RETHINKING MARKETINGTOWARDS ASEAN ECONOMIC COMMUNITY

PHILIP KOTLERS.C. Johnson & Son Distinguished Professor,Kellogg School of Management, Northwestern University

JAKARTA | OCTOBER 9, 2015

MANAGING THE NEW MARKETING

MEETING THE GLOBAL CHALLENGES1

BUILDING YOUR MARKETINGORGANIZATION2

MOVING FROM TRADITIONALTO DIGITAL MARKETING

MARKETING3

MOVING TO MARKETING 3.0 ANDCORPORATE SOCIAL RESPONSIBILITY

4

1MEETING THE GLOBAL CHALLENGES

1MEETING THE GLOBAL

CHALLENGES

•••••••••••

Globalization and ChindiaRegional trade associations Internet and digital media HypercompetitionShorter product life cyclesCommoditization Retail transformation Media proliferation Environmental concerns Consumer empowermentSlow economic growth

COMPANY RATE ?HOW DOES YOUR

Finding New OpportunitiesUsing Marketing Research andInnovating Successfully

Marketing Analytics

Using Communications EffectivelyRunning Your Sales Force EffectivelyRunning Your Distribution Channels Effectively Having a Well-Thought-Out Marketing Strategy Being Well Organized for MarketingCorporate Social Responsibility and Environment

45 is maximum

1 2 3 4 5

ON FINDING NEW OPPORTUNITIES

• Are there opportunities in old industries?– Yes, Starbucks, Zara, Zappos

• Are there opportunities in new industries?– Yes, software and apps, robotics, nanotechnology, bioengineering, 3D printing,

• Are there new opportunities in other countries?– Yes, some Asian countries are growing and Africa is the next frontier

• Are there new opportunities in the lower end of the market?

– Yes, in producing lower cost products:Tata Nano car for $2,000, $100 computer,

sneakers for $1• Are there new opportunities in the higher end of the market?

– Yes, China and Russia now have so many new millionaires• Are there new opportunities in specific sectors of the economy?

– Yes, health, education, energy

INNOVATIONS ?ARE THERE

STILL

• Digital wallet• Uber, abnb and…. Zip cars• Single serve coffee maker• Kidzania• IBMs Watson• Warby Parker eye glasses at $95• “Reverse innovation”• “Free marketing”• Nike+ (platforms)

Disruptive TechnologiesDISRUPTIVE

INNOVATION WILL FACE

YOU

••••••••••

Photographic filmWired telephones Store retailing Classroom education Offset printing General hospitals Open surgeryCardiac bypass surgeryManned fightersFull service stock brokerage

••••••••••

Digital photographyMobile telephones On-line retailing Distance education Digital printing Outpatient clinics Endoscopic surgery Angioplasty Unmanned aircraftOn-line stock brokerage

Source: Clayton M. Christensen, The Innovator’s Dilemma, p. xxix. ; google.com

OLD NEW

NEEDED TOOLS !

Vulnerability analysis

Opportunity analysis

Scenario planning

BUILDING YOUR MARKETING

ORGANIZATION

2

Linden and Chris Brown, The Customer Culture Imperative, McGraw Hill, 2014

WINNING AT MARKETING

IS THERE ANY DIFFERENCE

BETWEEN

SELLING

&MARKETING ?

YES

SELLING ISMILLIONS OF YEARS

OLD

MARKETING IS 110YEARS OLD

WHO WAS THE FIRST SALES PERSON ?

MARKETING STARTED BECAUSE SALESDEPARTMENTS

NEEDED

OTHERS

TO:

