Word of Mouse

By Hannah Wallace May 31, 2005

Is advertising really on the way out?

According to the Wall Street Journal it is. "The venerable television commercial has been scoffed at by legions of marketers who can point to alluring new ways to get a message across in a more targeted fashion," the newspaper proclaimed in March.

And that's not the only criticism.

"All the recent marketing successes have been PR success, not advertising successes," Al and Laura Ries announced in their 2002 book The Fall of Advertising and the Rise of PR.

"It's sad," says Philip Kotler, Longboat Key resident and S.C. Johnson & Son Distinguished Professor at the J.L. Kellogg Graduate School of Management at Northwestern University. "Advertising is not really working. It's like wallpaper-you don't notice it. Most sales promotions are a waste. Direct mail gets a 1-percent response rate. It can be a huge waste of dollars and time."

Whoa. Talk about an indictment of traditional marketing tactics. This is scary stuff, especially coming from Philip Kotler, Ph.D., arguably the world's preeminent marketing expert. Kotler, 72, is credited with coining phrases like segmentation, targeting and positioning, phrases that countless M.B.A.s in corporate cubicles around the country live and breathe by. Not only is Kotler sought around the globe for his marketing expertise as a consultant (among his clients are pharmaceutical giant Merck and computer leviathan IBM), he literally wrote the book on marketing. "Actually, it's been about 35 books," he says with a smile.

Sitting in his comfortable living room overlooking the Gulf of Mexico, Kotler explains that he and his wife were "drawn to the quiet charm of the west coast" of Florida. While he remains very tied to Northwestern-he continues to teach in its executive program-Kotler prefers Sarasota during this time of year over the "cold, slipping and ice" of a Midwestern winter. And while he is willing to chat about the delights of Longboat Key's climate, he's more interested in the state of marketing in the 21st century.

"Marketing is not just a set of tactics," explains Kotler. "It's a whole philosophy of finding needs and filling them." And doing that better than anyone else, he says, is the proverbial ticket to success.

"You absolutely have to have a customer orientation," he adds. "Marketing is not the art of finding clever ways to dispose of what you make. It is the art of creating superior customer value."

Like the outstanding professor he is, Kotler warms immediately to the subject of market segmentation. "You must start with a segment that has a well-defined need. That's your target, and then you must position the product to the target group," he says. Think of how Nike has built its business by segments: women, teens, pre-teens, college, boomers, etc. Nike identifies segments and develops footwear to meet the needs of those segments while keeping its brand an icon by using the very coolest influencers either in its advertising or by wearing the clothes.

While this is really marketing 101, Kotler asserts that many businesses still don't get it. "Now we've even moved in our thinking to define a niche within a segment. You can own the niche," he says, explaining that kind of approach will give a business "less volume, but more price." Niche marketing occurs when a company focuses on a well-defined group with special interests and needs, he explains. Two examples: people who want to build their own motorcycles, and outdoor cafes that want to buy well-built umbrellas for their outdoor tables. Notice that these are more specialized than segments, which are usually broader, such as motorcycle buyers or outdoor cafes.

Kotler goes on to explain that niche marketing has even evolved to one-to-one marketing, which involves getting personal information on each buyer in the niche and customizing the offer and message to each one. "Here we're talking about personalizing and customizing, but at this level it really moves in on the privacy laws," he says. Consider how lucrative it would be if pharmacies could sell a database of customers using a specific kind of drug. There are certain conclusions you could draw from that information that would allow you to customize other products for that person. But that information is rightfully covered by HIPPA laws. "The trade-off to that is the concept of serving someone extraordinarily well," says Kotler. "I'm talking about products appropriate to banks or other highly personalized businesses like financial services. However, I do think that if you have a well-defined segment, you don't need to go to the extraordinary tactics needed to go one-to-one."

That begs loads of how-to questions; chief among them, how do you reach your market segment, especially when it's clear that the old tricks of the trade-like advertising-are not moving the needle as in the past?

"Ads have become too tame," Kotler shrugs. "It's helped to create a climate where consumers are drawn to TiVo and other devices that zap ads." And this growing proliferation of new media-like TiVo, the Internet and satellite radio-further erodes advertising's effectiveness. "The overwhelming number of media outlets has caused a growing audience fragmentation," he explains.

Indeed, statistics tell us that prime-time television now reaches just 15 percent of the population, down from 40 percent in the mid-1980s. And consumers have much less time to pay attention to television and other media outlets.

Kotler also points to a lack of credibility in advertising. In a recent presentation to the Florida Public Relations Association, he pointed out that "Ford has been saying for over a decade that quality is job one, yet not a single Ford brand is in the top 10 ranks of quality."

