Kotler on Marketing: How to Create, Win, and Dominate Markets

Philip Kotler's name is synonymous with marketing. His textbooks have sold more than 3 million copies in 20 languages and are read as the marketing gospel in 58 countries. Now Kotler on Marketing offers his long-awaited, essential guide to marketing for managers, freshly written based on his phenomenally successful worldwide lectures on marketing for the new millennium.
Through Kotler's profound insights you will quickly update your skills and knowledge of the new challenges and opportunities posed by hypercompetition, globalization, and the Internet. Here you will discover the latest thinking, concisely captured in eminently readable prose, on such hot new fields as database marketing, relationship marketing, high-tech marketing, global marketing, and marketing on the Internet. Here, too, you will find Kotler's savvy advice, which has so well served such corporate clients as AT&T, General Electric, Ford, IBM, Michelin, Merck, DuPont, and Bank of America. Perhaps most important, Kotler on Marketing can be read as a penetrating book-length discourse on the 14 questions asked most frequently by managers during the 20-year history of Kotler's worldwide lectures. You will gain a new understanding of such age-old conundrums as how to select the right market segments or how to compete against lower-price competitors. You will find a wealth of cutting-edge strategies and tactics that can be applied immediately to such 21st-century challenges as reducing the enormous cost of customer acquisition and keeping current customers loyal.
If your marketing strategy isn't working, Kotler's treasury of revelations offers hundreds of ideas for revitalizing it. Spend a few hours today with the world's bestknown marketer and improve your marketing performance tomorrow.

ISBN-13: 9781476787909

Media Type: Paperback

Publisher: Free Press

Publication Date: 04-19-2014

Pages: 272

Product Dimensions: 6.10(w) x 8.90(h) x 0.90(d)

Philip Kotler is the S.C. Johnson & Son Distinguished Professor of International Marketing at the Northwestern University Kellogg Graduate School of Management in Chicago. He is hailed by Management Centre Europe as "the world's foremost expert on the strategic practice of marketing." Dr. Kotler is currently one of Kotler Marketing Group's several consultants. He is known to many as the author of what is widely recognized as the most authoritative textbook on marketing: Marketing Management, now in its 13th edition. He has also authored or co-authored dozens of leading books on marketing: Principles of Marketing; Marketing Models; Strategic Marketing for Non-Profit Organizations; The New Competition; High Visibility; Social Marketing; Marketing Places; Marketing for Congregations; Marketing for Hospitality and Tourism; and The Marketing of Nations. Dr. Kotler presents continuing seminars on leading marketing concepts and developments to companies and organizations in the U.S., Europe and Asia. He participates in KMG client projects and has consulted to many major U.S. and foreign companies--including IBM, Michelin, Bank of America, Merck, General Electric, Honeywell, and Motorola--in the areas of marketing strategy and planning, marketing organization, and international marketing.

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From: Chapter One

Are There Winning Marketing Practices?

Besides winning business practices, is there a set of winning marketing practices? One frequently hears of one-liner formulas that promise marketing success. Here are nine of the more prominent one-liners:

1. Win Through Higher Quality

Everyone agrees that poor quality is bad for business. Customers who have been burned with bad quality won't return and will bad-mouth the company. But what about winning through good quality? There are four problems.

First, quality has a lot of meanings. If an automobile company claims good quality, what does it mean? Do its cars have more starting reliability? Do they accelerate faster? Do the car bodies wear better over time? Customers care about different things, so a quality claim without further definition doesn't mean much.

Second, people often can't tell a product's quality by looking at it. Consider buying a television receiver. You go into Circuit City and see a hundred different sets with the picture on and the sound blaring. You took at a few popular brands that you favor. The picture quality is similar with most receivers. The casings may differ but hardly tell you anything about the set's reliability. You don't ask the salesperson to open the back of the set to inspect the quality of the components. In the end, you have at best an image of quality without any evidence.

Third, most companies are catching up to each other in quality in most markets. When that happens, quality is no longer a determinant of brand choice.

Fourth, some companies are known to have the highest quality, such as Motorola when it touts its 6 sigma quality. But are there enough customers who need that quality level and will pay for it? And what were Motorola's costs of getting to 6 sigma quality? It is possible that getting to the highest quality level costs too much.

2. Win Through Better Service

We all want good service. But customers define it in different ways. Take service in a restaurant. Some customers would like the waiter to appear quickly, take the order accurately, and deliver the food soon. Other customers would feel that this is rushing them on what otherwise should be a leisurely evening out. Every service breaks down into a list of attributes: speed, cordiality, knowledge, problem-solving, and so on. Each person places different weights at different times in different contexts on each of the service attributes. Claiming better service isn't enough.

