.523 --> 00:22:10.423 on Jay Leno's show. I want to-- I want to move up to being noticed. 00:22:10.423 --> 00:22:14.541 I want high visibility." I wrote a book with the title 00:22:14.541 --> 00:22:17.619 "High Visibility." How do you get that visibility. 00:22:17.619 --> 00:22:21.921 So, William Morris will look at her and her performance 00:22:21.921 --> 00:22:25.241 and maybe say, "You know, in a sense-- 00:22:25.241 --> 00:22:26.864 Don't be offended, but we can make you into a better product." 00:22:30.015 --> 00:22:33.996 That's sort of the language. You know, do your hair differently, 00:22:33.996 --> 00:22:42.318 walk a little-- dress differently. Actually, we're going to use you to 00:22:42.318 --> 00:22:49.035 reignite the archetype of Joan Baez. You know, Joan Baez, the folk singer. 00:22:49.035 --> 00:22:52.321 Well, we need a new Joan Baez. And so, we can recast you 00:22:52.958 --> 00:22:59.678 and form you into the kind of person we all miss, and so on. 00:22:59.678 --> 00:23:04.358 Now, social marketing is another branch. 00:23:04.358 --> 00:23:09.296 Today there are 2,000 social marketers around the world, trying to help people 00:23:10.382 --> 00:23:17.593 eat better, exercise more, say no to drugs, stop smoking cigar-- 00:23:17.593 --> 00:23:22.235 get off of tobacco, say no to a number of things. 00:23:22.235 --> 00:23:26.305 Positive behaviors and negative behaviors. 00:23:26.305 --> 00:23:30.677 By the way, my memory is that Sweden was one of the first countries 00:23:30.677 --> 00:23:39.167 to want to raise a nation of nonsmokers, non-drinkers, all the vices. 00:23:39.167 --> 00:23:45.124 And it starts at the primary school level, that you could technically raise people 00:23:45.124 --> 00:23:52.313 to avoid those vices, if that was thought to be good public policy. 00:23:52.313 --> 00:23:54.375 So that's social marketing. Now, political marketing, 00:23:54.375 --> 00:24:00.502 we're saturated with. And I think it's degenerated, 00:24:00.502 --> 00:24:06.172 but that's another thing. Fundraising is part of marketing. 00:24:06.172 --> 00:24:11.445 I mean, fundraising is an odd form, because you're not exchanging. 00:24:11.445 --> 00:24:16.474 Everything else is sort of an exchange of values. Fundraising seems to be 00:24:16.474 --> 00:24:21.246 a one-way transfer. Here's some money 00:24:21.246 --> 00:24:22.916 for the museum. But any fundraiser knows 00:24:22.916 --> 00:24:27.439 there's something that should come back to the person who is the donor 00:24:27.439 --> 00:24:31.139 and supporter of a museum, and working that way is important. 00:24:31.139 --> 00:24:38.555 So these are offshoots. Now all of us do marketing. 00:24:38.555 --> 00:24:42.226 If you read the list, we all do marketing. Did you ever compete for a job when 00:24:42.226 --> 00:24:45.844 you knew there were other applicants? Didn't you dress up as well as you could 00:24:45.844 --> 00:24:50.380 and even prepare what you're going to say, and so on? 00:24:50.380 --> 00:24:54.060 Did you compete for a desirable apartment which was scarce? 00:24:54.060 --> 00:24:58.893 Or a member of the opposite sex, if you wanted to court someone. 00:24:58.893 --> 00:25:03.943 So, in a sense, we're human animals who know how to make an impression 99:59:59.999 --> 99:59:59.999 and market ourselves, to some extent. 99:59:59.999 --> 99:59:59.999 What do we dislike about marketing? 99:59:59.999 --> 99:59:59.999 Well, there's a long list. It's a rather long list. 99:59:59.999 --> 99:59:59.999 Intrusion, interruption, exaggeration, and so on and so forth. 99:59:59.999 --> 99:59:59.999 And I really made a list that's a little separate from that. 99:59:59.999 --> 99:59:59.999 Here are some of the criticisms. Marketers get consumers to want 99:59:59.999 --> 99:59:59.999 and spend more than they can afford. 99:59:59.999 --> 99:59:59.999 And we know that from the financial disaster that people were buying homes 99:59:59.999 --> 99:59:59.999 with maybe nothing down. Marketers are skilled at 99:59:59.999 --> 99:59:59.999 creating grand differentiation where it shouldn't exist. 99:59:59.999 --> 99:59:59.999 Like with commodities, you know, a chicken is a chicken, cement is cement. 99:59:59.999 --> 99:59:59.999 So they spend a lot of time trying to tell you their cement is really better, 99:59:59.999 --> 99:59:59.999 their salt is really better, and so on. Marketers want to produce and sell 99:59:59.999 --> 99:59:59.999 more goods without considering the resource and environmental costs 99:59:59.999 --> 99:59:59.999 of producing the goods. The planet Earth is affected 99:59:59.999 --> 99:59:59.999 by the amount of production and the care with which it's done. 99:59:59.999 --> 99:59:59.999 Marketers had not paid enough attention to product safety. 99:59:59.999 --> 99:59:59.999 We know that because Ralph Nader made his career, basically, car-- 99:59:59.999 --> 99:59:59.999 the unsafety in cars, and then we got lead poisoning, 99:59:59.999 --> 99:59:59.999 we got asbestos problems, and so on. 99:59:59.999 --> 99:59:59.999 Here's a serious criticism. Marketers-- and this is not all marketers-- 99:59:59.999 --> 99:59:59.999 these are some particular companies, and so on. 99:59:59.999 --> 99:59:59.999 Marketers favor giving the public what it wants, whether its good or not for them. 99:59:59.999 --> 99:59:59.999 Sure, I'll sell you cigarettes. I'll sell you anything that will make money. 