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On behalf of our President \nand CEO, Greg Case
and our chief marketing\nofficer, Phil Clement
it's a real honor for Aon to be \n
And for many of you, \nyou might know that Aon
is now a UK-based company,\n
that the Aon Foundation, \nfor the past 25 years
has made it a priority to support\neducational activities and
cultural institutions like \nthe Chicago Humanities Festival
and the Charter Humanist Circle,\nthat does so much to enrich
the lives of all of us in this room\nand everybody in Chicago.
And even though we're now in the UK,\n
that we intend to continue \nthis commitment
and it will remain high on our\n
to support the community of \nChicago for many years to come.
On behalf of my colleagues \nat Aon, I want to thank
the Charter Humanist Circle\nand its members
for their very valuable support,\nand I also want to thank
Northwestern University Law \nSchool for allowing us to use
At Aon, we believe in the mantra\n"If we can\'t measure it
And because of that, \nit's a real honor for us
to be here supporting and\nintroducing Dr. Philip Kotler.
Dr. Kotler has defined marketing\nas "the science and art
of exploring, creating, and \ndelivering value to satisfy
the needs of a target \nmarket at a profit.
He is recognized around the world\nas one of the foremost experts
on business, of marketing,\nand for his insights on
how exemplary marketing has\nthe creativity and the power
to influence global \nconsumers every day.
In that spirit, I hope you'll join \n
Now before I turn the\nmicrophone over to Dr. Kotler
in the spirit of marketing, maybe\nmany of you in this room know
that Aon does a great many\n
that we've done that has created \ntremendous brand awareness
for our firm is our sponsorship\n
which by today won 2 to 1 \nversus Arsenal
at the top of the \npremiere league.
So in that spirit,\n[laughter]
I would like to present Dr. Kotler\n
Manchester United shirt.\n[applause]
And I will wear this,\nin a fantasy way.
May I say, I really appreciate\nyour introduction.
Of all the introductions I've received,\n
Oh, you may know of\nSteven Colbert
so I can't pull it off the same way.
There will be two groups, \nwith respect to marketing.
There will be a group that\ndoesn't like marketing
and I'm going to give you\nwhy they don't like marketing
and the justifications.\nI will also tell you
there's another group who loves\n
you will be totally confused,\nor at least opinionated.
So, what I want to do is\ntell you that--
These are called \nconfessions of a marketer.
That's, by the way, borrowed\nfrom David Ogilvy
who wrote a wonderful book called\n
And let me move on and say\nwhy is marketing a topic
And we would say that\nthere's a couple of reasons.
One: I regard marketing\nas a humanistic subject
because marketing has \naffected our lifestyles;
has created, not only affected\n
and we should be, from a point\nof view of popular interest
I want to say that marketing\nis very American
that it's beginnings are \nvery American.
That doesn't mean there weren't\n
and as a matter of fact, I'd like\n
of marketing, so that you understand\nwhat we mean by the word.
As a matter of fact, if you took a\n
in the year 1900, and looked up\nthe word marketing
you would not find it in the dictionary.
Yes, you would find the word market,\nbut not the word marketing.
If you then picked a dictionary...\n1910. You would find the word
marketing in it, because marketing\nis about 100 years old.
And it's much more than selling.\nSo let me show you...
Let's start...\nLet's start biblically.
[laughter]\nLet's start biblically.
Who is the marketer\nin this picture?
This is the biblical narrative.\n
I hate to admit it, because snake \nsounds like sneaky, and so on
But the fact is that it was \nthe snake who sold Eve
on getting Adam to eat an apple.\nSo it goes way back.
At least selling goes way back.\nNow let's go further.
Here is the father of marketing.
Wow, what an insult to him!\n[laughter]
Recently I was at a group,\nlittle party, and we were speculating
who we would like to meet most\n
and it boiled down to Plato,\nSocrates, or Aristotle.
It turns out that my vote \nwent for Aristotle.
Aristotle was Google, at the time.\nHe knew more about everything
than anyone in the world.\nHe wrote on science, politics
economics, rhetoric, art,\nand everything.
Now, why do I say that he had\nsome marketing impact?
