For Philip Kotler, Marketing as we know it today is over and has to evolve to something much more in line with our time in which the immediacy of information and total segmentation have completely changed our buying habits.
Kotler is recognized as the world's greatest authority on Marketing and is the author of the most important works written in the field of Marketing. He has been a consultant for companies such as General Electric, General Motors, IBM, AT&T, Honeywell, Bank of America and Merck.
This article is the summary of Philip Kotler's conference held at the World Sales and Marketing Forum, in Barcelona, October 2004.
Kotler assumes that Marketing as we know it is finished and has to evolve to something much more in line with our times, in which the immediacy of information and total segmentation have completely changed our consumption habits.
Marketing productivity has been declining over time
Television ads have less and less impact on the audience. According to a recent study, ads have a return of 32 cents for every dollar invested.
Also the traditional communication by mail has an increasingly poor response and even more telemarketing. With which, it is increasingly difficult for the launch of a new product to be successful, since the resistance of consumers is reaching extremes that make all the premises of traditional marketing have to be revised.
According to Kotler, a person in the United States is subjected to between 3,000 and 5,000 advertising hits, per day. With which people are completely saturated.
60% of the people interviewed in the study commented by Kotler, hate advertising and marketing. 70% of people change the channel or abandon the television during the commercial breaks. 60% of people want general advertising to be limited. 14% of the people want advertising to be banned. 41% of people would be willing to pay for television stations not to broadcast advertising. 70% would be willing to buy a product that helps them remove advertising from their screens.
The other battlefield is in the companies: What does a CFO think about the Marketing of his company?
Less than 57% of CFOs believe that the investment in marketing made by their company has a positive effect on its growth.
27% believe that Marketing is only useful as a short-term tactic.
32% admit that in tough times for a company, the first budget they would cut is Marketing.
The 10 principles of New Marketing proposed by Philip Kotler
Principle number 1: Recognize that power now has the consumer:
Information is ubiquitous (it is everywhere at the same time) and consumers are well informed about most of the products they are interested in, so the sale must be based on dialogue and “connect and collaborate” marketing, not in selling with a monologue and in focusing marketing on "directing and controlling" the consumer. We must offer our clients better solutions, more satisfying experiences and the opportunity for a long-term relationship.
Principle number 2: Develop the offer directly targeting only the target audience of that product or service.
Here Kotler illustrated us with a quote from Tony O'Rielly, former CEO of Heinz Foods:
Find a market niche, and then make sure there is a market for that niche.
And among the curiosities that Kotler showed in his presentations, I was first struck by the brutal segmentation (both because of the vocabulary it uses, and because of the magnitude), that even at the risk that this article should be divided into 2 to facilitate its reading, I prefer to cite here the different types of groups of people that Kotler uses in his geodemographic studies, ordered by type, not annual income:
Blue bloods (income over $ 70,000)
Money and brain (income over $ 45,000)
Furs and family cars ($ 50,000)
Pool and garden ($ 35,800)
Two or more rugs ($ 31,200)
Influential youth ($ 30,400) $)
Youth Approaching ($ 38,500)
Microchip Fans ($ 32,200)
Gold Coast Urbanites ($ 36,800) Miscellaneous
Bohemians ($ 21,900)
Black Companies ($ 33,150)
New Beginnings ($ 24,800)
From God's Land ($ 36,700) dollars) (I assume you are referring to landlords)
New owners ($ 25,900)
Streets and cities ($ 17,800)
Those who wear Levi's ($ 28,700)
Gray power ($ 25,200) (refers to the civil service mass)
Rank and rank ($ 26,200) (military)
Blue necks ($ 30,000) (average workers in Industry)
Average American (24,400 Dollars)
Coalburg & Corntown ($ 23,900) (translated: miners and farmers (primary sector))
Although it is as part of this second point among the 10 characteristics of New Marketing, I think it is the slide that left me the most perplexed of all that we saw during the conference. And it is that 21 segmentations by income and type of person, I had never seen them…
Principle number 3: Design marketing strategies from the customer's point of view.
