30 words summary
"Good companies will meet needs, great companies will create markets," says Philip
Kotler, the guru of marketing. That's useful advice for Indian managers as they gear up to face global managers used to fighting in tougher markets than India. So what should you do? Read on ….
100 words summary
Managers in your country have to accept that the barbarians are at the gate,” the guru of marketing tells me genially. "The question is, how are Indian managers going to face this competition?" Philip Kotler is nothing if not direct. In the 1960s, he shocked the world of management when he insisted that marketing should be at the core of every organization, not strategy, not manufacturing, not HR, not finance, not even sales. Fifty years on, he continues to defend this position relentlessly.
As we mentioned in an earlier issue of The Smart Manager (Jan-Mar 2003), before Kotler, marketing thinkers focused on what marketers do. Kotler changed the focus to what marketing is, and in doing so demonstrated the central relevance of marketing to business. A former economist and mathematician who had served time as a practicing manager and hence can be expected to know his trade, Kotler drew on several backgrounds when developing his concepts for marketing.
Keywords: Philip Kotler, marketing, competition, strategy, business, Airtel,
Reliance, Hutch, Tata, production concept, marketing concept, selling concept, product concept, Jet Airways, Naresh Goyal, Tesco, societal marketing, global brand, developing markets, global economy, Jagdish Sheth, Nirmalya Kumar Mohanbir S
Sawnhey, CK Prahalad, Morgen Witzel, Theodore Levitt, Freakonomics, marketing theory, Michael Tracy, Fred Wiersema, leaders, customer
Authors Summary: Philip Kotler is the SC Johnson & Son Distinguished Professor of
International Marketing at the Northwestern University Kellogg Graduate School of
Management in Chicago. He is hailed by Management Centre Europe as "the world's foremost expert on the strategic practice of marketing." He has authored what is widely recognized as the most authoritative textbook on marketing: Marketing
Management, now in it's 12th edition.
Charts: Message for India
Made in India philip kotler: the future is already here by Philip kotler
"Good companies will meet needs, great companies will create markets," says Philip
Kotler, the guru of marketing. That's useful advice for Indian managers as they gear up to face global managers used to fighting in tougher markets than India. So what should you do? Read on ….
Managers in your country have to accept that the barbarians are at the gate,” the guru of marketing tells me genially. "The question is, how are Indian managers going to face this competition?" Philip Kotler is nothing if not direct. In the 1960s, he shocked the world of management when he insisted that marketing should be at the core of every organization, not strategy, not manufacturing, not HR, not finance, not even sales. Fifty years on, he continues to defend this position relentlessly.
As we mentioned in an earlier issue of The Smart Manager (Jan-Mar 2003), before Kotler, marketing thinkers focused on what marketers do. Kotler changed the

focus to what marketing is, and in doing so demonstrated the central relevance of marketing to business. A former economist and mathematician who had served time as a practicing manager and hence can be expected to know his trade, Kotler drew on several backgrounds when developing his concepts for marketing.
Following in the footsteps of Abraham Maslow who propounded the Hierarchy of Needs, Kotler began by classifying approaches to marketing on five levels, each of increasing sophistication. First there was the production concept, which "holds that consumers will favor those products that are widely available and low in cost.
Management in production-oriented organizations concentrates on achieving high production efficiency and wide distribution coverage". Demand is assumed, and sales will ensue if the product can be got cheaply to the customer. This scenario perfectly describes India from its early beginnings to the 1990s. During this period, we lived in a seller's market, and in a seller's market, marketing bows to manufacturing.
Kotler defined the second level as the product concept, which "holds that customers will favor those products that offer the most quality, performance, and features. Management in these product-oriented organizations focus their energy on making good products and improving them over time". The emphasis here switched from price to the bundle of benefits the consumer receives when making the purchase, or in other words, from price to value. As Morgen Witzel, author of the erudite Biographical Dictionary of Management, points out, this is still a passive approach. This is the India of the 1991 reforms. The liberalization program introduced by the PV Narasimha Rao administration encouraged local entrepreneurship by simultaneously freeing big business and releasing pent up energy in medium size enterprises. Indian companies began to build capacities and improve product quality. Indian consumers responded greedily. HMT withered away,
Titan flourished. The Ambassador retired, the Maruti revved up.
