When I was still the Managing Editor of Launch Asia Magazine, I got the chance to interface with Professor Kotler in one of his Asian Tour seminars held at the Shangri-La Hotel in Manila entitled “New Marketing in the New Millennium.” If Professor Kotler is to be heard, marketing, the engine that drives growth, is in desperate need of an overhaul. “The only companies that will win will be those who make their customers into winners,” declares the marketing guru before hundreds of senior executives, brand managers and CEOs during the seminar.
Professor Kotler further cascades on the ways marketing is changing, and the role technology and the Internet play in that process. Having cited what the initiatives are in the new millennium, we pay attention on the pitfalls specifically within product-centered companies as Kotler insists that marketing should be dynamic, ever changing as the changing consumer behavior and the emergence of competition. “Marketing departments tend to develop a set budget and allocation pattern that persists year after year. Each manager wants at least the same amount of money he spent last year plus some. No one raises the question about radically shifting around the budget toward more productive uses of the money. Yet it is vitally important to make strong adjustments in budgets to reflect strong changes in the economy, consumer behavior and competition. Product-centered companies are doomed because their planning is inside-out, rather than outside-in. Companies must take their signals from the market and from customers.”
Professor Kotler also postulates that today’s companies can leverage the proliferating and expanding marketing communication and promotion channels (e.g. shelf space, direct mail, telemarketing, faxes, email, print media, web pages and web advertising), yet the difference lies in how to effectively use these into their benefit. “Advertising agencies can no longer rely on just creating ads and choosing media,” he says. “ There are so many new ways to communicate today. Smart ad agencies will turn into full service communication consulting agencies. They will work with their clients to choose the best messages and vehicles, whether ads, PR releases, events, sales promotions, sponsorships, and so on.”
A question was raised to Professor Kotler: “What is the formula for competing better in the new environment?”
“The art of marketing is the art of brand building. If you are not a brand, you are a commodity.” Companies all over ensure budget tools in order to understand their brand management better.
Instead of acquiring a lot of customers, for instance, he suggests that efforts must be made on of developing loyal and more frequent users among a company’s present base of customers.
“Traditional marketing managers have a good understanding of marketing research, buyer behavior, product featuring and positioning, pricing, advertising, sales promotion, and managing distribution. But competition is so intense that today’s marketing managers need to think more creatively outside of the box. The marketer must continuously find new ways to create new value for customers. Today’s marketers need additional skills brought about by the new technology:
· Database marketing and data-mining
· Telemarketing
· Public relations marketing (including event and sponsorship marketing)
· Profitability analysis applied to customers, market segments, channels, and order sizes
· Customer Relationship Management
· Partner Relationship Management
· Customer Solutions marketing
“Price is everything,” dares Professor Kotler, “and the low-cost producer is the only winner!”
“ A company should always try to make its products different and better. If this is not possible, the company must invest in making its services different and better. Many of today’s leading companies are winning on superior service since their products are not much different from competitors. Smart companies are moving toward Customer Relationship Management. This involves acquiring data on each valued customer and customizing the company’s offerings and services to each customer. These companies are developing a rich customer database and have the skills of analyzing and “mining” the customer database to detect new segments and new trends. “
Back to the basics, the first place to begin according to Kotler is for a company to have a thorough look at itself and where it stands at the moment for competing better in the new environment.
Kotler cues that companies operating in an industry can be classified as either a Generalist or a Specialist. Generalists consist of usually three (3) players. In terms of market shares, they are the No. 1, 2 and 3 companies. The Generalist focus on a full line of products and high volume and heavy promotion.
On the other hand, the Specialist focus on a target market, high margins, high service. For medium-sized companies, Kotler’s advice is for them to join the roster of the Specialists “or they will fall into an unprofitable Ditch.”
Following his observations,
· If the market suffers a downturn, the fight between #1 and #2 can send #3 into the ditch.
· The dogfight between #1 and #2 tends not to hurt the specialists.
· Generalists who try to operate specialist businesses generally fail.
· Global leaders must be strong in at least two of the triad markets.
· Foreign competition is most likely to hurt the #3 generalist.
· Enter the foreign market preferably with a better product at a lower price rather than a better product at a premium price.
November 21st, 2008
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