Conduct consumerresearch

Prepare brochures andother promotionsFind Leads

THE SALES

FUNNEL

PURCHASEINTENTION

CUSTOMERADVOCACY

PURCHASE

LOYALTY

ING

PRESEN-

& ISSUE

NEGOTIA-IN

GING

NEEDS

MENTATION

PROSPECT- QUALIFY- DEFINING DEVELOP- PROPOSAL REVISION CONTRACT IMPLE-

SOLUTION TATION RESOLUTION TION

THE

MARKETING

&SALES

FUNNEL

BRANDCONSIDE- RATION

BRANDPREFER- ENCE

CUSTOMERAWARENESS

BRANDAWARENESS

PURCHASEINTENTION

CUSTOMERADVOCACY

PURCHASE

LOYALTY

MARKETING

SALES

HANDOFF

SIX WAYS TO IMPROVE MARKETING / SALES ALIGNMENT

1. Hold regularly scheduled meetings between marketing and sales.

2. Make it easier for marketing and sales people to communicate with each other.

3. Arrange for more joint work assignments and job rotation between marketing and sales people.

4. Appoint a liason person from marketing to live with the sales forcehelp marketers understand sales problems better.

and

5. Set shared revenue objectives and reward systems.

6. Improve sales force feedback.

MARKETING’S CHANGING

FOCUS

1950 - 1970

PRODUCT ORIENTATION

1970 - 1990

CUSTOMER ORIENTATION

1990 - 2010

BRANDING ORIENTATION

2010 - 2015

VALUE & VALUES ORIENTATIONCO-CREATION & CROWDSOURCING ORIENTATION2015 -

2020

MARKETING’S EVOLVING

CUSTOMER

VIEW

1 FOCUS ON TRANSACTIONS

FOCUS ON CUSTOMERRELATIONSHIPS

2

FOCUS ON ENGAGING

AND3 CUSTOMIZING FOR EACH

CUSTOMER

ON USING MARKETING RESEARCH

&MARKETING

ANALYTICS

• New in Marketing Research– Ethnographic

marketing– Neural scanning– Metaphor analysis

• New in Marketing Analytics–

–––

Predictive analyticsCluster analysisMarketing mix modelingBig Data analysis: By processing a

steady stream of real-time data,organizations can make time-sensitive decisions faster than

everbefore, monitor emerging trends, course-correct rapidly, and jump on new business opportunities.One on one marketing:“We can tell you what music you are likely to buy, what movie you will select to buy or rent and what Apple product will most likely appeal to you.”

–

DATA BROKER INDUSTRY LISTS

KOTLER RECEIVES A LETTER FROM

A DATA BROKER

• Hi, I hope you are doing fine. I am checking in to see if you are looking for

marketing and data partners/supplier.We are providing b2b and b2c lists with email addresses and other information worldwide.We have 40 million b2b and 250 million b2c records across the world with their email addresses and other details.• The list can be used for multi-channel marketing purposes

liketelemarketing, fax marketing, direct marketing and email marketing.We can be your partners and would be happy to work with you as your back end partners.

JOB POSITIONS IN TODAY’SMARKETING

ORGANIZATION• Chief Marketing Officer (CMO)

orMarketing Vice President Brand managers Category managersMarket segment managers Distribution channel managers Pricing managersMarketing communication managersDatabase managersDirect marketersInternet and social media managersEtc.

••••••••••

FOUR CEO VIEWS

OF MARKETING

Much depends on

the CEO’s viewof marketing.• 1P

• 4P• STP• ME

CEOCEOCEOCEO

The size and type of department depends on the type of industry, size of company, nature of buying, and other factors.

WHAT ARE THE SIX TASKS OF THE CMO?

Represent the voice

the company and champion thebuild loyal customers.

of the customer (VOC) to others indevelopment of a strong customer-orientation to

1.

Monitor the evolving business landscape and gather customer insights tohelp develop new products and services for achieving growth objectives.

2.

Be the steward of the corporate brand and brand-building practice.

3.

Upgrade marketing technology and skills in the company.

4.

Bring insight into the corporate portfolio and synergies.

5.

Measure and account for marketing financial performance and containmedia and other service costs.

6.

IF YOU ARE APPOINTED CMO, YOU PREFERTHAT

YOUR

OFFICE BE LOCATED

NEXT

TO:

1.

CEO office

2.

CFO office? ?3

.CTO office

4.

CIO office

5.

VPS office

THE FOUR TASKS OF HOLISTIC MARKETING

CAN

MARKETING HELP GROW

COMPANY’S FUTURE?

THE

– Marketing is in the best position to detect business opportunities, calibrate

their size and estimate their likely profitability.– Marketing manages important intangible assets (brands,

customer relationship, networks, market position, market information)

Is Marketing only a Cost Center?

NO.Marketing Can Help the Company Grow its

Future!

EXAMPLES OF GREAT MARKETING VISION

Leader Brand Mission and VisionIngvar Kamprad IKEA Make stylish furniture

affordableRichard Branson Virgin Bring excitement in boring industries

Walt Disney Walt Disney Create magical world for familiesHerb Kelleher Southwest Airlines Make flying possible for

many peopleAnita Roddick The Body Shop Embed social activism in business

Bill Gates Microsoft Realize ubiquitous computingSteve Jobs Apple Transform how

people enjoy technologyJeff Bezos Amazon.com Provide the biggest selection of knowledge delivered conveniently

FIVESHIFTS

Driving businessImpact

• Creating MarketingStrategies1st Shift

Galvanizingyour network

• Controlling themessage2nd Shift

Pervasiveinnovation

• Incrementalimprovement3rd Shift

Inspiring marketingexcellence

• Managing marketinginvestment4th Shift

Relentlesscustomer

focus

5th Shift • Operational Focus

MOST COMPANIES ARE SHORT-LIVED

• Average company may last from 10-20 years.

