FUTURE OF MARKETING- A MUST READ

This thread is being started with the sole aim of discussing the evolution of marketing and ways of coping with the same. This will help gain a better understanding of where Marketing is headed and thereby provide us with the required edge. A bunch of eruditely articles will be presented about the same.
All in all, a must read for all present and future mangers/leaders.

In August last year, a group of marketing theorists gathered at Bentley College in Massachusetts, US. Among them were the grand viziers of marketing: Kellogg's Philip Kotler, Emory University's Jagdish Sheth and Wharton's Jerry Wind. The professors hadn't come together for another routine seminar discussing the intricacies of marketing. They had come together to discuss the future of the discipline itself. Why was marketing in such trouble? And what could be done to fix it?



In his luncheon speech, Kotler called for a greater attention to ethics. This, he declared, would help restore public confidence in marketing. Wind presented a paper on challenging the mental models of marketing. Sheth argued for an upgradation of marketing education and a certification programme for marketing practitioners. Rajendra Sisodia, professor of marketing at Bentley College and the symposium's sponsor, presented a study on the image of marketing done jointly with Sheth. That highlighted another area of concern - marketing's image has taken a beating, contributing to rising consumer resistance and declining confidence within companies about their marketing departments.

Some others were even more strident, arguing that the function needed to reinvent itself. This was the first time that so many had put forward so radical a set of suggestions.

Ironically, though the past few years have seen some great marketing successes, the function itself is in trouble. Within organisations, the function no longer enjoys the same clout as before. Outside them, competition has heightened, the media has fragmented, and retail has consolidated. At the same time, the consumer has become much more demanding.

In November 2002, a Businessworld cover story titled 'Why Is Marketing Not Working?' reported on this rising disenchantment. Initially, academics were reluctant to accept that marketing needed a radical overhaul, not mere nips and tucks. However, that realisation has sunk in gradually. And between 2002 and now, work on a resurrection has begun.


These efforts have partly centred on helping marketing departments do their job better. Some academics feel it is time to junk Kotler's four Ps - product, price, promotion and place. It's not built around the customer. Sisodia and Sheth have suggested an alternative framework called the four As - acceptability, affordability, accessibility and awareness. This, they say, is far more consumer-centric.

With marketing and his old framework under fire, Kotler offers two propositions. His new framework, holistic marketing, is an attempt to focus on the "whole consumption chain, the life-space of the customer, and the surrounding competitive environment" than just the product or service. Also, agreeing that the four Ps are the wrong starting point for marketers, he is now telling companies to first covert the four Ps into four Cs - customer value, customer costs, customer convenience and customer communication. That is Kotler's prescription for making marketing more customer-centric.

The thread of customer-centricity runs through the work of Venkat Ramaswamy and C.K. Prahalad - but with a slight twist. In The Future of Competition, the two professors at the University of Michigan's Ross School of Business argue that product and service differentiation are passé. Competitive advantage lies in meaningful customer experiences. Then they go on to propose that companies shouldn't even try to guess what experience customers might find compelling. Instead, they should innovate a process that enables every customer to create the product or service experience he wants.

As concepts go, co-creation has been around for a while. But by focusing on the consumer's experience, Prahalad and Ramaswamy have shown how to use it for achieving the attractive proposition of mass personalisation.

Not all are obsessed with grand frameworks alone. Some, like London Business School's Nirmalya Kumar, are more bothered about the immediacy of market realities. His major concern is the shifting balance of power - from brand owners to retailers. In another new approach, Harvard professor Gerald Zaltman is borrowing from neurology, sociology, cognitive science and psychology to understand how consumers contemplate needs and evaluate products.

In their recent best-seller, Blue Ocean Strategy, INSEAD professors Renee Mauborgne and W. Chan Kim suggest that companies should focus on creating uncontested market spaces instead of competing in overcrowded spaces.

They are training their guns on another marketing staple: segmentation. According to them, by concentrating on the differences between different consumer groups, companies have over-segmented some markets. To succeed, they say, companies should focus on the commonalities, and not the differences, among consumer groups. By doing that they will be able to cater to a larger market.

All these ideas represent one cluster of approaches.

Sheth, the originator of the four-A framework, has another, more daring proposition. Do away with the traditional definition of the marketing department, he counsels. Expand its role. So far, companies' marketing departments have focused on just one stakeholder - the consumer. According to Sheth, they should address the needs of not one, but seven, stakeholders. They comprise the three primary stakeholders of customers, employees and investors, and four others: the community within which the company exists, suppliers, the media, and government.

Surely, a churn is underway. Much of marketing theory was dominated by Kotler till now. Its future is now up for grabs.
 
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enigma

Par 100 posts (V.I.P)
'Marketers focus too much on the product'

In the world of marketing, there is perhaps no stronger brand name than Philip Kotler. It is he who created what is now somewhat disparagingly described as 'traditional marketing'. As his famous four-P framework has come under fire, the professor of international marketing at Kellogg School of Management has gone on the offensive. In his recent books, like Marketing Insights From A to Z and Ten Deadly Marketing Sins, he has asserted that the framework is robust enough to absorb all the changes in the marketplace, and that companies are not implementing it properly. Here, Kotler sticks to his guns.




Marketing has taken a lot of flak from several quarters. Some say marketing teams operate with a short-term orientation. Others feel the function bears no accountability for results. How much of this criticism is valid?
Marketing is at a crossroads. Traditional marketing doesn't work. It is too short-term, and seen more as a cost than an investment. It uses fewer tools than are now available. It relies on spending a lot of money on advertising. But TV advertising is growing less effective in several countries. People's time is scarce and they are occupied in many other ways than watching commercials. In fact, they have the capability of bypassing commercials. We need to forge a 'new marketing'.


