Guru of Marketing

Philip Kotler (born 27 May 1931 in Chicago) is the S.C. Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management at Northwestern University. He was selected as the #4 management guru of all time by the Financial Times (behind Jack Welch, Bill Gates, and Peter Drucker), and has been hailed by the Management Centre Europe as "the world's foremost expert on the strategic practice of marketing." Also considered one of the pioneers of social marketing.

Dr. Kotler has authored what is widely recognized as the best selling textbook on marketing: Marketing Management, now in its 12th edition. He has also authored, or co-authored a number of other books, including Kotler on Marketing; Lateral Marketing; Strategic Marketing for Non-Profits; Marketing for Healthcare Organizations; Marketing Professional Services; Marketing From A to Z; The 10 Deadly Marketing Sins; Marketing Moves; Marketing places; the Marketing of Nations; and Social Marketing.

In addition, Dr. Kotler has published more than one hundred articles in leading journals, including the Harvard Business Review, Sloan Management Review, Business Horizons, California Management Review, and the Journal of Marketing. He holds many major awards, including the Distinguished Marketing Educator of the Year Award of the American Marketing Association and Marketer of the Year by the Sales & Marketing Executives International (SMEI).

Through his consulting firm, the Kotler Marketing Group (KMG), Dr. Kotler has consulted to many major U.S. and foreign companies - including IBM, Michelin, Bank of America, Merck, General Electric, Honeywell, and Motorola - in the areas of marketing strategy and planning, marketing organization, and international marketing.

He presents continuing seminars on leading marketing concepts and developments to companies and organizations in the U.S., Europe and Asia, and participates in KMG client projects.

Kotler's Five top tips for Marketing Success

1. Come in under the radar

"Building a brand is a roll-out process, not a drop everywhere in the world at one time. Do you know what the best selling imported beer is in the United States? It's Corona. Who would expect a beer from Mexico to be popular? The fact is it's a terrific beer. But they didn't just come to the U.S. and put it everywhere. They went to the cities with a Mexican population -- Los Angeles, Chicago, New York -- and then they put it in restaurants and stores there. The key to brand-building is to have something good that you roll-out in a very intelligent way. Maybe even invisibly for a while because you want to be under the radar screen of competitors."

2. Know your customer

"There are still too many CEOs who identify marketing with selling and advertising. But marketing has evolved to be not only product centered but customer centered. We are saying you've got to understand and choose the customers you want to serve. Don't just go after everyone. Define the target market carefully through segmentation and then really position yourself as different and as superior to that target market. Don't go into that target market if you're not superior.

"We are trying to make the case that it's much more important for a company to be customer-centric than product-centric. The same customer you have for product X, may be available for product Y and Z and so on. And you won't know that if you have separate product managers, each only concerned with selling his or her product."

3. Own your branding

"We are not in a state of competition anymore; we're in a state of hyper-competition. So people are desperately looking for handles -- functional features, emotional appeals -- that will draw people to their product. We should think of owning a word or a phrase that helps to build customer retention and loyalty. Look at how we buy the Mercedes because it's the best engineered car. We buy a BMW because it's the best driving performance. We buy the Volvo because it's the safest automobile. A lot of these companies lose that edge too, but they don't lose the impression."

4. Stay ahead of the competition

"The worst thing is that if something works, your competitors are going to clone it and before you know it anything that you had as a differentiator is imitated by the others. So you're in the business of constant innovation. Constantly asking yourself, 'Three years from now, what will our differentiator be?'

"I had the CEO of a large company approach me and ask me to sign a copy of my book, which I always do, but this was a first edition from 1967. I looked at the book and I said I won't sign it. 'Why not?' he asked. I said, 'That book is from before there was the Internet. It has very little on branding, so I think it's useless.' At which point he said to me, 'Are you trying to sell me a new copy?' And I said, 'Yes, but it's not for my benefit-- I don't need the money." Markets change, so marketing has to change."

