00:00:00
it's not a good framework for
00:00:01
understanding that now you can expand
00:00:02
your definitions of Economics to
00:00:04
behavioral economics and then it gets
00:00:05
easier it used to be the business model
00:00:08
was you make a great product and the
00:00:11
product has tremendous value to the
00:00:14
customer all the value is in the product
00:00:17
and before you know
00:00:18
it all products will have to become good
00:00:22
because bad products will be known
00:00:23
instantly and good is not good enough
00:00:26
there are so many products and so much
00:00:28
competition that your product isn't very
00:00:31
different from a competitor's product
00:00:33
and so what has to happen now I'm
00:00:37
beginning to think now that the
00:00:40
stability that we associated with
00:00:42
products is gone and so if you if you
00:00:46
try to base your business on a product
00:00:49
that you think will last a long time uh
00:00:53
then I suspect you're likely to be in
00:00:54
trouble because Society will change more
00:00:57
rapidly 50 years ago you could say my
00:01:00
God anyone who had Supply could find a
00:01:01
customer people were desperate for
00:01:03
product the minute they had money to buy
00:01:05
let me give you an example um a long
00:01:08
time ago in the early
00:01:10
1970s we were working
00:01:12
on uh how to display text how to display
00:01:16
high quality text on a computer over the
00:01:18
course of the years that changed from
00:01:20
personal Computing and it grew into the
00:01:24
Technologies of pictures and music and
00:01:27
sounds and movies and then it grew
00:01:30
beyond that into the Technologies of
00:01:33
building communication systems and
00:01:35
environments and sensing but we're going
00:01:38
to reach the end of demand at some point
00:01:41
many of the forces that are determining
00:01:43
the new culture um fall outside of the
00:01:46
definition of traditional
00:01:52
economics from the start the Paramount
00:01:55
importance of consumption had been
00:01:58
fundamental and from the ribs of the
00:02:00
small neighboring
00:02:02
Village customers were
00:02:04
created and needs were taken Beyond
00:02:07
daily
00:02:09
Provisions then someone said let us make
00:02:13
them in our image after our
00:02:16
likeness and a new attitude will
00:02:18
revolutionize
00:02:21
economy and that revolutionary
00:02:24
element will be
00:02:27
called marketing
00:02:32
well I think it's partly history usually
00:02:34
sales comes
00:02:37
first a small company as it
00:02:40
grows has some salespeople and one day
00:02:43
somebody says we need a brochure we need
00:02:46
to do some
00:02:47
advertising and marketing starts as a
00:02:51
sales support function because marketing
00:02:54
definitely meant sales when it was first
00:02:58
used and then it started to mean more
00:03:01
than promoting an existing product it
00:03:04
meant uh 4 PS and that that is if you
00:03:08
will a model of marketing that is very
00:03:11
much from the supply side or the company
00:03:13
side out toward the customer we Define
00:03:16
what we're going to sell we figure out
00:03:17
how we're going to price it we determine
00:03:19
the promotional plan and then we push it
00:03:21
into marketing channels but very soon
00:03:24
marketing becomes interested in big
00:03:25
things
00:03:27
segmentation it becomes interested in
00:03:29
branding
00:03:30
and these things are not very
00:03:32
measurable but very
00:03:34
strategic we look at that as marketing
00:03:38
1.0 because it's really about a
00:03:41
distribution platform it's a model that
00:03:44
says that we at corporate headquarters
00:03:46
who control the supply need to make the
00:03:49
product available in ways that are
00:03:51
accessible to Consumers uh in all the
00:03:53
places they want us to be in the Ford
00:03:55
economy the whole drive towards
00:03:57
manufacturing was standardization you
00:03:59
could have any color model to you wanted
00:04:01
as long as it was black revolutionizing
00:04:04
consumer's ability to get products by
00:04:06
standardizing them into a single product
00:04:09
but it's basically a model that's
00:04:10
defined by corporate power and the lack
00:04:14
of any kind of power or clout on the
00:04:16
part of consumers or
00:04:22
retailers in those earlier times when
00:04:25
the marketing ecosystem was void and
00:04:28
formless a miscellane of unclassified
00:04:32
subjects eagerly crept up onto the
00:04:35
driving categories of this new
00:04:38
force and advertising salesmanship
00:04:43
market research Sales Management
00:04:46
