Competing Successfully: A
Humanistic Marketing Approach
May 15, 2015
Kellogg School of Management
Managing the New Marketing
1. Meeting The Global Challenges
2. Building Your Marketing and Sales
3. Moving From Traditional Marketing to
Digital Marketing and Marketing Analytics
4. Moving to Marketing 3.0 and Corporate
Managing the New Marketing
• Globalization and Chindia
• Regional trade associations
• Internet and social media
• Shorter product life cycles
• Retail transformation
• Media proliferation
• Environmental concerns
• Consumer empowerment
• Slow economic growth
Meeting the Global Challenges
How Does Your Company Rate?
__ Finding New Opportunities
__ Using Marketing Research and Marketing Analytics
__ Innovating Successfully
__ Using Communications Effectively
__ Running Your Sales Force Effectively
__ Running Your Distribution Channels Effectively
__ Having a Well-Thought-Out Marketing Strategy
__ Being Well Organized for Marketing
__ 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
• 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
• Digital wallet
• Zip cars
• Uber and Airbnb (sharing assets)
• Single serve coffee maker
• IBMs Watson
• Warby Parker eye glasses at $95
• “Reverse innovation”
• “Free marketing”
• Nike+ (platforms)
• Photographic film
• Wired telephones
• Store retailing
• Classroom education
• Offset printing
• General hospitals
• Open surgery
• Cardiac bypass surgery
• Manned fighters
• Full service stock brokerage
• Digital photography
• Mobile telephones
• On-line retailing
• Distance education
• Digital printing
• Outpatient clinics
• Endoscopic surgery
• Unmanned aircraft
• On-line stock brokerage
Source: Clayton M. Christensen, The Innovator’s Dilemma, p. xxix. ; google.com
Disruptive Innovation Will Face You
Six Ways to Improve
1. Hold regularly scheduled meetings between marketing and sales.
2. Make it easier for marketing and sales people to communicate with
3. Arrange for more joint work assignments and job rotation between
marketing and sales people.
4. Appoint a liason person from marketing to live with the sales force and
help marketers understand sales problems better.
5. Set shared revenue objectives and reward systems.
6. Improve sales force feedback.
Six Ways to Improve
Marketing’s Changing Focus
• 1950-1970 Product orientation
• 1970-1990 Customer orientation
• 1990-2010 Branding orientation
• 2010-2015 Value and values orientation
• 2015-2020 Co-creation and crowdsourcing
• 2020-2030 Corporate social responsibility
Marketing’s Evolving Customer View
• Focus on transactions
• Focus on building individual customer
• Focus on engaging customers and building a
On Using Marketing Research
and Marketing Analytics
• New in Marketing Research
– Ethnographic m arketing
– Neural scanning
– Metaphor analysis
• New in Marketing Analytics
– Predictive analytics
– Cluster analysis
– Marketing m ix m odeling
– Big Data analysis: By processing a steady stream of real-
tim e data, organizations can m ake tim e-sensitive decisions
faster than ever before, m onitor em erging trends, course-
correct rapidly, and jum p on new business opportunities.
– One on one m arketing: ““W e can tell you what m usic you
are likely to buy, what m ovie you will select to buy or rent
and what Apple product will m ost likely appeal to you.”
Big Data Marketing Examples
• Tesco supermarkets
– Tesco has identified 5,000 customer “needs”
segments. It sends out some 300,000 variations of
any given offer with redemption rates of 90%. It has
formed clubs such as Baby Club, A World of Wine
Club, My Time Club
– Kraft has the names of 110 million customers and 20
thousand facts for each household. Kraft launched
print magazine, Food & Family, that is delivered to
the homes of 2.1 million Kraft customers in 32
versions tailored to 32 segments.
Big Data and Analytics Marketing
1. Determining information needed
2. Big data collection
3. Apply analytics
4. Derive insights
5. Make decisions
6. Implement decisions
7. Check and learn from outcomes
Kotler Receives a Letter from a Data Broker
• Hi, I hope you are doing fine. I am checking in to see if you
are looking for marketing and data partners/supplier. We
are providing b2b and b2c lists with email addresses and
other information worldwide. We have 40 million b2b and
250 million b2c records across the world with their email
addresses and other details.
• The list can be used for multi-channel marketing purposes
like telemarketing, fax marketing, direct marketing and
email marketing. We can be your partners and would be
happy to work with you as your back end partners.