5. Make it an experience

"Once in a while we find someone having a whole new approach to a mature market. Starbucks is a very good example where coffee is coffee but they decided to sell it differently, put a higher price, make it good-tasting and make it an experience rather than just some coffee. In fact, I've heard that if Starbucks closed its shops, a lot of people would go crazy. They are in such a habit of going to the Starbucks before work, taking the coffee, and they'd become desperate otherwise.

"There's a big movement to say, 'we're not just adding services to our business and our product, we're actually trying to design an experience.' You'll see that language being used. We're in the experience design business."

Pepsi's Counter ad to Coke

Guerilla Marketing

Guerrilla marketing is an unconventional way of performing promotional activities on a very low budget. Such promotions are sometimes designed so that the target audience is left unaware they have been marketed to and may therefore be a form of undercover marketing (also called stealth marketing). The ethics of guerrilla marketing have often been called into question due to an alleged deceptive, misleading, or subtle nature of the campaigns. The Picture portraits an example for Guerilla Marketing for an amusement part.

Treating the Customer as King

Ratan Tata, chairman of the Tata Group, delivers some home truths about what the Tata Group needs to do to keep its customers in the centre of the business frame. In this frank and forthright interview with Christabelle Noronha, he explains and expands on his vision of what Tata companies must do to create a unified brand that is a class apart from the competition. And it all starts with how well the group and its companies are able to keep their customers satisfied.

Has the Tata way of addressing customer needs changed? If so, what is the strategy driving this change?
For many years, India has been in a protected environment. Tata Group companies, in many cases, were in a seller’s market, and we were very successful in that seller’s market. I think that, broadly, we were perceived as being fair and just to our customers, with our products being backed by a concern for quality. We have been credited with being ahead of the times.

But all of that, in terms of a business framework, no longer holds true. In the 15 years or so since economic reforms started in India, we have had internal liberalisation too. This has resulted in competition between Indian companies, as also from joint ventures established in the country by foreign companies. And now, with the World Trade Organisation and the market opening up from outside, we will face competition from global players. This calls for a new approach to recognising what the marketplace wants, and how to establish not just customer relations but customer loyalty.

Several of our companies operated as individual brands, or variants of a Tata brand. One thing that we have tried to do in the last few years is to unify this and turn it into a common, stronger brand that can be promoted centrally. But the brand by itself does not automatically usher in customer loyalty or strengthen customer relations. That is a human interface, and it embodies courtesy and fairness; it also embodies timely actions in terms of meeting customer needs. It strives at all times for customer loyalty, rather than mere customer satisfaction.

In today’s world, what customers are looking for, I believe, are products that suit their purpose best — in terms of price, features, quality and appearance. They expect to be treated as "kings" and to receive sales and service support for products like vehicles and air-conditioners. They expect to receive timely and competent attention, along with a definite solution to their problems from our service people, dealers or channel partners.

Our concern ought to be the interface with our customers. We have to ensure that it is excellent. This would involve training of our channel partners and improving the interface between them and us so that they can give the customer the service he or she wants.

To illustrate, if Tata Engineering is not backing its dealers in, for instance, the changing of parts during warranty, then obviously the dealer is going to haggle with the customer. The customer pays the cost of that in terms of inconvenience. This in turn reflects on the image of the product. Eventually, Tata Engineering pays the cost of customer dissatisfaction.

Some of our policies are framed almost on the basis that everybody abuses, and that a customer has to prove his bona fides. That is what we need to change. Where we have direct dealings with our customers, it is important that, at the middle-management levels, they are shown courtesy, dealt with fairly, and made to feel that they are receiving the attention they deserve. The interface with the customer should be a seamless one. Judging from the number of letters I get complaining about the manner in which people are treated by some of our companies, I would say that we as a group have a lot to change in terms of how we deal with our customers.

