Published on April 6, 2014
Prosperity Yangon, Myanmar Myanmar Marketing Forum March 8, 2014 Philip Kotler Kellogg School of Management Northwestern University
Globalization and localization Technological change and customer em - powerment Hyper- competition Government debt and regulation Major Forces Shaping the Global Economy
How Well Does Your Company Rate? __ On Finding New Opportunities __ On Using Marketing Research and Marketing Analytics __ On Innovating Successfully __ On Using Communications Effectively __ On Running Your Sales Force Effectively __ On Running Your Distribution Channels Effectively __ On Having a Well-Thought-Out Marketing Strategy __ On Being Well Organized for Marketing __ On Corporate Social Responsibility and Environment __ 45 is maximum
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, Asia is growing fast 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, $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
On Using Marketing Research and Marketing Analytics • New in Marketing Research – Ethnographic marketing – Neural scanning – Metaphor analysis • New in Marketing Analytics – Predictive analytics – Cluster analysis – Marketing mix modeling – Big Data analysis: By processing a steady stream of real- time data, organizations can make time-sensitive decisions faster than ever before, 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.”
On Innovating Successfully • Digital wallet • Zip cars • Tesco’s virtual subway store • Groupon • Single serve coffee maker • Kidzania • IBMs Watson • Warby Parker eye glasses at $95 • “Reverse innovation” • “Free marketing” • Nike+ (platform)
Leading Innovator • The 3M Company operates in 60 countries and produces innovative products in adhesives, abrasive, medical products, electronic circuits, optimal film, etc. • 3M has developed procedures, roles, processes, incentives and tools to make sure that employees innovate intelligently and balance risk and reward. Example 7
Thinks Ahead • GE hired sociologist Nelson Foote to think about what “kitchens” might be like five years into the future. • Clearly there would be trends and countertrends but these questions would open up the mind of GE management to new opportunities and possibilities. Kitchen Appliances Example 8
Invests Ahead • Samsung Electronics has drawn up its industry entry plans, planning to invest $20 billion in five fields -- solar panels, energy- saving LED lighting, medical devices, biotech drugs and batteries for electric cars. • Criteria for high growth: – New environmental rules – Exploding demand in emerging markets – Benefit from large-scale manufacturing to lower costs Example 9
Four Ways to Bring In Innovative Thinking Train an internal staff in creative techniques Outsource creativity to other organizations Give employees a periodic opportunity to deliver ideas to senior management Set up creative product groups Innovative Thinking 10
Tools for Idea Generation Lead user analysis Co-creation Crowdsourcing 11
New Technologies Abound • Robotics (Your Own Butler) • Artificial intelligence (IBM Chess, Watson) • Neuroscience • Information technology (Big Data) • Nanotechnology (New materials) • Biotechnology (Customized drugs) • Bioengineering (Artificial limbs) • Digital and social media • Energy science (Fracking) • Food science (P&G’s Cookie) • Education technology (Online and distant learning and MOOCs) • Entertainment (Kidzania, 3D movies) 12
The Eight Steps in the Stage-Gate Process Idea generation, Idea screening, Concept development and testing, Marketing strategy development, Business analysis, Product development, Market testing, Commercialization. 1 2 3 4 5 6 7 8 13
Roles in a Company’s Innovation Process Activators Browser Creators Developers Executors Financiers Source: Philip Kotler and Fernando Trias de Bes, Winning at Innovation, 2011. 14
India Innovates Low Cost Solutions The “Jaipur Foot” is a prosthetic foot made from rubber intended for below- the-knee amputees. It costs about $30 -- a fraction of the $10,000 cost of a Western prosthesis. The Aravind Eye Care system is the world’s largest provider of cataract surgery. It charges about 2 percent of what a cataract operation costs in developed countries and makes a profit. The Narayana Hrudayalaya cardiac care center in Bangalore is one of the world’s largest providers of heart surgery. The center serves telemedicine patients who receive consultation and treatment at remote sites, and accesses specialists through telecommunications links. The cost of a Western-style hotel room in Bangalore is typically US $300 per night. But the modern indiOne hotel charges only $20, and is very profitable. 15
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 – Only 9% strongly agree “I know our digital marketing is working” – 60% say digital marketing approaches are in a constant cycle of trial and error
On Using Communications Effectively - 2 • 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 into new media. • Companies have to get better at search engine optimization (SEO) • Be aware that Big data requires a dramatic change in skills, leadership, organizational structures, technologies and architectures.