Kotler says today's marketing is about branding. Some of the most successful companies do very little advertising and still reach market segments. Starbucks, which spends less than $10 million on advertising with sales over $1.3 billion, is a prime example. "Starbucks has designed an experience for its consumers," he says. Consumers know the brand, know the experience and seek it out. Whole Foods is another enterprise that has created an experience for their consumer. They do little advertising. Instead, "they rely on creating a buzz," Kotler says.

The Buzz Factor

Creating that buzz is the difference between traditional and non-traditional marketing, Kotler says.

Traditional marketing takes products to market relying on messaging. This is a tightly controlled process that evaluates how the product will benefit the consumer, the kinds of communication vehicles needed to reach the targeted audience and then measuring the impact of the message, its frequency and the media marketers chose to find out if the plan changed consumer awareness of the brand. For example, did the message that a low-carb food would help consumers stay on a diet, delivered via a radio ad, actually cause an increase in sales?

Carbonated soft drink companies like PepsiCo and Coca-Cola are the masters at this. Think of the millions of dollars spent in creating an image for diet or specialty flavors like vanilla or lime. Men don't perceive themselves as drinking a Diet Pepsi, but if they are calorie conscious, they might take a shot at Pepsi One.

Nontraditional marketing aims to build awareness through creating infatuation about the product among influencers who spread the word in their respective networks. "Street work, attention-getting things, buzz marketing, viral marketing, blogs-can you get them to talk about your product? You have to look for new communication channels," he asserts. These tactics center on getting trendsetters, now known as influencers, to carry your message. That could be physical, as in an influencer being seen with the product (think fashion); or, an influencer could chat up the brand or the brand experience in conversation or virtually, as in blogs. Kotler stresses that today people not only communicate with acquaintances, but also with strangers and the world available through the Internet. "Consumer-generated media" is the term now in vogue to describe this phenomenon-word of mouse rather than word of mouth.

"Using influencers is a long-term trend, and it will continue," he says. "And when you think about it, using influencers has been a staple. Now we're using them in different ways."

"Traditional marketing continues to be practiced by most companies and these companies are growing less satisfied with the results," says Kotler. "I have been recommending forms of non-traditional marketing as more effective in today's new economy marked by scarce time, cell phones, TiVo, Internet information and so on."

Kotler is a devotee of public relations. The success of public relations is based on the fact that people trust what they hear from others more than what they hear from advertisers or paid endorsers. "PR can build incremental marketplace excitement, drive effective communications, and influence and gain trust of key stakeholders," he says.

There is a downside to nontraditional tactics, however. Such marketing is harder to control and harder to measure, and requires creative skills of a very high order. It's not impossible, however, and Kotler has a list of strategies to consider.

  • SPONSORSHIPS. Companies have put their names on stadiums, teams, individual athletes. How can you match a sponsorship with your target market segment?
  • TALK SHOW MENTIONS. Think local. With the proliferation of media, there are radio and television talks show in every local market.
  • PRODUCT PLACEMENT. Think about movies and television shows with product placement. How can you duplicate that experience on a more local level?
  • STREET LEVEL PROMOTION. The auto companies have been successful with this tactic. Chrysler's PT Cruiser appeared in fashionable areas and college tailgate parties. Ford identified 120 people in six key markets and gave them each a Focus to drive for six months. Get your product into the hands of the market segment you've targeted and demonstrate it being used.
  • CELEBRITY ENDORSEMENTS. Send your brand to celebrities in hope of receiving implicit endorsement. Don't focus on the J. Lo's of the world. There are local celebrities, too.
  • BODY ADVERTISEMENTS. Dunkin' Donuts pasted logos on college kids' foreheads during an NCAA basketball tournament.

Besides teaching, globe-trotting consulting, art glass collecting and grandfathering to six, Kotler is also fascinated with motivating people to think and act ethically.

"Causes are my thing-how can we energize people, give them the information to change lives?" he asks. "I'm even interested in religious marketing-how to be a force for good. And social marketing. How can a society influence people to live better, care for the environment, act ethically? Are these marketing problems? I think so."


Philip Kotler's time-tested marketing strategies.

  • Marketers will be more successful if they think like the customer. If you want to be a bullfighter, you'd better think like a bull. It's that simple.
  • It's very important to segment the market and choose a segment you can offer superior value to. Don't try to go after the entire market. That's suicide.
  • Build a brand profile as a set of promises for consumers that you will meet or exceed.
  • Put your strategy and goals into a marketing plan.
  • Create a strong relationship between marketing and sales.
  • Use continuous feedback to improve your performance. Kotler strongly suggests using "mystery shoppers" internally and for competition.
  • Integrate marketing communications.
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