Let me read the definition of rhetoric.\n
by the way. The founders were \nthe sophists, around 600 B.C.
They were a group who wanted to use\n
for their own devious ends.\nBut Aristotle put the i--
the discipline of rhetoric on its feet.
Rhetoric is the art that aims to improve\n
who attempt to inform, persuade, \n
in specific situations.\nIt is the faculty of the observing
in any given case, the available \nmeans of persuasion.
So, in a sense, he could be\nthe father of selling.
The idea of getting someone \nto do something that they might
not have done otherwise.\nSo, let's move on, about other
early manifestations of marketing.\n
read this, so I will read it,\nbut the first department store
opened when, and in what country?\nNormally if you're in France
and you ask the question,\nthey would say of course
we invented the department store.\nIt was about 1845.
The same time we invented \npaperweights and some other things.
But it turns out that the first \ndepartment store was in Japan.
Mitsui company, which is still\nalive and well.
So that's where one of our \nretailing forms started.
The next one is the first \nnewspaper that carried an ad.
There were newspapers early,\n
in 1652, and it advertised coffee.\nAnd then, the first ad agency
started a little later.\nWell, much later.
N.W. Ayer, which is still a \nprosperous advertising agency.
First time a brand was put on a \n
the brand name was Pear's soap.
And then the first packaging\nappeared a little later
and finally we had a marketing\nresearch department formed.
So, now the word markets\nhas been around all these years.
The Middle Ages had markets.\nIn fact, whenever--
I would even say the agora,\nin ancient Greece--
that means the marketplace--\nIn ancient Greece
people would come on a particular \nday to sell things.
In the Middle Ages, \nthere were market days.
The word marketing wasn't there.\nIt was just market.
And trade was always there,\nbecause trade, through history
has taken place between people\nand regions and countries.
So all that is there, and it was\nin the decade of the 1900s
that marketing books first appeared.\n
who wrote those first marketing books.\nWere they sociologists?
What was the discipline of the people\n
They weren't physicists or chemists.
So why would economists start\na subject called marketing?
And the answer is: they were\ndisillusioned economists.
They couldn't find any mention\nof advertising in the discourse
of economists. In other words,\nnever did Adam Smith
Thomas Malthus, David Ricardo,\neven Alfred Marshall, and so on
they rarely talked about other\nforces that shaped demand.
The only force that shaped demand\nin their mind was price.
You know the famous curve.\nRaise the price, demand will go down
lower the price, you can sell more.\nPrice was the only thing
that affected demand.\nSo these economists
or institutional economists, said "Hey,\n
You've got to factor in retail stores,\n
And it was the neglect of \nthe classical economists
to not really texture the marketplace\n
that led to marketing.\nSo marketing is technically
Now who helped developed \nthis field of marketing?
Now, probably you don't \nrecognize maybe anyone here.
There's one person you \nmight recognize.
I don't know if you can see\nsome of these faces
but someone recognize anyone there?
Dale Carnegie.\nDale Carnegie is here
and his book was "How to \nWin Friends and Influence People
because in doing this, \nI wanted to find out
who was the exemplar \nof the selling method.
How to Win Friends\nand Influence People
But let me give you the whole picture.
Ernest Dichter. Some of \nyou may know of.
He was a motivational psychologist,\n
didn't like to eat prunes, why cigars \n
and all kinds of things.\nAnd his book called
The Study of Desire."\nHe apparently studied with
Sigmund Freud, and he brought \nthat kind of mind to marketing.
But he had an opponent named\nAlfred Pollitz, who was not
a head shrinker--We call \nhim a... a nose counter.
The expressions we would use if\nyou were very psychological
you were a head shrinker, and\n
Namely, a surveyor. You surveyed--\nYou found out what percentage
of people were of a certain age and \n
Julius Rosenwald was very much \nbehind the formation of
the Sears company, which was\na important episode in
the development of our retail chains.
Lester Wunderman deserves \ncredit as exemplifying the use
of direct mail and catalogs.\nThat you can sell more directly.
You don't have to be in the store.\n
David Ogilvy is the exemplar\nadvertising person
then Stanley Marcus,\nof Neiman Marcus
was a fella who could walk into\nany retail store and give them
100 suggestions on how to improve \n
and make a difference in the \nvoulme of business.