Job Positions in Today’s Marketing Organization
• Chief Marketing Officer (CMO) or
Marketing Vice President
• Brand managers
• Category managers
• Market segment managers
• Distribution channel managers
• Pricing managers
• Marketing communication managers
• Database managers
• Direct marketers
• Internet and social media managers
Four CEO Views of Marketing
The size and type of department depends on the type of
industry, size of company, nature of buying, and other factors.
Much depends on the CEO’s view of marketing.
• 1P CEO
• 4P CEO
• STP CEO
• ME CEO
What are the 6 Tasks of the CMO?
1. Represent the voice of the custom er (VOC) to others in
the company and champion the development of a strong customer-
orientation to build loyal customers.
2. Monitor the evolving business landscape and gather customer
insights to help develop new products and services for achieving growth
3. Be the steward of the corporate brand and brand-building
4. Upgrade marketing technology and skills in the company.
5. Bring insight into the corporate portfolio and synergies.
6. Measure and account for marketing financial performance and
contain media and other service costs.
If You Are Appointed CMO, You Prefer That
Your Office Be Located Next To:
1. CEO office
2. CFO office
3. CTO office
4. CIO office
5. VPS office
Is Marketing only a Cost Center?
Marketing Can Help the Company Grow its Future!
Can Marketing Help Grow
the Company’s Future?
– Marketing is in the best position to detect business opportunities,
calibrate their size and estimate their likely profitability.
– Marketing manages important intangible assets (brands, customer
relationship, networks, market position, market information)
Leader Brand Mission and Vision
Ingvar Kamprad IKEA Make stylish furniture affordable
Richard Branson Virgin Bring excitement in boring
Walt Disney Walt Disney Create magical world for families
Herb Kelleher Southwest Airlines Make flying possible for many
Anita Roddick The Body Shop Embed social activism in business
Bill Gates Microsoft Realize ubiquitous computing
Steve Jobs Apple Transform how people enjoy
Jeff Bezos Amazon.com Provide the biggest selection of
knowledge delivered conveniently
Examples of Great Marketing Vision
• Creating Marketing
• Controlling the
• Managing marketing
• Operational Focus5th Shift
Most Companies are Short Lived
• Average company may last from 10-20 years.
– Changing buyer wants and budgets
– Lack of an innovation culture
– Short term focus and failure to invest in a longer term
• Yet some companies have endured for hundreds
• What are their secrets?
Most Companies are Short Lived
Arie de Geus
• In Living Companies, Arie de Geus found that 30 companies have been
around at least 100 years, including DuPont, W.R. Grace, P&G, Mitsui,
Sumitomo, and Siemens.
• Four traits of Living Companies:
– Conservatism in financing
– Sensitivity to the world around them
– Awareness of their identity
– Tolerance of new ideas
• Four priorities:
– Valuing people, not assets
– Loosening steering and control
– Organizing for learning
– Shaping the human community
Traits of Long-Living Companies
HYPOTHETICAL STARBUCKS BRAND POSITIONING BULLSEYE
Coffee and the
and a better
Fast food &
gives m e the
Branding is Key:
The Case of Starbucks
Marketing Forges Ahead
• Commercial marketing
• Place marketing
• Person marketing
• Social marketing
• Political marketing
3. Moving From Traditional
to Digital Marketing
From Traditional to Digital Media
• Face-to-face sales calls
• Trade fairs
• Leaflets, posters, brochures
• Newspapers and magazines
• Direct mail and catalogs
• Street level promotion and
• Product placement
• Banners and pop-ups
• Expressive social media (Blogs,
• Collaborative social media
(Wikipedia, Rotten Tomatoes,
• Mobile marketing
From Traditional to Digital Marketing
Will your industry be the next industry to
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
– 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
• Be aware that Big data
requires a dramatic change in
Buying Behavior is Changing Radically
• A majority (58%) of all consumers now research products online
before purchasing. In searching for a car, you go first to your
friends for their ideas. Then you go to expert sites to see car
ratings. Then you go to Google to find the best dealers.
• An increasing number of people are ordering online, much to the
dismay of store based retailers.
• 65% of Asian Pacific consumers use online services to locate nearby products
• 70% of Americans say they look at online product reviews before making a
• 79% of consumers say they use a smartphone to help with shopping. Watch
for mobile marketing.
• B-to-B buyers don’t even want to see salespeople anymore.