99:59:59.999 --> 99:59:59.999 Therefore marketing promotes a materialistic mindset, 99:59:59.999 --> 99:59:59.999 that-- we get turned on to more of a materialistic world, 99:59:59.999 --> 99:59:59.999 a world of ever-changing products and services and keeping up with the Jones 99:59:59.999 --> 99:59:59.999 and some of that. 99:59:59.999 --> 99:59:59.999 Marketers rarely talk about sane consumption. 99:59:59.999 --> 99:59:59.999 Yeah, some beer companies say, "Please enjoy our beer, but don't 99:59:59.999 --> 99:59:59.999 drink too much." That's nice that they-- No one listens to that, and you still 99:59:59.999 --> 99:59:59.999 have binge-drinking, but they're trying to do what they can 99:59:59.999 --> 99:59:59.999 and so on and so forth. Now, let me just say 99:59:59.999 --> 99:59:59.999 there's another side. This is important too, 99:59:59.999 --> 99:59:59.999 because it's not a simple picture. The other side of it is 99:59:59.999 --> 99:59:59.999 Marketing has undoubtedly raised the standard of living 99:59:59.999 --> 99:59:59.999 in the United States. People don't naturally 99:59:59.999 --> 99:59:59.999 buy new things. In other words, do you know, people used to keep 99:59:59.999 --> 99:59:59.999 their refrigerators, which weren't refrigerators at the time, 99:59:59.999 --> 99:59:59.999 they were ice boxes and they would keep going out and getting some ice 99:59:59.999 --> 99:59:59.999 and putting it in the box, and so on. And even the washing machines 99:59:59.999 --> 99:59:59.999 were very slow to take-- In other words, people-- 99:59:59.999 --> 99:59:59.999 It would be very expensive to buy a new appliance, 99:59:59.999 --> 99:59:59.999 but marketers persisted in saying your life will be better with 99:59:59.999 --> 99:59:59.999 new appliances, and that's one of its jobs. 99:59:59.999 --> 99:59:59.999 I would even go so far as to say that marketing is so connected 99:59:59.999 --> 99:59:59.999 to the idea of the middle class. We're talking about preserving 99:59:59.999 --> 99:59:59.999 and building the middle class, and the lifestyle that goes with it, 99:59:59.999 --> 99:59:59.999 and marketing is an essential definer of what it is to be--and want-- 99:59:59.999 --> 99:59:59.999 what it is to want, as a member of the middle class. 99:59:59.999 --> 99:59:59.999 Marketing in the form of social marketing has helped improve 99:59:59.999 --> 99:59:59.999 a lot of things. You know, one of the first causes 99:59:59.999 --> 99:59:59.999 that marketing turned to was the environment and waste 99:59:59.999 --> 99:59:59.999 and the ill-effects of some products, and so on. 99:59:59.999 --> 99:59:59.999 Preserving the environment was one of the first things that 99:59:59.999 --> 99:59:59.999 social marketers got into. 99:59:59.999 --> 99:59:59.999 Now they're into obesity as a problem, littering as a problem, 99:59:59.999 --> 99:59:59.999 and other problems. 99:59:59.999 --> 99:59:59.999 Marketing is very important to the cultural world. 99:59:59.999 --> 99:59:59.999 Museums, performing arts, and one of the big problems 99:59:59.999 --> 99:59:59.999 that cultural institutions are facing, especially in the performing arts, 99:59:59.999 --> 99:59:59.999 is the aging of audiences. How do you get people 99:59:59.999 --> 99:59:59.999 who are in their forties to go to opera, to go to ballet, and so on. 99:59:59.999 --> 99:59:59.999 It's called the graying of the audiences, and maybe that problem has 99:59:59.999 --> 99:59:59.999 been with us for a long time, but marketers are at work 99:59:59.999 --> 99:59:59.999 doing segmentation, targeting, positioning, in order to 99:59:59.999 --> 99:59:59.999 make sure that all seats are filled in the theater, and also the museums 99:59:59.999 --> 99:59:59.999 are very busy, as marketing institutions, because they have to get visitors, 99:59:59.999 --> 99:59:59.999 they have to get donors, they have to get government grants, 99:59:59.999 --> 99:59:59.999 so marketing is almost an intrinsic function today that's going on. 99:59:59.999 --> 99:59:59.999 But let me-- 99:59:59.999 --> 99:59:59.999 This is not time to take a vote. Do you like marketing 99:59:59.999 --> 99:59:59.999 or you don't like marketing. But let me show you that 99:59:59.999 --> 99:59:59.999 the feeling-- the negative feelings about marketing came up from these people. 99:59:59.999 --> 99:59:59.999 The attackers. They attacked marketing. Do you recognize anyone? 99:59:59.999 --> 99:59:59.999 You see Ralph Nader? I don't... There he is. Yeah. 99:59:59.999 --> 99:59:59.999 Who else? 99:59:59.999 --> 99:59:59.999 Well, it is Ralph Nader. "Unsafe at Any Speed." 