With the current slowdown in economic growth, companies should abandon the growth strategy driven by mergers and acquisitions and re-emphasize the growth of market size and profits. Companies should focus on new technologies such as neural networks, robotics, AI, and VR to seek new growth opportunities.
Editor’s note: This article is from WeChat public account “China Europe Business Review” (ID: Ceibs-cbr), author Qi Qing.
Professor Kotler believes that with the current slowdown in economic growth, companies should abandon the growth strategy driven by mergers and acquisitions and re-emphasize the growth of market size and profits. Companies should focus on new technologies such as neural networks, robotics, AI, and VR to seek new growth opportunities.
Interviewed Philip Kotler, Professor of Life, Kellogg School of Management, Northwestern University, Global Partner and Chief Consultant, Kotler Consulting Group (KMG)
Visit Qi Qing
On October 12, 2019, the founder of modern marketing theory, Professor Philip Kotler visited China and participated in the 2019 Kotler organized by Kotler Consulting Group. Future Marketing Summit, and made a keynote speech. The journalist Qi Qing was invited by the Kotler Consulting Group to attend the conference and had an exclusive interview with Professor Philip Kotler on topics such as marketing in the future. The following is an interview with the interview.
01Two key elements of effective marketing
CBR: As the founder of modern marketing theory, your research history basically represents the evolution of marketing theory. What do you think is the most important change in marketing over the past 10 to 20 years?
Philip Kotler: Marketing campaigns were born about 115 years ago, and its initial essence was sales. At the beginning of marketing development, sales incentives were given to salespeople., brochures, etc., to help salespeople achieve better sales. With the development of sales activities, we realized that marketing can not only promote sales itself, but also help companies decide whether to produce this product or what kind of product. So we can see that the meaning of marketing is greater than sales.
Marketing grew rapidly in the 1950s and 1960s, driven by big companies such as Procter & Gamble (P&G), and consumer orientation was strong. But then it was the practice of Mass Marketing. For example, through a TV commercial, a 30-second advertising message is delivered to the entire market. But this raises the question – if the consumer does not have a demand or interest in the product, such an advertisement is annoying. In other words, such mass marketing is inefficient and not precise enough.
So, after that, we started thinking about market segmentation, targeting, and finally positioning. We believe that effective marketing has two key elements: one is to choose the target market, and the other is to create a value proposition for the target market. We also need to understand every consumer in the market in order to customize the marketing information and products and services. As some people have said recently: As long as you tell BMW, your car needs, they can help you customize a unique car. To be customized, we need to use big data and use new tools like social media.
Social media allows us to instantly capture the behavior of many individuals. This also means that marketing needs to shift from a broad marketing thinking in the past to a more personalized marketing thinking, one-on-one marketing thinking. One-to-one marketing, rather than extensive marketing, becomes what is currently needed. This is new marketing through appropriate marketing information, at the right time, at the right price, to the right customers. At present, I believe that because of the emergence of new technologies such as 3D printing and virtual reality (VR), marketing will continue to develop and experience different stages of development.
02Artificial Intelligence is not a substitute for the human brain
CBR: You are very concerned about the changes that new technologies bring to marketing. What changes will be brought about by the recent emergence of artificial intelligence, big data, blockchain, 5G and other technologies?
Philip Kotler: I can talk about artificial intelligence. We know that algorithmic technology is very important. The goal of artificial intelligence is to simulate the human brain. As a consumer, his/her brain makes decisions such as buying a car or searching for a message. So why don’t we create the same decision as the human brain?What is the virtual brain? By merging more information (big data), virtual brains may be more efficient than human brains. We are now trying to standardize AI operations to save time. However, there are many decisions in marketing that cannot be imitated by artificial intelligence. AI can do a lot of things, but it doesn’t have a global view of which market is better, so we still need people to make decisions and judgments.