Third, Kotler says, there is the selling concept. This "holds that customers, if left alone, will ordinarily not buy enough of the organization's products. The organization must therefore undertake an aggressive selling and promotion effort".
Here there is an active engagement with the market through various forms of selling, ranging from the 'soft sell' which emphasizes educating the customer about the product and allowing the latter to make a free decision, to the aggressive 'hard sell' which emphasizes completing the transaction.
In India, we are definitely seeing the 'hard sell' aspect of this concept in action, if not wholly the 'soft sell' part. The marketing initiatives of the various telecom companies - Airtel, Reliance, Hutch, Tata - perhaps best illustrates the various 'hard sell' approaches companies can take in a cut-throat market. At the same time, many organizations are making a push to educate the Indian customer and notable examples include ICICI Bank and Big Bazaar. Technically, Indian advertising has come of age, and is on par with the developed markets but customers are evolving at a slower pace.
Fourth comes the marketing concept, which "holds that the key to achieving organizational goals consists in determining the needs and wants of the target markets and delivering the desired satisfactions more efficiently and effectively than competitors". This approach requires some active engagement by both parties, and assumes that the basic goal of both parties in an exchange is to complete a transaction. The marketer's role is to find out what the needs of the customer are and attempt to deliver a product that meets as many of those needs as possible, making the transaction as satisfactory as possible.
Jet Airways is perhaps at the forefront of this level of sophisticated marketing.
Even when the airline was like a minnow in front of the eagles, Naresh Goyal insisted on using the best technology could buy to support customer service, an approach which sharply differentiated it from its competitors. And paid rich dividends in terms

of loyal, high net worth customers. Internationally, Tesco converted this concept into unique customer loyalty programs, becoming the process one of the world's most successful retailers. Today Tesco is readying to enter India. The barbarians are indeed at the gate. values underpin marketing
Finally, Kotler offers his most radical innovation, what he calls the societal marketing concept. This "holds that the organization's task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer's or society's well-being".
In India, Lijjat Papad is perhaps one of the best Indian examples of this concept. The papads are made by under-privileged women, each of whom works for herself and the cooperative. The daily wage the owner-worker makes helps her survive the next day. Product quality is sufficiently and consistently high for the papads to pass muster with the US Food and Drug Authority. The cooperative generates annual revenues of Rs3bn through exports and local sales. None of the
40,000 women can speak English, almost none can read or write.
The societal marketing concept was part of Kotler's more general campaign to
"broaden" the concept of marketing. In collaboration with Sidney Levy (also a marketing professor), Kotler argues that marketing is not just about commercial transactions. Every offering (product or service) made and sold performs some sort of social function. And social values are part of all exchanges. Every communication is value-laden.
Kotler and Levy push the idea to its outer boundary. They argue that the value principles of marketing can be applied to non-commercial exchanges, such as services and products, which are provided on a non-profit basis or even for free; or even to situations where no formal transaction takes place at all, such as elections of political candidates. Today, Kotler speaks about employees as the "internal customer", thereby neatly tying together contemporary thinking in human resources and marketing, rather than deepening a possible abyss. the hungry customer
Kotler thus creates a model of marketing as being founded on a few simple common elements, regardless of what is being marketed and to whom. Those elements begin with an analysis of the needs, wants and demands of the customer. Needs, he defines as the realization of the lack of some basic requirement. Wants are specific requests for products or services to fill needs. Demands are wants backed by the desire and ability to pay or otherwise make exchange.