99:59:59.999 --> 99:59:59.999 Rachel Carson, by the way, deserves so much more credit 99:59:59.999 --> 99:59:59.999 than we've given to her for her book on the Silent Spring, which was about 99:59:59.999 --> 99:59:59.999 the chemical pollution, the pesticides that were getting into our spring water, 99:59:59.999 --> 99:59:59.999 and so on. Vance Packard, who popularized the idea 99:59:59.999 --> 99:59:59.999 that we are hidden persuaders. That when you go into a movie theater, 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 99:59:59.999 --> 99:59:59.999 before you sit down. Subliminal advertising, 99:59:59.999 --> 99:59:59.999 which never did happen, but the hidden persuaders. 99:59:59.999 --> 99:59:59.999 And then John Kenneth Galbraith, who pointed out that while we spend 99:59:59.999 --> 99:59:59.999 so much money in making enough deodorants for any type of interest 99:59:59.999 --> 99:59:59.999 you have in deodorants, in the public sector-- 99:59:59.999 --> 99:59:59.999 In the public sector, you've got streets that are littered, 99:59:59.999 --> 99:59:59.999 and there's some garbage, and there's slow traffic, and-- 99:59:59.999 --> 99:59:59.999 And so we have a good private sector, but we can't enjoy it because 99:59:59.999 --> 99:59:59.999 the public sector doesn't have the public good that would facilitate things. 99:59:59.999 --> 99:59:59.999 You've got Naomi Klein, who's probably the prototype 99:59:59.999 --> 99:59:59.999 person now for attacking branding. Brands, brands, they're awful. 99:59:59.999 --> 99:59:59.999 You're paying more than you need to pay. 99:59:59.999 --> 99:59:59.999 The book is called "No Logo," logo being another name for brand. 99:59:59.999 --> 99:59:59.999 And Michael Sandel is-- has this new book out, which is really interesting 99:59:59.999 --> 99:59:59.999 and worth reading. He's the fella who ran a course on justice, 99:59:59.999 --> 99:59:59.999 and would ask groups about this size at Harvard, "What is the just thing to do 99:59:59.999 --> 99:59:59.999 in each situation?" But his new book is called 99:59:59.999 --> 99:59:59.999 "What Money Can't Buy: The Moral Limits of Marketing" 99:59:59.999 --> 99:59:59.999 where he points out that if you're in jail in California 99:59:59.999 --> 99:59:59.999 and you don't like the cell, you can pay for a better cell. 99:59:59.999 --> 99:59:59.999 You know, maybe one with a computer if you want a computer, and so on. 99:59:59.999 --> 99:59:59.999 But he's also-- he thinks today our culture divides people 99:59:59.999 --> 99:59:59.999 in social classes more clearly. We used to go to ball games; 99:59:59.999 --> 99:59:59.999 I would sit next to someone who was rich and someone who was poor. 99:59:59.999 --> 99:59:59.999 We'd all stand in the same line for hot dogs. 99:59:59.999 --> 99:59:59.999 Today, the guys who are rich are up in the sky box, 99:59:59.999 --> 99:59:59.999 and he calls it the sky box-ification of the United States. The sky box-ification. 99:59:59.999 --> 99:59:59.999 They're eating filet mignon and we peasants are down there having-- 99:59:59.999 --> 99:59:59.999 standing in line for our hot dog. So we are not meeting each other 99:59:59.999 --> 99:59:59.999 as we used to, in the older days. It's a very interesting treatment. 99:59:59.999 --> 99:59:59.999 I like to quote Will Rogers with this remark: "If advertisers spent 99:59:59.999 --> 99:59:59.999 the same amount of money that they-- on improving the product 99:59:59.999 --> 99:59:59.999 as they do on advertising, they wouldn't have to advertise it. And that's-- 99:59:59.999 --> 99:59:59.999 By the way, that's a very profound observation, because in the age 99:59:59.999 --> 99:59:59.999 of the internet, it's so much easier to talk about a product you like 99:59:59.999 --> 99:59:59.999 to others and also about a product you don't like. 99:59:59.999 --> 99:59:59.999 And in a sense, if this goes far enough, there will be no bad companies 99:59:59.999 --> 99:59:59.999 anymore. It would be not possible for a company to be a bad company, 99:59:59.999 --> 99:59:59.999 because the word of mouth will sink it. 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-- 99:59:59.999 --> 99:59:59.999 and others will advertise the good job you did. 99:59:59.999 --> 99:59:59.999 Now, I want to add another group, and this is a group of visionaries, 99:59:59.999 --> 99:59:59.999 and I'd like to call them our best marketers. 99:59:59.999 --> 99:59:59.999 But they're not necessarily the chief marketing officer, 99:59:59.999 --> 99:59:59.999 they're CEOs. But what-- Their contribution has been 99:59:59.999 --> 99:59:59.999 the kind you want from your chief marketing officers. 99:59:59.999 --> 99:59:59.999 So who do you see here? Do you know any of those people? 99:59:59.999 --> 99:59:59.999 [audience murmuring] 99:59:59.999 --> 99:59:59.999 Yeah. You've got to know some of them. But you probably don't know 99:59:59.999 --> 99:59:59.999 the first one. Ingvar Kamprad. It's very even hard to remember 99:59:59.999 --> 99:59:59.999 his name, but he's that Swedish person who invented IKEA, 99:59:59.999 --> 99:59:59.999 who said, "I must bring down the cost of furniture, and I can do that by 99:59:59.999 --> 99:59:59.999 taking the air out of it and just selling knocked down furniture, 99:59:59.999 --> 99:59:59.999 and now people can afford to have some nice things in their home. 99:59:59.999 --> 99:59:59.999 Richard Branson is phenomenal. He's a-- not only in self-promotion. 