PBNJ Marketing Blog

In The Economic Times yesterday, an article was presented with excerpts from Marketing Guru Philip Kotler from an interview that was done with ET.  Below are some of the excerpts from this article.

It is interesting to read what this expert, who is credited from coining the phrase ‘social marketing’, is saying about where the marketing market is today and where companies/institutions need to be aware of when it comes to social marketing.   He believes that ‘one requires a radical change in mindset & approach in such an age of turbulence.’  He states that he is working on a new framework called ‘holistic marketing’ which will go beyond the already well known framework named the ‘four P’s’ (Product, Price, Place, and Promotion).

These are only some of the excerpts but if you would like to read more, please click here to view the entire article.

You have said that the average company is using only about 10 per cent of the Internet’s potential. Which ‘eavenues’ are particularly under-used?

Companies should be increasingly turning to the new media, not to replace the old media, but to find blends of the new and the old that work well together. Tools that should be considered include webinars, blogs, podcasts, and most importantly, mining the social networks, where so much dialogue takes place about products and services (both favourable or unfavourable). We haven’t yet figured out how to use these new avenues and vehicles profitably; we’re still in the experimentation phase. Most companies are still using traditional media for the bulk of their promotions, but they should also be carrying out experiments to determine where they can mine some ‘gold’ in the new media.

You are credited with creating the concept of ‘social marketing’, which seeks to discourage unhealthy behaviour amongst consumers. Are you pleased with the results so far?

Very pleased, but social marketing involves much more than efforts to discourage unhealthy behaviour. The purpose is really to encourage positive behaviour and the maintenance of such behaviour, and to show people that while they are free to make their own choices, some choices are very counterproductive to their lifestyles and goals. Social marketing ideas have been widely applied to well-known causes like ‘say no to drugs’, ‘exercise more faithfully’ and ‘eat healthier’, but they can also be applied to broader social causes.

You have said that turbulence often leads to all the wrong responses from management. Like what?

One wrong move is to do nothing — to continue with the way you’ve been doing things. A second wrong response would be to panic, which often leads people to behave so conservatively that they forget that, as a wise person once said, ‘a crisis is something that shouldn’t be wasted’. Crises produce all sorts of new opportunities.

The third wrong response is to just cut budgets across the board by some fixed percentage. Let’s say a service-focused company cuts its service budget by 20 per cent. This basically removes the key factor that led people to prefer this company over others in the first place. So if there must be cuts — and often there will be some slashes in both budgets and in hiring — this must be done with great selectivity and care.

MAJOR SHIFTS IN THE MARKETING MINDSET

FROM marketers thinking about customers to everyone in the company thinking about customers.

FROM selling to everyone to trying to be the best at serving well-defined target markets.

FROM organising by products to organising by customer segments.

FROM emphasising tangible assets to emphasising intangible marketing assets such as brands, customer equity, channel loyalty and intellectual property.

FROM building brands through advertising to building brands through integrated marketing communications and performance that satisfies.

FROM making everything inside the company to buying more goods and services from outside.

FROM making profit on every sale to building long-term customer value.

FROM aiming for more market share to aiming for more share of each customer’s wallet.

FROM being local to being ‘glocal’ — both global and local.

FROM focusing on shareholder benefit to focusing on stakeholder benefit.

Until now, many business leaders have operated with a ‘playbook’ based on two underlying market conditions: a bull market and a bear market. Is this approach suitable for the Age of Turbulence?

These two playbooks will always be of some use, depending on whether the business cycle is going up or down, but as I’ve indicated, we are now also dealing with all kinds of unexpected disturbances. Just one disruptive technology entering an industry can have the effect of an earthquake: the ‘plates’ can move and suddenly an industry can find itself destroyed. Look at what happened with Kodak and film: we all stopped buying film for our cameras.

Luckily, there are things you can do in the face of such disruptions. One is to have an early warning system in place, because you’ll be in a better position if you can detect early signs of trouble; you can make preparations and adjustments. An early warning system would survey all of the external forces that could potentially damage your company. The second thing you can do is scenario planning. A lot of value can come from thinking about what you would do if an extremely pessimistic scenario took place.

Not that this scenario will actually occur, but what would you do if, in fact, things actually got that bad?  Suppose a competitor was to invent a better-quality product and sell it at half your price. What would you do? Another way to stretch your team’s thinking is to have them consider a highly favourable scenario, and what they would do in that case. Such scenario-building exercises have long been used by the military, and they can help companies think about what they would do under different ‘what if’ conditions.

The third thing we need is flexible budgets. Instead of every department having a firm budget, regardless of what happens, each department should be prepared to say what they would cut if they had to cut 20 per cent from their budget, and what amount of money they would ask for if things suddenly got so good that they could capitalize on some amazing new opportunities. These three tools — early warning systems, scenario planning, and flexible budgeting — can provide a strong defense against surprise developments that affect every industry.

Your marketing textbook is in its 13th edition and is used in most MBA Marketing courses worldwide. Are the ‘four Ps’ still a useful framework?

Definitely, because all marketing plans still have to address those four big questions — Product, Price, Place and Promotion. However, we are working on a new framework that will involve a more holistic set of considerations. What we call ‘holistic marketing’ entails the development, design and implementation of marketing programs, processes and activities that recognize a wide range of interdependencies, including the work of integrated marketing (the four Ps); internal marketing (i.e. getting support from the other functional areas); performance marketing (i.e. developing metrics to indicate what you’ve accomplished); and relationship marketing. So this new concept of holistic marketing goes way beyond just the four P’s.

Philip Kotler is the S.C. Johnson Distinguished Professor of International Marketing at the Kellogg Graduate School of Management.

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