– Hypercompetition– Changing buyer wants and budgets– Lack of an innovation culture– Short term focus and failure to invest in a longer term performance

• Yet some companies have endured for

hundreds of years.WHAT ARE THEIR SECRETS?

TRAITS OF LONG-LIVING COMPANIES

• In Living Companies, Arie de Geus found that 30 companies have been around at least 100 years, including DuPont,W.R. Grace, P&G, Mitsui, Sumitomo, and Siemens.

• Four traits of Living Companies:

– Conservatism in financing– Sensitivity to the world around them– Awareness of their identity– Tolerance of new ideas• Four priorities:– Valuing people, not assets– Loosening steering and control– Organizing for learning– Shaping the human community

HYPOTHETICAL STARBUCKS BRAND POSITIONING BULLSEYE

BRANDING IS KEY:THE

CASE OF STARBUCKS

Contemporary

ThoughtfulCaring

Stock options/health benefits

or baristas24 hour

training of baristas

FairlyPriced

Responsible, locally involved possible

BrandMantra

Relaxing, rewarding moments

Rich, RewardingCoffee Experience

Fresh high quality coffee

TripleFiltrated

water

Totallyintegrated

system

Varied, exotic coffee drinks

Rich sensory consumption experience

Convenient, friendly service Siren

logoGreen &Earth Colors

Consumer Need State

Desire for better coffee and a better

consumption experience

Competitive Product Set

Local cafes Fast food & convenience

shops

Consumer Takeaway Starbucks

gives me the richest

sensory experience

drinking coffee

Consumer Target

Discerning Coffee Drinker

ConsumerInsight

Coffee and the drinking

experience is often

unsatisfying

B2B

COMPANIES

TURN

TO

BRANDING

33

INGREDIENT COMPANIESTUR

NTO

BRANDING

Clothing

Carpets

Diet Soft Drinks

Cooking Utensils

Bicycle Gears

Sound Systems

Computer Chips

Crystal Component34

"The more profoundly andsystematically B2Bcompanies familiarize themselves with and accommodate theircustomers’ functional, emotional and strategic needs, the more powerful they are on the market.

Top brands are professionally andpassionately tuned in to their customers. Sales, Project Management, Marketing, R&D, Production and Purchasing work in concert to drive customer success, always with an eye to the future.”

MARKETING

FORGES

AHEAD

• Commercial marketing• Place marketing• Person marketing• Social marketing• Political marketing

3 MOVING FROM TRADITIONAL TO

DIGITAL MARKETING

FROM TRADITIONAL

TO DIGITAL MARKETING

•••••••••••••

Face-to-face sales callsTrade fairsLeaflets, posters, brochuresBillboardsNewspapers and magazines Direct mail and catalogs TelephoneRadio TV FilmSponsorshipsStreet level promotion and festivalsProduct placement

•••••••

WebsitesEmailBanners and pop-upsPodcasts Webcasts VideocastsExpressive social media (Blogs, Facebook,Twitter,, Linkedin,YouTube)Collaborative social media (Wikipedia, Rotten Tomatoes, Craigslist)Mobile marketing

•

•

TRADITIONAL MEDIA DIGITAL MEDIA

WILL YOUR INDUSTRY BE

THE NEXT INDUSTRY TO CRUMBLE?

ON USING COMMUNICATIONS EFFECTIVELY -1

• Digitalization has led to the death of Kodak and music stores and

the near death of bookstores and newspapers.• Digital products are much cheaper to produce and distribute.• Companies need to master several new digital tools:– Computers, databases, programmable devices,

software, Internet, smart phones, apps, social media, Big Data, the Cloud, the

Internet of Things, real time decision making• Yet companies are slow to master the new digital tools– According to a 2013 Adobe Survey, 76% say

marketing has changed more in the last two years than in the last 50 years.

– Only 9% strongly agree “I know our digital marketing isworking”– 60% say digital marketing approaches are in a

constant cycle of trial and error

EFFECTIVELY -2

ON USING COMMUNICATIONS

• The new media must be blended with the old media in a mutually reinforcing way.• Companies like P&G say that 25-35% of their budget now goes intonew media.• Companies have to get better atsearch engine optimization (SEO)• Be aware that Big data requires a dramatic change in skills, leadership, organizational structures, technologies and architectures.

