Contemporary trends in
Marketing 3.0: Values-Driven
April 4, 2011
Two Recent Books by Professor Kotler
Session One. How to deal with your company’s
major business challenges and opportunities.
Session Two. How to search for powerful new
Session Three. How to develop a superior
company reputation through sustainability
On a scale of 1 to 3 (3 = highest),
How much is this a challenge to your company?
• Distrust of business
• Economic recession and turbulence
• Technological advances and disruptions
• Environmentalism and climate change
• Customer empowerment and the new social media
• Political conflict and regulatory changes
Times Are Bad
CEO’s are now playing miniature golf.
Obama met with small businesses - Chrysler, Citigroup and GM, to discuss the
People in Africa are donating money to Americans.
The Mafia is laying off judges.
An optimist is a person who sees an opportunity in every calamity.
A pessimist is a person who sees a calamity in every opportunity.
Distrust of Business
• In a 2009 survey, only 16% of respondents respect the integrity of
business executives. And car salesmen and advertising executives
were the least admired by the public.
Business scandals: Enron, World Com, Tyco, Madoff, Goldman Sachs
High pay to the few: CEO paid 350 times average workers salary
Recession and falling behind
– More transparency
– Better boards and management
– Investing in corporate social responsibility
Is Your Company Going to Fail?
Signs to Watch for
• James Collins wrote in How the Mighty Fall :
– Stage 1. Successful companies get arrogant and think they
can do many things.
– Stage 2. They pursue growth too aggressively.
– Stage 3. They ignore early warning signs of failure
– Stage 4. Their failure becomes very public.
– Stage 5. If they don’t reform, they finally go bankrupt.
• Companies are often blind-sighted by their eagerness
to build short-term growth and ignore the risks.
• Most companies are short-lived.
– Advances in information, communication, and
transportation now connect the whole world
– Lowering of trade barriers
Globalization hurts as many nations as it helps
Globalization increases country inequality
Globalization provokes nationalism and protectionism
Globalization threatens cultural traditions and values
– New market opportunities if we can offer something better
Economic Recession and Turbulence
• Not all companies were hurt by the fiscal meltdown.
• Distinguish between:
• Risk reduction strategies
Early warning systems
Corporate social responsibility
• A radical change in an industry, business
strategy, etc., especially involving the
introduction of a new product or service that
creates a new market:
• E.g. Globalization and the rapid advance of
technology are major causes of business
Technological Advances and
• Scientific advances and inventions
– What is the impact of the birth control pill, Genome
project , digitalization, cell phones, social media, robotics,
nanotechnology, biotech, bioenergy…
• Creative destruction
– Can you avoid the fate of the music industry, publishing
industry (newpapers , magazines, books), high cost
• Theory of disruptive innovation
– What can happen to your industry or company?
Theory of disruptive innovation
• The theory of disruptive innovation was invented by Clayton
Christensen, of Harvard Business School, in his book “The
Innovator’s Dilemma”. Mr Christensen used the term to
describe innovations that create new markets by discovering
new categories of customers. They do this partly by
harnessing new technologies but also by developing new
business models and exploiting old technologies in new ways.
• He contrasted disruptive innovation with sustaining innovation, which
simply improves existing products. Personal computers, for example, were
disruptive innovations because they created a new mass market for
computers; previously, expensive mainframe computers had been sold
only to big companies and research universities.
Cardiac bypass surgery
Full service stock brokerage
On-line stock brokerage
Source: Clayton M. Christensen, The Innovator’s Dilemma, p. xxix.
Tomorrow Will Be Different
Southwest, Ryan Air
SkyWest, Air taxis
Source: Clayton Christensen
Environmentalism and Climate Change
• Companies need to go “green” to reduce
waste, pollution, and water shortage.
• Those companies that go “green” early will
establish a strong reputation and following.
They will also save money in the long run.
and the New Social Media
• Who has the most market power?
• What are the best new ways to communicate?
Rating systems (Edwards, J. D. Power, Rotten Tomatoes, Craig’s List)
Political and Regulatory Change
• Growth of social movements
Gay rights groups
• Political party shifts
• Regulatory interventions
– Financial regulation
– Anticompetitive regulation
– Safety and health regulation
MARKETING’S LOSS OF EFFECTIVENESS
MARKETING will be less
effective in the next few
demand more TRADE
PROMOTION. This will
leave less money for
consumer promotion for
brand building and
ultimately reduce brand
Investors will then
downgrade the stock.
This will leave the
company with fewer
resources to prop up
This is a VICIOUS
such as TV 30second spots,
are growing LESS
Marketing budgets will be
Categories are so
heavy price cutting
Companies will want
marketers to do more with
The public, in its
wish to spend less,
networks will play an
will be less inclined
to pay higher
influential role in
prices for top brands
where the quality
minimal. There is a
strong shift to
store brands and
means that top
overvalued and there
may be a brand
•1st Shift - from creating marketing
strategies to driving business impact.
•2nd Shift - from controlling the
message to galvanizing your network.
•3rd Shift - from incremental
improvements to pervasive
•4th Shift - from managing marketing
investments to inspiring marketing
•5th Shift - from an operational focus
to a relentless customer focus.