Power is Shifting to the Empowered Buyers
CMOs are Underprepared
• Only 26 percent of CMOs are tracking blogs, 42 percent are tracking third
party reviews and 48 percent are tracking consumer reviews. Yet
tracking these sources could provide insight into what customers want
• 80 percent of CMOs are still focusing primarily on traditional sources of
information such as market research and competitive benchmarking. 68
percent rely on sales campaign analysis.
• They don’t understand the younger generation in the U.S. and the
emerging middle class in developing countries. Marketers in India have
been focusing on affluent Indian consumers rather than on the Indian
emerging middle class.
Source: The 2011 IBM Global CMO Study of 1,734 CMOs in 19 industries and 64
countries, November 2011.
Marketers Are Underprepared
• 63 percent of CMOs believe ROMI will be the most important measure of
marketing performance by 2015, but only 44 percent feel prepared to
deliver this measure.
• CMOs recognize that they will need more digital, technological and
financial proficiency in the coming years.
• CMOs recognize that they have a strong influence over promotional
activities like advertising, external communications and social media
initiatives but CMOs play a smaller role in shaping the other 3Ps.
– Less than half have much sway over key parts of the pricing process.
– Less than half have much impact on new product development or channel
• Source: The 2001 IBM Global CMO Study of 1,734 CMOs in 19 industries and 64 countries,
CMOs Need to be More Financially Accountable
Audit Your Digital Activities - 1
• Establish a web site that people register to use and thereby accumulate a
large customer database.
• Buy customer information from firms that track the interest patterns of
specific consumers based on the sites they navigate.
• Encourage consumers to send in emails with questions, concerns, and
ideas, therefore creating learning relationships with consumers.
• Increase “content marketing” to customers and prospects who give
• Offer coupons-on-demand (Cool Savings, Netbonus) or samples of new
products on demand (Samples.com).
• Monitor social talk for insights and trends.
Increase Your Digital Activities
The Marketing Management Process
4. Moving to Marketing 3.0 and
Corporate Social Responsibility
What Should Our Goal Be?
• Capitalism originally assumed infinite resources and infinite
human needs. We now recognize this endangers Planet
• Paul Polman, the brilliant CEO of Unilever, made the
following statement: “Our ambitions are to double our
business, but to do that while reducing our environmental
impact and footprint… It has to be done via more
• Can economic growth and sustainability really be
• Should the rest of the world try to attain the U.S. standard of
Mind Heart Spirit
Profit Ability Return Ability Sustain Ability
Be BETTER DIFFERENTIATE
Appealing to the Customer
Marketing 1.0 Marketing 2.0 Marketing 3.0
MIND HEART SPIRIT
ECONOMIC- VALUE PEOPLE-VALUE ENVIRONMENT-
PROFITS SOCIAL PROGRESS HUMAN
MOVING TOWARD MARKETING 3.0
•Where is your company now?
•Where do you want it to be?
•What would steps would you take?
•What is Marketing 4.0?
Companies Americans Love
Amazon, Apple, Best Buy, BMW, CarMax,
Caterpillar, Commerce Bank, Container Store,
Costco, eBay, Google, Harley-Davidson, Honda,
IDEO, IKEA, JetBlue Johnson & Johnson, Jordan's
Furniture, L L Bean, New Balance, Patagonia,
Progressive Insurance, REI, Southwest, Starbucks,
Timberland, Toyota, Trader Joe's, UPS, Wegmans,
These “firms of endearment” were highly
profitable. They outperformed the market by a 9-
to-1 ratio over a ten-year period. More fulfilled
employees, happy and loyal customers,
innovative and profitable suppliers,
environmentally healthy communities.
Characteristics of “Firms of Endearment”
1. They align the interests of all stakeholder groups
2. Their executive salaries are relatively m odest
3. They operate an open door policy to reach top m anagem ent
4. Their em ployee com pensation and benefits are high for the
category; their em ployee training is longer; and their
em ployee turnover is lower
5. They hire people who are passionate about custom ers
6. They view suppliers as true partners who collaborate in
im proving productivity and quality and lowering costs
7. They believe that their corporate culture is their greatest asset
and prim ary source of com petitive advantage.
8. Their m arketing costs are m uch lower than their peers while
custom er satisfaction and retention is m uch higher.
