Philip Kotler is Professor Emeritus of Marketing at the Kellogg School of Management, where he held the S.C. Johnson & Son Professorship of International Marketing. Kellogg was consistently voted one of the top five business schools in Business Week‘s survey of U.S. business schools. It is also rated as the “Best Business School for the Teaching of Marketing.” Professor Kotler has significantly contributed to Kellogg’s success through his many years of research and teaching there.
He received his Master’s Degree at the University of Chicago and his PhD Degree at MIT, both in economics. He did post-doctoral work in mathematics at Harvard University and in behavioral science at the University of Chicago.
Professor Kotler is the author of 90 books including: Marketing Management: Analysis, Planning, Implementation and Control, the most widely used marketing book in graduate business schools worldwide; Principles of Marketing; Marketing Models; Strategic Marketing for Nonprofit Organizations; The New Competition; High Visibility; Social Marketing; Marketing Places; Marketing for Congregations; Marketing for Hospitality and Tourism; Strategic Marketing for Health Care Organizations;The Marketing of Nations; Kotler on Marketing; Building Global Biobrands; Attracting Investors; Ten Deadly Marketing Sins; Marketing Moves; Market Your Way to Growth; Winning Global Markets; Advancing the Common Good; and Confrontiing Capitalism. He has published over one hundred and seventy articles in leading journals, several of which have received best-article awards.
* * *
You earned two graduate degrees in economics. How specifically has that extended period of formal education proven to be of greatest benefit to your career in marketing?
I chose to study economics in order to understand economic justice. Why do people differ so greatly in their incomes and wealth? Why does a society allow so much poverty and hunger? Economics would seem to have the answer.
People get their incomes from work and exchange their money for needed goods and services. What determines their wages and the prices of goods and services? This led me into marketing. I saw marketing as a branch of economics.
However, as I studied the social sciences, I realized that the “rational buyer” concept of economics was a fiction. I
clearly saw that emotions drove many purchasing decisions. I pushed for the idea that we needed a new economics, a “behavioral economics.” Economists had to stop being physicists and start thinking like behavioral scientists.
Marketing needed to be understood and applied as a social science.
I’ve always viewed marketing as a process to create or increase demand for what is offered To what extent is that definition true? To what extent is it insufficient, inaccurate or flat-out wrong?
The traditional view of marketing is to create or increase demand. However, I developed a broader view of marketing. Marketing can be used to increase or decrease the level, composition or timing of demand. For example, we can use marketing to reduce the demand for water in areas where water is scarce, such as in California. We do this by raising the price of water or motivating people to change from grass lawns to cactus lawns, or to shower less often. As another example, we might want to reduce cigarette consumption by deglamorizing smoking or by raising the price of cigarettes. I invented the term “demarketing” when we want to discourage the use of some scarce or harmful product.
The purpose of marketing is to create, communicate and deliver real value to a target market at a profit. I summarize this as CCDVTP. Value and free exchange are the foundational concepts of marketing.
The actual process of marketing is MR->STP->TM->VP->MP->I->C: Marketing Research -> Segmentation, targeting and positioning -> Target market -> Value Proposition -> Marketing plan -> Implementation -> Control.
However marketing is defined, I am convinced that all stakeholders in the given enterprise must be directly or at least indirectly involved every day. What do you think?
Many stakeholders in a company do their day-to-day work without thinking about customers. The production people make cars, accountants keep cost and revenue records, financiers manage the cash flow, and human relations persons manage the employees. The job of marketing management is to remind all of them of the importance of customers. Employees could positively or negatively affect customers by how they answer the phone or meet the customer. P&G’s former CEO, A. G. Lafley, kept telling his people that marketing and customers are the essence of the P&G company.
What do you now know about the business world that you wish you knew when you began your career as a business professor?
When I began my career, I assumed that marketing was a key function of top companies. I found instead that sales was considered the key function and marketing’s job is to help sales people in three ways: 1. Provide help to sales people to find prospects, 2. Prepare brochures and ads, and 3. Provide research on customer characteristics and trends. While I consulted for IBM, I learned that what IBM called their marketers were essentially sales people. CEO John Akers asked me to bring more marketing thinking into IBM. Today, most of our top companies now treat the
Chief Marketing Officer (CMO) as a key member of the executive suite.
