Professor Philip Kotler’s utopian vision for the future of business
The internet’s ability to keep companies accountable will result in a future world where “all companies are good because bad companies will be exposed”, Professor Philip Kotler has foretold.
The still-prolific 83-year-old’s discussion topics at the World Marketing and Sales Forum in Melbourne this week included: meeting global challenges, responding to disruptive innovation, becoming more customer-centric and moving into his vision of ‘Marketing 3.0′.
Companies in ‘Marketing 3.0′ are ‘human-centric’, appealing to customers’ compassion and showing they truly care about their broader impact on the world through positive action to address sustainability and ethical issues.
This follows the discipline starting out in ‘Marketing 1.0′ as product-centric and focused on functional and rational appeals, then evolving to ‘Marketing 2.0′ as companies became more customer-centric and appealed to customers’ emotions.
He also touched briefly on a distant future idea of ‘Marketing 4.0′, in which companies aid customers towards self-actualisation, but ‘Marketing 3.0′ is the current focus.
Kotler was unable to fit much more on the topic into his three-hour session on the stage at Melbourne Town Hall, but Marketing caught up with him afterwards to chat further. Stay tuned for our video interview next week!
On the shift from traditional to digital media
As technology becomes a greater force in marketing departments, the marketers of the future will be of a younger average age, Kotler believes.
Digital media spend will continue to increase, and Kotler predicts the balance will settle at around 50% traditional media to 50% digital. He compared this to the example that currently, P&G’s digital spend is hovering around 30%.
“Should we stop buying 30 second commercials and switch to all digital? No, that’s not the answer,” Kotler explained.
“Most companies will hire young people trained in digital and give them five to 10% of the normal budget and see what happens. If it’s good results, they’ll let them do more. My prediction is it will be 50-50, but it’s not there yet.
“New media must be blended with the old media in a mutually reinforcing way.”
On disruptive innovation
“Your business is likely to be disrupted and you should spend time thinking about how that will happen and what you can do about it,” Kotler warned.
He recommended companies undertake the following three steps:
1. Vulnerability analysis: list weaknesses in your offering and all the ways a competitor might be able to hurt your business,
2. Opportunity analysis: list all the other businesses that you could get into, and
3. Scenario planning: come up with three possible scenarios and plan a course of action. “The world is too uncertain to predict exactly what’s going to happen”, but this process will build your team’s skills and make the business more flexible in future uncertainty, Kotler said.
On creating customer-centric culture
Kotler gave a sincere plug to an Aussie publication, The Customer Culture Imperative: A Leader’s Guide to Driving Superior Performance, by Linden Brown and Chris Brown.
“I consider the book a special contribution that we didn’t have before. By the way, they didn’t pay me to talk about their book,” he quipped.
As well as providing an in-depth analysis tool for companies to assess their customer-centricity, the book lists the following seven constituents of a customer culture:
- Customer insight (understanding the customer and their needs),
- customer foresight (predicting the customer’s future changing needs),
- competitor insight,
- competitor foresight,
- peripheral vision (understanding and embracing external societal changes – PESTE),
- collaboration (all parts of an organisation working well together without silos), and
- strategic alignment (of all parts of the company).
On the C-suite
According to Kotler, CMOs should be responsible for the following six tasks:
- Represent the voice of the customer,
- monitor changes in the environment,
- act as a steward of the brand,
- oversee upgrades to technology,
- offer an insight into the portfolio, and
- measure and account for financial performance.
“The CEO will set the tone for what marketing is in the company,” he said, outlining his four types of CEOs, in ascending order of desirability:
- 1P CEO: often hostile towards marketing and believes it is all about promotion,
- 4P CEO: believes marketing is responsible for tactics around product, price, place and promotion,
- STP CEO: realises that the starting point before the 4Ps should be segmentation, targeting and positioning, and
- ME CEO: believes ‘marketing is everything’ and encourages customer-centricity to permeate the organisation. Kotler attributes the ‘ME’ term to P&G’s A.G. Lafley.
Kotler listed some CEOs he respected for their marketing vision, including:
- Richard Branson,
- Walt Disney,
- Bill Gates,
- Steve Jobs
- Amazon’s Jeff Bezos,
- IKEA founder Ingvar Kamprad,
- The Body Shop’s Anita Roddick, and
- Southwest Airlines’ Herb Kelleher.
On marketing departments
Kotler advised organisations to have two parts to their marketing departments: one “helping the salesmen sell” dealing with current business, and the other, separately working on strategy to build a future for the company.
“It’s maybe only one, two or three people, but the rule must be that the strategic people are not drawn into selling today’s products,” he warned.
Since it can be difficult finding people who are equally right- and left-brained, marketing departments should always include people with creative skills and people with analytical skills, Kotler said.
“I don’t want a lack of either.”
It is also increasingly important that marketers be trained in finance, especially if they want to move up the corporate ladder.
“If I had to choose between two people, a former salesman who knew about marketing and someone trained in marketing and finance, I’d bet more on the second person,” he said.
Kotler also gave his six points on how marketing and sales can work better together:
- Have regular meetings between departments,
- make it easier to communicate between departments,
- set joint work assignments,
- set shared revenue objectives and reward systems, and
- improve sales force feedback.
On business longevity
Discussing the challenge of business longevity, Kotler said the average company lasts between 10 and 20 years, often due to:
- changing buyer wants and budgets,
- lack of innovation, or
- failing to invest in long-term focus.
He referenced Arie de Guis’ book, The Living Company, which surveyed a list of businesses that had succeeded the average lifespan, including DuPont, P&G, Siemens and a 500-year-old Japanese company.
These longstanding companies showed the following four traits:
- Conservative financial function,
- high sensitivity to the world/peripheral vision,
- awareness of the company’s special identity, and
- tolerance of new ideas.
And the following four priorities:
- People over assets,
- loose steering and control/no tight policies,
- organised for learning, and
- creating a human community within the company.
Kotler’s marketing test
Businesses should give themselves this impressionistic test to assess their marketing functions, Kotler advised the forum.
Here’s how to do it:
- Give your company a score from one to five on each of the nine questions (one is weak and five is strong),
- the maximum score is 45,
- if you score 35 or higher, you are doing pretty well, and
- any point you give a one to should be immediately addressed.
Score your business from 1-5 on these points:
- Finding new opportunities
- Using marketing research and marketing analysis
- Innovating successfully
- Using communications effectively
- Using sales force effectively
- Managing distribution channels effectively
- Having a well-thought-out marketing strategy
- Being well organised for marketing
- Corporate social responsibility and environment.