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On behalf of our President 
and CEO, Greg Case,

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and our 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,
[laughter]

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I would like to present Dr. Kotler
with his very own, personalized

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Manchester United shirt.
[applause

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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...

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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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Wow, 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, about other

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early 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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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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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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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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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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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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and brochures. So sales departments
added three people, or hired them

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from time to time.
Later on, it exploded

233
00:16:38,534 --> 00:16:42,949
to the day today, when we have
multinationals running--

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00:16:42,949 --> 00:16:46,916
with marketing--
In other words, marketing--

235
00:16:46,916 --> 00:16:50,616
Those three people split from sales
and became big enough to become

236
00:16:50,616 --> 00:16:53,296
its own department.
And so, some people

237
00:16:53,296 --> 00:16:57,798
in the audience here may be 
a chief marketing officer.

238
00:16:57,798 --> 00:17:01,246
The old name was Vice President
of marketing, but I like the name

239
00:17:01,246 --> 00:17:06,148
chief marketing officer because
that person now is part of

240
00:17:06,148 --> 00:17:09,740
the chief officers. Chief information
officer, chief financial officer,

241
00:17:09,740 --> 00:17:15,907
chief innovation officer, 
and the status has moved up.

242
00:17:15,907 --> 00:17:20,997
Some of you may be brand managers,
may have been in your past experience.

243
00:17:20,997 --> 00:17:24,366
Category managers, market 
segment managers,

244
00:17:24,366 --> 00:17:29,336
managing distribution channels,
like retail or wholesale things,

245
00:17:29,336 --> 00:17:34,369
pricing manager, communication
manager, database manager,

246
00:17:34,369 --> 00:17:36,916
direct marketers, internet
people, and so on.

247
00:17:36,916 --> 00:17:41,287
So, marketing is well-established.

248
00:17:41,287 --> 00:17:46,205
Now, the character of a marketing
department depends very much

249
00:17:46,205 --> 00:17:50,829
on what the CEO thinks of marketing.

250
00:17:50,829 --> 00:17:57,770
So, the 1P CEO is a person
who took over a company,

251
00:17:57,770 --> 00:18:03,566
and he says, "I don't like 
marketing, but I know I need it,

252
00:18:03,566 --> 00:18:06,984
and all I want from marketing is
some communications.

253
00:18:06,984 --> 00:18:12,068
I just want someone to broadcast
and promote us."

254
00:18:12,068 --> 00:18:15,885
So, that person is missing 
a lot of other things

255
00:18:15,885 --> 00:18:20,858
made up by other CEOs,
who are 4P CEOs.

256
00:18:20,858 --> 00:18:25,365
Now a 4P CEO says,
"I need a marketing plan."

257
00:18:25,365 --> 00:18:29,636
And the plan has to mention 
product--that's the first P.

258
00:18:29,636 --> 00:18:32,926
What about our product? What's good
about it? What are the features?

259
00:18:32,926 --> 00:18:37,395
Price: what should it be priced at?
Place: where should it be

260
00:18:37,395 --> 00:18:41,267
made accessible? Online,
offline, in stores?

261
00:18:41,267 --> 00:18:43,286
And finally promotion.

262
00:18:43,286 --> 00:18:44,026
So that's a more educated view
of the potential of marketing.

263
00:18:47,752 --> 00:18:52,287
But there's even a better view,
and that's called the CEO who says,

264
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

265
00:18:56,497 --> 00:19:00,437
the market is complex." 
There's a lot of segments.

266
00:19:00,437 --> 00:19:06,415
Each segment deserves its own plan.
In fact, one thing we've learned

267
00:19:06,415 --> 00:19:09,764
that if you just have one value
proposition for the whole market,

268
00:19:09,764 --> 00:19:14,621
it really doesn't trigger anything
in many parts of the market.

269
00:19:14,621 --> 00:19:19,918
So that CEO says, "What
segment should we go after?

270
00:19:19,918 --> 00:19:23,488
And what position should we 
take with each segment?

271
00:19:23,488 --> 00:19:27,369
What should we say about ourselves,
in how we can satisfy their needs?"

272
00:19:27,369 --> 00:19:34,100
Now there's even a higher type CEO,
which is exemplified by A.G. Lafley,

273
00:19:34,100 --> 00:19:37,824
who ran Procter & Gamble,
who recently retired.

274
00:19:37,824 --> 00:19:42,648
When you ask A.G. Lafley what's
marketing, what's your picture,

275
00:19:42,648 --> 00:19:46,719
he says, "Well, what do you mean?
Marketing is everything."

276
00:19:46,719 --> 00:19:47,980
[laughter]

277
00:19:47,980 --> 00:19:49,729
Now, marketing is everything.
What he means is

278
00:19:49,729 --> 00:19:53,710
everything starts with the customer.
No customers, no business.

279
00:19:53,710 --> 00:19:58,346
And I think he's making 
that point very much.

280
00:19:58,346 --> 00:20:04,157
Now, moving on, there's a lot of things 
that a chief marketing officer does,

281
00:20:04,157 --> 00:20:08,828
and I won't go into any detail,
but there's a lot of tasks,

282
00:20:08,828 --> 00:20:14,365
and the sad fact is that sometimes
the chief marketing officer only lasts

283
00:20:14,365 --> 00:20:18,507
on the average of two years.
In other words, does a job,

284
00:20:18,507 --> 00:20:24,942
and maybe the CEO is not feeling that 
it really brought in enough new business

285
00:20:24,942 --> 00:20:31,518
that the cost of the CMO exceeds 
what the value of the CMO is.

286
00:20:31,518 --> 00:20:36,498
There's a lot to go into about
why CMOs on the average

287
00:20:36,498 --> 00:20:40,088
hold on to their job for two years.
By the way, some of them

288
00:20:40,088 --> 00:20:43,718
get a better job after two years.
They become something higher

289
00:20:43,718 --> 00:20:47,329
than the chief marketing officer.
Some of them actually are pirated away

290
00:20:47,329 --> 00:20:52,006
because they're so good, they go 
to another company to be the CEO.

291
00:20:52,006 --> 00:20:55,776
But in any case, marketing--
commercial marketing,

292
00:20:55,776 --> 00:21:01,148
which I've been talking about,
could've stayed only commercial,

293
00:21:01,148 --> 00:21:05,947
and then I got involved in--
with Professor Sid Levy at Northwestern

294
00:21:05,947 --> 00:21:09,716
We started the idea of 
broadening marketing,

295
00:21:09,716 --> 00:21:15,499
because the set of tools that we use
to address consumers could be used

296
00:21:15,499 --> 00:21:18,496
in other areas.
So we have a thing

297
00:21:18,496 --> 00:21:22,676
called place marketing.
I will get a call from a city, let's say,

298
00:21:22,676 --> 00:21:27,037
and a city says, "We're not getting
enough tourists. We don't have

299
00:21:27,037 --> 00:21:32,048
any attractions for them to come 
and see. I would like to get a factory

300
00:21:32,048 --> 00:21:38,969
located here. We would like some digital
people to move here, who know digital--

301
00:21:38,969 --> 00:21:42,016
We want to start a Silicon Valley."
So that's place marketing.