3. Win Through Lower Prices

A low price strategy has worked for a number of companies, including the world's largest furniture retailer, IKEA; the world's largest general merchandise retailer, Wal-Mart; and one of America's most profitable airlines, Southwest. Yet low-price leaders must be careful. A lower-price firm might suddenly enter the market. Sears practiced low prices for years, until Wal-Mart beat it on prices. Low price alone is not enough to build a viable business enterprise. The Yugo automobile was low in price; it was also lowest in quality and disappeared. A measure of quality and service must also be present, so that customers feel they are buying on value, not price alone.

4. Win Through High Market Share

Generally speaking, market share leaders make more money than their tamer competitors. They enjoy scale economies and higher brand recognition. There is a "bandwagon effect," and first-time buyers have more confidence in choosing the company's products. But many high market share leaders are not that profitable. A & P was America's largest supermarket chain for many years and yet made pathetic profits. Consider the condition of such giant companies as IBM, Sears, and General Motors in the 1980s, a time when they were doing more poorly than many of their smaller competitors.

5. Win Through Adaptation and Customization

Many buyers will want the seller to modify his offering to contain special features or services they need. A business firm might want Federal Express to pick up its daily mail at 7 P.M., not 5 P.M. A hotel guest might want to rent a room for only part of the day. Such needs can represent opportunities for the seller. However, for many sellers, the cost may be too high to adapt the offering to each customer. Mass customization is working for some companies, but many others would find it to be an unprofitable strategy.

6. Win Through Continuous Product Improvement

Continuous product improvement is a sound strategy, especially if the company can lead the pack in product improvements. But not all product improvements are valued. How much more would customers pay if they are told about a better detergent, a sharper razor blade, a faster automobile? Some products reach the limit of their improvement possibilities, and the last improvement doesn't matter very much.

7. Win Through Product Innovation

A frequent exhortation is "Innovate or Evaporate." True, some great innovative companies, such as Sony and 3M, have earned substantial profits by introducing superb new products. But the average company has not fared well in its new product introductions. The new product failure in branded consumer packaged goods is still around 80 percent; in the industrial goods world, it is around 30 percent. A company's dilemma is that if it doesn't introduce new products, it will probably "evaporate"; if it does introduce new products, it may lose a lot of money.

8. Win Through Entering High-Growth Markets

High growth markets such as solid-state electronics, biotechnology, robotics, and telecommunications have the glamour. Some market leaders have made fortunes in those industries. But the average firm entering a high-growth market fails. One hundred new software firms start up in an area, such as computer graphics, and only a few survive. Once the market accepts some firm's brand as the standard, that firm begins to enjoy increasing volume and returns. Microsofts Office has become the standard, and other good alternatives have been shuttled aside. An added problem is that products become obsolete very fast in these fast-growing industries, and each company must invest continually to keep up. They hardly recoup their profits from their last offering before they have to invest in developing its replacement.

9. Win Through Exceeding Customer Expectations

One of the most popular marketing clichés today is that a winning company is one that consistently exceeds customer expectations. Meeting customer expectations will only satisfy customers; exceeding their expectations will delight them. Customers who are delighted with a supplier have a much higher probability of remaining a customer.

The problem is that when a customer's expectations are exceeded, he has higher expectations next time. The task of exceeding the higher expectations gets more difficult and more costly. Ultimately, the company must settle for just meeting the latest expectations.

Put another way, many of today's customers want the highest quality, added services, great convenience, customization, return privileges, guarantees -- all at the lowest price. Clearly each company has to decide which of these many customer wants it can meet profitably.

What Constitutes a Winning Marketing Strategy?

Clearly there is no one marketing road to riches. Instead of relying on one major differentiation or thrust, a company needs to weave its own unique tapestry of marketing qualities and activities. It is not enough to do most things a little better than the competitors. Professor Michael Porter of Harvard argues that a company doesn't really have a strategy if it performs the same activities as its competitors, only a little better. It is simply operationally more effective. Being operationally excellent is not the same as having a robust strategy. Operational excellence might help the firm win for a while, but other firms will soon catch up or pass up the firm.

Porter sees a business as having a robust strategy when it has strong points of difference from competitors' strategies. Thus Dell Computer developed a robust strategy by choosing to sell computers over the telephone instead of through retailers. It developed a mastery of direct and database marketing and could convince customers of its superior value and service. Then Dell created a subsequent strategy breakthrough by adding the Internet as a sales channel. Today Dell is selling more than $3 million dollars' worth of computers daily on the Internet.