For those primarily responsible for an organization’s marketing, what are the greatest challenges they will encounter in (let’s say) the next 3-5 years? Any advice for them?
Marketers have to adjust to new demands that businesses will face.
Businesses have to add sustainability to their objectives which includes practicing environmental protection; eliminating waste; reusing and recycling resources, reducing plastics in products and packaging, and reducing carbon output. Some marketers are telling me that their sales force and advertising are exhibiting diminishing effectiveness.
Just introducing new models of the same product also shows diminishing effectiveness. Marketers will have to identify and create more innovative offerings that address emerging new customer needs.
Marketers will have to advance their digital tools known as ”martech” tools: AI, algorithms, chatbots, machine learning, virtual and augmented reality, 3D printing, and facial and voice recognition, Marketers will be judged by how much they improved marketing automation and marketing forecasting.
Marketers will have to get better at advising their companies on how to handle major occurrences. Inflation calls for major adjustments, as do recessions. New diseases such as Covid call for major adjustments in the marketing mix and consumer and employee behavior. Conflicts such as the Russian attack on Ukraine lead to new shortages and delays in getting required resources.
Marketers are feeling a loss of some control over the 4Ps. Strategy wants more control over product development. Finance wants more control over price and advertising expenditures. Logistics wants more control of omnichannel planning. That will leave marketing with primarily communication and promotion. Ironically, the whole of modern
marketing was to integrate the 4Ps, not leave eacy to be set by separate players.
Some observers have suggested that marketing be treated as a staff function focused on building and managing brands. This would replace the idea that marketers should document how much marketing expenditures helped to increase revenue and profits.
Marketers will continue to try to document the financial return on the marketing investment.
Which of your books has proven to be far more successful than you expected when it was first published? How do you explain its success?
My big surprise was Marketing Management (MM) published in 1967. I felt that most marketing textbooks were primarily descriptive and overly prescriptive but lacked real research findings and methodologies. I decided to base MM on economic science, the social sciences (psychology and sociology), organizational science, and mathematical marketing models. As a result, MM was more analytical and strategic than most textbooks. I believed that MM would appeal to a small niche of teachers who wanted a more sophisticated marketing textbook. As it turned out, MM became a bestseller not only in the U.S. but around the world. My publisher Prentice Hall and I started to publish adapted versions of MM in Canada, Germany, France, Italy, Russia and China. We also published Marketing Management: An Asian Perspective and Marketing Management: Arab World Edition.
I believe that the success of MM was that it raised the image and importance of marketing and made professors feel prouder of their profession. Marketing students, and many non-marketing students, kept their copy of Marketing Management, rather than sell it. The book also attracted many students to move into marketing when they had planned to go into accounting or finance.
I am eager to share your thoughts with regard to issues you address in several of your books and articles. For example, how do you define the concept of “marketing mix”? In your opinion, what is its unique significance?
Many years ago, Harvard marketing professor Neil Borden proposed a list of 12 variables that he called the marketing mix. Other professors tried to collapse the list into a smaller number of tools for influencing demand. NU’s professor Richard Clewett called the mix: product, price, promotion and channels. Professor Jerry McCarthy changed channels to “place” and we had the 4Ps. The 4Ps are essential to discuss in every marketing plan. Some professors questioned where is packaging, where is sales people, where is branding, The answer is that each company is free to choose the key variables that they think will influence the brand’s sales.
You have been widely praised for promoting the universal importance of marketing, transforming it from a peripheral activity, bolted on to the more “important” work of production. What was your motivation? In your opinion, what remains the single most disruptive misconception about what marketing is and isn’t, what it does and doesn’t do?
Initially, companies had a vice-president of marketing who was not in the executive suite. Marketing didn’t even participate actively in product development.
Marketing was only called in when the newly developed product was ready to be sold. I realized that this was short sighted, that marketers can add high value to the new product planning process. Yes, engineers are the “masters of the possible”. But they don’t know whether the innovation will be perceived by customers as delivering real value. To me, marketers are the “masters of the valuable.” Marketers could suggest good features for the new product, the right price to charge, the packaging, etc. When we finally started appointing Chief Marketing Officers (CMOs), CMOs made sure that marketing not only commented on new product development but also shared responsibility for suggesting new products. Peter Drucker earlier stated that the whole success of a company depended on two main functions: innovation and marketing.