Marketers have not found easy ways to account for returns on investment (RoIs) of their campaigns. They think 'creativity' is enough. Senior management is no longer tolerating this. Senior management is highly financially-minded and wants marketers to account for RoIs.

For several decades, the four-P (product, price, promotion and place) framework you evolved dominated marketing theory and practice. Now many people feel the model is outmoded. What do you feel about it?
I don't agree. The four Ps are a useful framework for focusing on the elements of a company's offering. But it's a mistake to start with the four Ps. The starting point is segmentation, targeting and positioning. Then you move to the four Ps. But you convert them first into four Cs: customer value, customer costs, customer convenience and customer communication. This makes the customer the centre of the four Ps.

Various people have added more Ps. I have no objection. Among them are people, packaging, process and public relations. If it's useful for a company to highlight an additional dimension, that's fine. And it doesn't have to begin with a P.

Furthermore, I would welcome critics of the four Ps to propose an alternative framework. I will accept it readily if it provides more customer insight and carries more strategic implications.

At your session in Mumbai last year, you spoke about holistic marketing. How is that different and how does it reshape our understanding of what marketing now needs to deliver for businesses?
Marketers focus too much on the product or service offering, rather than on the whole consumption chain, the life-space of the customer, and the surrounding competitive environment. For example, the Lexus division of Toyota operates holistically by designing the customer experience in the dealer showroom, the customer experience in the car, and the customer experience when he or she brings the car in for service. This goes far beyond selling a car.

(In his book, Marketing Moves - A New Approach to Profits, Growth and Renewal, Kotler says that to explore, create, and deliver individual customer value in a dynamic and competitive environment, marketers need to invest in the company's relations with all stakeholders - consumers, collaborators, employees, and communities. Companies therefore go beyond customer relationship management towards whole relationship management. These companies, termed holistic marketers, succeed by managing a superior value chain that delivers a high level of product quality, service and speed. They achieve profitable growth by expanding customer share, building loyalty, and capturing customer lifetime value.)

Across the world, businesses are struggling to evolve marketing strategies that are truly differentiated. What is behind this phenomenon? Also, are generic competitive platforms - say, a low-cost position like Wal-Mart's - a sustainable strategy? After all, in any market, there can't be more than one Wal-Mart or one Southwest Airlines.
Every market will attract one or more price cutter who will draw business away from the higher-price firms. But price cutters need to offer more than low price. Wal-Mart also offers great product variety and is adding new categories of products and services. Southwest Airlines offers a comfortable flight on good aeroplanes at a low price.

High-price firms should not try to win on price but by meeting other segment needs. Ted Levitt said: "You can differentiate anything." And I agree. We have seen chicken differentiated by Frank Perdue and coffee differentiated by Starbucks.

Many firms in India continue to rely on advertising to build brands. In a world where consumers are taking more control over information, what impact can such over-reliance on advertising have on brands? What are the new tools and techniques marketers need to look at?
Marketers have to reduce their addiction to heavy TV advertising for brand building. They hold on to it because it's a lazy way to do marketing: the marketer hires an ad agency to do the work and the end product is a TV commercial.

Marketers now must use a large assortment of 'guerrilla' marketing tactics to get their name and message to the target market. Companies are adding product placement, radio interviews, sponsorship of events, street tactics, online marketing, reaching the influentials, and other communication strategies to the promotion mix. Some famous products did little or no advertising to get noticed: Starbucks, The Body Shop, Viagra, Amazon, Yahoo!, eBay, Palm, PlayStation, Harry Potter, Red Bull, Intel and Blackberry.

What would you define as a strong brand in today's cluttered marketplace? Can you pick out a few that you believe stand out? What are their characteristics and what do they do right? What can we learn from the way they are managed?
The strongest ones are cult brands, whose customers are fans, not just consumers. Think of Harley Davidson motorcycles, Manchester United and Starbucks.

Another category of strong brands is made up of those where customers have settled into a habit of ordering: Coca-Cola, McDonald's and Intel, among others. These are able to charge more and command a major share of the market. There is no one strategy that accounts for all strong brands. But in each case there was a vision of creating a brand that met a strong need that others did not address.

These days, you place a lot of emphasis on the role of technology in marketing. But, so far, customer relationship management (CRM) has not had enough impact. What's going wrong? Are marketers rushing in to build customer relationships - when they don't really want to enter into relationships?
CRM got a bad rap mainly because firms like Siebel and Oracle sold it as a technology without paying sufficient attention to whether a company's culture was ready to use it. These suppliers should have helped their customers first become customer-centric... . CRM is not for every firm and some firms don't realise it. But it gives a competitive edge to firms that want to understand their customers as individuals and want to 'customerise' their messages, offerings, and even purchase terms.

Everybody loves innovation. It is said to be marketing's key competitive weapon. Yet, very few companies have a good process for ensuring that huge investments in innovation deliver results. How can firms improve their strike rates on innovation?
3M, Sony and others have spelt out a flow of sequential processes to improve the chances of launching successful products. We set up stage-gates through which a new idea must pass and we know when to kill a project that won't succeed. In my Marketing Management book, I have spelt out eight stages and processes that must be in place to deliver successful new products. But even then, the lack of perfect information and the occurrence of fortuitous events always intrude to make the probability of success less than 100 per cent.
 
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