Edward Bernays is the father of\n
His name has sort of become \nobscure, but he really was
a very important person.\nThe word propaganda
was often used in connection with his \n
a model to motivate you to feel \na certain way about anything
regardless of the standards involved.\n
In any case, how did \nmarketing get its start?
Marketing got its start \nin sales departments.
Every company has a sales group.\n
to be in the office of a customer,\nbecause that's the only way
something happens. So they don't\nwant to do a lot of homework.
For example, three things they\ndidn't want to do.
They didn't want to do consumer\nresearch in a systematic way
because that's taking their time\naway from selling to customers.
Secondly, they would've liked \nsomeone else to find leads.
Now a lead means a prospect.\nIn fact, we distinguish between
a hot lead: "Oh boy, he\'s ready\n
a warm lead, a cold lead, so on.\nSomeone else should do that
for the sales people, so they don't\n
And the third thing was \nsomeone had to prepare
brochures and ads. And the \nsalesman is not skilled.
The salesperson isn't skilled at\n
and brochures. So sales departments\n
from time to time.\nLater on, it exploded
to the day today, when we have\nmultinationals running--
with marketing--\nIn other words, marketing--
Those three people split from sales\n
its own department.\nAnd so, some people
in the audience here may be \na chief marketing officer.
The old name was Vice President\n
chief marketing officer because\nthat person now is part of
the chief officers. Chief information\n
chief innovation officer, \nand the status has moved up.
Some of you may be brand managers,\n
Category managers, market \nsegment managers
managing distribution channels,\nlike retail or wholesale things
pricing manager, communication\nmanager, database manager
direct marketers, internet\npeople, and so on.
So, marketing is well-established.
Now, the character of a marketing\ndepartment depends very much
on what the CEO thinks of marketing.
So, the 1P CEO is a person\nwho took over a company
and he says, "I don\'t like \nmarketing, but I know I need it
and all I want from marketing is\nsome communications.
I just want someone to broadcast\nand promote us.
So, that person is missing \na lot of other things
made up by other CEOs,\nwho are 4P CEOs.
Now a 4P CEO says,\n"I need a marketing plan.
And the plan has to mention \nproduct--that's the first P.
What about our product? What's good\n
Price: what should it be priced at?\nPlace: where should it be
made accessible? Online,\noffline, in stores?
So that's a more educated view\nof the potential of marketing.
But there's even a better view,\n
No! I don\'t want to start with 4 Ps,\n
the market is complex." \nThere\'s a lot of segments.
Each segment deserves its own plan.\n
that if you just have one value\n
it really doesn't trigger anything\nin many parts of the market.
So that CEO says, "What\nsegment should we go after?
And what position should we \ntake with each segment?
What should we say about ourselves,\n
Now there's even a higher type CEO,\n
who ran Procter & Gamble,\nwho recently retired.
When you ask A.G. Lafley what's\nmarketing, what's your picture
he says, "Well, what do you mean?\nMarketing is everything.
Now, marketing is everything.\nWhat he means is
everything starts with the customer.\nNo customers, no business.
And I think he's making \nthat point very much.
Now, moving on, there's a lot of things \n
and I won't go into any detail,\nbut there's a lot of tasks
and the sad fact is that sometimes\n
on the average of two years.\nIn other words, does a job
and maybe the CEO is not feeling that \n
that the cost of the CMO exceeds \nwhat the value of the CMO is.
There's a lot to go into about\nwhy CMOs on the average
hold on to their job for two years.\nBy the way, some of them
get a better job after two years.\nThey become something higher
than the chief marketing officer.\n
because they're so good, they go \n
But in any case, marketing--\ncommercial marketing
which I've been talking about,\ncould've stayed only commercial
and then I got involved in--\n
We started the idea of \nbroadening marketing
because the set of tools that we use\n
in other areas.\nSo we have a thing
called place marketing.\n
and a city says, "We\'re not getting\n
any attractions for them to come \n
located here. We would like some digital\n
We want to start a Silicon Valley."\nSo that\'s place marketing.
The marketing of a place. How do you\n
Against all of the other \ncompetitive places.