Peter Drucker said that the other company functions were mainly costs of doing business.
You have also shifted emphasis away from price and distribution to a greater focus on meeting customers’ needs and on the benefits received from a product or service. In a phrase adding value. Please explain.
Marketers’ primary role is to be value creators, communicators, and deliverers of products, services and experiences that meet the target market’s needs and wants.
Value is greatly affected by product features and benefits, prices, accessible places, and impactful promotion (the 4Ps).
You have also broadened the concept of marketing from more selling to a general process of communication and exchange, and have shown how marketing can be extended and applied to charities, museums, performing arts organizations, political parties and many other non-commercial situations.
My take is that you think every organization — whatever its size and nature may be — should be heavily involved in marketing, every day, all the time, throughout the given enterprise. Is that a fair
Every organization needs to do marketing to survive, grow and prosper. A museum needs to attract a sufficient number of visitors, a sufficient number of donors, a sufficient number of competent staff members, and a sufficient number of artists and collectors ready to donate fine works of art to the museum. A religious congregation has to attract a sufficient number of members and attendees, donors, and volunteers to carry on the congregation’s activities. We can market places, persons, ideas and causes. We named this view the “broadening concept of marketing.”
I did a lot of early work with nonprofit organizations trying to get them to see that they were running a business and needed to learn marketing, strategy, management, finance, and human resources if they were going to achieve their goals.
According to Jim O’Toole, the greatest resistance to change is usually cultural in nature, the result of what he so aptly characterizes as “the ideology of comfort and the tyranny of custom.” Do you agree?
Most people like a set routine for its comfort. Change is effortable. Marketers are change agents. Their aim is to change some behavior. Start exercising, eat healthier foods, say no to drugs, stop smoking.
The result is that there are two types of marketing, sometimes working at cross purposes. The aim of “commercial marketing” is to sell something, even if it might be cigarettes or gambling. The “aim of social marketing” is to reduce a harmful practice, such as smoking or gambling. Social marketers use the same 4Ps, often in a reverse way.
Nancy Lee and I will shortly publish Success in Social Marketing: 100 Case Studies from Around the Globe.
To what extent (if any) does “societal marketing” differ from other marketing initiatives?
Societal marketing raises the question of what is marketing’s impact on society.
Marketing undoubtedly shapes lifestyles and behavior. We can ask in what ways does marketing improve our society and in what ways does it harm society. Does marketing contribute to the common good?
How do you define “economic justice”? How best to achieve it and then sustain it?
In my mind, the common good has increased when the happiness and well-being of people improve. GDP doesn’t measure this. GDP only measures whether the country has produced more goods and services. It doesn’t measure whether all the goods and services are all good, or whether people lost health in working so hard, and doesn’t measure the services of homemakers. We need to also measure whether happiness or well-being improved. I am impressed with the Nordic countries because they rank highest in producing happy, healthy, and educated people. All it takes is to pay higher taxes and use the money to make college free, health care free, and children
and grandparents stronger.
Which of your books do you think would be of greatest interest and value to someone now preparing for a career in business or has only recently embarked upon one? Please explain.
The 16th edition of Marketing Management. For a lighter reading, the latest edition of Principles of Marketing. For a still lighter reading, Kotler on Marketing, or Marketing 5.0.
These are among my favorite quotations. Please share your thoughts about them. First, Alvin Toffler: “The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.”
The 21st century is remarkable in its technological advances (computers, internet, mobile phones, 3D) and scientific advances (gene theory and DNA, brain theory, quantum theory). Every field of knowledge is subject to new theories and findings. My field of marketing is full of many changes. A CEO who was trained in my first edition of Marketing Management (1967) would be foolish not to get a copy of my 16th edition of Marketing Management (2022).
This rate of change in knowledge means that what the students learn today may well be inadequate for their jobs tomorrow. The only defense is to commit to “lifelong learning.”
At bottom, one needs to be curious and want to learn new things and unlearn old things.
Ultimately the educational objective is to teach people to be their own learners, to have
the skills to know how to search for knowledge and wisdom.
