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  • Episode: Disruption, Transformative Marketing and Demarketing

In This Episode

Philip Kotler, the S. C. Johnson Distinguished Professor of International Marketing at the J. L. Kellogg School of Management at Northwestern University, joins AMA’s Bennie F. Johnson to talk about disruption in the marketing profession, why marketing should be transformative, and the value of demarketing.

Featuring

  • Philip Kotler
  • Bennie F. Johnson

Transcript

Bennie F. Johnson 

Hello, and thank you for joining us for this very special edition of AMA Marketing / And. I’m your host, Bennie F. Johnson. In today’s episode, and in all of our episodes, we explore life through the lens of marketing, delving into conversations of individuals that flourish at the intersection of marketing and the unexpected. Through our series, we often introduce you to visionaries who you might not have heard of but are exactly the ones you need to know. Through our thought -provoking conversations, we unravel the challenges and triumphs and pivotal moments that have been shaped by marketing. That’s our introduction normally, but today is completely different. Our special guest is none other than Philip Kotler. And unlike many of our other guests who are new to our audience, Philip Kotler has really been one to shape the larger profession of marketing.

He needs no real introduction, but we’ll give you a few of the highlights. He’s known around the world as the true father of modern marketing. For more than 50 years, he taught at the Kellogg School of Management at Northwestern universities. His book, Marketing Management, I know for me and many other marketing leaders, was really our first introduction to the formal practice of marketing and continues to be honored as one of the world’s leading thinkers on marketing. Continuing to grow and expand, he’s authored more than 90 books and published more than 170 articles in leading journals, several of which were to receive the best article awards. In our AMA world, in leading the profession, he was the first recipient of our Distinguished Marketing Educator Award. He became the first recipient of the William Wilkie American Marketing Association Foundation’s Marketing for a Better World Award which looks at significant contributions to marketing in both theory and practice. And in 2013, he became the first recipient of our Sheth Foundation Medal for exceptional contributions to marketing, scholarship and practice. Most recently, we published an article for AMA’s journal, which really is a jumping off point for our conversation today that talked about a lifetime in marketing, lessons learned and the way forward.I’d like to welcome to our podcast today none other than Philip Kotler. Thank you, Good Sir.

Philip Kotler 

Bennie, I’m so happy you invited me. The AMA has been always important to me and I was active in it most of the time. And you as the leader, it’s just a pleasure to learn maybe more about what’s going on in marketing, which you’re in great position to hear many, many things going on.

Bennie 

Right. Well, I am welcome to have this kind of two -way conversation and dialogue and exploration. We talk, to get started, you know, one of the things I mentioned to you earlier is that our conversation today, although we’ll reference the past, it’s really going to be about the future. And, you know, one of the things that I always loved and admired is your constant thoughts about innovation, the profession, and the future. We’ll talk a little bit about how you started with the marketing management textbook. I’d love to hear, you know, what was the impetus to create this first textbook that’s been so transformative and influential?

Philip 

Well, you know. I decided to accept an invitation at Northwestern University to join their very eminent faculty at the time in marketing. I was actually given a choice of teaching economics or marketing, economics being my training. I decided marketing is the area that would excite me the most because there was so much more that had to be done in the field. And I said to prepare my lectures for these students. I wanted to make marketing stand on four platforms one is it should make the best use of consumer theory, secondly to make the best use of organizational theory and, third it should be quantitative in some of its aspects and fourth it should do a good job being consistent with economics as a theory and apparently the book was a success for a couple of reasons. Namely, it made the users of the book, the adopters, to feel much stronger about the scientific standing of marketing.

Bennie 

Right.

Philip 

Everyone always says marketing is two things, an art and a science, but they felt that the book would get impressed with students who want to have as strong a theory and material as possible to be in the field of marketing and that this book was delivering it better than anyone else. For example, I made it a practice to cite a lot of current stories that were symbolic of the new marketing. And secondly, I always wanted to quote some of the most important journal articles that came out during the period. And I’m still doing that today because right now, we are finishing the 17th edition. The 16th edition was published, but now we wanted the new 17th edition to be thorough with its use of the digital revolution and the use of AI. That will be the next

Bennie

Right. Wow.

