`Old marketing is not working'

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Marketing guru Philip Kotler says it's necessary to build new channels of communication in an exclusive interview to BrandLine.

PHILIP KOTLER, S.C. Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management at Northwestern University, speaking at a seminar in Chennai. _ Bijoy Ghosh
PHILIP KOTLER, S.C. Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management at Northwestern University, speaking at a seminar in Chennai. _ Bijoy Ghosh

Vinay Kamath

"There's a mistaken belief that companies are customer-oriented. But, that's not true; they're paying lip service."

It's easy to be in awe of Dr Philip Kotler. Author of the definitive textbook on marketing, Marketing Management, which legions of management students at B-schools across the world have grown up with, and the man who laid the basis for modern marketing practice with his 4Ps framework, Dr Kotler was recently in India on a whirlwind visit at the invitation of the Great Lakes Institute of Management, Chennai. The 75-year-old Kotler, the S.C. Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management at Northwestern University, addressed a series of media meets, seminars and workshops and also took closed-door sessions for corporates. However, the genial Kotler is not half as intimidating as his reputation and is ready to parlay all questions on marketing with wit and humour. BrandLine hopped into the marketing guru's Mercedes on the way to the Chennai airport for a quick tete-a-tete. From Chennai, the indefatigable Dr Kotler was off to Bangalore and Mumbai for further interactions with the corporate world. Excerpts from the interview:

You are making a distinction between `old marketing' and new ... what are the new marketing trends that you spot? What triggered your thoughts?

The old marketing is not working. Products are failing, advertising costs more than it is worth. Old marketing means a heavy reliance on advertising, sales promotions and marketing research. All those are necessary even today, and have to be done well, and people are still learning how to do them well. But, the problem of communicating messages to people who might be interested calls for new channels of communication: Web sites, blogs, podcasting ... you could build virtual communities.

There is also an explosion of channels of distribution besides channels of communication. It throws up new challenges for companies - if you're a food company should you put your food in the store next to the gas station or should you go online, even if you're a physical retailer? And, what do you do if you're a bank the fastest growth in banking in England came from online banking and insurance. A pattern will develop, maybe even a new framework that will make obsolete the four Ps and will sensitise us to new levers or drivers that we haven't been paying enough attention to.

You have been talking about companies creating and delivering value, so in some sense have you redefined what marketers have grown up with - the 4Ps of marketing?

Yes and No. Yes in the sense that it makes value the central term that explains what customers want to use to choose among the vendors. It makes it our job to create and communicate value. But of the 4Ps, product and price are the tools of creating value, and then promotion is the tool of communicating that value and place is delivering that value. So, in some sense it's the same.

What's the current debate around marketing? Many companies do not regard marketing as a strategic function. What's the big idea coming out of marketing that it should be taken seriously?

Well, marketing is seen as important and unimportant in different companies. For example, a company like Procter & Gamble would go all the way. On the other hand, you may have seen some marketing departments cut out because there was not much of accountability. The challenge is how to effectively get messages to people who are good prospects for our offering.

The other challenge is to figure out new areas of opportunity. For example, the Kraft company had slow growth. The new President said to the staff, `I want you to find me a billion-dollar business.' That's not easy and I am not sure that's the right way to ask for it. If he said I want you to find me four businesses which are each going to generate $250 million, it would be more like it.

But the problem would be firstly can you find new offerings and secondly can you do it in a way that it can't be copied fast, because here we are advocating innovation and if companies do it, and if it works, everyone else is on top of them very soon. That's the second challenge, how to create sustainable, long-term businesses.

You talked about other major trends for marketing - that marketers need to be more up-to-date in finance and with technology trends ...

Yes, but it's not that all people in the marketing department need to know all these things, but if you need someone who knows it and can be accountable. I would say that we need new approaches to understanding the customers. We have to use more ethnographic concepts, what goes on in the customers' homes, need more in-store understanding of what goes on in the shop and we need more depth interviewing and knowledge about what's going on in the unconscious, because if there are drivers of brand decision making, and if they are unconscious even to the buyer of the brand, you need new techniques to figure out what's driving them.

Earlier, it was a manufacturing-led economy and marketing evolved around that concept. But that has changed, it's more a services economy now, so, how was marketing evolved?

Two things: first of all when there is a society, when things are in short supply, marketing becomes less important because people are lining up to buy the goods without any effort. There were new products that everyone wanted fast and you didn't need a marketing department to sell it. And the manufacturers differentiated between themselves on product features. But now the question is, how do you get a customer orientation when products are in abundance and customers are scarce? Once that happens you're going to spend more on marketing to attract customers. Most industries are over-built; if they work three shifts, there will be 30 per cent more cars, but there is no demand for it. So, that raises a lot of questions.