302
00:21:42,016 --> 00:21:45,966
The marketing of a place. How do you
dress it up and make it attractive?

303
00:21:46,256 --> 00:21:48,952
Against all of the other 
competitive places.

304
00:21:48,952 --> 00:21:53,433
The second--
Person marketing.

305
00:21:53,433 --> 00:21:58,005
There's an agency called William Morris,
and a young singer might go to

306
00:21:58,005 --> 00:21:59,646
William Morris and say, "look, I want 
to get ahead. I want to appear

307
00:22:02,523 --> 00:22:10,423
on Jay Leno's show. I want to--
I want to move up to being noticed.

308
00:22:10,423 --> 00:22:14,541
I want high visibility."
I wrote a book with the title

309
00:22:14,541 --> 00:22:17,619
"High Visibility." How do you 
get that visibility.

310
00:22:17,619 --> 00:22:21,921
So, William Morris will look
at her and her performance

311
00:22:21,921 --> 00:22:25,241
and maybe say, 
"You know, in a sense--

312
00:22:25,241 --> 00:22:26,864
Don't be offended, but we can 
make you into a better product."

313
00:22:30,015 --> 00:22:33,996
That's sort of the language.
You know, do your hair differently,

314
00:22:33,996 --> 00:22:42,318
walk a little-- dress differently.
Actually, we're going to use you to

315
00:22:42,318 --> 00:22:49,035
reignite the archetype of Joan Baez.
You know, Joan Baez, the folk singer.

316
00:22:49,035 --> 00:22:52,321
Well, we need a new Joan Baez.
And so, we can recast you

317
00:22:52,958 --> 00:22:59,678
and form you into the kind of 
person we all miss, and so on.

318
00:22:59,678 --> 00:23:04,358
Now, social marketing is
another branch.

319
00:23:04,358 --> 00:23:09,296
Today there are 2,000 social marketers
around the world, trying to help people

320
00:23:10,382 --> 00:23:17,593
eat better, exercise more, say no
to drugs, stop smoking cigar--

321
00:23:17,593 --> 00:23:22,235
get off of tobacco, say no to
a number of things.

322
00:23:22,235 --> 00:23:26,305
Positive behaviors and 
negative behaviors.

323
00:23:26,305 --> 00:23:30,677
By the way, my memory is that
Sweden was one of the first countries

324
00:23:30,677 --> 00:23:39,167
to want to raise a nation of nonsmokers,
non-drinkers, all the vices.

325
00:23:39,167 --> 00:23:45,124
And it starts at the primary school level,
that you could technically raise people

326
00:23:45,124 --> 00:23:52,313
to avoid those vices, if that was 
thought to be good public policy.

327
00:23:52,313 --> 00:23:54,375
So that's social marketing.
Now, political marketing,

328
00:23:54,375 --> 00:24:00,502
we're saturated with. 
And I think it's degenerated,

329
00:24:00,502 --> 00:24:06,172
but that's another thing.
Fundraising is part of marketing.

330
00:24:06,172 --> 00:24:11,445
I mean, fundraising is an odd form,
because you're not exchanging.

331
00:24:11,445 --> 00:24:16,474
Everything else is sort of an exchange
of values. Fundraising seems to be

332
00:24:16,474 --> 00:24:21,246
a one-way transfer.
Here's some money

333
00:24:21,246 --> 00:24:22,916
for the museum. 
But any fundraiser knows

334
00:24:22,916 --> 00:24:27,439
there's something that should come
back to the person who is the donor

335
00:24:27,439 --> 00:24:31,139
and supporter of a museum,
and working that way is important.

336
00:24:31,139 --> 00:24:38,555
So these are offshoots. 
Now all of us do marketing.

337
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

338
00:24:42,226 --> 00:24:45,844
you knew there were other applicants?
Didn't you dress up as well as you could

339
00:24:45,844 --> 00:24:50,380
and even prepare what you're 
going to say, and so on?

340
00:24:50,380 --> 00:24:54,060
Did you compete for a desirable
apartment which was scarce?

341
00:24:54,060 --> 00:24:58,893
Or a member of the opposite sex,
if you wanted to court someone.

342
00:24:58,893 --> 00:25:03,943
So, in a sense, we're human animals
who know how to make an impression

343
00:25:06,040 --> 00:25:10,898
and market ourselves, to some extent.

344
00:25:10,898 --> 00:25:14,818
What do we dislike about marketing?

345
00:25:14,818 --> 00:25:19,262
Well, there's a long list.
It's a rather long list.

346
00:25:19,262 --> 00:25:26,166
Intrusion, interruption, exaggeration,
and so on and so forth.

347
00:25:26,166 --> 00:25:31,277
And I really made a list that's 
a little separate from that.

348
00:25:31,277 --> 00:25:37,262
Here are some of the criticisms.
Marketers get consumers to want

349
00:25:37,262 --> 00:25:40,636
and spend more than they can afford.

350
00:25:40,636 --> 00:25:46,856
And we know that from the financial
disaster that people were buying homes

351
00:25:46,856 --> 00:25:51,707
with maybe nothing down.
Marketers are skilled at

352
00:25:51,707 --> 00:25:55,389
creating grand differentiation 
where it shouldn't exist.

353
00:25:55,389 --> 00:25:59,180
Like with commodities, you know, a
chicken is a chicken, cement is cement.

354
00:25:59,180 --> 00:26:01,882
So they spend a lot of time trying to
tell you their cement is really better,

355
00:26:04,230 --> 00:26:06,967
their salt is really better, and so on.
Marketers want to produce and sell

356
00:26:06,967 --> 00:26:12,231
more goods without considering
the resource and environmental costs

357
00:26:12,231 --> 00:26:12,612
of producing the goods.
The planet Earth is affected

358
00:26:14,020 --> 00:26:15,240
by the amount of production
and the care with which it's done.

359
00:26:19,823 --> 00:26:25,631
Marketers had not paid sufficient
attention to product safety.

360
00:26:26,743 --> 00:26:31,593
We know that because Ralph Nader
made his career, basically, car--

361
00:26:31,593 --> 00:26:35,671
the unsafety in cars, and then 
we got lead poisoning,

362
00:26:35,671 --> 00:26:38,804
we got asbestos problems,
and so on.

363
00:26:38,804 --> 00:26:43,003
Here's a serious criticism. Marketers--
and this is not all marketers--

364
00:26:43,003 --> 00:26:47,293
these are some particular 
companies, and so on.

365
00:26:47,293 --> 00:26:51,423
Marketers favor giving the public what it
wants, whether its good or not for them.

366
00:26:51,423 --> 00:26:57,931
Sure, I'll sell you cigarettes. I'll sell 
you anything that will make money.