Next in importance come the concepts of value and satisfaction. Customers, when faced with a variety of products, make their choice based on perceived value to themselves, not to the marketing company. Value thus depends on how well the offering - be it a product or service or other good - will satisfy a need, want or demand, regardless of what the selling party perceives value to be. Satisfaction, then, is the extent to which actual value realized by the purchase or acquisition of the product matches the pre-purchase assessment of value. If actual value is equal to or greater than perceived value, satisfaction will result, if not, then dissatisfaction will result. an expensive proposition
Marketing, then, as defined by Kotler, is "a social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others". Not until an understanding of that definition has been

achieved should the company or manager proceed to the actual elements of doing marketing. Kotler is at pains to point out that while the marketing concept is actually a very simple one, doing marketing is quite complex and can be very costly.
The activities associated with marketing included research and analysis, environmental scanning, forecasting of potential demand, identification of marketing segments and the needs of customers in those segments, development of new products which will better meet those needs, product life cycle planning, marketing strategy, pricing strategy, establishment and maintenance of distribution channels, communications and promotion, among others. He insists that these activities are common to all marketing activity, and are carried out by every marketing department or organization in some guise or other. A market orientation - or better, a societal marketing orientation - is, he says, an essential pre-requisite for any marketing operation. In structural terms, the marketing department must be at the heart of the organization, not on its periphery. the mentor
What Kotler did not define is one of marketing's most loved concepts: the 4Ps of marketing. Developed by the Irishman, E Jerome McCarthy in 1960, the 4Ps stand for product, pricing, promotion and placement. Kotler was so taken by this definition that he included it in his book, Marketing Management: Analysis, Planning,
Implementation, and Control, the bible of marketers, used as a standard text in every MBA course around the world. McCarthy is forgotten, Kotler reins supreme. But it is not Kotler's fault. The meticulous footnotes and citings in Marketing Management are evidence of his scrupulous respect for the ideas of others.
"I accept Kotler as my guru," says Jagdish Sheth, "had he not noticed my work on the Rule of Three, I wonder how many people would have known me or my theories?" Currently, Kotler has four Indians on his radar: Emory University's Sheth,
London Business School's Nirmalya Kumar (and also columnist for The Smart
Manager), Kellogg's Mohanbir S Sawnhey, and the strategist CK Prahalad (see box:
Made in India).
As Witzel points out, Kotler's contribution to marketing specifically and to management generally is threefold. First, he promotes the importance of marketing, transforming it from being a peripheral activity "bolted onto" the more "important" work of production to a core activity. Second, he shifts the emphasis in marketing away from price and distribution issues to a greater focus on meeting customer needs, and on the bundle of benefits the customer receives from a product or service. Third, he broadens the concept of marketing from mere selling to a much more general process of communication and exchange, and shows how marketing can be extended and applied to non-profit and non-commercial situations.
And today? How have his thoughts changed or evolved over the past four decades, Gita Piramal asks Philip Kotler….
Can a global brand emerge from today's developing markets?
The answer was provided by Japan in the 1970s and 1980s when most of their products were not known. We have all heard of Sony, Toshiba, Casio, Canon. So it can be done. And remember Japan was then an economy recovering from World War
II.
The real question is, does India have the products and brands which can appeal to the mass public. You do have a beer called Kingfisher. It should be known in the States. But I don't believe I've ever heard an American say, "I want a
Kingfisher." Maybe some Indian restaurants serve it, but the Chinese Green Bamboo beer brand is not only well known in China but also abroad.

I don't know which Indian offerings can become global brands except in the
IT industry, but companies like Infosys, Wipro are really B2B type of global branding.
So I believe that you should move to garments, shoes, purses using your wonderful fabrics, maybe aided by Italian designers and French marketers.
Can medium companies survive in a global economy?
Oh yes. There will always be small and medium sized companies because the large ones become elephants and they don't know how to dance and they are too big to dance, with some exceptions. But your real question is about what's facing small and medium sized Indian companies and what they can do when the multinationals are coming in. There is always a foreign invasion. Do they sell out or do they fight? If they have some unique qualities and are more agile and flexible, they can face the invaders. For example, Nirma has done a marvelous job in spite of Unilever. It is up to each company to calculate the odds when they know they are going to face a Wal-
Mart and other very dominant marketers.