03Mobile Internet,Let American companies start learning Chinese companies
CBR: The mobile Internet has brought tremendous changes to China. Many of the outstanding companies that have emerged in China recently are related to the mobile Internet. In your opinion, what areas of Chinese companies will have new opportunities after the enthusiasm of the mobile Internet?
Philip Kotler: I very much agree with you that smartphones have changed the world and people no longer need to carry a computer. The smartphone in the pocket of buyers and sellers is equivalent to a micro-computer, and all information can be obtained. I don’t know which direction the future will develop. But apart from the mobile Internet, I know that there are still many emerging fields, such as neural networks, robots and other new technologies, which will allow us to make more progress.
Chinese companies have been very successful in new media, such as Alibaba and Tencent. I even think that you have created a lot of new things in the social new media field in a very short period of time, and done much better than us. In the past you learned from us and now we become learning from you.
CBR: In the era of mobile Internet, in many enterprises in China, a marketing strategy of “flow thinking” has emerged. In this regard, there are criticisms and approvals. What is your opinion on traffic thinking?
Philip Kotler: I understand that “flow thinking” is about attention. Attention is now a very important issue. People today are getting shorter and shorter. They don’t want to watch advertisements or even block advertisements. I don’t like to watch advertisements either. I also have a special advertising blocker because I want to make better use of my time.
So the question now is, what can be done to win the consumer?Attention. This involves the topic of promotion. The way many companies strive for consumers’ attention is through big price cuts. In order to allow customers to enter the store, the merchant gives the customer a preferential price.
But there is one problem: it is one thing to get sales growth, and profit growth is another. If you don’t pay attention, sales will increase, and profits may not increase. If I tell the consumer: If you buy my goods tomorrow, as long as half price, the company’s sales will increase, short-term benefits, and there is no benefit in the long run. Because consumers will only buy next time when the price is also half price. In the short term, the company has won the flow and attention of customers through price reduction promotion, but it will hurt repeated sales and long-term sales.
CBR: You mentioned a marketing concept (tool) that is somewhat related to the mobile Internet, the “Customer Journey Map” (CJM), you Can you talk more about how to understand and apply?
Philip Kotler: We always wanted to know – what prompted customers to enter the store and do business with us. We think the answer is that consumers know us before, see our information, and maybe buy the product from us. But this information is too little, and we need to conduct a more in-depth study of the underlying causes of these behaviors.
For example, why did customers choose to walk into a Toyota dealership? This leads to the concept of different points in the travel history of consumers, which we call “contacts.” There are many contacts. If the customer’s contact is wrong, the customer doesn’t even know that you are selling a car. So we need to know which key contacts are there to encourage consumers to make further decisions. The customer experience is built up by the salesperson referring to these contacts. We want our customers to be satisfied with these contacts. If the customer is not satisfied with a certain contact, if they are not satisfied with the sales manager’s way of speaking, they will not achieve sales. So we want to let everyone know the concept of “contacts” and achieve good contacts in the customer experience process to improve customer satisfaction.
To achieve successful sales, companies must ensure that they have contact with consumers during the purchase process, while ensuring that marketing efforts at each touch point are effective.
▲Marketing Revolution 4.0: Drawing a Consumer Journey Map
044P is not a marketing theory
CBR: Your proposed 4P marketing theory can be said to be the most basic marketing theory. What is the marketing theory of the next generation?
Philip Kotler: I have to explain two concepts first, what is a framework, and what is a theory. Theory is usually to explain what is happening in the world, “Why is the earth spinning around the sun? Gravity keeps the current distance between the Earth and the Sun.” This is a theoretical discussion. But 4P does not teach us how to determine product pricing or how to determine a product. It is a framework. A framework is needed to do marketing programs. This framework tells you that you can start with 4P and all 4 Ps need to be considered. Perhaps even the fifth P needs to be considered in the marketing plan. I think 4P is very important, but there are other important aspects to consider, such as packaging, services, etc. Therefore, 4P is still a very basic framework.