367
00:26:57,931 --> 00:27:03,522
Therefore marketing promotes 
a materialistic mindset,

368
00:27:03,522 --> 00:27:09,923
that-- we get turned on to
more of a materialistic world,

369
00:27:09,923 --> 00:27:14,811
a world of ever-changing products and
services and keeping up with the Jones

370
00:27:14,811 --> 00:27:17,372
and some of that.

371
00:27:17,372 --> 00:27:22,431
Marketers rarely talk about
sane consumption.

372
00:27:22,431 --> 00:27:27,285
Yeah, some beer companies say,
"Please enjoy our beer, but don't

373
00:27:27,285 --> 00:27:34,171
drink too much." That's nice that they--
No one listens to that, and you still

374
00:27:34,171 --> 00:27:37,964
have binge-drinking, but they're
trying to do what they can

375
00:27:39,538 --> 00:27:43,355
and so on and so forth.
Now, let me just say

376
00:27:43,355 --> 00:27:46,537
there's another side.
This is important too,

377
00:27:46,537 --> 00:27:51,588
because it's not a simple picture.
The other side of it is

378
00:27:51,588 --> 00:27:54,775
Marketing has undoubtedly 
raised the standard of living

379
00:27:58,623 --> 00:28:02,241
in the United States.
People don't naturally

380
00:28:02,241 --> 00:28:07,423
buy new things. In other words,
do you know, people used to keep

381
00:28:07,423 --> 00:28:10,433
their refrigerators, which
weren't refrigerators at the time,

382
00:28:10,433 --> 00:28:15,412
they were ice boxes and they would
keep going out and getting some ice

383
00:28:15,412 --> 00:28:20,483
and putting it in the box, and so on.
And even the washing machines

384
00:28:20,483 --> 00:28:24,364
were very slow to take--
In other words, people--

385
00:28:24,364 --> 00:28:26,562
It would be very expensive to
buy a new appliance,

386
00:28:26,562 --> 00:28:30,231
but marketers persisted in saying
your life will be better with

387
00:28:30,231 --> 00:28:38,011
new appliances, and 
that's one of its jobs.

388
00:28:38,011 --> 00:28:43,825
I would even go so far as to say
that marketing is so connected

389
00:28:43,825 --> 00:28:45,094
to the idea of the middle class.
We're talking about preserving

390
00:28:45,094 --> 00:28:48,371
and building the middle class,
and the lifestyle that goes with it,

391
00:28:48,371 --> 00:28:53,733
and marketing is an essential
definer of what it is to be--and want--

392
00:28:53,733 --> 00:28:58,431
what it is to want, as a member
of the middle class.

393
00:28:58,431 --> 00:29:04,273
Marketing in the form of social
marketing has helped improve

394
00:29:04,273 --> 00:29:08,562
a lot of things. You know,
one of the first causes

395
00:29:08,562 --> 00:29:10,512
that marketing turned to was 
the environment and waste

396
00:29:10,512 --> 00:29:15,412
and the ill-effects of some 
products, and so on.

397
00:29:15,412 --> 00:29:18,303
Preserving the environment
was one of the first things that

398
00:29:18,303 --> 00:29:21,091
social marketers got into.

399
00:29:21,627 --> 00:29:24,441
Now they're into obesity as a problem,
littering as a problem,

400
00:29:24,441 --> 00:29:29,465
and other problems.

401
00:29:29,465 --> 00:29:33,739
Marketing is very important
to the cultural world.

402
00:29:33,739 --> 00:29:37,600
Museums, performing arts,
and one of the big problems

403
00:29:37,600 --> 00:29:43,771
that cultural institutions are facing,
especially in the performing arts,

404
00:29:43,771 --> 00:29:50,079
is the aging of audiences.
How do you get people

405
00:29:50,079 --> 00:29:56,131
who are in their forties to go to opera,
to go to ballet, and so on.

406
00:29:56,131 --> 00:30:00,000
It's called the graying of the audiences,
and maybe that problem has

407
00:30:00,000 --> 00:30:04,392
been with us for a long time,
but marketers are at work

408
00:30:04,392 --> 00:30:08,082
doing segmentation, targeting,
positioning, in order to

409
00:30:08,082 --> 00:30:14,487
make sure that all seats are filled
in the theater, and also the museums

410
00:30:14,487 --> 00:30:20,388
are very busy, as marketing institutions,
because they have to get visitors,

411
00:30:20,388 --> 00:30:24,360
they have to get donors, they have to
get government grants,

412
00:30:24,360 --> 00:30:30,362
so marketing is almost an intrinsic
function today that's going on.

413
00:30:30,362 --> 00:30:33,410
But let me--

414
00:30:33,410 --> 00:30:37,619
This is not time to take a vote.
Do you like marketing

415
00:30:37,619 --> 00:30:41,680
or you don't like marketing. 
But let me show you that

416
00:30:41,680 --> 00:30:49,161
the feeling-- the negative feelings about
marketing came up from these people.

417
00:30:49,161 --> 00:30:54,612
The attackers. They attacked marketing.
Do you recognize anyone?

418
00:30:54,612 --> 00:31:00,110
You see Ralph Nader? I don't...
There he is. Yeah.

419
00:31:00,110 --> 00:31:07,778
Who else?

420
00:31:07,778 --> 00:31:11,380
Well, it is Ralph Nader.
"Unsafe at Any Speed."

421
00:31:11,380 --> 00:31:14,588
Rachel Carson, by the way,
deserves so much more credit

422
00:31:14,588 --> 00:31:18,566
than we've given to her for her book
on the Silent Spring, which was about

423
00:31:18,566 --> 00:31:23,569
the chemical pollution, the pesticides
that were getting into our spring water,

424
00:31:23,569 --> 00:31:26,780
and so on. Vance Packard,
who popularized the idea

425
00:31:26,780 --> 00:31:30,797
that we are hidden persuaders. 
That when you go into a movie theater,

426
00:31:30,797 --> 00:31:35,396
you don't know this but an ad is sort of
flashing to go and get some popcorn

427
00:31:35,396 --> 00:31:38,943
before you sit down. 
Subliminal advertising,

428
00:31:38,943 --> 00:31:42,471
which never did happen, 
but the hidden persuaders.

429
00:31:43,568 --> 00:31:47,468
And then John Kenneth Galbraith,
who pointed out that while we spend

430
00:31:47,468 --> 00:31:52,108
so much money in making enough
deodorants for any type of interest

431
00:31:52,108 --> 00:31:56,233
you have in deodorants,
in the public sector--

432
00:31:56,233 --> 00:31:59,156
In the public sector, you've got
streets that are littered,

433
00:31:59,156 --> 00:32:01,946
and there's some garbage, 
and there's slow traffic, and--

434
00:32:01,946 --> 00:32:07,143
And so we have a good private sector,
but we can't enjoy it because

435
00:32:07,143 --> 00:32:13,194
the public sector doesn't have the
public good that would facilitate things.

436
00:32:13,194 --> 00:32:16,898
You've got Naomi Klein,
who's probably the prototype

437
00:32:16,898 --> 00:32:22,070
person now for attacking branding.
Brands, brands, they're awful.