99:59:59.999 --> 99:59:59.999 He's one of the best self-promoters possible. I don't know if you know 99:59:59.999 --> 99:59:59.999 that he was in Times Square some years ago 99:59:59.999 --> 99:59:59.999 to introduce his new cell phone, the Virgin cell phone, 99:59:59.999 --> 99:59:59.999 and he said he was going to drop off of a building, a 30-story building, 99:59:59.999 --> 99:59:59.999 and-- not wearing any clothes or something, so everyone showed up. 99:59:59.999 --> 99:59:59.999 I don't know why they would want to show up, but they showed up 99:59:59.999 --> 99:59:59.999 in Times Square, and sure, he did jump down, but it was on a rope 99:59:59.999 --> 99:59:59.999 and he's carrying a huge version of his new cell phone. 99:59:59.999 --> 99:59:59.999 And so everyone--not just in Times Square--the reporters 99:59:59.999 --> 99:59:59.999 were covering it. All of New York knew about the new-- there was 99:59:59.999 --> 99:59:59.999 a new Virgin cell phone. So he's very good at that. 99:59:59.999 --> 99:59:59.999 But right now, he told me something I couldn't believe. I was in Dubai, 99:59:59.999 --> 99:59:59.999 and he gave a speech, and we were just chatting, and he said, 99:59:59.999 --> 99:59:59.999 "Where are you from?" I said Chicago, and he says, "You know, there will be 99:59:59.999 --> 99:59:59.999 a time when you can go from Dubai to Chicago in half an hour." 99:59:59.999 --> 99:59:59.999 What is it-- Is this a time machine you're inventing? 99:59:59.999 --> 99:59:59.999 He says, "No, it's just a rocket ship." So the rocket ship takes off from 99:59:59.999 --> 99:59:59.999 Dubai, it just goes right up in the air and lands in Chicago. 99:59:59.999 --> 99:59:59.999 So he's working with some people on the new spaceships, basically. 99:59:59.999 --> 99:59:59.999 And you want to watch him. Of course, Walt Disney. 99:59:59.999 --> 99:59:59.999 Great, great visionary. 99:59:59.999 --> 99:59:59.999 Herb Kelleher. Thanks to him, we have Southwest Airlines, 99:59:59.999 --> 99:59:59.999 which started a whole class of low-cost airlines. 99:59:59.999 --> 99:59:59.999 And then we've got Anita Roddick, who ran The Body Shop, where she said 99:59:59.999 --> 99:59:59.999 "I'm not selling hope, I'm selling good skin lotion. All the others sell hope." 99:59:59.999 --> 99:59:59.999 That was a famous remark by Revlon, "In the factory we make lipstick, 99:59:59.999 --> 99:59:59.999 in the store we sell hope." But she wrestled with that one. 99:59:59.999 --> 99:59:59.999 Then you've got Bill Gates, Steve Jobs, and Jeff Bezos. 99:59:59.999 --> 99:59:59.999 And Jeff-- Let's see, we've gotta make sure he gets in there. 99:59:59.999 --> 99:59:59.999 [laughter] Jeff is extraordinary. 99:59:59.999 --> 99:59:59.999 If there's anyone who has consumer thinking in his mind, 99:59:59.999 --> 99:59:59.999 wanting to facilitate the consumer to really order or re-order or return 99:59:59.999 --> 99:59:59.999 or anything like that. And then to buy more than books, to buy electronics, 99:59:59.999 --> 99:59:59.999 to buy clothes. He's done a marvelous job. He's very exemplary in that sense. 99:59:59.999 --> 99:59:59.999 We're running out of time and I'm going to want some questions from you, 99:59:59.999 --> 99:59:59.999 but let me just refer to a few more things. 99:59:59.999 --> 99:59:59.999 This is a chart I use in the book, "Marketing 3.0," 99:59:59.999 --> 99:59:59.999 basically to say that every company should define its mission, it's vision 99:59:59.999 --> 99:59:59.999 for the future, and its values-- what it really cares about, 99:59:59.999 --> 99:59:59.999 and if you're a 1.0 marketer, it's a good job you're doing. 99:59:59.999 --> 99:59:59.999 I mean, of course you're trying to deliver satisfaction, make a profit, 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 99:59:59.999 --> 99:59:59.999 help people realize their aspirations. You want to deliver things that 99:59:59.999 --> 99:59:59.999 they might aspire to have. They will return frequently to buy more, 99:59:59.999 --> 99:59:59.999 and your product is different than the others. Not only better, but different. 99:59:59.999 --> 99:59:59.999 And suddenly, you move from mind to heart to spirit. 99:59:59.999 --> 99:59:59.999 What's spirit? It's that small set of companies that say 99:59:59.999 --> 99:59:59.999 "We're compassionate. We have compassion for the state of the world. 99:59:59.999 --> 99:59:59.999 We want to get involved. We want the companies to be a machine 99:59:59.999 --> 99:59:59.999 for improving the lives of people." You could say-- you could reduce that 99:59:59.999 --> 99:59:59.999 to just some charity work they're doing. Or it could be a real, fundamental 99:59:59.999 --> 99:59:59.999 strain in the way they do their business. We can name some companies that 99:59:59.999 --> 99:59:59.999 really have felt that they want to help reshape the world 99:59:59.999 --> 99:59:59.999 into being a better world. So that is-- 99:59:59.999 --> 99:59:59.999 Here's one of my favorite companies that illustrate the cells in that picture. 