Characteristics of Firms of Endearment
Companies Are Increasingly Being
Rated on Social Responsibility
• The Council on Economic Priorities evaluates company performance on a
range of social dimensions and publishes Shopping for a Better World to
influence consumers’ purchasing decisions.
• Fortune magazine annually rates “Most Admired Companies” where
social responsibility is included as a factor.”
• Fortune magazine annually rates “Best Companies to Work For.”
• 84% of Americans in 2002 said that they “would be likely to switch
brands to one associated with a good cause, if price and quality were
Companies are Increasingly Being Rated
on Corporate Social Responsibility
Rationale for Companies Investing
in Social Initiatives
• Companies need to differentiate themselves. Companies with civic
virtue will be preferred.
• Companies need a decision framework for facing daily requests for
sponsorships, improved health coverage, injury prevention,
environmental protection and community contributions.
• Corporate heads and boards need to understand the social pressures and
opportunities facing their companies.
• Companies need to build a bank of public goodwill to offset potential
• Employees, investors, and partners will be more motivated and loyal.
Rationale for Investing in CSR
DuPont turns green.
Stage 1. Focus on internal safety and meeting environmental
Stage 2. Focus on making better products with less impact on
Stage 3. Focus on all stages of product development from R&D
efforts through selecting suppliers and determining what
distributors and retailers to use.
Stages in Moving toward Corporate Social Responsibility
Stages in Moving toward CSR
Wal-Mart turns green
Wal-Mart announced in 2005 that it will be a “good steward to the
environment” and will spend $500 million a year to increase fuel efficiency
in Wal-Mart’s truck fleet by 25% over three years; reduce greenhouse gases
by 20% in seven years; reduce energy use at stores by 30%; and cut solid
waste from U.S. stores and Sam’s Clubs by 25% in three years.
Wal-Mart is experimenting with green roofs, corn-based plastics and
It is also working with suppliers to figure out ways to cut down on
packaging and energy costs and has opened two “green” supercenters
Wal-Mart’s moves are mainly done for economic purposes—to save energy,
save costs, and increase revenue from increasing demand for green products.
Wal-Mart Moves toward Environmental Sustainability
Wal-Mart Moves toward CSR
Timberland: “Doing Well by Doing Good”
Timberland is a leader in the design, engineering and marketing of premium-quality footwear,
apparel and accessories for outdoor consumers.
In shoes, Timberland uses recycled materials, non-chemical substances as much as
possible, made in energy-saving factories. The label gives consumers information “about
the product they are purchasing, including where it was manufactured, how it was
produced, and its effect on the environment”.
Timberland gives back to communities. Under the Path of Service program, its employees
have contributed over 200,000 total hours of service that benefited over 200 community
organizations in 13 countries, 26 states and 73 cities.
To commemorate Earth Day, Timberland plants a tree on behalf of each consumer who
Timberland has also done such things as offering $3,000 incentives to employees who
purchase hybrid cars.
Other companies in this category are Patagonia, Whole Foods Market, Fetzer Vineyards, and
Timberland Moves Toward Environmental Sustainability
Timberland Moves Toward CSR
What are some major social causes that
Avon Breast cancer
General Mills Better nutrition
General Motors Traffic safety
Home Depot Habatat for Humanity
Kraft Reducing obesity
Levi Strauss Preventing AIDS
Motorola Reducing solid waste
Pepsi Cola Staying active
Shell Coastal cleanup
Petsmart Animal adoption
British Airways Children in need
Starbucks Tropical rainforests
Best Buy Recycle used electronics
Companies Choose a Specific Higher Cause to Advocate
Companies That Adopted a Higher Cause
What is the Relationship between
Business and Society?
• Old philosophy: “What is good for business is good for society!”
The simple act of profit maximization is good enough.
• New philosophy: “What is good for society is good for
– Every company should figure out not only how to improve
its output but also its outcomes. A food company should
improve nutrition; an energy company should improve
energy; a bank should improve sound savings.
Michael Porter and Michael Kramer, “The Big Idea: Creating Shared Value,”
Harvard Business Review, January/February 2011.
What is the Relationship between
Business and Society?
Capitalism Has Become
the Global Economic System
• Capitalism has three
freedom, and the rule
• Supply side capitalism.
Excellent. Demand side
capitalism. Not so good.
• 14 Problems of
• Not just
• Not just
. Not just
“Within five years. If you’re in the same business you
are in now, you’re going to be out of business.”