I find it difficult to understand why all our managers and officers cannot be courteous at all times to all people. It seems to me that it is part of the Indian psyche to say, "I will treat important people with great courtesy, and I will treat everyone else, not with scorn, but as second-class citizens. I will show my superiority as an individual." I think this is really terrible.

The multinationals coming to India are showing that their customer interface is dramatically different from what we find in major Indian companies. I would have wished that Tata companies would enjoy customer trust and loyalty.

I fear today that in many of our companies, we are not treating our customers well, and we are not showing our shareholders appropriate courtesy. This may not be happening at senior management levels, but it is certainly happening at interface levels.

We should be treating the customer in the same way that we would want to be treated as customers. I think we have a lot to learn on this front — and a lot to change.

Is there anything that the group or its companies are doing to address this issue proactively?
I have advocated on several occasions that we should possibly look at formal training programmes. In some cases, at the sales and dealer levels, we have implemented or initiated such programmes. What we need is, perhaps, formal training within our companies to make their interface with customers truly seamless.

Does the customer value a brand just for the brand’s sake, or do the Tatas have a brand advantage?
I think we have a tremendous brand advantage.

The Tata Group has this long-term goal of being the biggest household name in the country. How can customer loyalty be built when others are also vying for this position? What should the group do to ensure that the difference remains in the eyes of the customers for years to come?
Being a household name is very much a function of the products you sell. Having said that, a highly respected brand is what I would like to see the Tatas becoming, with consistently high quality, and a constant attempt to refresh and improve our products so that they are at the leading edge, rather than followers of other products. We have to ensure that our products are genuinely appealing to customers and that we service our customers well.

What are some of the challenges companies face with respect to customer acquisition and retention?
I believe a fundamental change of outlook is necessary. In terms of their products or business lines, companies need to create products and strategies that are based on what they believe the market wants. Often we deliver products or work on strategies that are based on what we want.

People sometimes hide behind market surveys. If you introduce a new vehicle, for example, and the management cannot adequately determine what the market wants, the company is in trouble. Theoretically, the top managers of a company should take up the role of that ideal customer: they should be driving their competitors’ vehicles, they should be driving the best-of-breed vehicles, and they should be making cost comparisons. They must have an idea of what they, as customers, expect from a Tata vehicle. And they should try to ensure that the product is within the price parameters a customer would pay for.

While a top manager should be the ideal customer, he should also be the greatest critic of his company’s products. If the CEO compromises, or is only looking at the margins, then even if he is successful, the company’s success will be shortlived. That is because the market will determine whose product works and whose product is successful. That, in turn, will bring everything else into play.

How important is market feedback vis-à-vis internal quality or service parameters?
Market feedback is very important, but it has to be stripped of its colour. You have to be able to strip away the vested interest or the bias that sometimes comes in. You have to view it objectively, not defensively.

How do you sensitise employees to the value of the brand?
Firstly, I don’t think you can sensitise employees, in the sense that your product has to be successful, and you have to have pride in that product. You may say that a product cannot be successful unless you create a sense of pride in your employees. I think that there is an issue of involvement: employees at all levels should feel motivated and committed to making a product successful. The shop floor needs to be motivated too. They need to feel that they are part of what the companies do.

What would you like to see done?
I think managers should talk about the new products that they are in the process of launching and give all employees a sense of involvement.

Very often in companies, when you see a new product or a new project, a sense of belonging is created. Employees wear badges, labels on their sleeves, special caps. Tata Steel did it quite effectively with Project Gopalpur. It created a cadre of people who were all excited about the project. Tata Steel tends to do that from project to project, which is good.

In these times of economic change, what advice would you give CEOs to enthuse their employees about creating value for shareholders and customers?
We need to make it our responsibility to expose employees to the company holistically. They need to recognise the need to earn the return for the person who has invested in their company. This kind of awareness can perhaps be built best by moving people into positions where they have to face different constituents.

