On behalf of our president and CEO Gregg case and our chief marketing officer Phil Clement it's

a real honor for a on to be the sponsor of this event today and for many of you you might know
that Aon is now a uk-based company but it's also important for you to know that the Aon
foundation for the past 25 years has made it a priority to support educational activities and cultural
institutions like the Chicago humanities festival and the Charter humanists circle that does so much
to enrich the lives of all of us in this room and everybody in Chicago and even though we're now
in the UK I want everybody in this room to know that we intend to continue this commitment and
it will remain high on our priority list for the things we do to support the community of Chicago
for many years to come on behalf of my colleagues at a on I want to thank the Charter humanists
circle and its members for their very valuable support and I also want to thank Northwestern
University Law School for allowing us to use the auditorium today at a on we believe in the mantra
if if we can't measure it we don't do it and because of that it's a real honor for us to be here
supporting and introducing dr. Philip Kotler dr. Cutler is defined marketing as quote the science
and art of exploring creating and delivering value to satisfy the needs of a target market at a profit
he is recognized around the world as one of the foremost experts on business of marketing and for
his insights on how exemplary marketing has the creativity and the power to influence global
consumers every day in that spirit I hope you'll join me in welcoming dr. Philip Kotler now before
I turn the microphone over to dr. cobbler in the spirit of marketing maybe many of you in this
room know that Aon does a great many things globally but one of the things that we've done that
has created tremendous brand awareness for our firm is our sponsorship of Manchester United
Football team which by today 1/2 to 1 verse Arsenal where we're at were at that right now we're
at the top of the Premier League so in that spirit I would like to prevent present dr. Cutler with his
very own personalized David thank you very much and I will wear this in in a fantasy way may I
say I really appreciate your introduction of all the introductions I've received yours is the most
recent nation nation well you meet no Stephen Colbert so I can't pull it off the same way there will
be two groups with respect to marketing there will be a group that does doesn't like marketing and
I'm gonna give you why they don't like marketing and the justifications I will also tell you there's
another group who loves marketing so before we're through you will be totally confused or at least
opinionated so what I want to do is tell you that these are called confessions of a marketer that's
by the way borrow from David Ogilvy who wrote a wonderful book called confessions of an
advertising man and let me move on and say why is marketing a topic for the Humanities and we
would say that there's a couple of reasons one I regard marketing as a humanistic subject because
marketing has affected our lifestyles has created not only affected a lifestyle but created lifestyles
and we should be from a point of view of popular interest interested in that and it really I want to
say that marketing is very American that its beginnings are very American that doesn't mean there
weren't manifestations of marketing earlier and as a matter of fact I'd like to give you a very short
history of marketing so that you understand what we mean by the word as a matter of fact if you
took a dictionary a Webster's dictionary in the year 1900 and looked up the word marketing you
would not find it in the dictionary yes you would find the word market but not the word marketing
if you then picked a dictionary 1910 you would find the word marketing in it because marketing
is about a hundred years old and it's much more than selling so let me show you let's start let's start
biblically let's start biblically it who is the marketer in this picture this is the biblical narrative who
is the first marketer in the world I hear Eve the snake I hate to admit it because snakes sounds
sounds like sneaky and so on and so forth but the fact is that it was a snake who can who sold Eve
on getting Adam to eat an apple so it goes way back at least selling goes way back now let's go
further here is the father of marketing wow what an insult to him I mean that's Aristotle recently I
was at a group little party and we were speculating who we would like to meet most if we had an
hour with such a person and it boiled down to Plato Socrates or Aristotle that's a hard one it turns
out that my vote went for Aristotle Aristotle was Google at the time he what he knew more about
everything than anyone in the world they wrote on science politics economics rhetoric art and
everything now why do I say that he had some marketing impact let me read the definition of the
of rhetoric and he is he's not the founder of rhetoric by the way the founders were the Sophists
around 600 BC there were a group who wanted to use selling and speech and persuasion for their
own devious ends but Aristotle put the the ID the discipline of rhetoric on its on its feet rhetoric is
the art that aims to improve the facility of speakers or writers who attempt to inform persuade or
motivate particular audiences in specific situations it is the Faculty of the observing in any given
case the available means of persuasion so in a sense he could be the father of selling the idea of
getting someone to do something that they might not have done otherwise so let's move on about
other early manifestations of marketing I know many of you cannot necessarily read this so I will
read it but the first department store opened when and then what country normally if you're in
France and you ask the question they will say of course we invented the department store it was
about 1845 the same time we invented paper weights and some other things but it turns out that
the first department store was in Japan Mitsui company which is still alive and well so that's where