438
00:32:22,070 --> 00:32:26,037
You're paying more than 
you need to pay.

439
00:32:26,037 --> 00:32:30,938
The book is called "No Logo,"
logo being another name for brand.

440
00:32:30,938 --> 00:32:35,878
And Michael Sandel is-- has this 
new book out, which is really interesting

441
00:32:35,878 --> 00:32:39,997
and worth reading. He's the fella
who ran a course on justice,

442
00:32:39,997 --> 00:32:47,597
and would ask groups about this size
at Harvard, "What is the just thing to do

443
00:32:47,597 --> 00:32:50,301
in each situation?" 
But his new book is called

444
00:32:50,301 --> 00:32:53,668
"What Money Can't Buy: 
The Moral Limits of Marketing"

445
00:32:53,668 --> 00:32:57,049
where he points out that 
if you're in jail in California

446
00:32:57,049 --> 00:33:02,527
and you don't like the cell,
you can pay for a better cell.

447
00:33:02,527 --> 00:33:05,897
You know, maybe one with a computer
if you want a computer, and so on.

448
00:33:05,897 --> 00:33:12,037
But he's also-- he thinks today
our culture divides people

449
00:33:12,037 --> 00:33:17,053
in social classes more clearly.
We used to go to ball games;

450
00:33:17,053 --> 00:33:20,005
I would sit next to someone who was
rich and someone who was poor.

451
00:33:20,005 --> 00:33:22,647
We'd all stand in the 
same line for hot dogs.

452
00:33:22,647 --> 00:33:26,726
Today, the guys who are rich
are up in the sky box,

453
00:33:26,726 --> 00:33:32,197
and he calls it the sky box-ification of 
the United States. The sky box-ification.

454
00:33:32,197 --> 00:33:37,328
They're eating filet mignon and
we peasants are down there having--

455
00:33:37,328 --> 00:33:42,358
standing in line for our hot dog.
So we are not meeting each other

456
00:33:42,358 --> 00:33:43,739
as we used to, in the older days.
It's a very interesting treatment.

457
00:33:48,562 --> 00:33:54,812
I like to quote Will Rogers with this
remark: "If advertisers spent

458
00:33:54,812 --> 00:33:59,591
the same amount of money that they--
on improving the product

459
00:33:59,591 --> 00:34:03,943
as they do on advertising, they wouldn't
have to advertise it. And that's--

460
00:34:03,943 --> 00:34:07,012
By the way, that's a very profound 
observation, because in the age

461
00:34:07,012 --> 00:34:15,164
of the internet, it's so much easier
to talk about a product you like

462
00:34:15,164 --> 00:34:19,552
to others and also about
a product you don't like.

463
00:34:19,552 --> 00:34:24,383
And in a sense, if this goes far enough,
there will be no bad companies

464
00:34:24,383 --> 00:34:31,315
anymore. It would be not possible
for a company to be a bad company,

465
00:34:31,315 --> 00:34:35,904
because the word 
of mouth will sink it.

466
00:34:35,904 --> 00:34:44,043
So he's sort of touching on that point.
Make-- Do a good job, and don't--

467
00:34:44,043 --> 00:34:47,962
and others will advertise 
the good job you did.

468
00:34:47,962 --> 00:34:51,293
Now, I want to add another group,
and this is a group of visionaries,

469
00:34:54,371 --> 00:34:56,732
and I'd like to call them 
our best marketers.

470
00:34:56,732 --> 00:35:01,654
But they're not necessarily the 
chief marketing officer,

471
00:35:01,654 --> 00:35:02,783
they're CEOs. But what--
Their contribution has been

472
99:59:59,999 --> 99:59:59,999
the kind you want from your 
chief marketing officers.

473
99:59:59,999 --> 99:59:59,999
So who do you see here? 
Do you know any of those people?

474
99:59:59,999 --> 99:59:59,999
[audience murmuring]

475
99:59:59,999 --> 99:59:59,999
Yeah. You've got to know some of 
them. But you probably don't know

476
99:59:59,999 --> 99:59:59,999
the first one. Ingvar Kamprad.
It's very even hard to remember

477
99:59:59,999 --> 99:59:59,999
his name, but he's that Swedish 
person who invented IKEA,

478
99:59:59,999 --> 99:59:59,999
who said, "I must bring down the cost
of furniture, and I can do that by

479
99:59:59,999 --> 99:59:59,999
taking the air out of it and just 
selling knocked down furniture,

480
99:59:59,999 --> 99:59:59,999
and now people can afford to have
some nice things in their home.

481
99:59:59,999 --> 99:59:59,999
Richard Branson is phenomenal.
He's a-- not only in self-promotion.

482
99:59:59,999 --> 99:59:59,999
He's one of the best self-promoters
possible. I don't know if you know

483
99:59:59,999 --> 99:59:59,999
that he was in Times Square 
some years ago

484
99:59:59,999 --> 99:59:59,999
to introduce his new cell phone,
the Virgin cell phone,

485
99:59:59,999 --> 99:59:59,999
and he said he was going to drop off 
of a building, a 30-story building,

486
99:59:59,999 --> 99:59:59,999
and-- not wearing any clothes or
something, so everyone showed up.

487
99:59:59,999 --> 99:59:59,999
I don't know why they would want to
show up, but they showed up

488
99:59:59,999 --> 99:59:59,999
in Times Square, and sure, he did 
jump down, but it was on a rope

489
99:59:59,999 --> 99:59:59,999
and he's carrying a huge version
of his new cell phone.

490
99:59:59,999 --> 99:59:59,999
And so everyone--not just in
Times Square--the reporters

491
99:59:59,999 --> 99:59:59,999
were covering it. All of New York 
knew about the new-- there was

492
99:59:59,999 --> 99:59:59,999
a new Virgin cell phone.
So he's very good at that.

493
99:59:59,999 --> 99:59:59,999
But right now, he told me something
I couldn't believe. I was in Dubai,

494
99:59:59,999 --> 99:59:59,999
and he gave a speech, and we 
were just chatting, and he said,

495
99:59:59,999 --> 99:59:59,999
"Where are you from?" I said Chicago,
and he says, "You know, there will be

496
99:59:59,999 --> 99:59:59,999
a time when you can go from
Dubai to Chicago in half an hour."

497
99:59:59,999 --> 99:59:59,999
What is it-- Is this a time
machine you're inventing?

498
99:59:59,999 --> 99:59:59,999
He says, "No, it's just a rocket ship."
So the rocket ship takes off from

499
99:59:59,999 --> 99:59:59,999
Dubai, it just goes right up in the 
air and lands in Chicago.

500
99:59:59,999 --> 99:59:59,999
So he's working with some people
on the new spaceships, basically.

501
99:59:59,999 --> 99:59:59,999
And you want to watch him.
Of course, Walt Disney.

502
99:59:59,999 --> 99:59:59,999
Great, great visionary.