Once we are clear about which segment we are targeting with our product, Kotler recommends that we focus on the value proposition that we offer to our customers and that we design a marketing campaign aimed at communicating this value proposition, not the characteristics of our product that is what is usually done normally.
In order to discover what things our clients consider "value propositions", Kotler advises the following:
Identify the expectations of our clients or potential clients.
Decide which of these values we are going to compete for (for example, Nike competes for: winning, exceeding the masses, extreme effort, the smell of sweat… New Balance, on the other hand, competes in the same segment, but does so with the values: self improvement, inner harmony, the smell of nature, spiritual development, etc.…)
Analyze the ability of our organization to give these values to our clients.
The message that we must communicate and sell is about the value we transmit, not about the characteristics of our product.
Ensuring that we deliver the promised value and that over time we improve and expand this value model.
To encourage and guide listeners, Kotler showed us some examples of sales messages aimed at conveying the value that is offered to the user, instead of orienting it to the product. Here are some of them:
Product sold: Liters of paint to paint cars. Message to convey: we make painted cars come true.
Product: animal food. Message: Health and weight gain for animals.
Product: diesel engines. Message: Power that is never interrupted.
Product: explosives. Message: Rocks crumbles.
Principle number 4: Focus on how the product is distributed / delivered, not on the product itself.
Kotler proposes that we ask ourselves if we can find a way to redefine our distribution and delivery network, to offer much more value to the user. Some companies have already done it, this is the case of Dell online and Ikea in the offline world.
Principle number 5: Go to the customer to jointly create more value: the role of the company has changed.
With Transactional Marketing (around 1950), the company defined and created value for consumers. With Relationship Marketing (from 1980 to the present day), the company focused on attracting, developing and retaining profitable customers. The new Marketing, or Collaborative Marketing (as Kotler calls it), must focus on collaborating with the customer so that together, they create new and unique ways to generate value. To do this, he proposes that we establish dialogues with our customers and with the communities of consumers of our products.
Collaborative marketing can be done from 2 aspects:
Offering a wide line of products, so that the customer can find the one that is closest to his wishes. For example, 20 different colors for the same garment, or 26 different options for some hockey sticks (this is a real case).
Have everything ready to adapt our product to the specific needs of a client. The clearest example of this is the purchase of a Dell computer, but Kotler showed us many other examples of online and offline companies that also make normal consumer products, tailored to the buyer (custom jeans, makeup, perfumes, candles, golf clubs, breakfast cereals, credit cards, etc…)
Although Kotler also proposes that we let the customer participate in the original design of the products, for example by asking customers for advice while the product prototypes are being developed.
Principle number 6: Use new ways to reach the customer with our messages.
… And above all, be very vigilant with dissatisfied customers, since the Internet allows many people to be reached, and they can do a lot of damage if they are not treated properly.
Regarding our marketing campaigns, Kotler placed special emphasis on "Permition Marketing" (or Marketing with permission), since it is a good way for the client to indicate whether or not they want to receive this type of advertising and it is not necessary that we disturb those who do not want it.
Regarding the use of new ways to reach the client, he recommended that in our advertising messages we always include 3 things:
The value we want to convey.
Useful information for the user.
Something that amuses you or at least entertains you.
And about new ways of advertising, he stressed the importance of sponsorships, mentions of our products in television series or entertainment programs or their appearance at festivals, and above all, direct promotion on the street.
At this point, Kotler illustrated us with an amusing example of a practice that apparently has become fashionable in some tourist areas. Near an interesting monument is a stewardess / saleswoman disguised as a tourist, who asks other tourists to take a photograph of him with a mobile / digital camera. The hostess / saleswoman explains to tourists how the camera works and its advantages. Tourists take a photo of it and see the result on the screen. Unknowingly, they have been participating in a product demo, paying 100% attention to the seller's explanations.
