Philip Kotler talks about how the marketing landscape is evolving and why companies need to adopt marketing 3.0

POORNIMA KAVLEKAR AND MADHUMITA PRABHAKAR

His name is synonymous with marketing, his book is a bible for management students, and he is the propagator of the 4Ps of marketing (product, price, place, promotion). A researcher, teacher, speaker and a very influential business writer, Philip Kotler is the S.C. Johnson & Son Distinguished Professor of International Marketing at Northwestern University’s Kellogg School of Management. Nurturing a deep passion for marketing, he is known to constantly reinvent himself. From being the first person to debunk the first generation 4Ps, he has now moved on to talk about marketing 3.0.

In a Global Thought Leader Series (an initiative to bring top business gurus to share their vision and insights with the corporate leaders of India) organised by the Great Lakes Institute of Management, Dr. Philip Kotler talks about “Marketing in the new millennium” and its impact on companies across the world.

UNDERSTANDING TODAY’S MARKET DYNAMICS 

A major trend that Kotler indicated in the business dynamics today, is the threat that emerging multinationals (China, India, Brazil, Russia, Turkey) are posing to the western multinationals, due to their cost advantage, availability of newer equipment and accessibility to cheaper but highly skilled labour.

SOME OF THE OTHER EMERGING TRENDS HE OBSERVED ARE:

• The shift from globalisation to glocalisation (global localisation) and now to de-globalisation (diminishing interdependence and integration between nation-states)
• The rising power of Chindia (phenomenon of China and India), which holds a great growth potential
• The rapid emergence of the middle class, which is leading to the problem of congestion
• The growing power of consumers (consumer empowerment)
• The green movement, the waste brigade and limits on growth
• The changing production and distribution of energy
• The rise of a highly interconnected world with the adoption of social networks and social media
• The growing importance of CSR and the shared value movement
• The changing demographics – longer life spans, women empowerment and the emergence of nerd generation, to name a few

ENGINEERING A COMPANY’S FUTURE THROUGH MARKETING

Kotler points out that we are all marketers in whatever we do, be it when attempting to raise capital, when purchasing a new apartment or during a job interview. We cannot get away from a force where we try to exchange goods and services or ideas. In fact, one of Kotler’s efforts has been to broaden the use of marketing beyond normal goods and services, to many other forms like place marketing, visibility marketing, social marketing and commercial marketing.

He believes that, today, although marketing is increasingly adopting a scientific approach, it is still an art. It manages important intangible assets such as brand value, customer relationship networks, market position and market information. Moreover, it is in the best position to identify business opportunities, calibrate their size and estimate their likely profitability.

However, the success of marketing depends on the level of involvement and understanding of its strategies and functions, not only by the marketing team, but also across verticals, including the CEO.

To explain how companies should be customer driven and market driven, he quotes the example of Proctor and Gamble where every employee’s action and vision is aligned to the customer’s need.

IDENTIFYING THE EXISTING RELATIONSHIP BETWEEN SALES AND MARKETING 

One of the key concerns he highlighted in today’s marketing landscape is the strained relationship between a company’s marketing and sales departments. He stresses the need for a partnership between sales and marketing, that is not only well defined but also aligned where the two groups are partners. He states that if the marketers are effective, they will build a strong preference and place the brand within the customer’s consideration set (the big three brands), which in turn will ease the salesman’s job of creating an intention to purchase and focus on creating loyalty. The problem arises when there are bad hand-offs. This can be tackled by placing a sales force representative in the marketing planning process.

THE KEVIN ROBERTS WARNING: END OF MARKETING 

Elaborating on this unforeseen statement made by the inventor and propagator of Lovemarks, Kotler explains that end of marketing means we need to end the dependence on just traditional marketing and gain a steady foothold on new age marketing. A synergy of these is what he calls integrated marketing communications.

SOME OF THE OBSERVATIONS THAT KOTLER MADE, BASED ON THE KEVIN ROBERTS WARNING ARE : 

Every industry is in over supply. What’s in short supply is the customer and that’s why marketing is the answer for a lot of companies

Budget should be divided into many small things. Target marketing is more effective than mass marketing. Better yet, precision marketing or one-to-one marketing. This will lead to disruptive changes

It is important to identify what will take away a business rapidly. Sometimes it may be technology, as that is what changing so rapidly. Take the case of solar energy, where there have been many iterations to bring the down cost of solar power

We do not know how long a company will last, who will be the leader, what companies have really lasted a long time and what is their secret

Thus, the focus of marketing should now be on four divisions. Product management, which is the starting point, customer management, which essentially means that if a company has good customers, the product will sell, brand management, which reflects the promise of performance it gives to its customers and lastly, value management or value proposition, which may vary for each segment of product or brand.

MOVING TOWARDS MARKETING 3.0 

In marketing 3.0, Kotler observes that, earlier, many companies tried to create an appeal in the customer’s mind, by selling the idea of superior performance. However, over time, they have moved from creating an appeal to the mind to appealing to the heart as well. Terming companies which have adopted this practice as firms of endearment, he highlights some of their characteristics, which have helped them create a strong emotional and rational connect with their employees, stakeholder, customers and vendor networks.

• They align the interests of all stakeholder groups
• Their executives’ salary is relatively modest
• They follow an open door policy to reach top management, because many good ideas die if the supervisor says it is not a good idea to discuss with the boss
• The employees are paid more than what the competitors will pay. Their employee compensation and benefits are high for the category; their employee training is longer and their employee turnover is lower
• They hire people who care about customers
• They view suppliers as true partners who collaborate in lowering costs and improving productivity and quality of delivery
• Corporate culture is their greatest asset and primary source of advantage
• Their marketing costs are much lower than their peers while customer satisfaction and retention is much higher
• The company is loved not because it advertises more, but because it advertises less. Customers and the internet are their advertisers

On an concluding note, Kotler insists that along with the adoption of co-creation and prosumerism, the time has also come for companies to drive the market, instead of being market driven. Such companies will shape the market and give the customers, ideas they did not even have. This is where the differentiation will lie.