Marketing Week Meets: Philip Kotler

(dramatic music) - Marketing Week Meets, sponsored by Salesforce's intelligent one-to-one customer journeys. Helping you achieve higher revenue, happier customers, and lower costs. - Hello and welcome to Marketing Week Meets, a monthly podcast in which we speak to a market in luminary about their life, career, and thoughts on the safety of the marketing universe. Our criteria for interview subjects is this, people who have made a mark in marketing and, of course, have an opinion or two. Our guest on this podcast ticks both of those boxes. Professor Philip Kotler is a writer, author, academic, and one of the most influential figures in marketing. The so-called father of modern marketing helped create the template of marketing for marketers the world over. His 1967 textbook, Marketing Management, introduced much-needed rigor to the field of marketing. He helped popularize the four Ps, a description of the core pillars of a marketer's job that still holds true today. While his definition of the core purpose of marketing is quoted as much in 2019 as it was in previous decades. He's as busy now as ever, publishing his latest book of more than 60 just last year and continuing in his role as SC Johnson Distinguished Professor of International Marketing at the Kellogg School of Management at Northwest University. Now, into the ninth decade of his life, he told the American Marketing Association last year that he will never retire. "I enjoy producing more than consuming," he said of how he relaxes. Philip Kotler, hello. - Hello, Russell. - You're not ready to take it easy just yet, then? - No, I'm always thinking about a field called marketing that keeps changing. It's not a geometry which has been set the way it is for 2000 years. - If you were to identify maybe just one or two things that have changed in your time in marketing, what would they be? - We are seeing marketing undergoing a dramatic change because of the digital revolution. A company that depends on only the 32nd commercial, which became the stalwart aspect of modern marketing, that is the power of mass marketing by preparing a very elaborate and expensive 32nd commercial was pretty much where we were. Now, those commercials are still important in the new marketing, but instead of being the only thing that counts, that plus print advertising, now we can reach customers almost on an individual person basis. We have so much data on each individual that it's possible to not bother them with useless contacts, but with very meaningful content that will interest them. - What I'm hearing from what you're telling me is that in many ways the key tenants, four Ps and other fundamentals of marketing haven't changed massively, but obviously the new world presents lots more opportunities to reach people, to engage with people, to communicate and promote goods and services to people. Do you think though that we've got a bit carried away with the excitement of the new possibilities and many people are forgetting some of those fundamentals? - Well, I hope that isn't happening, but let me remind you of the fundamentals. Four Ps is one of the fundamentals because you can't do a marketing plan without stating somewhere in the plan what the product is like, the price, the place and the promotion. And by the way, even that is challenged. People say, well, where does packaging come up? Where does service come up? Well, every company has to just figure out its four Ps. I mean, whatever, in a perfume company, they better spend a lot of time on the packaging. We consider packaging part of product, but the four Ps. But going beyond the four Ps into the tenets of modern marketing, let's add what I call STP, the whole idea of segmentation, targeting and positioning. We no longer want to address the whole market. I mean, many people buy automobiles, but they differ so much in age and income, education and so on. So we say the first job is to find the market you're interested in and then to segment it into different groups and don't serve them all. Find a group where you have a better solution for that group and that's called targeting. So segmentation is followed by targeting. And even then, you may not be the only one going after that segment. So what is your positioning in relation to your competitors? Are you gonna be the low price firm or the high price firm for that same market target that you chose? So a second tenant, the first was four Ps. And the second tenant is segmentation, targeting and positioning. There's a number of other tenets in the field of modern marketing or what I sometimes call older marketing. - Where do you stand on mass marketing? There obviously is a school of thought that targeting is perhaps not the best way and mass marketing to reach as many people as much of the time is the better way to market goods and services. What do you think about that? - Yes, I think there are some product classes and service classes that might benefit from an indiscriminate mass marketing approach where maybe 80% of the market you reach are not interested in your product at all, but you're reaching still those 20% at a lower total cost without all the effort to do marketing research and analysis and data gathering. Sure, there are some businesses that should continue with that if it's working. I want to add that we have not been able to measure how well mass marketing really works. There are some cases where the ad was so ingenious that there's no question that it made multitude of money for the company using it, but for the average ad campaign done on a mass market basis, it's very hard to