I often tell some of my colleagues: "You don’t have to face the shareholders when you make a loss. I do. Maybe you should stand up one day and face the shareholders for what you’ve deprived them of." Selectively involving people in shareholder meets, investor conferences and dealer meets will help in exposing them to different situations that they may face. We have been doing that at Tata Engineering. We have been sending plant people to customer-service operations to enable them to see the different kinds of problems people face in the field. Otherwise, it is their production and somebody else’s problem. Employees have to believe that they are responsible for the company.

How do you create that culture, that sense of belonging? Is it something that can be done? Does it have to be inbuilt?
I think it is something that has to be created by the CEO of the company. The CEO has to be concerned with all kinds of things, not just the bottom line, production figures or the company’s image. A holistic concern should be created.

What attributes should a CEO have in order to be passionate as well as able enough to enthuse his employees, to create that feeling of commitment?
I don’t think you can ever teach a CEO to do that. The CEO has to be compassionate, fair, self-critical and humble, and yet have the tremendous drive it takes to make his company the best there is. An ideal CEO is not found everywhere. One way to do this is to benchmark him against his targets and against the best performers in his industry, and hope that this does not demoralise him, but, rather, that it makes him strive to do better.

One very important initiative is the Tata Business Excellence Model and Tata Quality Management Services exercise we have been undertaking, where we have been talking about the quality of products and the quality of the manner in which operations are run — and having a scorecard for that. I think this is a process that will yield results over time.

In terms of customer acquisition, with so many competing brands and products available today, what is, or should be, the Tata differentiator?
Very often it is said about several companies that they take a lot of pains to make a sale. However, once they get the order, customers cannot even get anyone to answer their calls. I would like the customer to say that the next product he buys will also be a Tata product because of everything that he experienced. That is really what customer retention is about.

You cannot afford to have a customer say, "I made a mistake. I’ll never buy another product from this company." You cannot even afford to have him say he is merely happy with your product. It needs to go further than that. He has to say, "The next product I buy will be a Tata product."

In my own case, any consumer electronic product that I buy will be a Sony, because there are so many things about the company’s products that I admire or respect. If somebody introduces a product that Sony does not have, I will probably wait for Sony to bring out that product before I buy it. And Sony is not even contacting me. That’s customer retention.

New Product Development Decision Process

Kotler's Answers

Dr. Kotler is in India on an invitation from Great Lakes Institute of Management, Chennai. Even in his hectic schedule, he spent an hour on the Rediff Chat on Thursday, July 20, 2006, responding to readers' queries on marketing, planning, growth of the retail market as a brand......

Visitor 1: Hi Phillip! This is a rather different question. Do you think the principles of marketing apply in the terror networks?

Especially, the way Al Qaeda seem to be operating - without the hierarchical elements of the traditional
organizations, does it pose a challenge to marketing thought? And do you think it is possible for intellectuals to make a change there - for good?

Dr. Philip Kotler: You are raising an interesting question. There are a lot of markets that are underground. Even if you look at hard drug distribution, you know they are making use of the principles of distribution. In the case of terrorist networks, they are operating with marketing principles. Instead of using reason and propaganda, they are using fear. I don't want to think of marketing being corrupted to their ends. If you really wanted to win power, they would think much differently about how to market their cause. I think their methods are self-defeating.

Visitor 2: Hello Sir, how can micro-finance help to achieve the GDP growth of country?

Dr. Philip Kotler: Marketing has neglected the poor (85% of the people) because they don't have much money. It is time to remedy this. I am researching strategies for alleviating poverty and will write a book describing such strategies. Micro-finance is one of those strategies. It works on the principle that there are members of the poor who are entrepreneurial but who lack capital. Now there are lenders who will help them buy, for example, a cell phone where the borrower can sell single phone calls, recover the cost, and repay the loan, at a profit. Micro-finance is one of the most promising approaches. However, it won't lift the GDP very much initially, but over time will help.

Visitor 3: Sir, I m a big fan of yours. What are the opportunities for Ph.D. in Marketing and Economics under you?