99:59:59.999 --> 99:59:59.999 The SC Johnson company in Racine, Wisconsin 99:59:59.999 --> 99:59:59.999 whose products are shown over here. You probably have purchased some 99:59:59.999 --> 99:59:59.999 of their waxes or some of their insect repellent or other things, 99:59:59.999 --> 99:59:59.999 but they're just winning awards for being a very caring company. 99:59:59.999 --> 99:59:59.999 Incidentally, a book that you might want to read is called 99:59:59.999 --> 99:59:59.999 "Firms of Endearment," which is a fancy way to say 99:59:59.999 --> 99:59:59.999 companies we love. Firms of Endearment. 99:59:59.999 --> 99:59:59.999 And I love the subtitle, "How World-Class Companies 99:59:59.999 --> 99:59:59.999 Profit from Passion and Purpose." And it's based on asking audiences-- 99:59:59.999 --> 99:59:59.999 random meeting of people--is there any company that you like? 99:59:59.999 --> 99:59:59.999 That you like a lot? Now, let me ask that question. 99:59:59.999 --> 99:59:59.999 Name a company that you would dearly miss if it disappeared, vanished. 99:59:59.999 --> 99:59:59.999 [audience murmurs] Apple! See, always Apple. 99:59:59.999 --> 99:59:59.999 I thought you were going to say Harley Davidson, but that's 99:59:59.999 --> 99:59:59.999 another one. Amazon. I would miss Amazon. 99:59:59.999 --> 99:59:59.999 I really would. I would even subsidize it to continue. 99:59:59.999 --> 99:59:59.999 [laughter] Which one? 99:59:59.999 --> 99:59:59.999 Costco. Of course. I'm with you on Costco. 99:59:59.999 --> 99:59:59.999 Nike. Okay, well you see what happens is, 99:59:59.999 --> 99:59:59.999 these are the names of the companies that came up again and again. 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. 99:59:59.999 --> 99:59:59.999 Because it would be a different mix of companies that would come up. 99:59:59.999 --> 99:59:59.999 But the main thing is, firms of endearment are so much 99:59:59.999 --> 99:59:59.999 more profitable than the ones that have not been dear to us. 99:59:59.999 --> 99:59:59.999 One of the things is that they-- They're either 9 or 10 times 99:59:59.999 --> 99:59:59.999 as profitable, but let's see why, and without going through 99:59:59.999 --> 99:59:59.999 everything here, look at the last one. These are the attributes 99:59:59.999 --> 99:59:59.999 of that set of companies. And the last attribute is that 99:59:59.999 --> 99:59:59.999 they spend less on marketing than rather more. 99:59:59.999 --> 99:59:59.999 I bet you thought that the companies that were going to be dear to us 99:59:59.999 --> 99:59:59.999 are the ones who are just advertising all the time. 99:59:59.999 --> 99:59:59.999 They're so familiar. We see Coca-Cola 99:59:59.999 --> 99:59:59.999 all the time. All the time. No! They spend less on advertising, 99:59:59.999 --> 99:59:59.999 so who's doing the advertising? The customer. You guys are. 99:59:59.999 --> 99:59:59.999 So that's where you should put your money. 99:59:59.999 --> 99:59:59.999 Create a love affair. Create fans with others. 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. 99:59:59.999 --> 99:59:59.999 "The End of Work" This is Jeremy Rifkin's book. 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 99:59:59.999 --> 99:59:59.999 in population growth, automation of factories and computers, robotics, 99:59:59.999 --> 99:59:59.999 3D printing, can the nation create enough jobs? Can the world create 99:59:59.999 --> 99:59:59.999 enough jobs for the population, and so on. 99:59:59.999 --> 99:59:59.999 And it raises a question about marketing's role. 99:59:59.999 --> 99:59:59.999 Marketing's role normally is seen as to sell you some things. 99:59:59.999 --> 99:59:59.999 The basic role of marketing is to create jobs. 99:59:59.999 --> 99:59:59.999 It is the job creator. Namely, it gets you to want something 99:59:59.999 --> 99:59:59.999 that someone has to produce. So there's a basic question: 99:59:59.999 --> 99:59:59.999 Does marketing really create new jobs or does it only 99:59:59.999 --> 99:59:59.999 create shifts in the shares? Like if I switch from brand X 99:59:59.999 --> 99:59:59.999 to brand Y, that's not creating-- Brand X loses a job and brand Y 99:59:59.999 --> 99:59:59.999 gets a job. So, but it is true that if we're talking a new product, 99:59:59.999 --> 99:59:59.999 marketing will help accelerate it's recognition, the awareness of it, 99:59:59.999 --> 99:59:59.999 and intensify the drive to purchase it. In other words, we buy our iPads 99:59:59.999 --> 99:59:59.999 and other things that come along partly because they're wanted, 99:59:59.999 --> 99:59:59.999 they are desired objects, and marketing accelerates 99:59:59.999 --> 99:59:59.999 the rate at which growth takes place with those new products. 99:59:59.999 --> 99:59:59.999 The other book, and I'll end with this, is another downer. 99:59:59.999 --> 99:59:59.999 "The Death of Demand" 99:59:59.999 --> 99:59:59.999 And what is the relationship between marketing and demand? 99:59:59.999 --> 99:59:59.999 And is-- he uses a term saturated-- finding growth in a saturated 99:59:59.999 --> 99:59:59.999 global economy. 99:59:59.999 --> 99:59:59.999 I've been wrestling with that problem, and growth is the issue today. 