Are markets different? Or are people essentially the same?
No, I don't buy into one or the other. That was a big mistake made by Ted Levitt in his well-known article about globalization. He says we will see a convergence of cultures. That's partly because everyone has access to the TV programs of other countries through CNN and others. And the lifestyles of those who are interested in the same things, such as music, will create a homogenous world population living in a global village. He was wrong. In fact, nationalism and other forces have reasserted the importance of culture. So there are some things about people that are similar; some things that are different. It will be a big mistake for a marketer to assume that there are universal appeals that work in every country.
What is new in marketing? In strategy, there has been a lot of new thinking in the past 50 to 60 years: after Michael Porter, there was CK Prahalad in the 1990s, you mentioned the Tipping Point in a slightly different context and Theodore Levitt's Freakonomics. But what are the advances in marketing theory?
There is old marketing and there's new marketing. The old marketing was about mass marketing and approaching big marketplaces using heavily targeted advertising on TV and so on. And it worked. Companies who did this were the first ones to recognize the power of that medium and were very successful in creating brands.
But today we have to see marketing very differently. For example mass media is wasteful, it is untargeted, it is unfocussed, it is expensive and the viewership is going down. So we have to start using other means. We have to start using the Internet, the web, we need blogs, more event marketing, more sponsorship marketing, more PR. The communication nexus is changing.
The big changes in marketing are led by the relationship with the customer.
Marketing is no longer just about a one time relationship with your customer. You have to move from transaction marketing to relationship marketing. In fact it's moving beyond relationship marketing to what we call co-creation marketing where the customer is viewed as a partner.
Another change is the movement from mass marketing, to segment marketing, to niche marketing, to one-to-one marketing. This requires the gathering of information of each customer. Tesco, the big supermarket chain, knows everything its customers buy every week through cash registers, credit cards and its loyalty card. This information becomes the basis for Tesco to create clubs such as the wine club, the mothers' club and so on.

Marketing is changing. At the same time, the fundamental premise of marketing remains unchanged. More companies must shift their thinking from being product-centric to being customer-centric. As Peter Drucker observed fifty years ago, the aim of business is to create the customer.
Where does marketing end and strategy begin? For example, Michael Porter talks about cost versus differentiation. Michael Tracy and Fred Wiersema talk about The Discipline of Market Leaders - and these thinkers are normally regarded as strategists.
Strategy planners used to be popular. At one time General Electric had 300 people doing strategy. Now they have zero. That's not to say they no longer think strategically. They do. But strategy is coming from teams filled with marketers and others.
Marketing generates most of the opportunities. It spots them and tests them to see whether an area of need can actually be capitalized. But you also have to bring in the finance function and the manufacturing skills to make sure you can adopt a certain strategy. But strategic insight is in the hands of marketers. As a matter of fact, the two books you cited - particularly the one on market leaders - are by people who are very astute about marketing.
Let's say that we have a branch of marketing called Marketing Strategy rather than Marketing Tactics. Most of what we hear in marketing is tactics: 90% of marketing is to help the sales people get orders. But the smart companies keep at least 10% to 20% of the marketing people thinking of the next three years on how the markets are changing, and to start making proposals as opportunities become visible. The message in the Kraft company, for example, which has slowed down a bit, is that they need to find a billion dollar new opportunity. And they expect marketing to come up with it. Strategic marketing is now the platform for a company's basic strategy.
What about people and HR? For example, Hal Rosenbluth wrote a book called The Customer Comes Second…
For many businesses, especially in services, the offering is delivered by a person. So
HR is now taking to the idea of the 'internal customers' viz employees. Internal marketing shifts the focus from 'telling' employees to understanding their needs so that they can serve the customer better. Internal marketing means creating an environment and atmosphere where employees love the company, and are enthused about the value proposition of the company.
For example at Volvo, everyone believes in their mission, which is safe cars.