Dr. Philip Kotler: I am pleased to hear that you want to get a Ph.D. in Marketing and Economics. This means that you want to do research to add to marketing knowledge and also to teach. I am not available, however, because of other commitments. There are many fine programs in my country where you can get a Ph.D. in Marketing.

Visitor 4: I am a Product Manager with Microsoft, and one of the biggest challenges that the company is facing is changing the perceptions of the company over the quality of the product. How do you change a brand perception using a quality product?

Dr. Philip Kotler: My experience with Microsoft is that some years ago they would develop new software without much input or participation by marketing. Some of the software was overly complex and failed to win a following. In the last three years, my colleagues at the Kellogg School - Dipak Jain and Mohan Sawhney - have been teaching Microsoft how to upgrade its marketing skill and include marketers in developing new products. To my knowledge, the success rate is now higher because of the marketing participation in new product development.

Visitor 5: Hello Sir, how can IT sector revolutionize Indian rural villages in terms of economy, marketing and social upliftment?

Dr. Philip Kotler: India's largest sector, the rural sector, will benefit greatly when we are able to make and distribute $100 computers to villages. The farmers will get more information on crop prices and what to plant. Families will get more information on health and educational opportunities. IT will affect a revolution in the rural area.

Visitor 6: To what extent the Net economy would influence the business environment in next 5 to 10 years? I see lot of business being done over net, especially in USA, just wondering how long it may take to have similar kind of trends in developing economies like India and China. If it does, would the same business models that exist in developed markets be applicable to these upcoming economies?

Dr. Philip Kotler: I don't think that you will have to wait long to see the Net economy pouring into India, especially in the city and business sectors. Its use, I believe, will increase at an increasing rate and leave behind those businesses that are not alert enough to realize its power to carry on business more efficiently.

Visitor 7: Sir, what do you think should be the approach that an MNC should take in a diverse country (especially based on language and culture) like India when it is trying to market its product over the Internet?

Dr. Philip Kotler: One answer is to concentrate to serving the online interests of one group rather than try to satisfy all cultures. Another answer is to offer different entry points into the Web site for different communities where the language - and even offer-mix - is varied.

Visitor 8: What do you feel about the marketing consultation business, and its future?

Dr. Philip Kotler: Some of the largest multinationals will make use of firms like McKinsey and Accenture for advice and assistance. Smaller businesses will use consultants recommended by their friends and acquaintances. The real problem is that of finding a good consultant who is worth the money. I have published a book called Marketing Professional Services in which I advise consultants how they can create and maintain visibility and a solid reputation.

Visitor 9: Hello. What do you think is the secret behind the success of big brand names like Coca Cola?

Dr. Philip Kotler: Major brand names have been created in the past by a heavy use of mass advertising accompanying an excellent product. But the efficiency of mass advertising is on a decline and marketers are searching for new ways to deliver brand-building messages efficiently. The closer they can come to using word-of-mouth techniques and buzz, the more the credibility of these messages. Try to read articles and books on buzz, guerrilla marketing, etc. Read The Tipping Point by Malcolm Gladwell.

Visitor 10: You address marketing on a pure basis. But when one-steps into the world market, one understands that almost 50-60% of buying is done by Govts. Most parts of the world where Govt is involved, there is corruption. In such cases, what is the role of marketing? Is there a special marketing management for corrupt markets?

Dr. Philip Kotler: No, marketing textbook has dealt with this difficult question of how to respond in the face of corruption. It is hard to stand by and see less efficient competitors win the bid because they paid a corruption "tax" to get the business.

U.S. companies cannot play in this field because of the Anti-Corruption laws that would jail U.S. business people who engage in this practice. One answer is to avoid doing business with government and focus on private industry. Unfortunately, corrupt practices are found there as well. Until a mass movement of business people to clean out corruption occurs, a business would be best to stay away from government and industries that require this tax.

Visitor 11: Do you think that in Retailing there is not so much necessarily of branding of all items sold, but only the branding of retail store?