On Running Your Sales Force Effectively • It is Increasingly hard for sales people to get to see the purchasing agent or doctor. • Best sales force training approach: SPIN (Situation, Problem, Implications, Need-Payoff) • Best sales people are listeners, not extroverts who overtalk. • Sales management is greatly facilitated by Salesforce.com
Two Customer Value Types ©2010 Neil Rackham Value = Benefits – Cost Consultative customers Transactional customers • Know what they want • Treat you as a commodity • Buy on price and convenience • Have a problem • Value your time • Buy on expertise and trust
Why Transactional and Consultative Don’t Mix: Psychological Reasons When salespeople have both Transactional and Consultative opportunities, they always pay too much attention to the low-margin transactional business at the expense of higher margin [but longer sales cycle] Consultative opportunities.
On Running Your Retailing Effectively • The rise of online buying is threatening store sales. The battle is between Amazon and Walmart. • Supermarkets need to worry about: – Walmart – Rise in private labels – Home delivery • Automobile companies need to worry: – Low priced autos (Tata Nova) – Car pooling – Collaborative consumption • Rise of experiential retailing – Starbucks, Apple, Virgin • Franchising and multilevel marketing keeps growing
On Having a Well-Thought Out Marketing Strategy • Winning companies will be Customer-centric, not Product-centric. The process that a company must go through is called Customerization. • Winning companies practice Higher Purpose Marketing. A cosmetics company is selling inside beauty. A farmer is trying to end world hunger. • Winning companies know their individual customers and practice Customization and personalization. • Winning companies seek to win and keep customers through engagement supported by content development , co-creation and crowdsourcing. • Winning companies are stakeholder focused, not just shareholder focused. • Winning companies use a combination of organic growth and acquisition growth (Kellogg buys Keebler, In Bev buys Budweiser and Heinz). • Winning companies find ways to bring down product prices dramatically (low cost airlines, McDonald’s). • Winning companies revise their locations for R&D, manufacturing and distribution from time to time, and put a heavy emphasis on localization.
On Being Well-Organized for Marketing • Marketing departments are now headed by CMOs who carry out a number of responsibilities. • CMO is a member of senior management and needs to spearhead thinking about opportunities for future growth. • A company should consider having two marketing departments: one strategic and the other tactical. • The CMO must work closely with other department heads, including CIO, CFO, Sales, etc. • Other companies have appointed a Chief Growth Officer, or a Chief Customer Officer, or a Chief Experience Officer
On Corporate Social Responsibility (CSR) • All companies now acknowledge that they need to exercise corporate social responsibility and pursue the 3 Ps: profits, people and the planet. • CSR’s original purpose was to help charitable organizations by some grants of money. • Today’s companies would to be smarter to choose a major cause to support in which they can make a difference. • Companies can go further and practice “buy one/give one” (e.g., Warby Parker eyeglasses and Tom’s shoes). • The most progressive companies build social responsibility into their very operations and strategy for growth and prosperity, called Creating Shared Value (CSV). • All companies need to reduce or manage their carbon footprint through waste reduction, pollution control, reuse, repair, and recycling.
Finally, the Role of Marketing • Marketing’s immediate role is to create sales and profits; its ultimate role is to create happiness. • Marketing is the major job creator in an economy. It has built the middle class. • Marketing gets people to improve their lives by adopting new products and services. Marketers got us to brush our teeth (Claude Hopkins) and wash our hands regularly (P&G). • Companies, technologies, products and services are always changing, so marketing must change as well.
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