isolate what influenced the actual resulting demand. Was it the ad or was it a bunch of other factors? By the way, I say that because as we moved toward targeted marketing and particularly targeting on an individual basis, we don't know much more about whether an ad got someone into a store than we were ever able to do with mass marketing. - Let me take you back, Philip, to when you began your career. What was it that attracted you to marketing in the first place? - Actually, my original idea was not marketing. It was becoming an economist. And the reason I was interested in economics is I was always puzzled about the existence of poverty and the existence of very, very super rich people. And it seemed to me something as a social injustice that so many people would go hungry and a few people would be super rich, where it wouldn't matter to them, money would never be a question of interest to them in terms of needing to live well. So I decided to study economics and I went to the University of Chicago and Milton Friedman was my professor and those who know Milton Friedman know that he was a genius in economics, won the Nobel Prize. And he also wrote a book called "Freedom to Choose" and felt very much that the only goal of a company should be to maximize the profits for the sake of the shareholders. And that became a dictum used and taught in all the business schools ever since the 70s that the purpose of the corporation is to make the rich shareholders richer. Now you asked about how I got into marketing. I've always had a reservation about the way economics was taught, two reservations in particular as I was doing my PhD work in economics. One was the view that the shareholder counted more than these other stakeholders. So I mentioned that. The second was that the model of behavior used by economists was so unrealistic that basically a customer was seen as fully informed of every brand that they might buy and motivated solely by price differences. It was unrealistic, emotions were never mapped by the economists and we know that much buying is emotionally motivated. So that got me into marketing because I wanted to know and understand how things happen in the marketplace, how they really happen and that got me into marketing. And incidentally, I think when the economists recently moved their whole discipline to what they call behavioral economics where they go beyond the old model that every consumer is buying rationally. I call that marketing and I'm actually saying that behavioral economics is something that marketers have been doing for a hundred years ever since the discipline started. In other words, the correct word is they have discovered not behavioral economics, they have discovered marketing. It's almost a rediscovery of what perhaps they'd forgotten. - They are never learned. - Oh, never learned in the first place. I mean, we do hear a lot, certainly in the UK anyway, about customer centricity and putting the customer at the heart of all your decision making and everything that you do as a marketer to which my general response is, what were you doing in the first place? Do you think whether or not it be data or technology or other things people have forgotten as you've identified some of those basics? - Well, that basic is one I should have added in our previous question, that customer centricity is the heart of the new marketing that I pushed very hard on in my 1967 first edition of marketing management. The customer is the center of the company's universe, really. However, strange things happen. For example, the myriad corporation, the largest hotel firm in the world maybe, says that the customer comes second. Well, I was stunned, but here's what they meant by that. They felt that if they would do the best job possible in getting the best employees in the hotel business who just like being in that business and they are good to the customers, then you will have the customers coming back again and again, so there's a company that says, first are the employees, let's center our business on getting good employees and then the good customers will be developed that way. But that really points again to the importance of all the people that are important in getting a sale. And it's not just the salesman or employees, but it's even the suppliers and the distributors and the community feeling toward a company and so on. Marketing Week meets sponsored by Salesforce, helping you to connect to your customers in a whole new way. Back to your career and early career. I mean, who or what in those early stages, you mentioned Milton Friedman there, who or what else was the biggest influence on your career? I would say Peter Drucker was the real enlightened one. We talk about Buddha, he's our Buddha. Peter is still, while he's not alive now, the life he led is very much alive because there's a Drucker forum every year for the last 11 years in Vienna. I'm going to attend the next one. In Claremont, California University, there is a Drucker group. Now, what is it about Drucker? Drucker was the first one to really say, what is a business about? When he would meet with CEOs in his own home in Claremont, California, a very modest home, the CEO of General Motors would be sitting in this modest home with him and a team of GM people. And Peter would say, what is your business really? Who are your customers? What needs do they really have? And so on and so forth. There were five top questions and they're not easy to answer, especially maybe the question of, why are you in business to begin with? By the way, that is becoming a core question now. What is the purpose of your