•GE, Wal-Mart, Charles Schwab,
Procter & Gamble, Burger King,
Zappos, Best Buy and Dell
Involve Your Customers In Your Planning
• Four ways to view customers:
– Purchasers of our product
– Persons from whom we gain insight and with whom we can test
our planned products
– Persons who Influence others to buy our product (net
promotion score NPS)
– Persons who co-create product and communication ideas
• Company examples of co-creation:
– Lexus invites customers to build their own Lexus by going to
www.Lexus.com and drawing from a complete package of
available colors and options packages.
– Lego and Harley Davidson have welcomed their respective
enthusiasts to participate in improving their market offerings.
– Doritos ran an online promotion urging fans to create 30-second
spots for Doritos and post them for on-line voting to be picked
to air in one of the three Super Bowl slots. The user-generated
ad won the top spot at the 21st USA Today Super Bowl Ad
Meter defeating ads made by professional agencies.
Market to All Your Stakeholders
• Our thinking has shifted from maximizing shareholder value to maximizing
• Stakeholders include customers, employees, channel members, and
– Customers: They need a feeling of gaining superior value from your offering.
– Employees: They need to believe in their company’s mission, vision and
– Channel members: They must believe that they are receiving equitable
reward for their contributions.
– Investors: They need assurance that the company has a viable long run plan
for growth and continued profitability
MARKETING 1.0 vs 2.0 vs 3.0
Satisfy and retain the
Make the world a better
New Wave Technology
How companies see
Mass Buyers with
Smarter Consumer with
Mind and Heart
Whole Human with
Mind, Heart, and Spirit
Corporate and Product
Corporate , Vision,
Are there any companies that you love or would
deeply miss if they went out of business?
Companies Americans Love
Amazon, 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, Whole Foods.
The researchers found these “firms
of endearment” to be highly
They also found eight
characteristics common to these
Characteristics of “Firms of Endearment”
They align the interests of all stakeholder groups
Their executive salaries are relatively modest
They operate an open door policy to reach top management
Their employee compensation and benefits are high for the
category; their employee training is longer; and their employee
turnover is lower
They hire people who are passionate about customers
They view suppliers as true partners who collaborate in improving
productivity and quality and lowering costs
They believe that their corporate culture is their greatest asset and
primary source of competitive advantage.
Their marketing costs are much lower than their peers while
customer satisfaction and retention is much higher.
How Are You Planning
to Grow Profitable?
– Finance and cost control become important (time and motion
– Finance becomes important
• Organic growth
– Marketing and sales become important
– R&D and technology become important
Innovativeness is a Capability
• Innovativeness is a capability; consider Sony and 3M.
• Innovation requires organizing three markets within the firm:
– An idea market
– A capital market
– A talent market
• The best innovations provide solutions to customer problems,
not to the company’s product problems.
• Strong market-creating innovations have a long life and create
Companies Need an Innovation
• There are four major types of innovation in business:
Business model innovation
• A company first needs to choose an innovation strategy.
• The decision should include building an innovation culture
and providing funds for training, incentivizing, and
• Each approved innovation project must have an innovation
plan, budget, time line, and deadline.
• A high level executive manages the innovation projects
portfolio, updates their status, shares with the CEO, and
they make further decisions on extending or terminating.
Business Model Innovations
Amazon and Kindle
Apple and iTunes
Barnes and Nobles bookstores
• Incentive innovations
Guarantees and warranties
Subscription selling (Book of the Month Club)
• Retailing innovations
Category killer stores
Differentiated stores with same chain (Best Buy)
Exclusive lines of merchandise (Target: Michael Graves, Martha Stewart)
Selling on TV (Home Shopping Network)
Selling on the Internet
• Producer innovations
– Brand as a platform (Virgin, iTunes)
How does your company go about getting new
product and service ideas? What are the best
sources of new ideas? Who is responsible for
collecting new ideas?
Sources of New Ideas
• Scientists and Engineers
– 3M and Philips
– Problems in present products
– Dream products
• Other partners in the company network
How Will Your Company Be Measured?
Indices now measure how well a company performs in the triple bottom
line: profit, planet, and people.
To encourage companies to improve their economic, environmental, and
social impact on the society.
Good companies work toward environmental sustainability, have
positive relationship with all stakeholders, protect universal human
rights, possess good supply chain labor standards, and counter
Corporate sustainability as “a business approach that creates longterm shareholder value by embracing opportunities and managing
risks deriving from economic, environmental and social
Introduce the GS Sustain Focus List, which includes the list of
companies with sustainable practices
The Marketing Mindset
• Your company and stakeholders need to embrace a market and
• Your company needs a CMO who participates in formulating the
company’s growth strategy.
• Your company needs to define its mission, vision and values as the starting
point for its transformation to Marketing 3.0.
• Your offerings must touch the customer’s mind, heart, and human spirit if
they are to win over the customer.
• Your company needs to practice the Triple Bottom-Line: Economic Value,
Environmental Health, and Social Progress. This is the key to Profitability,
Returnability, and Sustainability.
“Within five years, if you run
your business in the same way
as you do now, you’re going
to be out of business.”
THANK YOU FOR YOUR