Dr. Philip Kotler: Stores themselves will be seen as a brand whether or not they do conscious brand building. So why not sit down as a retailer and decide on what you want to be known for? A fast service store? A store of the lowest prices (Wal-Mart)? A store full of surprises in its merchandise? Once you decide on what types of customers that you want to serve, and how you will serve them, you can undertake the work of transmitting the image that you want.

Visitor 12: Does the brand have any value in today's world where we see the life cycle of a brand and innovation is of such a short duration, which leads me to ask a question - how much must we concentrate on brand building verses INNOVATION, which I guess was one of your theory in wealth of nation?

Dr. Philip Kotler: Product life cycles are truly getting shorter because of an increased number of competitors from here and abroad, and their readiness to copy anything that seems to be taking off. This was the problem faced by Steve Jobs with his iPod where he knew that all the electronic firms would rapidly come in with their iPod versions. But he is a marketing genius and instead of defending in his innovation with expensive advertising, he defended it with more innovation. He upgraded the iPod to carry photos as well while his competitors were only carrying music. Then he moved on to video. He obviously has mapped out a marketing trajectory for his product development, which keeps the competitors always lagging. This is a lesson for all of us. The same marketing magic is being worked by Howard Schultz of Starbucks who continues to add new innovations to the coffee service business.

Visitor 13: In a cut-throat dog-eat-dog industry like telecom/ISP where number of subscribers have to be ramped up at a rapid pace, otherwise competition will grab it. So with low marketing budgets, which comes first - tactical marketing or build the brand first? Its a chicken and egg story.

Dr. Philip Kotler: Telecom is an industry where it is hard to hold on to subscribers when their contract is up, because there is always another service provider who will offer a lower price. Some telecoms lose as much as 30% of their customers this way. Building the brand is required partly to get new subscribers to have confidence in the telecom. But price is the major driver. Telecoms must seek to be low cost operators so that they can use price to attract new subscribers. For their current subscribers, they may make incentive offers to renew. Thus, a heavy user whose subscription is about to end should be given a gift of some kind for renewing (even a price reduction).

Visitor 14: Are Indian corporate good enough to compete at the International level or do they have a long way to go?

Dr. Philip Kotler: I am impressed with a number of Indian corporations and their management. Look at what Mittal is accomplishing to rationalize the world steel industry. Look at how Infosys, Wipro and others have set up huge and impressive campuses for training and attracting new business clients who tangibly see highly professional companies to serve their interests. In the last 6 months, Indian companies acquired 85 foreign companies, while foreign companies only acquired 35 Indian companies. India is on a roll.

Visitor 15: Phil, how easy or difficult is it for marketers to apply the marketing frameworks in developing markets vis-a-vis developed markets? Is it at all possible to have well-defined frameworks for developing markets?

Dr. Philip Kotler: The marketing framework is very elastic. It has to be because the best marketing is often local. Companies that over-standardize their marketing practice around the world can suffer. McDonald's is not No. 1 in the Philippines. Jolly Bee took the lead because they adapted the hamburger to local tastes. To make sure that my marketing recommendations make sense in India, I chose two highly regarded marketing academics to co-write an Indian edition of the 12th edition of Marketing Management that will be published in the next few months. They are Professor Koshy of IIM Ahmedabad and Professor Jha of IIM Bangalore. They are Indianizing the book because we believe in maximizing the value of the lessons.

Visitor 16: Mr. Kotler, do you think that companies indulge in some kind of false assurances and false publicities while marketing their products?

Dr. Philip Kotler: Marketers tend to exaggerate the benefits and raise the expectations regarding their product. Most consumers are aware that buying a certain shampoo brand is not going to have men fall in love with you. So consumers generally are not fooled by exaggerated claims. But what is less tolerable is outright lying about the product or service. In the long run, such companies destroy themselves, increasingly because the Internet allows consumers to broadcast (via blogs) to other consumers about both good and bad companies.