business? Drucker didn't maybe ask it that way, but in any case, he's my hero. And one could reread any of his books and find new insights that were passed over or not appreciated at the time. He's been my influence. Purpose is a word that we hear a lot about in marketing in 2019. What's your take on what that means and whether or not companies do need to find that purpose? I feel very much that we are in business to really raise the standard of living of people and the quality of their lives. That should always be in our mind. And I use the term, the common good. Businesses should be contributing to and advancing the common good. Incidentally, my latest book, which comes out September 30th of this year and already on Amazon Books is called, Advancing the Common Good. Now, what the common good really bounds to is take an action which will create the greatest good for the greatest number, not the greatest good for a few, but try to improve the lives of as many people as possible. So when it comes to a corporation, it goes back to the old debate. Should the corporation only make money and give dividends to the shareholders or should it accept some responsibilities for the state of society? And if you look around in the United States, and I think in Britain too, government isn't working well. It's just not working well. In the United States, Congress is getting nothing done because of the partisanship and the divide between the two parties. Someone's got to worry about society. Now, we normally say society becomes the responsibility of the nonprofit organizations, of which there are so many, there are environmental firms and the Red Cross and so on. And government, and there aren't enough nonprofits and government isn't working. So if the society is gonna start working better, it's got to be partly the responsibility of business firms to start doing some good work. Now, by the way, many business firms, especially larger ones, are philanthropic. Is that enough? Is it just to hand out some money? Or I developed a recent book called Brand Activism. And the idea is a brand is not just an identifier or buy our brand because it's a lower price brand. No, or the higher price brand. It's got to be something more meaningful, something that shows us the values of the firm. What does the firm, what does that company care about? And so increasingly, we are moving toward what's your purpose as a firm? What do you want to make better in the world? And that's my philosophy, although many companies still are buying into milk and freedmen and they should only worry about making the most profits for the shareholders. - Are you except what you're saying, obviously, about government, both in the US and the UK, clearly very dysfunctional? I wonder though, and there are many critics of brand purpose that perhaps would echo my thoughts, that if companies do try to find a purpose that simply isn't there, they will be clumsy and they'll overstretch. I mean, you can only have a purpose if you actually organically and authentically have a purpose. Otherwise, you're just adding and bolting on worthwhile and worthy causes that you've got absolutely no right to talk about. - Well, you know, that will be Russell so apparent to the marketplace that it would be not only insincere, but it would hurt them. They better not adopt the cause. They don't, that isn't part of their culture. The purpose of searching for a cause for your brand and so on is what is your culture like in the company? Do you have, you have a culture. It could be a good or a bad one. It could be well-defined or weakly-defined. It would help a company to have a good culture that things are authentic that they care about and express through their brand work and their advertising work and so on. But I agree with that problem there. Don't do it just because it's fashionable to have some cause. - You've obviously have a much experience, much expertise, a great deal of insight. Have you ever thought about using all of that and trying your look as a marketing director, as a CMO, a chief brand officer, whatever the role is in a company? - Well, I've done that superficially because I have consulted a lot of very big companies and my advice is coming to them as if I am the CEO and certainly if I am the CMO. But why didn't I actually become a chief marketing officer? And the reason is that I was a very much a book learner and book lover from way back at age seven. And I always am learning. I'm interested in so many subjects. And of course, I would never get to most of those things if I was running the CMO position or CEO position. In fact, I would have to fill my time with finding out the names of all the people who are working for me, all the sales force. I'd have to get into their problems because I wanted them to be effective. So if they have a personal problem, I wanna hear it, et cetera, et cetera. And that means very little time is available to people doing the marketing work to indulge in other things that they're interested in. As an academic, on the other hand, I can study anything I want to as long as I do a good job of sharing what I know about the subjects that the students have enrolled to hear me talk about. - What is your biggest bugbear in marketing? What really gets your goat? - Terms are pretty slow in moving into the digital world. They have to be dragged in 'cause it's expensive to start learning all this new stuff, so to speak. And they're going to be far behind. I worry about that. The thing about digital is you're gonna overshoot anyways once you start it, a good example, Procter & Gamble almost moved to about 35% of their