There's a mistaken belief that companies are customer-oriented. But, that's not true; they're paying lip service. They are still product-centric. Even having product divisions means that each division is looking at a slice of a customer's life ... how about a company saying that the consumer buys so many of our goods and maybe we can put different things together, with new packaging and some cross-selling. We still have a long way to go to make companies think customer.

Which companies do you see that deliver great value?

There are some companies that are centred on delivering great value. For example, Volvo, with respect to safety. It lives safety and that company will not make a feature that makes it less safe in the car. Disney is about entertainment; if we're not entertained, we won't go there; if the coffee at Starbucks is not delivering the experience, people won't go there. I like Barnes & Noble, it makes me comfortable. At their bookstore, I can have some coffee and sit down at a table and read some of their books without buying them. There are a lot of companies delivering such value.

You talked about IBM and GE having made marketing a strategic function and having marketers on the Board. Has it made a difference to them?

Marketing in most cases does not have a position on the board. I think that's bad because you want a report card for marketing as you do for finance. I would argue the marketing scorecard is the future and the financial scorecard is the past. So, it's good for those two companies for having made marketing important. They recognise the importance between upstream and downstream marketing.

Prof Jagdish Sheth postulated the 4As of marketing, quite similar to the 4Ps; is that a redefinition of the basics of marketing?

Some of those As are same as the Ps ... we've done a little differently too with the 4Cs; he's looking at it from the point of view of the consumer whereas the 4Ps take it back to the seller and what he has to do. We did the same thing with the 4Cs - we said customer value, convenience, cost and certain values - in any case the 4As cannot be done before the 4Ps, you still have to make a product and put a price on it. Let's not say the 4As is a replacement, it precedes the 4Ps ... it's an earlier layer.

In your opinion, which companies do you think would be great marketers?

I have a list of companies which have been the most creative: Swatch, when it started, made watches like a fashion item; Dell was a genius of an idea where you could customise a computer; Body Shop, Nike ... FedEx too was a brilliant idea. In India, I wish someone would figure out the key ideas, like the sachet idea for shampoos, we should spread that around the world.

Has branding as a concept come around to the commoditisation of brands?

Branding has been rediscovered to be more than simply the naming of a company's product and property. It's becoming a platform; a brand is the embodiment of the value proposition, it's a promise made by a brand. That means the brand is a platform, because once you define it, it's going to dictate the magazines you advertise in, the pricing and the packaging. The brand idea is a very important thing. There is so much similarity in products ... is the consumer fooled by that? Some are; even in an area of homogenous products, you just feel comfortable with a certain brand ... Branding of a product is to create a real or psychological difference and should be worked on by companies.

India has managed to brand itself quite well, thanks to the software boom. What happens to Indian firms in other sectors and how do they get to the next stage? How should they market themselves?

Well, the question is what are the sectors you could develop next? There's a lot of work to be done with agricultural products where you could add value instead of just exporting them. Like the grapes you grow could be made into branded wine, for example. The other one is medical. You train a lot of physicians, people all over the world need help in surgeries, your costs are lower, you could become a medical destination. With manufacturing, you could strengthen your export of fabrics by redesigning them; you have good fabrics. Take silk and the sari industry; if you could give it a Western touch by working more with the Italians after all, their labour costs are rising. You could also make high fashion purses and shoes with their help. You could say Made in India, but it won't connote not made well.

My guess is that each major city here like Chennai has to figure out what kind of economy to build for itself. Remember, Singapore is a city, not a country, and look at what it's done for itself a leader in finance, healthcare and retail. So, why cannot Chennai figure out what it connotes to the rest of India and abroad. Why can't Mumbai do that? Maybe it can't be done at the national level but perhaps regionally?

I was curious how you started your career as a labour economist and moved to marketing ... how did you make that transition?

I have always been interested in the problems of the poor, having grown up that way in part ... not in poverty, lower middle-class really. I always wondered about the distribution of incomes. So, I went into labour economics to see how to do more justice for the proletariat. The answers are hard to come by, of course, and I was sort of pro-union because I thought they were a good counterweight and I got more interested in marketing because I was also interested in how to make life better besides getting more money. Marketing sort of gives the tools of living better.

You spent about nine months in India in the Fifties, didn't you?

Yes, I got married and my wife and I came to India to do my PhD dissertation, set here to study whether companies that paid higher wages would end up with healthier workers who were more productive who wouldn't go back to the villages quickly. And, I couldn't prove it; but I didn't disprove it either but they said fine, since I gave some evidence (to support my thesis).

(This article was published in the Business Line print edition dated July 27, 2006)
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