I will introduce 5C again. 5C is a key element in marketing. The first is competitors and customers. Besides, I think we also need partners and partners, and we have company suppliers and partners. Of course, there may be many other factors in the company’s business environment, such as women’s rights and issues, diversified issues, etc., which will constitute an environment of influence. The company’s 4P should be adjusted according to these circumstances and background. I think 5C is also a framework, not a theory. The first framework is what we call 4P. We call it the 4P marketing mix, and further expand, there is a 5C framework. After knowing these frameworks, you still don’t know how to determine the solution, but we have the focus.
05How Marketing Creates Value Growth
CBR: We have observed that in recent years, the growth of the world’s macro economy has been roughly slowing down. Enterprises are looking for growth. From the perspective of marketing strategy, what should companies do?
Philippe Kotler: We must first make clear that the slowdown in economic growth is not something that can be solved by the power of a certain company. Therefore, companies should focus on how to expand market share and grow rapidly, and the focus of marketing is here.
Companies need to understand the market share of their competitors and use better products and services to persuade customers to leave your competitors to buy your products. Your product portfolio may be better for your customers, perhaps because you cut the price, orBecause you have increased product performance. Each company is responsible for its own market growth rate.
▲Discovery about “growth”
I very much agree with you that smartphones have changed the world and people no longer need to carry a computer. The smartphone in the pocket of buyers and sellers is equivalent to a micro-computer, and all information can be obtained. I don’t know which direction the future will develop. But apart from the mobile Internet, I know that there are still many emerging fields, such as neural networks, robots and other new technologies, which will allow us to make more progress.
Chinese companies have been very successful in new media, such as Alibaba and Tencent. I even think that you have created a lot of new things in the social new media field in a very short period of time, and done much better than us. In the past you learned from us and now we become learning from you.
CBR: When it comes to growth, it is necessary to talk about profits. You have repeatedly stressed that companies should create value for stakeholders, not just create profits. How do we understand creating value for our stakeholders?
Philip Kotler: Let me give you an example. We are not only serving shareholders, but also serving all stakeholders. Because usually success is created by a team, not by individuals. The company wants to have a good CEO, a good chief marketing officer, salesman and advertising. After all these success factors are in place, how is the profit distributed?
If your employees have helped you with a big project, they have played an important role in the win-win process. Why can’t they give them more bonuses? The bonus is not a long-term salary increase, but rather your gratitude to them: We have a good performance this year, and we hope that you will share with us this year’s generous performance awards. If the performance is not good next year, employees will still get their basic salary, but they will not get the bonus.
Sometimes can also give suppliers bonuses – if there are many problems in the delivery process, such as the shortage of truck drivers, but the supplier has helped us solve these problems successfully, we are now successful and willing to supply Business bonuses are encouraged and shared successfully.
So weIt is not contradictory to create value for stakeholders and increase corporate profits. We can create more value through reasonable sharing of benefits.
06Dr. Economics in Research Marketing
CBR: The last question, you majored in economics at university and earned a doctorate in economics. Why do you want to engage in marketing research and teaching?
Philip Kotler: I did follow three very good Nobel Prize economists and earned a doctorate in economics. Cultivating economists’ thinking methods is no different from cultivating engineers or lawyers. I didn’t like some of the doctrines of economics before, because I think these views are unrealistic. For example, economic assumptions always assume that consumers are smart and rational. In recent years, economics has only begun to develop in the direction of behavioral economics to study the true thoughts and feelings of consumers.
However, marketing was a long time ago in behavioral economics. Before people knew behavioral economics, marketing has learned in its more than 100 years of history that consumer buying behavior is related to feelings. I think economists are now training from the perspective of social scientists, which is a good direction. But behavioral economics is still the category of economics. We also need knowledge of sociology, anthropology, psychology, and social psychology. We should not call this discipline “behavioral economics”, but should be called “human behavior”. This discipline should integrate economics, sociology, and psychology to understand consumers more comprehensively.