The second--\nPerson marketing.
There's an agency called William Morris,\n
William Morris and say, "look, I want \n
on Jay Leno's show. I want to--\n
I want high visibility."\nI wrote a book with the title
High Visibility." How do you \nget that visibility.
So, William Morris will look\nat her and her performance
and maybe say, \n"You know, in a sense--
Don\'t be offended, but we can \nmake you into a better product.
That's sort of the language.\nYou know, do your hair differently
walk a little-- dress differently.\n
reignite the archetype of Joan Baez.\n
Well, we need a new Joan Baez.\nAnd so, we can recast you
and form you into the kind of \nperson we all miss, and so on.
Now, social marketing is\nanother branch.
Today there are 2,000 social marketers\n
eat better, exercise more, say no\nto drugs, stop smoking cigar--
get off of tobacco, say no to\na number of things.
Positive behaviors and \nnegative behaviors.
By the way, my memory is that\n
to want to raise a nation of nonsmokers,\n
And it starts at the primary school level,\n
to avoid those vices, if that was \n
So that's social marketing.\nNow, political marketing
we're saturated with. \nAnd I think it's degenerated
but that's another thing.\nFundraising is part of marketing.
I mean, fundraising is an odd form,\n
Everything else is sort of an exchange\n
a one-way transfer.\nHere's some money
for the museum. \nBut any fundraiser knows
there's something that should come\n
and supporter of a museum,\nand working that way is important.
So these are offshoots. \nNow all of us do marketing.
If you read the list, we all do marketing.\n
you knew there were other applicants?\n
and even prepare what you're \ngoing to say, and so on?
Did you compete for a desirable\napartment which was scarce?
Or a member of the opposite sex,\nif you wanted to court someone.
So, in a sense, we're human animals\n
and market ourselves, to some extent.
What do we dislike about marketing?
Well, there's a long list.\nIt's a rather long list.
Intrusion, interruption, exaggeration,\nand so on and so forth.
And I really made a list that's \na little separate from that.
Here are some of the criticisms.\nMarketers get consumers to want
and spend more than they can afford.
And we know that from the financial\n
with maybe nothing down.\nMarketers are skilled at
creating grand differentiation \nwhere it shouldn't exist.
Like with commodities, you know, a\n
So they spend a lot of time trying to\n
their salt is really better, and so on.\n
more goods without considering\n
of producing the goods.\nThe planet Earth is affected
by the amount of production\nand the care with which it's done.
Marketers had not paid sufficient\nattention to product safety.
We know that because Ralph Nader\n
the unsafety in cars, and then \nwe got lead poisoning
we got asbestos problems,\nand so on.
Here's a serious criticism. Marketers--\n
these are some particular \ncompanies, and so on.
Marketers favor giving the public what it\n
Sure, I'll sell you cigarettes. I'll sell \n
Therefore marketing promotes \na materialistic mindset
that-- we get turned on to\nmore of a materialistic world
a world of ever-changing products and\n
Marketers rarely talk about\nsane consumption.
Yeah, some beer companies say,\n
drink too much." That\'s nice that they--\n
have binge-drinking, but they're\ntrying to do what they can
and so on and so forth.\nNow, let me just say
there's another side.\nThis is important too
because it's not a simple picture.\nThe other side of it is
Marketing has undoubtedly \nraised the standard of living
in the United States.\nPeople don't naturally
buy new things. In other words,\ndo you know, people used to keep
their refrigerators, which\nweren't refrigerators at the time
they were ice boxes and they would\n
and putting it in the box, and so on.\n
were very slow to take--\nIn other words, people--
It would be very expensive to\nbuy a new appliance
but marketers persisted in saying\nyour life will be better with
new appliances, and \nthat's one of its jobs.
I would even go so far as to say\nthat marketing is so connected
to the idea of the middle class.\nWe're talking about preserving
and building the middle class,\n
and marketing is an essential\n
what it is to want, as a member\nof the middle class.
Marketing in the form of social\nmarketing has helped improve
a lot of things. You know,\none of the first causes
that marketing turned to was \nthe environment and waste
and the ill-effects of some \nproducts, and so on.