one of our retailing forms started the next one is the first newspaper that carried an ad there were
newspapers early but the first ad appeared in England in 1652 and it advertised coffee and then the
first ad agency started a little later and well much later NW Aires which is still a prosperous
advertising agency first time a a brand was put on a commodity the commodity being soap the
brand name was pears soap and then the first packaging appeared a little later and finally we had
a marketing research department formed so now the word markets has been around all all these
years the Middle Ages had markets in fact whenever I would even say the Agora in ancient Greece
that means the marketplace in ancient Greece people would come on a particular day and to sell
things in the Middle Ages there were market days the word marketing wasn't there was just market
and trade was always there because trade through history has taken place between people and and
regions and countries so all that is there and it was in the decade of the 1900s that marketing books
first appeared and the interesting thing is who wrote those first marketing books were they
sociologists what was the what was the discipline of the people who wrote the first marketing
books any guesses where they were in physicists or chemists they were economists so why would
economists start a subject called marketing and the answer is they were disillusioned economists
they they couldn't find any mention of advertising in the discourse of economists in other words
never did Adam Smith Thomas Malthus David Ricardo even Alfred Marshall and so on be really
talked about other forces that shape demand the only force that shaped demand in their mind was
price you know the famous curve raised the price the man will go down lower the price you can
sell more price was the only thing that affected the man so these economists were institutional
economists who said hey you got a factor in advertising you got a factor in retail stores wholesalers
jobbers agents and and was the neglect of the classical economists too to not really texture the
marketplace and in the way an economy work that led to marketing so marketing is technically a
branch of economics now who helped develop this field of marketing now probably you don't
recognize maybe anyone here there's one person you might recognize that I don't know if you can
see some of these faces but someone recognize anyone there yeah Dale Carnegie Dale Carnegie is
here and his book was how to win friends and influence people because in doing this I wanted to
find out who is the exemplar of the selling method how to win friends and influence people but let
me give you the whole picture Ernest dictor some of you may know of he was a motivational
psychologist and he could explain why people didn't like to eat prunes why they why why cigars
were offending some people and all kinds of things in his book called the study of desire he
apparently studied with Sigmund Freud and he brought that kind of mind to marketing but he had
an opponent named Alfred Pollitz who was not Drinker we call him a a counter a nose counter that
the expressions we would use if you were very psychological you were a head shrinker and
otherwise you were a nose counter namely a surveyor you surveyed people you found out what
percentage of people were of a certain age and why do they buy a particular product Julius Waltz
and Rosenwald was very much behind the formation of the Sears company which was a important
episode in the development of our retail chains Lester Wunderman deserves credit as exemplifying
the use of direct mail and catalogs that you can sell more directly you don't have to be in a store
you can get people to order goods by mail and phone later David Ogilvy is the exemplar advertising
person then Stanley Marcus of Neiman Marcus was the fella who could walk into any retail store
and give them a hundred suggestions and how to improve the layout the size of the aisles and and
and make a difference in the volume of business Edward Bernays is the father of public relations
in the United States his name has sort of become obscure but he really was a very important person
the word propaganda was often used in connection with his work because people thought it was it
was a model to to motivate you to feel a certain way about anything and regardless of the standards
involved and then there's Dale Carnegie in any case how did marketing get its start marketing got
its start in sales departments every company has a sales group and the salespeople really want to
be in the office of a customer because that's the only way something happens so they don't want to
do a lot of homework for example three things they didn't want to do they didn't want to do
consumer research in a systematic way because that's taking their time away from selling the
customers secondly they would have liked someone else to find leads now a lead means a prospect
in fact we distinguish between a hot lead oh boy he's ready to buy he even called us to buy a warm
lead a cold lead and so on someone else should do that for the sales people so they don't waste
their time making calls and the third thing was someone had to prepare brochures and ads and the
salesman is not skilled the sales person isn't skilled at communicating through advertising and
brochures so sales departments had three people or hired them from time to time later on it
exploded to the day today when we have multinationals running with with marketing them in other
words marketing those three people split from sales and became big enough to be its own
department and so some people in the audience here maybe a chief marketing officer the old name
was vice president of marketing but I like the name chief marketing officer because that person
now is part of the chief officers chief information officer chief financial officer chief innovation
officer and and the status has moved up some of you may be brand managers may have been in
your past experience category managers market segments managers managing distribution