budget in the new marketing digital and social media. And then they started to retract. They put more money back into more mass marketing. They didn't go from 35 to zero, but obviously you're gonna try everything with Facebook, Instagram, Pinterest. All of these are gonna have to be tried. You're gonna overshoot, but the work of doing that will tell you which of those social media really work. And so yes, there will be over expenditure on some of these, but you gotta learn how to use the media. The other problem is the data, quality of data. When we think we know a lot about a particular consumer, it's a mishmash of data sources. We may have learned something about what the customer bought in the past, what media he uses, what prices he cares about, but we're always using imperfect data. And but I do think that the idea of being able to understand a customer well enough to not annoy him with commercials when he or she is not in the market, but to give them very good content and help when they are in the market for a car or something is important. However, that gets into privacy concerns. People have different opinions about that. We as in marketing say, we're trying to be relevant to you and not reach you when you're not interested, but they are upset consumers in general about how much we might know about them as individuals. So that's an issue that's gonna get worse, not better. - What are you most proud of in your career? - Well, I think the fact that I'm in the 16th, the 15th edition of marketing management and the 17th edition of principles of marketing, and that I have 70 books out, most of them, most of them on marketing, leaving out my book on capitalism and the problems of capitalism and my book on democracy and the growing problems in democracy, I'm proud of the output because I've always felt that the pen is mightier than the sword, that idea, being a thought leader, being an idea person is very rewarding, if in fact, of course, the real evidence of that is when someone becomes the leader of a movement, the environmental movement, or Martin Luther King's movement and so on. That's not what I'm talking about, but the fact that there's a stream of ideas that I've been propagating and there's interest in following my logic. - Do you have any regrets in your career today? - Yes, two things I would have loved to play, a musical instrument. At the time, I thought it took a lot of talent and energy to do the violin or the clarinet, less so, but my vision would have been to be part of a small chamber music group or a band, and I can still do it. I can still learn an instrument now, but that was one regret. The other regret is I played a lot of tennis and I was good at it, but I never took real lessons in training, and I would have been at least a better player in tennis had I done that. - What would you hope that your legacy is? What mark would you like to say I left in business, in marketing? - I would like people to think that I cared about the business disciplines, and that includes finance and production and innovation and marketing. I cared about the disciplines being more scientific, more quantitative, but also more qualitative so that companies would have guidance on how to use their resources in a way that makes good money for them and it contributes to the common good. My work with the book called "In Fronting Capitalism" and the other book called "The Democracy and Decline" came to me because as a marketer and as an economist, maybe the more even the economist than me, that there were many problems occurring in both of the two systems that arrange our lives for us. In capitalism, is capitalism working for most people? And I don't think it is. It's not working for most people. And is democracy working well? And the answer is no, because the voters taking one simple thing, 90% of us want to control guns in the United States by not having weapons of war guns and we want background checks and 90% want it and Congress won't move on it. So we may have to go back to referendums in some cases, referendums, not trust that the public, people who in a republic represent us are really representing us. They seem to be representing us more to in front of the lobbyists than in front of what the people in their districts care about. So I think that if there's any legacy, it's to stimulate people to think about how to make our capitalism and democracy work for more people. I've been moving much closer to admiring the Nordic concept of capitalism. And it's wonderful things, sure, the taxes are higher, but at the same time, education is free and health, it really covers you completely, health care. So that's what I'm interested in and still writing pieces about. - You've certainly left a legacy and your mark in marketing already, and I'm sure you will continue to do so. It would be an incredibly strong legacy if you can look back and say that you stimulated that kind of conversation about capitalism and democracy. Philip Kotler, thank you very much for your time today. Much appreciated. - Russell, thank you. - You have been listening to Market and Weep Meet, sponsored by Salesforce and brought to you by Bauer London Creative, with me, Russell Parsons, and producer, Tim O'Donoghue. You can hear previous episodes by subscribing via Spotify, iTunes, and SoundCloud, and via MarketandWeep.com. Well, you'll hear previous interviews with the likes of Scott Galloway, Byron Sharp, and Silzalla. Until next time, goodbye. - Marketing week meets, sponsored by Salesforce's intelligent one-to-one customer journeys, helping you achieve higher revenue, happier customers, and lower costs.