Philip 

Next look of the 17th edition.

Bennie

You know, what I love about your contributions to the field and the profession is they’re without end. You’re continuing to look as we grow as a profession. We’re always encouraging and we’re seeing that contemporary marketers that they’re new tools, they’re new approaches that are built on a foundation, but that foundation of building forward. So, you know, Mark Twain is often quoted as saying that history doesn’t repeat itself, but it sometimes rhymes. I think about you now, creating new knowledge. I was amazed this December when I looked up and you had not one but two more books out.

Philip 

Yeah, it’s sort of a hobby of mine to do a lot of thinking about things that are happening. And often it takes the form of I do my thinking by writing, basically. But you talked about the interest in new things. And you may know about my next book that will be published with V Kumar, who I hope you know, because he’s one of the top marketers in the world. And the book is called Transformative Marketing. And it’s really eight chapters, full chapters on eight things that are happening. Starting with machine learning, which is what we use to take the data on individuals and squeeze out insight and then we know the messages that would be meaningful to them. But it goes on to talk about IOT, the big revolution of the internet of things. It has a chapter on the metaverse.

Bennie 

Mmm. Right? Of things, right?

Philip

Which we could talk about for the full hour, but I won’t start. It has a full chapter on drones and air coming into the use of marketers and also robots will come in also. Now those drones and robots are a little far off, but we wanted to anticipate some of the things that will happen. But we do a lot with eight different developments. So this means that someone more working in a company as a marketer and wants to be updated on new things happening. The book takes eight very important new things and gives them a good sense when they talk to others. They may not be the ones who could do machine learning that easily, but it will tell them what it’s all about and how to do it if they want to do it.

Bennie

Right. You know, over the years in your study and practice in marketing, as you’ve seen moments of change, what advice do you have for today’s marketer with dealing with these new moments of change?

Philip 

Well, you know, the biggest change that had occurred earlier in my 50 years of teaching marketing was to make the point that broadening what marketing is because we know there were two groups. One group says marketing is only something done about firms buying and selling things to other firms and to individuals. It’s all commercial and it shouldn’t be poisoned by being extended. Beyond that. Meanwhile, I was working with museums to help them market. I was working with churches to get more members of the church. And it turns out that every organization is involved in trying to improve its position and its market share in a sense. And therefore, even individuals are becoming aware of self branding, in fact, the kind of they want to stand out by being different and better in some way. So marketing has been pervasive. I don’t know where it is not even taking place because I think it’s taking place everywhere. So that’s my first awareness. And we won the battle that it is appropriate for these other organ nonprofits and so on to use it. So and political parties use it. And that’s we are well

Bennie

Right. Right.

Philip 

Aware and that’s they’re using advertising they’re using Salesforce everything and so on. The second awareness I have is so much of marketing has depended on the four P’s and we thought that’s not enough we need the four P’s product price place and promotion were always in the market marketing planning process you had to address those four P’s.

Bennie

Right.

Philip 

But you were superficial on some other things that didn’t have the letter P. And so we had it set, we expanded the four to seven, except they don’t all end with a P, particularly. Let’s take product. We always know that product comes with service, but we didn’t take service as a separate thing to plan more carefully. So it’s product and service. And then the third thing is brand. There’s a whole group that works hard to enhance the brand and manage the brand. So it’s product, service and brand. But also when we mentioned price, we don’t want to just say there’s a fixed price. We know that the prices change all the time with bonuses and two for the price of one. So we use the word incentives. In other words, these incentives and price, the fixed price is changed by the need to make sure you’re adapted to the recession, if there’s a recession, or you want to raise the price if there’s good times. And then finally, we say we must separate and identify the whole communication system we’re going to use to get to be known and reach our customers and to have a whole distribution system to work for us to deliver the promises we made through our communication system. Now the point there, is that the distribution system has become very complex. It’s not just stores, it’s online, it’s vending machines, you can buy products in gas stations, food products. So the number of channels have proliferated and they have to be omni -marketed and managed so they are consistent in what the brand, our brand means in all of the channels that we use.