channels like retail or wholesale things a pricing manager communication manager database man
direct marketers internet people and so on so marketer marketing is is well-established now the
character of an of a marketing department depends very much on what the CEO thinks of
marketing so the one pc e o--- is a person who took over a company and he says I don't like
marketing but I know I need it and all I want from marketing is some communicate I just want
someone to broadcast and promote us so that person is missing a lot of other things made up for
by other CEOs who are for PCOS now for P CEO says I need a marketing plan and the plan has
to mention product that's the first B what what what about our product what's good about it what
are the features price what should it be priced at place where should it be made accessible online
offline in stores and finally promotion so that's a more educated view of the potential of marketing
but there's even a better view and that's called the CEO who says no I don't want to start with 4 PS
I wanted to start with the fact the market has come complex there's a lot of segments each segment
deserves its own plan in fact one one thing we've learned that if you just have one value proposition
for the home market it really doesn't trigger anything in many parts of the market so that CEO says
what segments should we go after and what position should we take with each segment what do
we say about ourselves and how we can satisfy their needs now there's even a higher type CEO
which is exemplified by AG Lafley who an Proctor and Gamble recently retired when you asked
AG Lafley what's marketing what your picture he says well Andy what do you mean marketing is
everything now marketing is everything what he means is everything starts with the customer no
customers no business and and I think he's making that point very much now moving on there's a
lot of things that a chief marketing officer does and I won't go into any detail but there's a lot of
tasks and the sad fact is that sometimes the chief marketing officer only lasts on the average of two
years in other words does a job and maybe the CEO is not feeling that it really brought in enough
new business that the cost of the CV but the CMO exceeds what the value of the CMO is there's a
lot to go into about why CMOS on the average hold on to their job for two years by the way some
of them get a better job after two years they become something higher than the chief marketing
officer some of them actually are private is a way because they're so good they go to another
company to be the CEO but in any case marketing commercial marketing which I've been talking
about could have stayed only commercial and then I got involved in with professor Sid levy at
Northwestern we started the idea of broadening marketing because the set of tools that we use to
address consumers could be used in other areas so we have a place a thing called place marketing
I will get a call from a city let's say and the city says we're not getting enough tourists we don't
have any attractions - for them to come and see I would like to get a factory located here and we
would like some digital people to move here who know digital we want to start at Silicon Valley
so that's place marketing the marketing of a place how do you dress it up and make it attractive
against it's all of the other competitive places the second person marketing there is an agency called
William Morris and a young singer might go to William Morris and say look I want to get a hit I
want to appear on Jay Leno's show I want to I want to move up to being noticed I want high
visibility I wrote I wrote a book with the title high visibility how do you get that visibility so
William Morris will look at the her and her performance and maybe say you know in a sense you
don't be offended but we can make you into a better product that's sort of the language you know
your hair differently walk a little dress differently actually we're gonna use you to to reignite the
archetype of Joe and Joan Baez you know Joan Baez the folk singer well we need a new Joan Baez
and so we can recast you and form you into the kind of person we all miss and so on now social
marketing is another branch today there are 2000 social marketers around the world trying to help
people eat better exercise more say no to drugs stop smoking cigarette off of tobacco say no to a
number of things positive behaviors and negative behaviors by the way my memory is that Sweden
was one of the first countries to want to raise a nation of non-smokers non-drinkers all the vices
and it starts at the primary school level that you could technically raise people to avoid those those
vices if that was thought to be good public policy so that's social marketing now political marketing
were saturated with and III think it's degenerated but that's another thing fundraising is as part of
of marketing I mean fundraising is is an odd form because you're not exchanging everything else
is sort of an exchange of values fundraising seems to be a one way transfer here's some money for
the museum but any fundraiser knows there's something that should come back to the person who
is the donor and supporter of a museum and working that way is important so these are offshoots
now all of us do marketing if you read the list we all do marketing did you ever compete for a job
when you knew there were other looking's didn't you dress up as well as you could and and and
even prepare what you're going to say and so on did you compete for a desirable apartment which
was scarce or a member of the opposite sex if you wanted to court someone so in the sense we're
human animals who know how to make an impression and market ourselves to some extent what
do we dislike about marketing well there's a long list it's a rather long list it intrusion interruption
exaggeration and so on and so forth and I really made a list that's a little separate from that here
are some of the criticisms marketers get consumers to want and spend more than they can afford