503
99:59:59,999 --> 99:59:59,999
Herb Kelleher. Thanks to him,
we have Southwest Airlines,

504
99:59:59,999 --> 99:59:59,999
which started a whole class
of low-cost airlines.

505
99:59:59,999 --> 99:59:59,999
And then we've got Anita Roddick,
who ran The Body Shop, where she said

506
99:59:59,999 --> 99:59:59,999
"I'm not selling hope, I'm selling good
skin lotion. All the others sell hope."

507
99:59:59,999 --> 99:59:59,999
That was a famous remark by Revlon,
"In the factory we make lipstick,

508
99:59:59,999 --> 99:59:59,999
in the store we sell hope."
But she wrestled with that one.

509
99:59:59,999 --> 99:59:59,999
Then you've got Bill Gates, 
Steve Jobs, and Jeff Bezos.

510
99:59:59,999 --> 99:59:59,999
And Jeff-- Let's see, we've gotta
make sure he gets in there.

511
99:59:59,999 --> 99:59:59,999
[laughter]
Jeff is extraordinary.

512
99:59:59,999 --> 99:59:59,999
If there's anyone who has 
consumer thinking in his mind,

513
99:59:59,999 --> 99:59:59,999
wanting to facilitate the consumer
to really order or re-order or return

514
99:59:59,999 --> 99:59:59,999
or anything like that. And then to buy
more than books, to buy electronics,

515
99:59:59,999 --> 99:59:59,999
to buy clothes. He's done a marvelous
job. He's very exemplary in that sense.

516
99:59:59,999 --> 99:59:59,999
We're running out of time and I'm going
to want some questions from you,

517
99:59:59,999 --> 99:59:59,999
but let me just refer to 
a few more things.

518
99:59:59,999 --> 99:59:59,999
This is a chart I use in
the book, "Marketing 3.0,"

519
99:59:59,999 --> 99:59:59,999
basically to say that every company
should define its mission, it's vision

520
99:59:59,999 --> 99:59:59,999
for the future, and its values--
what it really cares about,

521
99:59:59,999 --> 99:59:59,999
and if you're a 1.0 marketer,
it's a good job you're doing.

522
99:59:59,999 --> 99:59:59,999
I mean, of course you're trying
to deliver satisfaction, make a profit,

523
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

524
99:59:59,999 --> 99:59:59,999
help people realize their aspirations.
You want to deliver things that

525
99:59:59,999 --> 99:59:59,999
they might aspire to have.
They will return frequently to buy more,

526
99:59:59,999 --> 99:59:59,999
and your product is different than the
others. Not only better, but different.

527
99:59:59,999 --> 99:59:59,999
And suddenly, you move 
from mind to heart to spirit.

528
99:59:59,999 --> 99:59:59,999
What's spirit? It's that small
set of companies that say

529
99:59:59,999 --> 99:59:59,999
"We're compassionate. We have
compassion for the state of the world.

530
99:59:59,999 --> 99:59:59,999
We want to get involved. We want 
the companies to be a machine

531
99:59:59,999 --> 99:59:59,999
for improving the lives of people."
You could say-- you could reduce that

532
99:59:59,999 --> 99:59:59,999
to just some charity work they're doing.
Or it could be a real, fundamental

533
99:59:59,999 --> 99:59:59,999
strain in the way they do their business.
We can name some companies that

534
99:59:59,999 --> 99:59:59,999
really have felt that they want 
to help reshape the world

535
99:59:59,999 --> 99:59:59,999
into being a better world.
So that is--

536
99:59:59,999 --> 99:59:59,999
Here's one of my favorite companies
that illustrate the cells in that picture.

537
99:59:59,999 --> 99:59:59,999
The SC Johnson company in 
Racine, Wisconsin

538
99:59:59,999 --> 99:59:59,999
whose products are shown over here.
You probably have purchased some

539
99:59:59,999 --> 99:59:59,999
of their waxes or some of their
insect repellent or other things,

540
99:59:59,999 --> 99:59:59,999
but they're just winning awards
for being a very caring company.

541
99:59:59,999 --> 99:59:59,999
Incidentally, a book that you
might want to read is called

542
99:59:59,999 --> 99:59:59,999
"Firms of Endearment,"
which is a fancy way to say

543
99:59:59,999 --> 99:59:59,999
companies we love.
Firms of Endearment.

544
99:59:59,999 --> 99:59:59,999
And I love the subtitle,
"How World-Class Companies

545
99:59:59,999 --> 99:59:59,999
Profit from Passion and Purpose."
And it's based on asking audiences--

546
99:59:59,999 --> 99:59:59,999
random meeting of people--is there 
any company that you like?

547
99:59:59,999 --> 99:59:59,999
That you like a lot?
Now, let me ask that question.

548
99:59:59,999 --> 99:59:59,999
Name a company that you would
dearly miss if it disappeared, vanished.

549
99:59:59,999 --> 99:59:59,999
[audience murmurs]
Apple! See, always Apple.

550
99:59:59,999 --> 99:59:59,999
I thought you were going to say
Harley Davidson, but that's

551
99:59:59,999 --> 99:59:59,999
another one. Amazon.
I would miss Amazon.

552
99:59:59,999 --> 99:59:59,999
I really would. I would even 
subsidize it to continue.

553
99:59:59,999 --> 99:59:59,999
[laughter]
Which one?

554
99:59:59,999 --> 99:59:59,999
Costco. Of course.
I'm with you on Costco.

555
99:59:59,999 --> 99:59:59,999
Nike. Okay, well you see
what happens is,

556
99:59:59,999 --> 99:59:59,999
these are the names of the companies
that came up again and again.

557
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.

558
99:59:59,999 --> 99:59:59,999
Because it would be a different mix
of companies that would come up.

559
99:59:59,999 --> 99:59:59,999
But the main thing is, firms of
endearment are so much

560
99:59:59,999 --> 99:59:59,999
more profitable than the ones
that have not been dear to us.

561
99:59:59,999 --> 99:59:59,999
One of the things is that they--
They're either 9 or 10 times

562
99:59:59,999 --> 99:59:59,999
as profitable, but let's see why,
and without going through

563
99:59:59,999 --> 99:59:59,999
everything here, look at the last
one. These are the attributes

564
99:59:59,999 --> 99:59:59,999
of that set of companies.
And the last attribute is that

565
99:59:59,999 --> 99:59:59,999
they spend less on marketing
than rather more.

566
99:59:59,999 --> 99:59:59,999
I bet you thought that the companies
that were going to be dear to us

567
99:59:59,999 --> 99:59:59,999
are the ones who are just 
advertising all the time.

568
99:59:59,999 --> 99:59:59,999
They're so familiar.
We see Coca-Cola

569
99:59:59,999 --> 99:59:59,999
all the time. All the time.
No! They spend less on advertising,

570
99:59:59,999 --> 99:59:59,999
so who's doing the advertising?
The customer. You guys are.

571
99:59:59,999 --> 99:59:59,999
So that's where you should
put your money.