Preserving the environment\nwas one of the first things that
Now they're into obesity as a problem,\nlittering as a problem
Marketing is very important\nto the cultural world.
Museums, performing arts,\nand one of the big problems
that cultural institutions are facing,\n
is the aging of audiences.\nHow do you get people
who are in their forties to go to opera,\n
It's called the graying of the audiences,\n
been with us for a long time,\nbut marketers are at work
doing segmentation, targeting,\npositioning, in order to
make sure that all seats are filled\n
are very busy, as marketing institutions,\n
they have to get donors, they have to\nget government grants
so marketing is almost an intrinsic\n
This is not time to take a vote.\nDo you like marketing
or you don't like marketing. \nBut let me show you that
the feeling-- the negative feelings about\n
The attackers. They attacked marketing.\nDo you recognize anyone?
You see Ralph Nader? I don't...\nThere he is. Yeah.
Well, it is Ralph Nader.\n"Unsafe at Any Speed.
Rachel Carson, by the way,\ndeserves so much more credit
than we've given to her for her book\n
the chemical pollution, the pesticides\n
and so on. Vance Packard,\nwho popularized the idea
that we are hidden persuaders. \n
you don't know this but an ad is sort of\n
before you sit down. \nSubliminal advertising
which never did happen, \nbut the hidden persuaders.
And then John Kenneth Galbraith,\n
so much money in making enough\n
you have in deodorants,\nin the public sector--
In the public sector, you've got\nstreets that are littered
and there's some garbage, \nand there's slow traffic, and--
And so we have a good private sector,\n
the public sector doesn't have the\n
You've got Naomi Klein,\nwho's probably the prototype
person now for attacking branding.\n
You're paying more than \nyou need to pay.
The book is called "No Logo,"\nlogo being another name for brand.
And Michael Sandel is-- has this \n
and worth reading. He's the fella\nwho ran a course on justice
and would ask groups about this size\n
in each situation?" \nBut his new book is called
What Money Can\'t Buy: \nThe Moral Limits of Marketing
where he points out that \nif you're in jail in California
and you don't like the cell,\nyou can pay for a better cell.
You know, maybe one with a computer\n
But he's also-- he thinks today\nour culture divides people
in social classes more clearly.\nWe used to go to ball games;
I would sit next to someone who was\n
We'd all stand in the \nsame line for hot dogs.
Today, the guys who are rich\nare up in the sky box
and he calls it the sky box-ification of \n
They're eating filet mignon and\n
standing in line for our hot dog.\n
as we used to, in the older days.\n
I like to quote Will Rogers with this\n
the same amount of money that they--\non improving the product
as they do on advertising, they wouldn't\n
By the way, that's a very profound \n
of the internet, it's so much easier\n
to others and also about\na product you don't like.
And in a sense, if this goes far enough,\n
anymore. It would be not possible\n
because the word \nof mouth will sink it.
So he's sort of touching on that point.\n
and others will advertise \nthe good job you did.
Now, I want to add another group,\n
and I'd like to call them \nour best marketers.
But they're not necessarily the \nchief marketing officer
they're CEOs. But what--\nTheir contribution has been
the kind you want from your \nchief marketing officers.
So who do you see here? \nDo you know any of those people?
Yeah. You've got to know some of \n
the first one. Ingvar Kamprad.\nIt's very even hard to remember
his name, but he's that Swedish \nperson who invented IKEA
who said, "I must bring down the cost\n
taking the air out of it and just \n
and now people can afford to have\n
Richard Branson is phenomenal.\n
He's one of the best self-promoters\n
that he was in Times Square \nsome years ago
to introduce his new cell phone,\nthe Virgin cell phone
and he said he was going to drop off \n
and-- not wearing any clothes or\n
I don't know why they would want to\nshow up, but they showed up
in Times Square, and sure, he did \n
and he's carrying a huge version\nof his new cell phone.
And so everyone--not just in\nTimes Square--the reporters
were covering it. All of New York \n
a new Virgin cell phone.\nSo he's very good at that.
But right now, he told me something\n
and he gave a speech, and we \nwere just chatting, and he said
Where are you from?" I said Chicago,\n
a time when you can go from\nDubai to Chicago in half an hour.