POWER IS SHIFTING TO

THE EMPOWERED BUYERS• A majority (58%) of all consumers now research products online

beforepurchasing. In searching for a car, you go first to your friends for their ideas.Then you go to expert sites to see car ratings. Then you go to Google to find the best dealers.•65% of Asian Pacific consumers use online services to locate nearby products and brands.

•70% of Americans say they look at online product reviews before making a purchase.

•79% of consumers say they use a smartphone to help with shopping. Watch for mobile marketing.

• B-to-B buyers don’t even want to see salespeople anymore.

MARKETERS ARE UNDERPREPARED

• Only 26% of CMOs are tracking blogs, 42% are tracking third party reviews and 48% are tracking consumer reviews. Yet tracking these sources could provide insight into what customers want and buy.

• 80% of CMOs are still focusing primarily on traditional sources of information such as market research and competitive benchmarking. 68% rely on sales campaign analysis.• They don’t understand the younger generation (Millennials) in the U.S. and the emerging middle class in developing countries. Marketers in India have been focusing on affluent Indian consumers rather than on the Indian emerging middle class.Source:The 2011 IBM Global CMO Study of 1,734 CMOs in 19 industries

and 64 countries,November 2011.

CMOs NEED TO BE MORE

FINANCIALLY ACCOUNTABLE• 63 percent of CMOs believe ROMI will be the most

important measure ofmarketing performance by 2015, but only 44 percent feel prepared todeliver this measure.• CMOs recognize that they will need more digital,

technological andfinancial proficiency in the coming years.

• CMOs recognize that they have a strong influence over promotional

activities like advertising, external communications and social mediainitiatives but CMOs play a smaller role in shaping the other 3Ps.

– Less than half have much sway over key parts of the pricing process.

– Less than half have much impact on new product development or channel selection.Source:The 2011 IBM Global CMO Study of 1,734 CMOs in 19 industries

and 64 countries,November 2011.

INCREASE YOUR DIGITAL ACTIVITIES

• Establish a website that people register to use and thereby accumulate alarge customer database.Buy customer information from firms that track the interest patterns ofspecific consumers based on the sites they navigate.Encourage consumers to send in emails with questions, concerns, and ideas, therefore creating learning relationships with consumers.Increase “content marketing” to customers and prospects who givepermission.Offer coupons-on-demand (Cool Savings, Netbonus) or samples of new products on demand (Samples.com).Monitor social talk for insights and trends.

•

•

•

•

•

THE

MARKETING

MANAGEMENT

PROCESS

Plan

Manage

Execute

Measure

• MarketingAnalytics

• DemandModeling

• Marketing Resource Management

• CampaignManagementLead Management Events Management Loyalty Management Media Management

•• Web

Analytics

• MarketingInvestment

•

•

•

MOVING TO MARKETING 3.0 AND

CORPORATE SOCIAL RESPONSIBILITY

4

APPEALING

TO

THE

CUSTOMER

INDIVIDUAL

DIFFERENCE

COM

PAN

YMind

Heart Spirit

MIS

SIO

N(W

hy) Deliv

erSATISFACT

ION

Realize

ASPIRATION

Practise

COMPASSION

VISI

ON

(Wha

t)Profit Ability

Return Ability

Sustain Ability

VALU

ES(H

ow)

Be BETTER DIFFERENTIATE

Make a

VALUES-BASED MATRIX OF S.C. JOHNSON

MARKETING 3.0

MOVING

TOWARDS

•Where is your company now?•Where do you want it to be?•Why?•What would steps would you take?•What is Marketing 4.0?

Marketing 1.0 Marketing 2.0 Marketing 3.0MIND HEART SPIRIT

PRODUCT-CENTERED CUSTOMER-ORIENTED VALUES-DRIVEN

ECONOMIC- VALUE PEOPLE-VALUE ENVIRONMENT- VALUEPROFITS SOCIAL PROGRESS HUMAN HAPPINESS

Amazon, Apple, Best Buy, BMW, CarMax,Caterpillar, Commerce Bank, Container Store, Costco, eBay, Google, Harley-Davidson, Honda, IDEO, IKEA, JetBlue Johnson & Johnson, Jordan's Furniture, L L Bean, New Balance, Patagonia, Progressive Insurance, REI, Southwest, Starbucks, Timberland,Toyota,Trader Joe's, UPS,Wegmans, Whole Foods.These “firms of endearment” were highlyprofitable.They outperformed the market by a 9-to-1 ratio over a ten-year period. More fulfilled employees, happy and loyal customers, innovative and profitable suppliers, environmentally healthy communities.