99:59:59.999 --> 99:59:59.999 Growth is the issue. Growth means jobs, and so on. 99:59:59.999 --> 99:59:59.999 And the fact is, there are 8 ways to grow a business. 99:59:59.999 --> 99:59:59.999 So the title of the book is "Market Your Way to Grow: 99:59:59.999 --> 99:59:59.999 8 Ways to Win." And you know all of them. 99:59:59.999 --> 99:59:59.999 You know that we can go to places where there is growth. 99:59:59.999 --> 99:59:59.999 We can sell in China, even if it's a low growth here. 99:59:59.999 --> 99:59:59.999 Or Brazil. We know we can grow by acquiring other firms. 99:59:59.999 --> 99:59:59.999 We know we can grow by innovating. Inventing something new. 99:59:59.999 --> 99:59:59.999 We know we can grow by taking business away from someone else, 99:59:59.999 --> 99:59:59.999 and so on and so forth. So one of the things 99:59:59.999 --> 99:59:59.999 we're wrestling with is how do you, as a firm, grow? 99:59:59.999 --> 99:59:59.999 And by coincidence, another colleague of mine at 99:59:59.999 --> 99:59:59.999 the Kelogg School of Management, Tim-- He just wrote a book called 99:59:59.999 --> 99:59:59.999 "Defending Your Business," and it's so nice that his book came out 99:59:59.999 --> 99:59:59.999 with mine, because the first job is always defend what you've got. 99:59:59.999 --> 99:59:59.999 Hold on to the customer you have, then you start worrying about 99:59:59.999 --> 99:59:59.999 some more growth. So we both, as members 99:59:59.999 --> 99:59:59.999 of the department, are wrestling with how to ignore these books 99:59:59.999 --> 99:59:59.999 and say they're wrong, and that there is a bright future ahead. 99:59:59.999 --> 99:59:59.999 [laughter] So let me stop here 99:59:59.999 --> 99:59:59.999 and take any questions you might have. 99:59:59.999 --> 99:59:59.999 [applause] 99:59:59.999 --> 99:59:59.999 Thank you. 99:59:59.999 --> 99:59:59.999 [Moderator]: Okay, we have time for a few questions for Professor Kotler. 99:59:59.999 --> 99:59:59.999 Is there anyone on this side of the auditorium that would like 99:59:59.999 --> 99:59:59.999 to ask a question? 99:59:59.999 --> 99:59:59.999 [Kotler]: Yes. I see-- I see you over there. 99:59:59.999 --> 99:59:59.999 Now a microphone will magically come down here. 99:59:59.999 --> 99:59:59.999 [Moderator]: Susan will bring you a microphone. 99:59:59.999 --> 99:59:59.999 [Kotler]: And if there's any other people-- and there's a person over there 99:59:59.999 --> 99:59:59.999 Would you introduce yourself, please? 99:59:59.999 --> 99:59:59.999 [Audience member]: My name is Iris Witkowski and I've been 99:59:59.999 --> 99:59:59.999 coming to the Humanities Festival as long as it exists, and I very much 99:59:59.999 --> 99:59:59.999 appreciate your talk today. [Kotler]: Thank you. 99:59:59.999 --> 99:59:59.999 [Audience member]: My-- I'm making a statement. 99:59:59.999 --> 99:59:59.999 What really drives me nuts, as far as saturation is concerned, 99:59:59.999 --> 99:59:59.999 is the placement of products on television programs. 99:59:59.999 --> 99:59:59.999 It used to be that in a movie you'd say "Oh, I saw that brand." 99:59:59.999 --> 99:59:59.999 It seemed to be accidental. Now it's all over. 99:59:59.999 --> 99:59:59.999 Even the anchormen have L.L. Bean jackets on. 99:59:59.999 --> 99:59:59.999 [Kotler]: You know, that's the field called product placement, 99:59:59.999 --> 99:59:59.999 and we first got conscious of it with the James Bond films, 99:59:59.999 --> 99:59:59.999 where each time there was a different car, he drove an Audi or he drove 99:59:59.999 --> 99:59:59.999 something else, because it was a matter of what car company would pay 99:59:59.999 --> 99:59:59.999 the most for the next film to feature that car, and now, 99:59:59.999 --> 99:59:59.999 does the person speaking pick up a Coke bottle or a Pepsi bottle? 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, 99:59:59.999 --> 99:59:59.999 but it has been discovered as a way to get some visibility for certain products. 99:59:59.999 --> 99:59:59.999 Product placement. 99:59:59.999 --> 99:59:59.999 [Audience member]: I'm Cody Hagle. I'm a Charter Humanist. 99:59:59.999 --> 99:59:59.999 Again, thank you. On the evening national news, 75 to 80 percent 99:59:59.999 --> 99:59:59.999 of the ads are for pharmaceuticals. [Kotler]: And they say awful things 99:59:59.999 --> 99:59:59.999 about each one! [laughter] 99:59:59.999 --> 99:59:59.999 [Audience member]: And I believe there was a change in legal 99:59:59.999 --> 99:59:59.999 requirements some years ago. What are your thoughts about that, 99:59:59.999 --> 99:59:59.999 because clearly that advertising is driving demand, which is driving 99:59:59.999 --> 99:59:59.999 costs, etcetera, etcetera. [Koterl]: Yeah. 99:59:59.999 --> 99:59:59.999 It's called over-the-counter advertising, too. 99:59:59.999 --> 99:59:59.999 But maybe it's also prescription. But basically, you can make a case 99:59:59.999 --> 99:59:59.999 for it by saying consumers should know what they might think would be 99:59:59.999 --> 99:59:59.999 the right thing for them, otherwise the only one who could tell them 99:59:59.999 --> 99:59:59.999 what's right is the doctor. And the doctors don't like it, of course. 