branding started to make the world go
00:04:50
around by then Philip Cutler one of the
00:04:55
founding fathers and author of the best
00:04:57
pages in the marketing Bible
00:05:00
made a division in the history of the
00:05:02
discipline and starting with
00:05:04
fundamentals such as the four
00:05:07
Ps every sort of thing in and around
00:05:11
market and
00:05:12
customers was given a
00:05:15
name many of us have taught in Business
00:05:17
Schools what's taught in MBA curricula
00:05:20
to this day um is really designed around
00:05:22
that model the famous model of the four
00:05:24
Ps of the essence of marketing is
00:05:27
putting together a marketing mix that is
00:05:28
defined by product
00:05:30
promotion price and of course
00:05:32
distribution or place so that was the
00:05:34
second stage the third stage was um
00:05:38
segmentation targeting and positioning
00:05:40
you're not dealing with a mass Market
00:05:42
anymore it has pieces to it and segments
00:05:44
so you want to go after the right ones I
00:05:48
always think you're looking at the
00:05:49
overall Trends uh you know how are ages
00:05:53
changing how are tastes changing uh is
00:05:55
there a big move to the environment uh
00:05:58
something like that be up to now we were
00:06:00
only thinking of a transaction but now
00:06:03
we're in the relationship stage which is
00:06:06
to build not only good loyal customers
00:06:08
but loyal Partners first of all you
00:06:10
start with trust you start with quality
00:06:13
you start with all the normal stuff you
00:06:15
get taught at MBA school or marketing
00:06:18
101 from Mr Cutler and then you infuse
00:06:23
mystery sensuality and
00:06:26
intimacy and then you watch it become a
00:06:28
love Mark and the fifth stage is brand
00:06:30
new and that is companies are thinking
00:06:33
about co-marketing with their customers
00:06:36
that is not just making something and
00:06:38
seeing if they're interested but having
00:06:40
them help us make what they would be
00:06:41
interested
00:06:43
in and after product Place price and
00:06:47
promotion were kind of dismissed as
00:06:50
being old-fashioned the P's became C's
00:06:54
and convenience cost to the user
00:06:58
communication cust needs and wants ruled
00:07:02
over the Earth and this and this idea of
00:07:05
you know moving from uh from you know
00:07:06
from sort of a bullhorn where you're
00:07:10
shouting out messages to ones where
00:07:11
you're trying to
00:07:13
stimulate you know an organic
00:07:15
conversation amongst amongst consumers
00:07:18
is very tricky because if if you if it
00:07:21
looks like you're pulling the strings it
00:07:23
won't be authentic this quest for
00:07:25
authenticity I think that you're seeing
00:07:28
products really now being marketed in
00:07:30
ways that they have to touch all of the
00:07:32
different communities to be truly
00:07:34
successful and I think that's what what
00:07:36
successful marketers are doing today
00:07:39
selling is much more about
00:07:41
strategy about planning about
00:07:44
understanding customers and about being
00:07:47
creative understanding the customer Val
00:07:50
uh well enough to know how the customer
00:07:52
sees value you just can't go by your gut
00:07:55
you just can't go by the Numbers either
00:07:57
you have to have a good theory and the
00:07:59
numbers have to really back it up so I
00:08:01
really kind of try to look at the
00:08:03
numbers I try to look at the
00:08:04
developments I try to get out the
00:08:06
magnifying glass and I try to come up
00:08:08
with a lot of theories about how people
00:08:10
are acting and what's
00:08:12
new which means that salespeople today
00:08:14
have to understand not just the products
00:08:17
they have to understand customers the
00:08:20
customer's business the customer
00:08:22
finances if you really buy the argument
00:08:25
that consumers have the power then it's
00:08:27
not return on product it's not return on
00:08:29
ad budget it's not return on technology
00:08:31
it's how do you give the customer a
00:08:33
better return on herself by Dent of the
00:08:37
fact that she gave you her business and
00:08:39
not your competitor I I was satisfied
00:08:42
with an expression to remind people what
00:08:44
it really is and I call it CC
00:08:48
DVP so what is marketing it is creating
00:08:51
communicating and delivering value to a
00:08:54
target market at a profit there there
00:08:56
isn't a new idea there there's just um
00:08:59
all you know existing ideas that are
00:09:00
finally being executed well so they have
00:09:02
the impact that we thought they would