COMPANIES AMERICANS LOVE

CHARACTERISTICS OF FIRMS OF ENDEARMENT

1.2.3.4.

They align the interests of all stakeholder groupsTheir executive salaries are relatively modestThey operate an open door policy to reach top managementTheir employee compensation and benefits are high for the category; theiremployee training is longer; and their employee turnover is lowerThey hire people who are passionate about customersThey view suppliers as true partners who collaborate in improving productivity and quality and lowering costsThey believe that their corporate culture is their greatest asset andprimary source of competitive advantage.

5.6.7.

8. Their marketing costs are much lower than their peers while customersatisfaction and retention is much higher.

CORPORATE SOCIAL RESPONSIBILITY

COMPANIES ARE INCREASINGLY BEING RATED

ON CORPORATE SOCIAL RESPONSIBILITY

• The Council on Economic Priorities evaluates company performanceon a range of social dimensions and publishes Shopping for a

Better Worldinfluence consumers’ purchasing decisions.

to

• Fortune magazine annually rates “Most Admired Companies” where

social responsibility is included as a factor.”• Fortune magazine annually rates “Best Companies to Work For.”• 84% of Americans in 2002 said that they “would be likely to switch

brands to one associated with a good cause, if price and quality weresimilar.”

RATIONALE FOR INVESTING IN CSR

• Companies need to differentiate themselves. Companies with civic virtue will be preferred.

• Companies need a decision framework for facing daily requests for sponsorships, improved health coverage, injury prevention, environmental protection and community contributions.• Corporate heads and boards need to understand the social pressures andopportunities facing their companies.

• Companies need to build a bank of public goodwill to offset potential criticisms.

• Employees, investors, and partners will be more motivated and loyal.

STAGES

IN MOVING TOWARD CSR

Focus on all stages of product development from R&D effortsthrough marketing and sales.

Focus on making better products with less impact on theenvironment.

Focus on internal safety and meeting environmentalregulations.

STAGE 1

STAGE 2

STAGE 3

Wal-Mart announced in 2005 that it will be a “good steward to the environment”and will spend $500 million a year to increase fuel efficiency in Wal-Mart’s truck fleet by25% over three years; reduce greenhouse gases by 20% in seven years; reduce energy use at stores by 30%; and cut solid waste from U.S. stores and Sam’s Clubs by 25% in three years.

Wal-Mart is experimenting with green roofs, corn-based plastics and green energy.It is also working with suppliers to figure out ways to cut down on packaging andenergy costs and has opened two “green” supercenters

Wal-Mart’s moves are mainly done for economic purposes—to save energy, savecosts, and increase revenue from increasing demand for green products.

MOVES TOWARD CSR

Timberland is a leader in the design, engineering and marketing of premium-qualityfootwear, apparel and accessories for outdoor consumers.

In shoes,Timberland uses recycled materials, non-chemical substances as much as possible,made in energy-saving factories. The label gives consumers information “about the product they are purchasing, including where it was manufactured, how it was produced, and its effect on the environment”.Timberland gives back to communities. Under the Path of Service program, its employees have contributed over 200,000 total hours of service that benefited over 200 community organizations in 13 countries, 26 states and 73 cities.To commemorate Earth Day,Timberland plants a tree on behalf of each consumer who spends $150.Timberland has also done such things as offering $3,000 incentives to employees who purchase hybrid cars.Other companies in this category are Patagonia,Whole Foods

Market, FetzerVineyards, and Herman Miller.

MOVES TOWARD CSR

COMPANIES

THAT ADOPTED

A HIGHER

CAUSE

AvonGeneral MillsGeneral MotorsHome DepotKraftLevi StraussMotorolaPepsi ColaShellPetsmartAleveBritish AirwaysStarbucksBest Buy

Breast cancerBetter nutritionTraffic safetyHabitat for HumanityReducing obesityPreventing AIDSReducing solid wasteStaying activeCoastal cleanupAnimal adoptionArthritisChildren in needTropical rainforestsRecycle used electronics

WHAT IS THE RELATIONSHIP BETWEEN BUSINESS AND SOCIETY?

Source: thanzyl@markandcomm.com. Creating shared value.

“Within five years, if you’re in the samebusine

ssyou

areout

in now, you’re

going

to

beofbusiness

.”

THANK YOU