What is it-- Is this a time\nmachine you're inventing?
He says, "No, it\'s just a rocket ship."\n
Dubai, it just goes right up in the \nair and lands in Chicago.
So he's working with some people\n
And you want to watch him.\nOf course, Walt Disney.
Herb Kelleher. Thanks to him,\nwe have Southwest Airlines
which started a whole class\nof low-cost airlines.
And then we've got Anita Roddick,\n
I\'m not selling hope, I\'m selling good\n
That was a famous remark by Revlon,\n
in the store we sell hope."\nBut she wrestled with that one.
Then you've got Bill Gates, \nSteve Jobs, and Jeff Bezos.
And Jeff-- Let's see, we've gotta\nmake sure he gets in there.
[laughter]\nJeff is extraordinary.
If there's anyone who has \nconsumer thinking in his mind
wanting to facilitate the consumer\n
or anything like that. And then to buy\n
to buy clothes. He's done a marvelous\n
We're running out of time and I'm going\n
but let me just refer to \na few more things.
This is a chart I use in\nthe book, "Marketing 3.0
basically to say that every company\n
for the future, and its values--\nwhat it really cares about
and if you're a 1.0 marketer,\nit's a good job you're doing.
I mean, of course you're trying\n
and make a good product. Be better.\n
help people realize their aspirations.\n
they might aspire to have.\n
and your product is different than the\n
And suddenly, you move \nfrom mind to heart to spirit.
What's spirit? It's that small\nset of companies that say
We\'re compassionate. We have\n
We want to get involved. We want \nthe companies to be a machine
for improving the lives of people."\n
to just some charity work they're doing.\n
strain in the way they do their business.\n
really have felt that they want \nto help reshape the world
into being a better world.\nSo that is--
Here's one of my favorite companies\n
The SC Johnson company in \nRacine, Wisconsin
whose products are shown over here.\n
of their waxes or some of their\n
but they're just winning awards\nfor being a very caring company.
Incidentally, a book that you\nmight want to read is called
Firms of Endearment,"\nwhich is a fancy way to say
companies we love.\nFirms of Endearment.
And I love the subtitle,\n"How World-Class Companies
Profit from Passion and Purpose."\n
random meeting of people--is there \nany company that you like?
That you like a lot?\nNow, let me ask that question.
Name a company that you would\n
[audience murmurs]\nApple! See, always Apple.
I thought you were going to say\nHarley Davidson, but that's
another one. Amazon.\nI would miss Amazon.
I really would. I would even \nsubsidize it to continue.
Costco. Of course.\nI'm with you on Costco.
Nike. Okay, well you see\nwhat happens is
these are the names of the companies\n
I don't think there's any surprises there.\n
Because it would be a different mix\n
But the main thing is, these firms of\nendearment are so much
more profitable than the ones\nthat have not been dear to us.
One of the things is that they--\nThey're either 9 or 10 times
as profitable, but let's see why,\nand without going through
everything here, look at the last\none. These are the attributes
of that set of companies.\nAnd the last attribute is that
they spend less on marketing\nthan rather more.
I bet you thought that the companies\n
are the ones who are just \nadvertising all the time.
They're so familiar.\nWe see Coca-Cola
all the time. All the time.\nNo! They spend less on advertising
so who's doing the advertising?\nThe customer. You guys are.
So that's where you should\nput your money.
Create a love affair.\nCreate fans with others.
Now I'm going to end with two slides.\n
The End of Work"\nThis is Jeremy Rifkin\'s book.
It's now about 9 or 10 years old.\n
in population growth, automation\n
3D printing, can the nation create\n
enough jobs for the \npopulation, and so on.
And it raises a question about\nmarketing's role.
Marketing's role normally is seen\nas to sell you some things.
The basic role of marketing\nis to create jobs.
It is the job creator. Namely, it \ngets you to want something
that someone has to produce.\nSo there's a basic question:
Does marketing really create\nnew jobs or does it only
create shifts in the shares?\nLike if I switch from brand X
to brand Y, that's not creating--\n
gets a job. So, but it is true\n
marketing will help accelerate \n
and intensify the drive to purchase it.\n
and other things that come along\npartly because they're wanted
they are desired objects,\nand marketing accelerates
the rate at which growth takes place\nwith those new products.