Bennie 

Did you ever imagine the complexities that marketers would be in charge of today? Let’s say 30 years ago, right?

Philip

Well. Yeah, you know marketing was so simple 30 years ago because I had to an idea of a product. I would make it. I would hire some salespeople. I would hire an ad agency to give me some advertising and that’s it I would be then hoping and praying that I reach enough people to buy it and I did mass marketing mass marketing Is not going to work for you anymore. It’s your works for coca -cola. There’s no question they don’t even have to know who you are. They know you want to coke. However…Most of the new marketing is target marketing. And the target, of course, will be segments initially that seem to contain people who would have a strong interest in your product. But we are down to the individual person. We are now collecting information on what does John read? What does he see? What stores does he go to? We have enough information on individual that we can address them specifically and the reason they might have to buy our product.

Bennie

Right. You look at all of the tools in which we have in the space in there, it really equips marketers and marketing leaders in a different way in the C -suite and organizations. One of your newest books deals with a topic that’s near to me, entrepreneurial marketing. I think being an entrepreneur is how I found my way in marketing. Those two things make sense to me, using marketing to start new ideas and businesses. Talk a bit about your thoughts about entrepreneurship and marketing as a guide to creativity, leadership, and ultimately sustainability.

Philip

Yes, it turns out that the people in marketing are very professional and to be appreciated for the work, the hard work they do to get their products sold to the right people. They work almost endlessly to get more sold of what they’re selling. Now that leaves no time to think out of the box.

Bennie

Mm -hmm. Right. Right.

Philip 

By that I mean maybe someone’s going to say we should acquire a certain company to add it to our business because it will be an entree would provide to another market. Or how about this adjacent market that we’re not paying any attention to. Now, how do you find time when your goals were set and your sales were not meeting them? You’re going to do everything to sell more and have no time to start.

Bennie 

Right.

Philip 

A little movement in the company to maybe expand and transform their thinking. For example, it has to do with AI. Maybe some of the younger people know AI and the company says, you know, we’ve been successful without it. So let’s not touch it now. But you want to have some entrepreneurs who, and now you may say, where do you find them?

Look, do you know that in many schools now for an MBA, there’s even a whole course on creativity. And now it is true, you normally cannot teach creativity, but you can say a lot about it by studying innovators. How did the head of Apple do so well in new things, starting a Mac and all that. So the thing is, we believe that you should welcome to your sales force or your professional marketers an oddball or two who is respected for ideas that will come about. And that person, in fact, may be talking to some of your other professional people who are endorsing it. And, you know, they no one wins by themselves to get a change in a company. You win by being persuasive about something.

Bennie 

Right. Right.

Philip 

That is really needed. So I got interested in the book, Entrepreneurial Marketing. By the way, for those who are not financially minded enough in marketing, we have two or three good chapters that really say marketing and finance must be like brother and sister or something. They must work together at the top. And you want to know all the terms that finance people use to judge policy and to prepare strategy and most marketers didn’t learn that because they’re in marketing because they saw a MadMen or something in the TV series. They wanted the adventure of being in marketing rather than finance but they must know finance and I tell every major I get, every student, please I’m glad you’re going to concentrate in marketing but don’t forget your finance courses too.

Bennie

Right. Well, it’s, you know, to your to your first point, well, really to the second point, absolutely. Like we need to understand how to work with, understand the language and translate all those other skills that are going to give us credibility at leading the organization. But I love your point of creativity and where do you find them? Often in organization, it’s just about us unleashing them. We’ve got the innovative, creative people who are there and our organization locks you into the checklist. To your point.

Philip 

Yeah. Yes, you’re right. They are here. Right. Okay. I had added a section on how if you’re one of those who is creative and so on, how to really, you know, here are the secrets of getting to be effective in it with a new idea that you have for the company. Yes.