They do everything to get the skills to help make cars safer. How you get employees to live the brand, how to turn strategy into a living behavior on the part of the employees is the challenge. I was very impressed with Infosys. When I went to that campus to see the educational facilities, the restaurants, the health clubs, the energy of the young people walking from one place to another, the visit made me understand why they have been ranked as the number one place where people want to work. Such a thoughtful culture, such a passionate culture. I believe great companies build great cultures.
What is your view on power brands?
I like the idea of a company focusing on brands that are well established and have growth potential. And I am always worried about the distraction that minor brands cause and the problems they cause. I wrote an article in the Harvard Business
Review in the late 1970s called Pruning The Product Mix, where I outlined a system of how to keep track of all of your brands and even your SKUs, with red signals

warning, 'Watch this, it's not going anywhere.' Companies should have a product pruning committee getting rid of the weaker parts of the product mix, based on the idea that you need the cash for better things. There's often the argument that it is easier to add product extensions than to get rid of something. So the product mix is like a wild force that grows and grows but every so often the company realizes it, and it takes a machete and cuts the underbrush. But this process should not be periodical, it should be continuous. You need a system for that.
And some courage because there are always vested interests…
That's correct, there are always vested interests. But a company doesn't exist to please everyone. A kind company can be overly kind. That's not good.
I'm sure you must have read Naomi Klein's book, "No Logo". Your comments?
I like what she is trying to do because marketing practice and some theory has to be questioned even though she is exaggerating some parts of the criticism.
Marketing has one major problem: it is impossible to talk about sustainability and also about marketing in the same breath. Marketing wants to nurture needs and satisfy them, which really means using more resources, more trees and more newspapers. We have to have more heat and energy. And we are using up nonreplenishable resources.
Yet there are people, and I welcome them, talking about how to do sustainable marketing, marketing that adds to the global working wealth. She also talks about manipulation and that we are suckers for buying things we don't need.
And a lot of us are part of a consumer culture that is more about driving up wants rather than reducing those wants. If you were Buddhist you would be happy reducing your wants rather than madly trying to go around life fulfilling your needs. It's a sobering argument. And has an audience and a following. And we should all read it and use the wiser parts of the message.
It's not a new message: it goes way back to 1957 and Vance Packard's book,
The Hidden Persuader. And many other critics have been around to point these things out but Naomi Klein put it in a very powerful form.
What about the end of privacy? Good or bad?
That's another aspect of marketing. We argue that the more we can know about you, the more we can do to meet your needs. So don't mind us trying to know how large your family is, whether your son is going to go to college, so we as a bank can make a loan for you. We are really there to assist you and your family. On the other hand, if you want to know more things about me, what I like and how my mind works, what turns me on, isn't that giving you opportunities for manipulation? Yes, privacy is a real concern.
So what are the limits? How do you put up walls? It is an individual choice.
Just as I would never advise any cigarette company on how to get more people to smoke - I don't believe in helping them - I wouldn't advise any company which says they want to put cookies into your computer.
Quite often I lie as a customer because I don't want them to know me. What can the marketer do?
I don't think that actual lying is a very high percentage of the response content in surveys, not even in focus groups where there is a lot of spontaneity and talking.
The real problem is that consumers are not the best reporters of what is happening when they buy a product. If I ask someone why they bought a tin of Campbell soup rather than some other soup, the answer may not be the right one. Even so it's

worth knowing their answer, but it's usually not the full story. There is an emotional component. Maybe they grew up with their mother serving Campbell soup and so on.
And there is some avoidance of mentioning the deeper drivers. For example, if you ask a person, 'Why did you buy that Mercedes?', you may get the reply, 'It's a well made car'. What you won't get is, 'I want to feel important', 'It tells others that I am very important'.
We do have projective techniques which get into the unconscious and allows us to know more about what drives us. There is a whole new field of brand research under the name of Nerve Marketing. It measures what happens in the brain when you see certain images so that markers can select the better symbols, images, movie actresses to support the brand. As we get better in understanding these readings, the bad news is that marketing becomes manipulative.