99:59:59.999 --> 99:59:59.999 The doctors in some cases are offended by-- 99:59:59.999 --> 99:59:59.999 by the patient saying what he wants as a prescription. 99:59:59.999 --> 99:59:59.999 But, you know, this has happened with lawyers who are advertising now. 99:59:59.999 --> 99:59:59.999 Doctors are advertising themselves, even if they don't like that. 99:59:59.999 --> 99:59:59.999 The expert is Prabha Sinha, who runs a firm called ZS 99:59:59.999 --> 99:59:59.999 and he's always working with the doctors and pharmaceutical people, 99:59:59.999 --> 99:59:59.999 and could help answer that. 99:59:59.999 --> 99:59:59.999 Any other things that bother you about advertising? 99:59:59.999 --> 99:59:59.999 [Audience member]: Hi, my name is Bob Michaelson. 99:59:59.999 --> 99:59:59.999 Thank you, Professor Kotler. It is a pleasure to hear you in person. 99:59:59.999 --> 99:59:59.999 You've been a big influence to so many people, myself in particular, 99:59:59.999 --> 99:59:59.999 for so many years. My question-- [Kotler]: One second. 99:59:59.999 --> 99:59:59.999 How many of you have read any of my books? Any hands? 99:59:59.999 --> 99:59:59.999 Thank you-- I owe thanks to you! 99:59:59.999 --> 99:59:59.999 [laughter] Please proceed. 99:59:59.999 --> 99:59:59.999 [Audience member]: My question is in regards to social media, 99:59:59.999 --> 99:59:59.999 and you started off your presentation talking about so much of marketing 99:59:59.999 --> 99:59:59.999 was defined at the beginning of the 20th century. We're 100 years into it. 99:59:59.999 --> 99:59:59.999 As you look at social media, do you see across a continuum of marketing 99:59:59.999 --> 99:59:59.999 this thing a short-term phenomena or radical change in as we do marketing 99:59:59.999 --> 99:59:59.999 for the next century. That's part 1. And part 2: Do you see the ability 99:59:59.999 --> 99:59:59.999 to apply an ROI to social media? 99:59:59.999 --> 99:59:59.999 [Kotler]: Yeah. Those are excellent questions. 99:59:59.999 --> 99:59:59.999 I-- This is not a fad. We are in the digital age. We've passed analog, 99:59:59.999 --> 99:59:59.999 and there's no turning back. That means that-- 99:59:59.999 --> 99:59:59.999 I see the following happening. Every company I talk to says 99:59:59.999 --> 99:59:59.999 "We're gonna go digital too, but slowly. We're gonna rely 99:59:59.999 --> 99:59:59.999 on our tradition," which is newspapers-- which are disappearing, by the way-- 99:59:59.999 --> 99:59:59.999 radio, TV, billboards, and magazines. 99:59:59.999 --> 99:59:59.999 So, at best, they will say this, "Let's turn 10% of our next budget 99:59:59.999 --> 99:59:59.999 over to digital," which means Facebook, Twitter, and YouTube 99:59:59.999 --> 99:59:59.999 and so on. And let's see what happens. Let's hire a 12-year-old 99:59:59.999 --> 99:59:59.999 [laughter] --give them a budget, 99:59:59.999 --> 99:59:59.999 and hope they come back saying, "Look what I did with Facebook! 99:59:59.999 --> 99:59:59.999 Look at how many mentions!" And so on. 99:59:59.999 --> 99:59:59.999 Now, that goes to your second question. How do we measure the impact 99:59:59.999 --> 99:59:59.999 of using Facebook or something like that? 99:59:59.999 --> 99:59:59.999 Progress is being made. But remember, we never 99:59:59.999 --> 99:59:59.999 measured advertising right either! I mean, traditional advertising was a-- 99:59:59.999 --> 99:59:59.999 was-- first of all, the basic notion of traditional advertising is 99:59:59.999 --> 99:59:59.999 you know that half the people will never see the-- what did Wanamaker say? 99:59:59.999 --> 99:59:59.999 I know that half of the money I spent on advertising is wasted, 99:59:59.999 --> 99:59:59.999 it's just that I don't know which half! [laughter] 99:59:59.999 --> 99:59:59.999 Basically, we judge things by how many people were, in principle, 99:59:59.999 --> 99:59:59.999 exposed--cost per thousand people exposed-- 99:59:59.999 --> 99:59:59.999 when we make an advertising budget, and frankly many of them were 99:59:59.999 --> 99:59:59.999 in the bathroom or the kitchen when the ad appeared. 99:59:59.999 --> 99:59:59.999 So... and increasingly, people are more on their TVs-- 99:59:59.999 --> 99:59:59.999 on their computer screens than they are necessarily watching ads. 99:59:59.999 --> 99:59:59.999 And I think the advertising industry is making the mistake of sa-- 99:59:59.999 --> 99:59:59.999 putting too many ads now. I mean, there's little content left 99:59:59.999 --> 99:59:59.999 on some programs, with the number of ads that flash by. 99:59:59.999 --> 99:59:59.999 They're all 30-second things. 99:59:59.999 --> 99:59:59.999 So, now about measuring. If you read Advertising Age, 99:59:59.999 --> 99:59:59.999 you'll see a lot of statements and claims that there is 99:59:59.999 --> 99:59:59.999 measurement going on. One thing I would say is this: 99:59:59.999 --> 99:59:59.999 Don't take your ad budget and take 50% and switch it to digital, 99:59:59.999 --> 99:59:59.999 which one firm did, and it was a terrible result. 99:59:59.999 --> 99:59:59.999 Because until you know what each social medium does, 99:59:59.999 --> 99:59:59.999 what you want is 10% of your budget going that way, and then when there's 99:59:59.999 --> 99:59:59.999 some proof, you put in another 5 or 10 percent 99:59:59.999 --> 99:59:59.999 into that particular use of the social media. 