572
99:59:59,999 --> 99:59:59,999
Create a love affair.
Create fans with others.

573
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.

574
99:59:59,999 --> 99:59:59,999
"The End of Work"
This is Jeremy Rifkin's book.

575
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

576
99:59:59,999 --> 99:59:59,999
in population growth, automation
of factories and computers, robotics,

577
99:59:59,999 --> 99:59:59,999
3D printing, can the nation create
enough jobs? Can the world create

578
99:59:59,999 --> 99:59:59,999
enough jobs for the 
population, and so on.

579
99:59:59,999 --> 99:59:59,999
And it raises a question about
marketing's role.

580
99:59:59,999 --> 99:59:59,999
Marketing's role normally is seen
as to sell you some things.

581
99:59:59,999 --> 99:59:59,999
The basic role of marketing
is to create jobs.

582
99:59:59,999 --> 99:59:59,999
It is the job creator. Namely, it 
gets you to want something

583
99:59:59,999 --> 99:59:59,999
that someone has to produce.
So there's a basic question:

584
99:59:59,999 --> 99:59:59,999
Does marketing really create
new jobs or does it only

585
99:59:59,999 --> 99:59:59,999
create shifts in the shares?
Like if I switch from brand X

586
99:59:59,999 --> 99:59:59,999
to brand Y, that's not creating--
Brand X loses a job and brand Y

587
99:59:59,999 --> 99:59:59,999
gets a job. So, but it is true
that if we're talking a new product,

588
99:59:59,999 --> 99:59:59,999
marketing will help accelerate 
it's recognition, the awareness of it,

589
99:59:59,999 --> 99:59:59,999
and intensify the drive to purchase it.
In other words, we buy our iPads

590
99:59:59,999 --> 99:59:59,999
and other things that come along
partly because they're wanted,

591
99:59:59,999 --> 99:59:59,999
they are desired objects,
and marketing accelerates

592
99:59:59,999 --> 99:59:59,999
the rate at which growth takes place
with those new products.

593
99:59:59,999 --> 99:59:59,999
The other book, and I'll end 
with this, is another downer.

594
99:59:59,999 --> 99:59:59,999
"The Death of Demand"

595
99:59:59,999 --> 99:59:59,999
And what is the relationship between
marketing and demand?

596
99:59:59,999 --> 99:59:59,999
And is-- he uses a term saturated--
finding growth in a saturated

597
99:59:59,999 --> 99:59:59,999
global economy.

598
99:59:59,999 --> 99:59:59,999
I've been wrestling with that problem,
and growth is the issue today.

599
99:59:59,999 --> 99:59:59,999
Growth is the issue.
Growth means jobs, and so on.

600
99:59:59,999 --> 99:59:59,999
And the fact is, there are 
8 ways to grow a business.

601
99:59:59,999 --> 99:59:59,999
So the title of the book is
"Market Your Way to Grow:

602
99:59:59,999 --> 99:59:59,999
8 Ways to Win."
And you know all of them.

603
99:59:59,999 --> 99:59:59,999
You know that we can go to
places where there is growth.

604
99:59:59,999 --> 99:59:59,999
We can sell in China,
even if it's a low growth here.

605
99:59:59,999 --> 99:59:59,999
Or Brazil. We know we can grow
by acquiring other firms.

606
99:59:59,999 --> 99:59:59,999
We know we can grow by innovating.
Inventing something new.

607
99:59:59,999 --> 99:59:59,999
We know we can grow by taking 
business away from someone else,

608
99:59:59,999 --> 99:59:59,999
and so on and so forth.
So one of the things

609
99:59:59,999 --> 99:59:59,999
we're wrestling with is how 
do you, as a firm, grow?

610
99:59:59,999 --> 99:59:59,999
And by coincidence, another 
colleague of mine at

611
99:59:59,999 --> 99:59:59,999
the Kelogg School of Management,
Tim-- He just wrote a book called

612
99:59:59,999 --> 99:59:59,999
"Defending Your Business," and it's
so nice that his book came out

613
99:59:59,999 --> 99:59:59,999
with mine, because the first job 
is always defend what you've got.

614
99:59:59,999 --> 99:59:59,999
Hold on to the customer you have,
then you start worrying about

615
99:59:59,999 --> 99:59:59,999
some more growth.
So we both, as members

616
99:59:59,999 --> 99:59:59,999
of the department, are wrestling with
how to ignore these books

617
99:59:59,999 --> 99:59:59,999
and say they're wrong, and that
there is a bright future ahead.

618
99:59:59,999 --> 99:59:59,999
[laughter]
So let me stop here

619
99:59:59,999 --> 99:59:59,999
and take any questions you might have.

620
99:59:59,999 --> 99:59:59,999
[applause]

621
99:59:59,999 --> 99:59:59,999
Thank you.

622
99:59:59,999 --> 99:59:59,999
[Moderator]: Okay, we have time for 
a few questions for Professor Kotler.

623
99:59:59,999 --> 99:59:59,999
Is there anyone on this side of
the auditorium that would like

624
99:59:59,999 --> 99:59:59,999
to ask a question?

625
99:59:59,999 --> 99:59:59,999
[Kotler]: Yes. I see--
I see you over there.

626
99:59:59,999 --> 99:59:59,999
Now a microphone will
magically come down here.

627
99:59:59,999 --> 99:59:59,999
[Moderator]: Susan will
bring you a microphone.

628
99:59:59,999 --> 99:59:59,999
[Kotler]: And if there's any other
people-- and there's a person over there

629
99:59:59,999 --> 99:59:59,999
Would you introduce yourself, please?

630
99:59:59,999 --> 99:59:59,999
[Audience member]: My name is
Iris Witkowski and I've been

631
99:59:59,999 --> 99:59:59,999
coming to the Humanities Festival
as long as it exists, and I very much

632
99:59:59,999 --> 99:59:59,999
appreciate your talk today.
[Kotler]: Thank you.

633
99:59:59,999 --> 99:59:59,999
[Audience member]: My--
I'm making a statement.

634
99:59:59,999 --> 99:59:59,999
What really drives me nuts,
as far as saturation is concerned,

635
99:59:59,999 --> 99:59:59,999
is the placement of products
on television programs.

636
99:59:59,999 --> 99:59:59,999
It used to be that in a movie
you'd say "Oh, I saw that brand."

637
99:59:59,999 --> 99:59:59,999
It seemed to be accidental.
Now it's all over.

638
99:59:59,999 --> 99:59:59,999
Even the anchormen have 
L.L. Bean jackets on.

639
99:59:59,999 --> 99:59:59,999
[Kotler]: You know, that's the field
called product placement,

640
99:59:59,999 --> 99:59:59,999
and we first got conscious of it
with the James Bond films,

641
99:59:59,999 --> 99:59:59,999
where each time there was a different
car, he drove an Audi or he drove

642
99:59:59,999 --> 99:59:59,999
something else, because it was a 
matter of what car company would pay

643
99:59:59,999 --> 99:59:59,999
the most for the next film to 
feature that car, and now,

644
99:59:59,999 --> 99:59:59,999
does the person speaking pick up
a Coke bottle or a Pepsi bottle?