Peter Drucker: “The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.“
Although Peter Drucker is described as the father of management, I also picture him as the grandfather of modern marketing. His observations of the role of marketing remain insightful and profound. Peter saw that consumers select products and services that meet their perceived needs. Marketers must sharpen their tools and concepts to deeply understand buyers’ beliefs, wants, values and behavior. Marketers need to “walk” in the “customers’ shoes” if they hope to present something desirable and satisfying to target customers.
Peter followed this remark with another observation: “The aim of marketing is to make selling unnecessary.” By understanding the customer so well and designing exactly what he/she wants, the product will sell itself. It would not need a salesman, only an order taker.
Here’s another of his most widely quoted observations. “The purpose of business is to create and keep a customer.”
Most companies say that their purpose is to make good profits. But profits require customers who freely decide to choose that company as its best supplier.
Companies need to do more than just find a customer. Drucker added “keep” a customer so that long-run profits flow to the company and long-run satisfaction flows to the customer. I would add “grow” a customer by finding and supplying other benefits that the customer might also value and want. Once the company builds customer trust,
customers will buy more from a valued supplier. At bottom, the customer relationship is strongest when both the customer and the company feel like winners in that relationship.
I would add that the company hopes that customers are so satisfied that they become “fans” and “advocates”. Once a company has created a lot of advocates, these advocates become the company’s word-of-mouth marketing agents. Positive word-of-mouth marketing is much more powerful than commercial ads. To the extent that the
company has developed many advocates, its marketing budget can be reduced.
Again, from Peter Drucker: “The two most important functions are innovation and marketing. All the
other functions are costs.”
By this statement Peter may have irritated people in a company’s production, accounting and finance departments. But it enabled him to clarify the main successful formula for a company. Winning companies will learn how to innovate the right products and have the marketing ability to get them sold.
A final assertion by Drucker. “There is surely nothing quite so useless as doing with great efficiency
what should not be done at all.”
There can be a tradeoff between efficiency and effectiveness. Suppose the CVS pharmacy decides to locate only one store in Chicago. It’s likely to be so busy that the store boasts of its efficiency in serving so many customers with so few sales people.
However, (1) most customers won’t come again because of the poor service and (2) CVS could be more effective as measured by total profits if they had opened several neighborhood stores.
Here’s my favorite passage in Lao-tse’s Tao Te Ching:
“Learn from the people
Plan with the people
Begin with what they have
Build on what they know
Of the best leaders
When the task is accomplished
The people will remark
We have done it ourselves.”
This passage offers several great lessons in leadership. The leader who runs a “command and control” system is less likely to be successful. The employees might get their jobs done but are likely to be resentful and feel unappreciated.
A successful leader would join them in the work sandbox, invite and compliment them on their ideas and finally feel they have jointly advanced the company’s interests.
Michael Porter: “The essence of strategy is choosing what not to do.”
Michael Porter has been a major contributor to business strategy thinking. He developed a number of helpful frameworks to aid strategy thinking. He wanted companies to actively eliminate courses of action that won’t produce results. However, this statement does not provide the strategist with the best course to pursue.
Maya Angelou: “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”
Maya’s statement urges companies to move from transactional thinking to relationship thinking. Smart companies want to move from just selling something to someone to enriching their life.
From Charles Kettering: “If you’ve always done it that way, you’re probably wrong.”
Kettering was the head of research at GM and holder of 186 patents. He kept seeing that every car can be improved. I saw this in my consulting work with Samsung. As soon as Samsung launched a new smartphone, they put a team together to make it better or obsolete.
Thomas Edison: “Vision without execution is hallucination.”
I have always liked this quote. I used it to explain the difference between innovators and marketers. Innovators are the “masters of the possible.” The Philips Company was very innovative but several of its innovations failed. I told them that they needed better marketing, that marketers are “masters of the valuable.” They finally hired C.K. Prahalad who helped them strengthen their marketing capability.
Theodore Roosevelt: “People won’t care how much you know until they know how much you care.”
I am a fan of so many attitudes and deeds of Teddy Roosevelt. In marketing, we train our students to deeply understand their customers, to walk in their shoes, to care about their problems, to find relevant solutions. Marketing knowledge is not enough.
* * *
Phil cordially invites you to check out these websites:
His faculty page at Kellogg School of Management at Northwestern University
Kotler Marketing Group website
His YouTube videos