Bennie

You’re doing all the checklists. You’ve got team ins – Well, humbly count me in if you want to write a new chapter. I’d love to join along with you on that one. But yeah, because you’re absolutely right. There’s innovation in so many organizations. In talking to friends of mine who’ve run innovation spaces and other marketing leaders and spaces, the organization’s culture may dampen and kill innovation, especially if the organization has been successful in previous generations.

Philip 

Yeah, legacy is keeps pointing out how everything worked in the past don’t disturb the legacy and change things. But here’s the thing about new products and so on. Marketing is very disruptive. It should be. Great marketing is going to be disruptive. Now let’s take two examples. The beer we drink, if we drink a lot of it, it’s not good for us. It makes us into alcoholics. So along comes marketers and brands that sell a beerless beer, right? It’s a mock beer. And there was only one or two brands that did that. Now we have 10 or more brands that offer you a new form of beer and so on. And now the same with our hamburgers. How much should we eat at McDonald’s every day? Probably not. But besides it killing all these cows, but…Main thing is we could have plant -based food hamburgers and that’s another disruption of the marketeers. Namely, as far as food habits go, there’s a lot of work being done to make our foods and drinks healthier.

And that is, it takes a CEO at the head of the company to say either don’t do that because we are selling just beer as beer, you know, or go ahead, get a good tasting something. Let’s see if it works.

Bennie 

Right. Now, you talked a little bit. You broached the part of marketing and sustainability. I’d love to dig into one of the concepts that was in your Journal of Marketing article, the concept of kind of demarketing. And you said, we may reach a point in our human history where demarketing will almost be  as active as marketing.

Philip

Yes. Well, let me start by saying that we wanted always growth in our company and we wanted endless growth. That was admirable. The only thing that we discovered is that what grows is not only our business, but our carbon and our emissions of greenhouse gas and so on. And that the more we do, the more we increase the harm to the planet. And taking in the form of fire and hurricanes and everything else. And the evidence is very clear. So sustainability is what we must do. So every good company is balancing being profitable and being sustainable. And by the way, both, because if you’re just gonna be profitable, I think you’re not gonna last long as a company, because you didn’t put in the systems that are gonna be demanded. All right.

Bennie 

Right.

Philip 

Right now, what do we mean by demarketing? We start with the idea that there are some things that are valuable to us, and we’re abusing and losing them. Water is a good example. There are many parts of the world short of water. Now, what’s going to happen to agriculture if it’s short of water? How do you grow it? How do cities operate without water? So I’ve seen in California, when they we’re really needing more water. They developed the whole market. It’s called a demarketing plan. How can you get more people to conserve on that scarce resource? Now, you know, we are doing it with our air. We want to make sure our air is not polluted. So we demarket, not the use of the air, but the creation of bad air. And…

Bennie 

Mm -hmm. Right.

Philip 

The ocean to work for the fish and we have to demarket throwing garbage from ships into the ocean. So in many ways demarketing and it’s leading to a concept called the degrowth movement. Now don’t take it too seriously but it’s…To think about. It’s sort of a way of saying can we slow down the growth. It’s more, it could have been called just slower growth with sensibility, but degrowth, there’s even a book or two by an author called…prosperity without growth. My God, what is he saying? You mean I could be prosperous by doing, you know, the sustainable thing and so on and all right, but the growth is all about recycling your assets and resources into what is called.

Finding them, using them, conserving them, putting them to new uses, recycling, all that. And therefore, we gotta look at some things we’re doing in our packaging. How many boxes do you need? Why plastics? Why plastics when the consumer buys groceries? And so on and so forth. So demarketing and degrowth will have ideas seeding some changes in marketing, but not at the limit where we don’t want any growth, you know.

Bennie 

Right. Right, right. I think it’s interesting to speak to it. It starts to explore this really dynamic tension between what we’ve classically thought about with marketing and push, push, push to understanding what moves you’re making and when, how to apply the right energy towards the push. What are the things you’re growing at? How does it work together? Which is kind of a surprising moment to think about that tension. Now you’ve authored over 90 books.

Philip 

Yeah.