Other companies have created unique strategies. Ikea created a new way to make and sell furniture that stood in stark contrast to typical furniture retailers. The Saturn division of General Motors sells cars in an entirely different way from the typical auto manufacturer. Enterprise Rent-A-Car carved out a unique niche in the rental car market by renting older cars in cheaper locations and tying in with referrals from insurance companies.

But don't these successful new strategies get imitated very quickly, only to settle into being ordinary? Yes, imitators come along, as Southwest Airlines and IKEA have learned. However, it is one thing to copy some aspects of a new strategy, but quite another for an imitator to copy all aspects of the strategic architecture. The great strategies consist of a unique configuration of many reinforcing activities that defy easy imitation. The imitator not only has to incur great costs in trying to duplicate all the activities of the leader, but at best he ends up as only a pale imitation with average returns.

What Marketing Challenges Do Most Companies Face?

I have asked many managers in my seminars to describe how they see today's customers. Here are their answers:

• Customers are growing more sophisticated and price sensitive

• They are short of time and want more convenience

• They see growing product parity among the suppliers

• They are less manufacturer brand sensitive and are more accepting of reseller brands and generics

• They have high service expectations

• They have decreasing supplier loyalty

Then I ask how well their marketing tools are working, and they tell me:

• Their products are not much different from competitors' products

• They are giving away a lot of costly service and add-ons to get the sale

• Their pricing is readily matched by competitors

• Advertising is getting more expensive and less effective

• They are spending too much on sales promotion

• Sales force costs are rising

Copyright © 1999 by Philip Kotler

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Reading Group Guide

Discussion Group Questions
1. List the major marketing issues facing your business. What do you regard as your most creative marketing responses to these issues?
2. What do you think of the marketing predictions in this book for the year 2005 AD? What are your predictions for your industry? What are you doing to prepare for them?
3. How to your other departments view marketing? What can be done to improve perception and cooperation? What can be done to get everyone to focus on the customer?
4. Does your business unit operate on the mass-market level, the segment level, the niche level, or the individual customer level? Is this still the right level given the current and future marketplace?
5. Map the normal customer activity cycle that customers go through in acquiring, using, and disposing of your product. What opportunities are suggested by points in the customer activity cycle?
6. List all the marketing tools used by your business. Which are the most important? Are any tools missing that should be added? Are any tools in the list a "waste of money?"
7. Are you satisfied with the proportions of funds that your business unit spends on each promotional tool? If you were to shift funds, which tools would you reduce and which would you increase?
8. Has your company analyzed the average customer acquisition cost (CAC) and compared it with the average customer lifespan profits (CLP)? How does it look? What steps can be taken to improve the ration of CLP to CAC?
9. Do you measure the profitability of individual customers? What percentage of your customers is unprofitable? How do you handle them? How should you handle them?
10. In what ways have you been able to help your customers reduce their ordering, inventory, processing, and administrative costs? What further opportunities do you see?
11. Has your company established a sufficient number of market segment managers and area managers to respond to the market differences that exist in your market?
12. Do you see enough seamless cooperation between product management, sales management, and customer service? If not, recommend how to improve the situation.
13. Does your company use marketing scorecards in judging performance? What marketing measures are included in your marketing scorecard? What measures should be added?
14. Is your company building and using a rich database containing the names and profiles of your customers and prospects? Are you applying data mining techniques to extract insight from the information in the database?
15. How has your company utilized the marketing opportunities posed by the Internet? What next steps are called for?

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Table of Contents

CONTENTS
Preface
PART ONE: STRATEGIC MARKETING
1. Building Profitable Businesses Through World-Class Marketing2. Using Marketing to Understand, Create, Communicate, and Deliver Value3. Identifying Market Opportunities and Developing Targeted Value Offerings4. Developing Value Propositions and Building Brand Equity
PART TWO: TACTICAL MARKETING
5. Developing and Using Market Intelligence6. Designing the Marketing Mix7. Acquiring, Retaining, and Growing Customers8. Designing and Delivering More Customer Value
PART THREE: ADMINISTRATIVE MARKETING
9. Planning and Organizing for More Effective Marketing10. Evaluating and Controlling Marketing Performance
PART FOUR: TRANSFORMATIONAL MARKETING
11. Adapting to the New Age of Electronic Marketing
Appendix
Characteristics, Success Strategies, and Marketing Department Roles in Different Types of Industrial Businesses
Notes
Company and Brand Name Index
Subject Index Show More