The other book, and I'll end \nwith this, is another downer.
And what is the relationship between\nmarketing and demand?
And is-- he uses a term saturated--\n
I've been wrestling with that problem,\n
Growth is the issue.\nGrowth means jobs, and so on.
And the fact is, there are \n8 ways to grow a business.
So the title of the book is\n"Market Your Way to Grow:
8 Ways to Win."\nAnd you know all of them.
You know that we can go to\nplaces where there is growth.
We can sell in China,\neven if it's a low growth here.
Or Brazil. We know we can grow\nby acquiring other firms.
We know we can grow by innovating.\nInventing something new.
We know we can grow by taking \nbusiness away from someone else
and so on and so forth.\nSo one of the things
we're wrestling with is how \ndo you, as a firm, grow?
And by coincidence, another \ncolleague of mine at
the Kelogg School of Management,\n
Defending Your Business," and it\'s\n
with mine, because the first job \n
Hold on to the customers you have,\nthen you start worrying about
some more growth.\nSo we both, as members
of the department, are wrestling with\nhow to ignore these books
and say they're wrong, and that\nthere is a bright future ahead.
[laughter]\nSo let me stop here
and take any questions you might have.
[Moderator]: Okay, we have time for \n
Is there anyone on this side of\nthe auditorium that would like
[Kotler]: Yes. I see--\nI see you over there.
Now a microphone will\nmagically come down here.
[Moderator]: Susan will\nbring you a microphone.
[Kotler]: And if there's any other\n
Would you introduce yourself, please?
[Audience member]: My name is\nIris Witkowski and I've been
coming to the Humanities Festival\n
appreciate your talk today.\n[Kotler]: Thank you.
[Audience member]: My--\nI'm making a statement.
What really drives me nuts,\nas far as saturation is concerned
is the placement of products\non television programs.
It used to be that in a movie\nyou\'d say "Oh, I saw that brand.
It seemed to be accidental.\nNow it's all over.
Even the anchormen have \nL.L. Bean jackets on.
[Kotler]: You know, that's the field\ncalled product placement
and we first got conscious of it\nwith the James Bond films
where each time there was a different\n
something else, because it was a \n
the most for the next film to \nfeature that car, and now
does the person speaking pick up\n
And things like that. Most of us don't\n
but it has been discovered as a way to \n
[Audience member]: I'm Cody Hagle.\nI'm a Charter Humanist.
Again, thank you. On the evening\nnational news, 75 to 80 percent
of the ads are for pharmaceuticals.\n
[Audience member]: And I believe\nthere was a change in legal
requirements some years ago. \nWhat are your thoughts about that
because clearly that advertising \n
costs, etcetera, etcetera.\n[Koterl]: Yeah.
It's called over-the-counter \nadvertising, too.
But maybe it's also prescription.\n
for it by saying consumers should know\n
the right thing for them, otherwise\n
what's right is the doctor. And the \n
The doctors in some cases\nare offended by--
by the patient saying what he \nwants as a prescription.
But, you know, this has happened\n
Doctors are advertising themselves,\n
The expert is Prabha Sinha,\nwho runs a firm called ZS
and he's always working with the \n
Any other things that bother \nyou about advertising?
[Audience member]: Hi, my name\nis Bob Michaelson.
Thank you, Professor Kotler. It is\n
You've been a big influence to so\n
for so many years. My question--\n[Kotler]: One second.
How many of you have read\nany of my books? Any hands?
Thank you-- I owe thanks to you!
[Audience member]: My question\nis in regards to social media
and you started off your presentation\n
was defined at the beginning of the\n
As you look at social media, do you see\n
this thing a short-term phenomena \n
for the next century. That's part 1.\n
to apply an ROI to social media?
[Kotler]: Yeah. Those are \nexcellent questions.
I-- This is not a fad. We are in the\n
and there's no turning back.\nThat means that--
I see the following happening.\nEvery company I talk to says
We\'re gonna go digital too, \nbut slowly. We\'re gonna rely
on our tradition," which is newspapers--\n
radio, TV, billboards, and magazines.