99:59:59.999 --> 99:59:59.999 [Moderator]: Okay, we've got time for just one more question. 99:59:59.999 --> 99:59:59.999 I know a lot of our attendees are going to other events, 99:59:59.999 --> 99:59:59.999 so we have one right here [Kotler]: Oh, okay. 99:59:59.999 --> 99:59:59.999 [Audience member]: Mark Ruen is my name. I've been in 99:59:59.999 --> 99:59:59.999 direct marketing my entire career, and so it's interesting that I should 99:59:59.999 --> 99:59:59.999 follow up a question about measurement in advertising 99:59:59.999 --> 99:59:59.999 because I've lived by my metrics. Now, my question is this: 99:59:59.999 --> 99:59:59.999 I've always guided my marketing decisions according to the so-called 99:59:59.999 --> 99:59:59.999 4 Ps or 5 Ps, depending on where you're coming from, 99:59:59.999 --> 99:59:59.999 and in terms of the P of the placement, I mean, the internet 99:59:59.999 --> 99:59:59.999 certainly flattened the world, and our distribution channels 99:59:59.999 --> 99:59:59.999 have changed. But how do you see the other Ps in this digital age? 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. 99:59:59.999 --> 99:59:59.999 Direct marketing people are much more accountable for the results. 99:59:59.999 --> 99:59:59.999 They could actually experiment with trying to release different 99:59:59.999 --> 99:59:59.999 direct messages and seeing-- and testing, and then going with the one 99:59:59.999 --> 99:59:59.999 and knowing what it costs to do the campaign, what the sales were, 99:59:59.999 --> 99:59:59.999 and it's just a pure P and L kind of exercise, 99:59:59.999 --> 99:59:59.999 which we couldn't do with just the normal commercials on TV. 99:59:59.999 --> 99:59:59.999 Now, are you asking where the other three Ps are going, in a sense? 99:59:59.999 --> 99:59:59.999 Like, what's happening to product thinking and pricing and place? 99:59:59.999 --> 99:59:59.999 See, there will be new distribution channels all the time. 99:59:59.999 --> 99:59:59.999 I've been asked this question when I wrote the book "Marketing 3.0," 99:59:59.999 --> 99:59:59.999 which is really the case that some companies should be 99:59:59.999 --> 99:59:59.999 socially responsible as well. Someone would ask me, 99:59:59.999 --> 99:59:59.999 "When are you gonna come up with 4.0?" 99:59:59.999 --> 99:59:59.999 And I don't really have an answer, because when 99:59:59.999 --> 99:59:59.999 you go from the mind to the heart to the spirit, 99:59:59.999 --> 99:59:59.999 I don't know how much farther you could go, 99:59:59.999 --> 99:59:59.999 but I am thinking that 4.0's gonna describe companies 99:59:59.999 --> 99:59:59.999 in the future that are building ecosystems and platforms 99:59:59.999 --> 99:59:59.999 where we get involved with them in such a way that 99:59:59.999 --> 99:59:59.999 everything is being supplied that we want, as an individual. 99:59:59.999 --> 99:59:59.999 Think of iTunes, think of the iPhone, iTunes, the whole setup 99:59:59.999 --> 99:59:59.999 of cre-- think of Harley Davidson. If I buy a Harley Davidson, 99:59:59.999 --> 99:59:59.999 I'm a member of-- they call them the Harley... the hogs! I'm a hog. 99:59:59.999 --> 99:59:59.999 Harley owner...? owner groupie. [laughter] 99:59:59.999 --> 99:59:59.999 and not only that. I can take my motorcycle 99:59:59.999 --> 99:59:59.999 and just go and meet people I don't know. Some have beards. 99:59:59.999 --> 99:59:59.999 Others have beads, but they're fake. 99:59:59.999 --> 99:59:59.999 [laughter] 99:59:59.999 --> 99:59:59.999 They're wearing leather jackets. These are business people. 99:59:59.999 --> 99:59:59.999 They may be chief financial officers, but they want to be macho, 99:59:59.999 --> 99:59:59.999 so they supply a whole system to fit into that more and more companies might 99:59:59.999 --> 99:59:59.999 sort of begin to think about that. Now, let's take-- what's the one 99:59:59.999 --> 99:59:59.999 who's making shoes now? Is it Tom's shoes or the other one? 99:59:59.999 --> 99:59:59.999 Zappos? They're creating a system that's going to go 99:59:59.999 --> 99:59:59.999 beyond the shoes that you buy. It's going to go into clothing. 99:59:59.999 --> 99:59:59.999 So some companies, as one evolution for certain companies-- 99:59:59.999 --> 99:59:59.999 by the way, it's not different in business to business, 99:59:59.999 --> 99:59:59.999 where a company that supplies-- Boeing supplies 747s and other planes. 99:59:59.999 --> 99:59:59.999 They have to create a whole system so you can't even leave it. 99:59:59.999 --> 99:59:59.999 You know, once you get involved-- Once you get with IBM, 99:59:59.999 --> 99:59:59.999 you're not gonna leave for Honeywell or something like that. 99:59:59.999 --> 99:59:59.999 So this is maybe what 4.0 thinking will do. 99:59:59.999 --> 99:59:59.999 In other words, it won't be product-centered, it will be 99:59:59.999 --> 99:59:59.999 system-centered. A whole system. I think we're out of time. 99:59:59.999 --> 99:59:59.999 Thank you very much. [applause]