645
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,

646
99:59:59,999 --> 99:59:59,999
but it has been discovered as a way to 
get some visibility for certain products.

647
99:59:59,999 --> 99:59:59,999
Product placement.

648
99:59:59,999 --> 99:59:59,999
[Audience member]: I'm Cody Hagle.
I'm a Charter Humanist.

649
99:59:59,999 --> 99:59:59,999
Again, thank you. On the evening
national news, 75 to 80 percent

650
99:59:59,999 --> 99:59:59,999
of the ads are for pharmaceuticals.
[Kotler]: And they say awful things

651
99:59:59,999 --> 99:59:59,999
about each one!
[laughter]

652
99:59:59,999 --> 99:59:59,999
[Audience member]: And I believe
there was a change in legal

653
99:59:59,999 --> 99:59:59,999
requirements some years ago. 
What are your thoughts about that,

654
99:59:59,999 --> 99:59:59,999
because clearly that advertising 
is driving demand, which is driving

655
99:59:59,999 --> 99:59:59,999
costs, etcetera, etcetera.
[Koterl]: Yeah.

656
99:59:59,999 --> 99:59:59,999
It's called over-the-counter 
advertising, too.

657
99:59:59,999 --> 99:59:59,999
But maybe it's also prescription.
But basically, you can make a case

658
99:59:59,999 --> 99:59:59,999
for it by saying consumers should know
what they might think would be

659
99:59:59,999 --> 99:59:59,999
the right thing for them, otherwise
the only one who could tell them

660
99:59:59,999 --> 99:59:59,999
what's right is the doctor. And the 
doctors don't like it, of course.

661
99:59:59,999 --> 99:59:59,999
The doctors in some cases
are offended by--

662
99:59:59,999 --> 99:59:59,999
by the patient saying what he 
wants as a prescription.

663
99:59:59,999 --> 99:59:59,999
But, you know, this has happened
with lawyers who are advertising now.

664
99:59:59,999 --> 99:59:59,999
Doctors are advertising themselves,
even if they don't like that.

665
99:59:59,999 --> 99:59:59,999
The expert is Prabha Sinha,
who runs a firm called ZS

666
99:59:59,999 --> 99:59:59,999
and he's always working with the 
doctors and pharmaceutical people,

667
99:59:59,999 --> 99:59:59,999
and could help answer that.

668
99:59:59,999 --> 99:59:59,999
Any other things that bother 
you about advertising?

669
99:59:59,999 --> 99:59:59,999
[Audience member]: Hi, my name
is Bob Michaelson.

670
99:59:59,999 --> 99:59:59,999
Thank you, Professor Kotler. It is
a pleasure to hear you in person.

671
99:59:59,999 --> 99:59:59,999
You've been a big influence to so
many people, myself in particular,

672
99:59:59,999 --> 99:59:59,999
for so many years. My question--
[Kotler]: One second.

673
99:59:59,999 --> 99:59:59,999
How many of you have read
any of my books? Any hands?

674
99:59:59,999 --> 99:59:59,999
Thank you-- I owe thanks to you!

675
99:59:59,999 --> 99:59:59,999
[laughter]
Please proceed.

676
99:59:59,999 --> 99:59:59,999
[Audience member]: My question
is in regards to social media,

677
99:59:59,999 --> 99:59:59,999
and you started off your presentation
talking about so much of marketing

678
99:59:59,999 --> 99:59:59,999
was defined at the beginning of the
20th century. We're 100 years into it.

679
99:59:59,999 --> 99:59:59,999
As you look at social media, do you see
across a continuum of marketing

680
99:59:59,999 --> 99:59:59,999
this thing a short-term phenomena 
or radical change in as we do marketing

681
99:59:59,999 --> 99:59:59,999
for the next century. That's part 1.
And part 2: Do you see the ability

682
99:59:59,999 --> 99:59:59,999
to apply an ROI to social media?

683
99:59:59,999 --> 99:59:59,999
[Kotler]: Yeah. Those are 
excellent questions.

684
99:59:59,999 --> 99:59:59,999
I-- This is not a fad. We are in the
digital age. We've passed analog,

685
99:59:59,999 --> 99:59:59,999
and there's no turning back.
That means that--

686
99:59:59,999 --> 99:59:59,999
I see the following happening.
Every company I talk to says

687
99:59:59,999 --> 99:59:59,999
"We're gonna go digital too, 
but slowly. We're gonna rely

688
99:59:59,999 --> 99:59:59,999
on our tradition," which is newspapers--
which are disappearing, by the way--

689
99:59:59,999 --> 99:59:59,999
radio, TV, billboards, and magazines.

690
99:59:59,999 --> 99:59:59,999
So, at best, they will say this,
"Let's turn 10% of our next budget

691
99:59:59,999 --> 99:59:59,999
over to digital," which means
Facebook, Twitter, and YouTube

692
99:59:59,999 --> 99:59:59,999
and so on. And let's see what happens.
Let's hire a 12-year-old

693
99:59:59,999 --> 99:59:59,999
[laughter]
--give them a budget,

694
99:59:59,999 --> 99:59:59,999
and hope they come back saying,
"Look what I did with Facebook!

695
99:59:59,999 --> 99:59:59,999
Look at how many mentions!"
And so on.

696
99:59:59,999 --> 99:59:59,999
Now, that goes to your second question.
How do we measure the impact

697
99:59:59,999 --> 99:59:59,999
of using Facebook or 
something like that?

698
99:59:59,999 --> 99:59:59,999
Progress is being made.
But remember, we never

699
99:59:59,999 --> 99:59:59,999
measured advertising right either!
I mean, traditional advertising was a--

700
99:59:59,999 --> 99:59:59,999
was-- first of all, the basic notion
of traditional advertising is

701
99:59:59,999 --> 99:59:59,999
you know that half the people will never
see the-- what did Wanamaker say?

702
99:59:59,999 --> 99:59:59,999
I know that half of the money I 
spent on advertising is wasted,

703
99:59:59,999 --> 99:59:59,999
it's just that I don't know which half!
[laughter]

704
99:59:59,999 --> 99:59:59,999
Basically, we judge things by
how many people were, in principle,

705
99:59:59,999 --> 99:59:59,999
exposed--cost per 
thousand people exposed--

706
99:59:59,999 --> 99:59:59,999
when we make an advertising budget,
and frankly many of them were

707
99:59:59,999 --> 99:59:59,999
in the bathroom or the kitchen 
when the ad appeared.

708
99:59:59,999 --> 99:59:59,999
So... and increasingly, people
are more on their TVs--

709
99:59:59,999 --> 99:59:59,999
on their computer screens than they
are necessarily watching ads.