Bennie

And I know when you go through the process of the book, you learn a bit about yourself in 90 books. What, what have you been surprised to learn about yourself?

Philip 

Well, I realized that marketing as a system is based on economics. By the way, there was bad economics that originally was based on namely the rational man. There’s no creature. I would say that 70 % of our behavior and buying something is emotional. And that’s true even of business to business companies that don’t want to take too much risk, you know, and they risk and so on. So I said to myself,

Bennie

Mm -hmm. Right. So true.

Philip 

There’s not just economics and there’s not just social science. I want to broaden marketing to make the best use of social science. And then along comes the idea of how this is marketing essential to capitalism or is capitalism essential to marketing. So I wrote a book because I was feeling there are several things about capitalism that can be legitimately questioned, namely that it’s…

It’s driving and growing extreme distribution of income where you have now in the United States 700 billionaires. China’s up to four or five billionaires now. India has a lot of billionaires and that means that we’re gonna make more mansions and more fancy boats and airplanes for individuals. But what about all the people who don’t even have enough enough to pay a $400 bill that suddenly comes up. And certainly, how about all the people who retire and their savings are inadequate to keep them alive? So there’s a lot about capitalism that needs to be improved. Buy simple things like a higher tax on the rich, not on the middle class. You want a good, strong middle class. But those who are trying to stop, the rich who are trying to stop this.

They say that all of you are going to be taxed more. No, listen to Biden. Biden was going to put out a tax on the rich, which is 37% is the lowest level of the top bracket that we ever had before. We used to, you know, during the war, we had a 90% tax at the highest level. So I won’t get into the politics of that, but let me say that that led me to the question of our democracy, because as I saw more marketers fighting for one party or the other using all of the tools we have. I said, how is democracy working well? Are these people who we elect working for us or working for the donors?

And I am convinced that the ones who get elected are the ones that donors wanted to get elected. And once elected, the politician will do what is in the interest of the donor, not of his constituency. And therefore, I started to say, well, with capitalism and democracy both having problems, what? but ties them together. And I wrote the book called Advancing the Common Good. And my whole understanding is we have been shortchanging the common good. Common good is two things. It’s the happiness of people and the well -being of people. That’s what it’s all about. That’s what marketing has to be about.

Is it? And it’s it says it’s about that. Look, someone has a need. I’m trying to make him satisfy his need, make him happy, and I hope this is for his well being. Hey, what if you sell cigarettes?

You may make them happy, but you’re certainly reducing his well -being. So there’s a whole field we don’t talk about. We have to create it. It’s called societal marketing, which raises the question of every company, is it good for the society as a whole? Okay, so that’s where I am. I was very happy to get to the point of broadening things enough to ask.

To what extent is capitalism democracy and all pursuing and raising the common good, which is two things, well being and happiness.

Bennie 

I think it’s a beautifully elegant point and powerful to our conversation of the future of marketing. When you talk about kind of stepping into that leadership and sustainability, asking those questions and probing that, I’m often having conversations with marketing leaders and saying, just because we should doesn’t mean we can’t. Just because we can doesn’t mean we should. And challenging us to use these marketing powers of persuasion and conversation to move society in organizations and interest to a positive space.

It’s so incredible in that space in there. So I ask you early on when we’re talking.

Philip

You know, you’re interested in the future as you should be and you’re doing a great job and I want to say I do have something more immediate to say about the future. Often I’m asked what companies will win with their marketing. I said it’s very interesting how things have changed. For example, two of the tools of marketing that have been so intrinsic in marketing are failing us a little bit. One of them is

Bennie 

Haha, Right.

Philip

One is called advertising.

Bennie 

Okay. Right?

Philip 

Because we still cannot tell the CEO who wants to know how marketing work. By the way, not the CEO, but the influence on the CEO, which is the chief marketing officer. He’s always saying, I don’t see what you did to market share. You spent a lot of money, but it didn’t increase market share. So is mass, no, we should say is the 30 second commercial worth it?

Bennie 

Right.