00:09:04
have all
00:09:05
along but while historical accounts may
00:09:09
lead us to conclude that marketing has
00:09:12
always
00:09:13
existed I wonder if it is true that it
00:09:17
is the mere application of new names to
00:09:19
Old
00:09:21
practices why is it that
00:09:23
marketing its theories and its
00:09:26
Advocates seem to be always under
00:09:30
scrutiny and at the same time blindly
00:09:35
worshiped as holy
00:09:47
scriptures rising from factual and
00:09:50
conceptual basis to higher levels of
00:09:53
generalization and
00:09:55
integration the character of marketing
00:09:58
thought has being determined not only by
00:10:01
hard data from
00:10:03
reality but by the subjective elements
00:10:06
that from time
00:10:08
immemorial far beyond memory record or
00:10:13
tradition have influenced the viewpoints
00:10:15
of
00:10:17
man I think marketing is being replaced
00:10:21
by
00:10:22
connectors it was Steve Jobs at Apple
00:10:25
that said creativity is just connecting
00:10:28
stuff there are brands that are loved by
00:10:32
people and if it if that love affair is
00:10:36
continued through various activities
00:10:39
events um and
00:10:42
Communications uh and not through
00:10:44
advertising and so on then the brand
00:10:47
strength can be preserved uh without uh
00:10:50
the old Mass ad advertising approach uh
00:10:54
the fact is that uh when we think
00:10:57
holistically or systemically about what
00:11:00
controls a Market's perception of a
00:11:02
brand which ultimately is about
00:11:04
attitudes how do we feel about a brand
00:11:06
behaviors how much do we buy from a
00:11:08
brand think about MP3 players okay I
00:11:11
mean you can buy a zoom a Samsung a
00:11:15
Phillips or an
00:11:17
iPod okay now maybe the zoom's cheaper
00:11:20
maybe it's um better value maybe it
00:11:24
lasts
00:11:25
longer but the iPod's irresistible thep
00:11:29
pod's dripping with mystery
00:11:32
sensuality intimacy um this ability to
00:11:36
um uh to uh to be able to associate a
00:11:40
product with its consumers to be able to
00:11:42
say I I like this consumer and this
00:11:44
consumer likes this product therefore I
00:11:45
might like that product if you know if
00:11:47
you make it explicit of course it won't
00:11:49
work but if you build social social
00:11:52
factors social social social um media if
00:11:55
you will into everything you do is much
00:11:58
greater and as you and I both know I
00:12:00
mean the enlightened organizations of
00:12:02
the world essentially reverse engineer
00:12:04
their operations by defining the types
00:12:06
of customer experiences they want to
00:12:08
deliver in the market for the customers
00:12:09
or segments of customers they care about
00:12:11
we have basically infinite data um uh
00:12:15
about about behavior and um the problem
00:12:18
was there weren't enough people looking
00:12:20
at the data analyzing it thinking about
00:12:23
it from an economics perspective most
00:12:25
marketing people spend most of their
00:12:27
time in the business of doing business
00:12:29
or
00:12:30
in false situations like focus groups
00:12:34
and so on they don't spend enough time
00:12:37
observing living with consumers
00:12:39
societies are too big for you to operate
00:12:42
just on the basis of observation you've
00:12:44
got to really go out and draw the
00:12:46
statistics you know if you live in the
00:12:48
big cities you're just not going to
00:12:50
understand how people are living out in
00:12:52
the more rural areas anymore and how
00:12:54
they want to change unless you're really
00:12:55
following the the the numbers and and
00:12:58
the thoughts and the
00:12:59
you know if you want to learn about how
00:13:02
a lion hunts you've got to go to the
00:13:05
Jungle not to the zoo if you want to
00:13:08
learn about consumers you've got to live
00:13:11
with them not put them in focus groups
00:13:13
and not spend time in internal
00:13:20
meetings consciously or not we built
00:13:24
upon the foundation of
00:13:26
marketing a multi-dimensional super
00:13:29
structure with the temporal cultural
00:13:33
personal flare of each moment of
00:13:37
time
00:13:39
moreover throughout modern
00:13:41
history marketing has increasingly
00:13:44
become an integral part of every human
00:13:47
exchange of goods and
00:13:49
services until we finally had to admit
00:13:52
it was a process of value creating
00:13:56
chain and now
00:13:59
even if we don't manufacture Widgets or
00:14:02
we aren't pushing our Wares to make a
00:14:05
profit we are engaged in marketing
00:14:08
activities all the time