710
99:59:59,999 --> 99:59:59,999
And I think the advertising industry
is making the mistake of sa--

711
99:59:59,999 --> 99:59:59,999
putting too many ads now.
I mean, there's little content left

712
99:59:59,999 --> 99:59:59,999
on some programs, with the
number of ads that flash by.

713
99:59:59,999 --> 99:59:59,999
They're all 30-second things.

714
99:59:59,999 --> 99:59:59,999
So, now about measuring.
If you read Advertising Age,

715
99:59:59,999 --> 99:59:59,999
you'll see a lot of statements
and claims that there is

716
99:59:59,999 --> 99:59:59,999
measurement going on.
One thing I would say is this:

717
99:59:59,999 --> 99:59:59,999
Don't take your ad budget and take
50% and switch it to digital,

718
99:59:59,999 --> 99:59:59,999
which one firm did, and it 
was a terrible result.

719
99:59:59,999 --> 99:59:59,999
Because until you know
what each social medium does,

720
99:59:59,999 --> 99:59:59,999
what you want is 10% of your budget
going that way, and then when there's

721
99:59:59,999 --> 99:59:59,999
some proof, you put in 
another 5 or 10 percent

722
99:59:59,999 --> 99:59:59,999
into that particular use 
of the social media.

723
99:59:59,999 --> 99:59:59,999
[Moderator]: Okay, we've got time
for just one more question.

724
99:59:59,999 --> 99:59:59,999
I know a lot of our attendees are
going to other events,

725
99:59:59,999 --> 99:59:59,999
so we have one right here
[Kotler]: Oh, okay.

726
99:59:59,999 --> 99:59:59,999
[Audience member]: Mark Ruen
is my name. I've been in

727
99:59:59,999 --> 99:59:59,999
direct marketing my entire career,
and so it's interesting that I should

728
99:59:59,999 --> 99:59:59,999
follow up a question about
measurement in advertising

729
99:59:59,999 --> 99:59:59,999
because I've lived by my metrics.
Now, my question is this:

730
99:59:59,999 --> 99:59:59,999
I've always guided my marketing
decisions according to the so-called

731
99:59:59,999 --> 99:59:59,999
4 Ps or 5 Ps, depending on
where you're coming from,

732
99:59:59,999 --> 99:59:59,999
and in terms of the P of the
placement, I mean, the internet

733
99:59:59,999 --> 99:59:59,999
certainly flattened the world,
and our distribution channels

734
99:59:59,999 --> 99:59:59,999
have changed. But how do you
see the other Ps in this digital age?

735
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.

736
99:59:59,999 --> 99:59:59,999
Direct marketing people are much 
more accountable for the results.

737
99:59:59,999 --> 99:59:59,999
They could actually experiment 
with trying to release different

738
99:59:59,999 --> 99:59:59,999
direct messages and seeing--
and testing, and then going with the one

739
99:59:59,999 --> 99:59:59,999
and knowing what it costs to do the
campaign, what the sales were,

740
99:59:59,999 --> 99:59:59,999
and it's just a pure P and L
kind of exercise,

741
99:59:59,999 --> 99:59:59,999
which we couldn't do with just
the normal commercials on TV.

742
99:59:59,999 --> 99:59:59,999
Now, are you asking where the 
other three Ps are going, in a sense?

743
99:59:59,999 --> 99:59:59,999
Like, what's happening to product
thinking and pricing and place?

744
99:59:59,999 --> 99:59:59,999
See, there will be new 
distribution channels all the time.

745
99:59:59,999 --> 99:59:59,999
I've been asked this question when
I wrote the book "Marketing 3.0,"

746
99:59:59,999 --> 99:59:59,999
which is really the case that
some companies should be

747
99:59:59,999 --> 99:59:59,999
socially responsible as well.
Someone would ask me,

748
99:59:59,999 --> 99:59:59,999
"When are you gonna 
come up with 4.0?"

749
99:59:59,999 --> 99:59:59,999
And I don't really have
an answer, because when

750
99:59:59,999 --> 99:59:59,999
you go from the mind to
the heart to the spirit,

751
99:59:59,999 --> 99:59:59,999
I don't know how much 
farther you could go,

752
99:59:59,999 --> 99:59:59,999
but I am thinking that 4.0's
gonna describe companies

753
99:59:59,999 --> 99:59:59,999
in the future that are building
ecosystems and platforms

754
99:59:59,999 --> 99:59:59,999
where we get involved with 
them in such a way that

755
99:59:59,999 --> 99:59:59,999
everything is being supplied 
that we want, as an individual.

756
99:59:59,999 --> 99:59:59,999
Think of iTunes, think of the
iPhone, iTunes, the whole setup

757
99:59:59,999 --> 99:59:59,999
of cre-- think of Harley Davidson.
If I buy a Harley Davidson,

758
99:59:59,999 --> 99:59:59,999
I'm a member of-- they call them
the Harley... the hogs! I'm a hog.

759
99:59:59,999 --> 99:59:59,999
Harley owner...? owner groupie.
[laughter]

760
99:59:59,999 --> 99:59:59,999
and not only that.
I can take my motorcycle

761
99:59:59,999 --> 99:59:59,999
and just go and meet people
I don't know. Some have beards.

762
99:59:59,999 --> 99:59:59,999
Others have beads, but they're fake.

763
99:59:59,999 --> 99:59:59,999
[laughter]


764
99:59:59,999 --> 99:59:59,999
They're wearing leather jackets.
These are business people.

765
99:59:59,999 --> 99:59:59,999
They may be chief financial officers,
but they want to be macho,

766
99:59:59,999 --> 99:59:59,999
so they supply a whole system to fit into
that more and more companies might

767
99:59:59,999 --> 99:59:59,999
sort of begin to think about that.
Now, let's take-- what's the one

768
99:59:59,999 --> 99:59:59,999
who's making shoes now?
Is it Tom's shoes or the other one?

769
99:59:59,999 --> 99:59:59,999
Zappos? They're creating
a system that's going to go

770
99:59:59,999 --> 99:59:59,999
beyond the shoes that you buy.
It's going to go into clothing.

771
99:59:59,999 --> 99:59:59,999
So some companies, as one
evolution for certain companies--

772
99:59:59,999 --> 99:59:59,999
by the way, it's not different in
business to business,

773
99:59:59,999 --> 99:59:59,999
where a company that supplies--
Boeing supplies 747s and other planes.

774
99:59:59,999 --> 99:59:59,999
They have to create a whole system
so you can't even leave it.

775
99:59:59,999 --> 99:59:59,999
You know, once you get involved--
Once you get with IBM,

776
99:59:59,999 --> 99:59:59,999
you're not gonna leave for 
Honeywell or something like that.

777
99:59:59,999 --> 99:59:59,999
So this is maybe what
4.0 thinking will do.

778
99:59:59,999 --> 99:59:59,999
In other words, it won't be
product-centered, it will be

779
99:59:59,999 --> 99:59:59,999
system-centered. A whole system.
I think we're out of time.

780
99:59:59,999 --> 99:59:59,999
Thank you very much.
[applause]