So, at best, they will say this,\n
over to digital," which means\nFacebook, Twitter, and YouTube
and so on. And let's see what happens.\nLet's hire a 12-year-old
[laughter]\n--give them a budget
and hope they come back saying,\n"Look what I did with Facebook!
Look at how many mentions!"\nAnd so on.
Now, that goes to your second question.\n
of using Facebook or \nsomething like that?
Progress is being made.\nBut remember, we never
measured advertising right either!\n
was-- first of all, the basic notion\n
you know that half the people will never\n
I know that half of the money I \nspent on advertising is wasted
it's just that I don't know which half!\n[laughter]
Basically, we judge things by\n
exposed--cost per \nthousand people exposed--
when we make an advertising budget,\n
in the bathroom or the kitchen \nwhen the ad appeared.
So... and increasingly, people\nare more on their TVs--
on their computer screens than they\n
And I think the advertising industry\n
putting too many ads now.\nI mean, there's little content left
on some programs, with the\nnumber of ads that flash by.
They're all 30-second things.
So, now about measuring.\nIf you read Advertising Age
you'll see a lot of statements\nand claims that there is
measurement going on.\nOne thing I would say is this:
Don't take your ad budget and take\n50% and switch it to digital
which one firm did, and it \nwas a terrible result.
Because until you know\nwhat each social medium does
what you want is 10% of your budget\n
some proof, you put in \nanother 5 or 10 percent
into that particular use \nof the social media.
[Moderator]: Okay, we've got time\nfor just one more question.
I know a lot of our attendees are\ngoing to other events
so we have one right here\n[Kotler]: Oh, okay.
[Audience member]: Mark Ruen\nis my name. I've been in
direct marketing my entire career,\n
follow up a question about\nmeasurement in advertising
because I've lived by my metrics.\nNow, my question is this:
I've always guided my marketing\n
4 Ps or 5 Ps, depending on\nwhere you're coming from
and in terms of the P of the\nplacement, I mean, the internet
certainly flattened the world,\nand our distribution channels
have changed. But how do you\n
[Kotler]: Okay. First of all, let me say, \n
Direct marketing people are much \n
They could actually experiment \nwith trying to release different
direct messages and seeing--\n
and knowing what it costs to do the\n
and it's just a pure P and L\nkind of exercise
which we couldn't do with just\nthe normal commercials on TV.
Now, are you asking where the \n
Like, what's happening to product\n
See, there will be new \ndistribution channels all the time.
I've been asked this question when\n
which is really the case that\nsome companies should be
socially responsible as well.\nSomeone would ask me
When are you gonna \ncome up with 4.0?
And I don't really have\nan answer, because when
you go from the mind to\nthe heart to the spirit
I don't know how much \nfarther you could go
but I am thinking that 4.0's\ngonna describe companies
in the future that are building\necosystems and platforms
where we get involved with \nthem in such a way that
everything is being supplied \nthat we want, as an individual.
Think of iTunes, think of the\niPhone, iTunes, the whole setup
of cre-- think of Harley Davidson.\nIf I buy a Harley Davidson
I'm a member of-- they call them\n
Harley owner... owner groupie.\n[laughter]
and not only that.\nI can take my motorcycle
and just go and meet people\nI don't know. Some have beards.
Others have beads, but they're fake.
They're wearing leather jackets.\nThese are business people.
They may be chief financial officers,\nbut they want to be macho
so they supply a whole system to fit into\n
sort of begin to think about that.\n
who's making shoes now?\nIs it Tom's shoes or the other one?
Zappos? They're creating\na system that's going to go
beyond the shoes that you buy.\nIt's going to go into clothing.
So some companies, as one\nevolution for certain companies--
by the way, it's not different in\nbusiness to business
where a company that supplies--\n
They have to create a whole system\nso you can't even leave it.
You know, once you get involved--\nOnce you get with IBM
you're not gonna leave for \nHoneywell or something like that.
So this is maybe what\n4.0 thinking will do.
In other words, it won't be\nproduct-centered, it will be
system-centered. A whole system.\nI think we're out of time.
Thank you very much.\n[applause]
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