Without going to these extremes of "deception" to the potential client, Kotler presented some examples of campaigns carried out on the street that have given very good results:
Vespa campaign through the streets of Los Angeles: some more or less well-known models walked for a while through the streets of Los Angeles, with these motorcycles, visiting the fashionable bars and talking with the people who frequented them.
Ford Campaign to Launch Ford Focus: Ford identified 120 people in 6 key markets, and allowed them to use a Focus and promotional material for 6 months free of charge. This same practice is often done by video game companies with hundreds of teenagers who enjoy games for free in exchange for them to tell their friends about them.
Principle number 7: Develop metrics and analyze ROI (Return on Investment)
Philip Kotler stressed the importance of having a scorecard that offers us an exact vision of how each of the factors involved in the sales process are evolving.
I list below some of the metrics that Kotler considers indispensable:
About the product:
Quality improvements: measure how many improvements have been implemented in our products.
Percentages of sales of new products
Profit generated by product
Customer segmentation:
Customer satisfaction
Average price of sales to a customer
Number of customer complaints
About the markets:
Market penetration Market
share
Increase in sales
Profits
Principle 8: Develop high-tech marketing.
At this point, Kotler warned us that while high technology is necessary, it is not necessary to the same degree for all companies. Nor is it just about implementing a CRM or ERP.
As an anecdote, Kotler illustrated us with a funny equation: NT + OO = EOO
New Technology + Old Organization = Expensive Old Organization
The 8 pillars of high technology applied to marketing are:
Performing predictive analytics
The automation of sales: the objective is to provide salespeople with negotiating power. To do this, they must know in real time the status of the stock, the margins per product, etc….
Marketing automation: there are many marketing threads that can be automated: the selection of names for a certain campaign, the decision-making on whether you can have a credit or not, send samples to a certain target, etc….
Model making: Marketing engineering called it Kotler
The creation of process tables: graphical representation of processes such as growth in new customers, customer charges, billing, etc….
The creation of performance tables: Results broken down by concept and by person.
The direction of the campaigns
Project management
A new product management
Kotler emphasizes the management of campaigns, projects and products, especially because it has been detected that the main obstacle when implementing high technology is the ignorance of its existence, on the part of marketers. Hence, the direction of these three sections is key when implementing it.
Principle 9: Focus on creating long-term assets
6 key factors for creating long-term assets:
Be honest with our brand
Be honest with our clients
Offer a quality service
Maintain good relations with our shareholders
Be aware of our intellectual capital
Build a corporate reputation
Kotler highlighted the difference between a profit-oriented company, versus a company oriented to achieve customer loyalty:
The profit-oriented company: reduces costs, replaces people with technology, reduces the price and value of products, gets many customers.
The company oriented to customer loyalty: invests in marketing assets, empowers its employees using technology, seeks to reduce the price of products to reward the customer, investigates how it can give more value to its customer, selects customers that gets.
Principle 10: Look at marketing as a whole, to regain influence in your own company.
Marketing affects all the processes of a company and this is what we must transmit in our own company.
Decisions made in marketing affect customers, company members and external collaborators.
Together they must define which market the company is targeting will be. Together they must discover what opportunities appear in the market (for this Kotler proposes to think of at least 5 new opportunities each year), and together they must discover what training and infrastructure will be necessary to carry everything out.
The intervention of these 3 factors: the clients, the company and the network of collaborators, in the marketing of our company, is what will show us that we are on the right track and that we are beginning to apply the rules of New Marketing.
And with this last point, we have finished the "summary" of Philip Kotler's conference in the framework of the World Sales and Marketing Forum. The truth is that the conference was really worth it and that all the attendees left it with a great desire to start applying what we learned. The bad thing is that it costs his thing to be able to specify actions to apply what has been explained, to the company itself, but at least Kotler was quite clear and illustrated us with many examples.
Interesting links:
Link to not get lost in the world: PowerPoint presentation of a Kotler seminar, which includes the 10 principles set out in these 3 articles. It is in English, but it is very good and very complete.
Kotler
FMMV website
Program and biographies of the speakers
Marketing and Sales
Next HSM-Group event:
Expomanagement Madrid 2005