Philip 

Or are we better off with more of the person -to -person marketing, the targeted marketing? And secondly, the sales force. I’m hearing that a lot of because of the internet, a lot of customers say, I don’t need a salesman because everything is on the internet. I don’t even want him to come to be persuading me. In fact, if you look at medical practice, you see that all the doctors are visited by sales very…

Bennie 

Mm -hmm. Mm -hmm.

Philip

Good -looking women often with a new drug to tell the doctor about but she never get to see the doctor because all he wants is the drug dropped off and the brochure dropped off. So we must if our two biggest tools are advertising and in Salesforce we see they’re going to be taking a different level in the future or reconsider what they should be doing but will really be important is speaking.

Bennie 

Right.

Philip 

Smart pricing will be one. Second, having…dominance in the channels of distribution. A dominant to, you know, if you own, you know, Campbell’s Soup owned much of the soup space and they accept new ones came along too. But being aimed to get dominance in the channels that come. And also I think please get into AI and AI.

Bennie 

Right.

Philip 

On e -commerce become as competent as you can as a company in e -commerce because right now I think that 15 % of the goods bought are bought online. I think it will get to 50 % eventually. I’m judging that from my wife who never goes to stores. Everything ordered and half of it is returned.

Bennie 

Uh huh. Everyday that Hahaha.

Philip 

But the point is, be prepared to be very good online in e -commerce.

Bennie 

It’s so interesting as we talk about these transitions that challenge some of the core paradigms that we’re part of marketing, right? We’re part of the apparatus that we use. How do we reconsider those? I could spend all day talking to you about marketing today and the challenges that we’ve seen and we’ve grown in. I can’t believe we’re almost at the end of our time. I do want to ask you one question.

What excites you the most about marketing for tomorrow? But what gives you encouragement when you think about where we are today and what we can be tomorrow?

Philip 

Well, I’d like to see more companies disrupt some of the existing practices where what they are producing is either unnecessary or harmful to our health or our well -being. And I hope, and I mentioned the beer and I’m…meat, artificial meat and all that. But more broadly, I think that if we want healthy marketing, we must make sure that more people have the incomes to permit a better distribution of the benefits of our resources. And so I am feeling very much we need a tax on high incomes beyond 37%.

I know even the rich are taxed, feel very much taxed, but that doesn’t hurt them. That doesn’t change their lifestyle. Talk about people who don’t have much. And you know, our middle class is shortened, has gone down in size, and our working class is still unhappy about their work relations and pay, and of course the poor.

Bennie 

Right.

Philip 

Not only poor but getting more poor. So the system isn’t working and I think we all have to make. By the way, I always talk about the Scandinavian countries because they are capitalists too. They have very strong international companies but they have a whole different mindset. They tax higher and you know what? If you ask me this question, which pop countries have the healthiest people, the smartest people, by that I mean the most educated, and the happiest people. It’s Denmark, Norway, Sweden, and Finland, and so on. In fact, Finland now, again, is the happiest country in the world. So that’s what it’s all about that will make me continue to watch marketing and add to it if possible. Thank you.

Bennie 

Mm -hmm. Right. Right? Well, well, this has been an incredible privilege for for me as a host and for our audience to get a chance to spend some time with you. I just have to thank you for all of us on the profession for continuing to challenge us intellectually, to tend to be a steward and a champion of what it means to use marketing for good in society. It’s wonderful to hear our conversations about all of the practice that goes into marketing but yet how marketing can help push us forward. Phil, thank you so much. This has been a delight. And I…

Philip 

Thank you. Yeah. Any student of the life from me, you’ve been a wonderful host and your questions are wonderful.

Bennie

Oh, oh, thank you, good sir. And I like to encourage everyone, if you haven’t had a chance to delve into the research, the articles, the opinions, the support, the ideas of marketing for a better world by our guest today, Phil Kotler, we encourage you to do so. We also encourage you to join in with the AMA as we have resources to help bring in this marketing to a reality. Thank you all for joining me for this episode of AMA’s Marketing / And. I’m your host Bennie Johnson and we’ll talk to you next time. Thank you.