Interview

Philip KOTLER

Current ranking: 9

Now in his seventies, Philip Kotler remains prolific. The world's pre-eminent marketing thinker has over 25 books to his name including his latest, Marketing Moves (written with Dipak Jain and Suvit Maesincee).

Kotler started out as an economist and studied under Nobel Prize winners Milton Friedman and Paul Samuelson. He then became fascinated by marketing. Seeking out textbooks on the subject he was disappointed to find them heavily descriptive rather than helpfully prescriptive. So, he wrote Marketing Management, still the definitive work on marketing and the textbook on every marketing student’s shelves.

Subsequently, Kotler has applied marketing theory to a huge variety of new areas -- nonprofit organizations (museums, performing arts, hospitals, colleges, etc.), social causes, places (cities, regions, and nations), and celebrities. Along the way he has coined phrases such as “mega marketing,” “demarketing,” “social marketing,” “place marketing,” and “segmentation, targeting, and positioning.”

Kotler, a professor at Northwestern University, has a flair for neat and useful definitions. “When I am asked to define marketing in the briefest possible way I say marketing is meeting needs profitably. A lot of us meet needs - but businesses are set up to do it profitably,” he says. “Marketing is the homework that you do to hit the mark that satisfies those needs exactly. When you do that job, there isn't much selling work to do because the word gets out from delighted customers that this is a wonderful solution to our problems.”

In this interview, Kotler surveys the new world of online marketing and offers his insights on marketing in the digital age.

Why has marketing been slow to respond to changes in markets?

Markets always change faster than marketing. Companies have ingrained practices and fairly frozen allocations of marketing funds. Each function—advertising, sales promotion, sales force--wants the same or a large budget each year independent of whether the function is gaining or losing productivity. It doesn’t matter whether advertising is losing its effectiveness. This is why marketing practice remains out-of-touch with the new marketplace.

What is a holistic approach to marketing?

Marketing has too often been treated as a department, one that essentially carries out marketing communications and promotions. In Marketing Moves, we argue that marketing, properly conceived, is a strategic function and should be the driver of company strategy. Peter Drucker noted this with his famous questions put to companies: “What business are you in? Who are your customers? What is value to the customers?” He went on to say: “The two most important functions of a company are marketing and innovation.” Our holistic approach develops this further and calls for marketing to be the architect of the company’s demand and supply chain and its network of collaborators.

What effect has the advent of the new economy and the Internet had on your thinking and on marketing?

I became fascinated with the implications of e-commerce and e-business for business strategy. At first I thought that pure click operators such as Amazon and Yahoo would have a tremendous competitive advantage, as they owned few physical assets. My mind changed when I saw how much they had to spend on marketing to build their brand and attract and keep customers.

I believe that the Internet will fundamentally change business and marketing practice. I expect that the price transparency of the Internet will put great pressure on prices. I expect the emergence of business-to-business websites will reduce the number of salespeople involved in routine sales work. I expect to see companies increasingly differentiate their services to different tiers of customers according to customer lifetime value.

Where do the main online opportunities lie for marketers?

Some companies illustrate the power of online commerce when it is done well. Dell Computer has exploited the Internet as way to help customers customize their computers and transact at a lower cost to both the customers and Dell. Amazon offers not only the largest number of available books online but value-added information in the form of editorial and customer reviews. Not everything can be sold online profitably, as many dot-coms have found out. The truth is that the importance of the Internet far exceeds its use as an e-commerce tool.

You call on managers to completely redefine their companies. But isn’t the managerial ability and enthusiasm to do this extremely limited?

The scarce resource is creativity, not managerial ability or enthusiasm. Companies can only thrive in a hypercompetitive market by continually improving and inventing. Yet so few companies put a premium on new ideas or manage any system to capture them.

What is the difference between marketplace and marketspace?

If I go to a Barnes and Noble bookstore to buy a book, I am transacting in the marketplace. If I go on www.barnesandnoble.com, I am transacting in marketspace (called cyberspace).

Haven't successfull companies always realized that the customer is king?

Although the customer is king today, this is not always the case. He is not king in the face of a monopolist. Nor is he king during periods of shortage. Much depends on whether there is a shortage of goods or customers. When customers are scarce, businesses will have to compete for them and cater to them. That’s today’s situation.

You talk of there being four customer wants -- change, participation, freedom and stability. Is this a new concept?

No. This serves only as a useful framework for analyzing markets and identifying market segments. People differ in the weights they put on change, participation, freedom and stability and these weights change over time and circumstance.

Are the four Ps of marketing still relevant or useful?

The four Ps of marketing—product, price, place, and promotion—serve as useful building blocks for constructing the marketing mix to carry out the firm’s strategy to win a chosen target market. Each P carries a subset of tools for influencing the level, timing, and composition of demand. Thus there is a product mix, price mix, place mix, and promotion mix that must be established in preparing the marketing battle plans.

How can companies capitalise on the emergence of metamarkets?

A metamarket facilitates all of the activities involved in obtaining an item for use or consumption. To buy a car, I must choose the car, finance it and get insurance. Thus Edmunds.com represents an online metamarket where I will get information about all cars, search for the best dealer for the car I want, arrange for a loan, and buy insurance. Knots.com represents an online metamarket for obtaining everything connected with preparing a wedding, including gowns, invitation cards, gifts, and the like.

Is it still useful to talk of old and new economies?

Today’s economy is a hybrid of an industrial economy (where manufacturing predominates) and a post-industrial economy (marked more by services, finance, globalization and technology). At best, we can describe today’s economy as a hybrid economy with old and new elements.

Is global marketing becoming more adaptive to the growing markets of Asia and India?

Many anticipate that this century will be called the Asian century. Japan made a strong beginning in the 1970s followed by the five smaller dragons of South Korea, Thailand, Malaysia, Singapore, and Hong Kong. They all hit a wall in the late 1990s but will come back. China now is showing the most exuberance, growing as one of the world’s leading manufacturing powers. India is less organized but represents huge market potential for investors.

Can and should the United States be marketed? And, if so, how?

The U.S. is marketed everywhere everyday, for good or bad, by McDonald’s, Coca Cola, and Hollywood. It advertises its brand of capitalism as one of free markets, free trade, and freedom of the press. It attracts admiration, it attracts envy, and it attracts censure for many of its ways and outcomes. I think that the U.S. needs a fresh marketing program that drops some of the old rhetoric and presents a new view of universal values and aspirations, not limited to the seeming cowboy mentality that its leaders project.

What is the best marketing job in the world?

The most satisfying marketing job is not to sell more Coca Cola or Crest toothpaste but to bring more education and health to people and make a real difference in the quality of their lives.

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