and we know that from the financial disaster that people were buying homes with maybe nothing
down marketers are skilled at creating brand differentiation where it shouldn't exist like with
commodities you know chicken is a chicken cement to cement so they spend a lot of time trying
to tell you their cement is really better their salt is really better and so on marketers want to produce
and sell more goods without considering the resource and environmental costs of producing the
goods the planet earth is affected by the amount of production and the care with which it's done
marketers had not paid sufficient attention to product safety and we know that because Ralph
Nader made his career basically car.the unsafety of in cars and then we got lead poisoning we got
asbestos problems and so on here's a serious criticisms marketers and this is not all marketers these
are some particular companies and and so on marketers favor giving the public what it wants
whether it's good or not for them sure I'll sell you cigarettes I'll sell you anything that we'll make
money there for marketing promotes a materialistic mindset that is we get turned on to more of a
materialistic world a world of ever-changing products and services and keeping up with the
Joneses and some of that marketers rarely talk about sane consumption yeah some beer companies
say please enjoy our beer but don't drink too much that's that's nice that they no one listens to that
and you stand you still have binge drinking but they're trying to do what they can and so on and
so forth now let me just say there's another side this is important too because it's not a picture the
other side of it is marketing has undoubtedly raised the standard of living in the United States
people don't naturally buy new things in other words you know people used to keep their
refrigerators which weren't refrigerators at the time they were ice boxes and they would keep
getting going on getting some ice and putting it in the box and so on and and even the washing
machines were very slow to take in other words people it would be expensive to buy a new
appliance but marketers persisted in saying your life will be better with new appliances and that's
one of its jobs I would even go so far as to say that marketing is so connected to the idea of the
middle-class we're talking about preserving and building the middle-class and the lifestyle that
goes with it and marketing is an essential definer of what it is to be and want what it is to want as
a member of the middle-class marketing in the form of social marketing has helped improved a lot
of things you know one of the first cause is that marketing turn to was the environment and waste
and and the ill effects of of some products and so on preserving the environment was one of the
first things that social marketers got into now they're into obesity as a problem littering as a
problem and other problems marketing is very important to the cultural world museums
performing arts and one of the big problems that cultural institutions are facing especially in the
performing arts is the aging of audiences how do you get people who are in their 40s to go to opera
to go to ballet and so on it's called the graying of the audiences and maybe that problem has been
with us for a long time but marketers are at work doing segmentation targeting positioning in order
to make sure that all seats are filled in the theater and also the museum's are very busy as marketing
institutions because they have to get visitors they have to get donors they have to get government
grants so marketing is almost an intrinsic function today that's going on but let me this is not time
to take a vote are you a do you like marketing you don't like marketing but let me show you that
the feeling the negative feelings about marketing came up from these people the attackers they
they attacked marketing do you recognize any one agency Ralph Nader I don't Darrius yeah who
else well it is Ralph Nader unsafe at any speed Rachel Carlson by the way deserves so much more
credit than we've given her for her book on the Silent Spring which was about the chemical
pollution the pesticides that were getting into our spring water and so on Vance Packard who
popularized the idea that we are hidden persuaders that when you go into a movie theater you don't
know this but an ad is sort of flashing to go and get some popcorn before you sit down subliminal
advertising which never did happen but the hidden persuaders and then John Kenneth Galbraith
who pointed out that while we spent so much money in making enough deodorants for any type of
interest you having deodorants in the public sector in the public sector you've got streets that are
littered and there's some garbage and there's slow traffic and and and and we so we have a good
private sector but we can't enjoy it because the public sector doesn't have the public goods that
would facilitate things you got Naomi Klein who's probably the prototype person now for attacking
branding brands brands they're awful the brand you're paying more than you need to pay the book
is called no logo logo being another name for a brand and Michael Sandel is has this new book out
which is really interesting and worth reading he's the fella who ran a course on justice and and
would ask fine groups about this size and at Harvard what is the just thing to do in each situation
but his new book is called what money can't buy the moral limits of marketing where he points out
that if you're in jail in California and you don't like to sell you can pay for a better cell you know
maybe one with a computer if you want a computer and so on but he's also he thinks today our
culture divides people in in social classes more clearly we used to go to ball games I would sit next
to someone who was rich and someone who is poor we'd all stand in the same line for hot dogs
today the guys who are rich are up in the skybox and he calls it the skybox off' occasion of the
United States the skybox off' occasion they're eating filet mignon and we peasants are down there
having standing in line for our hotdogs so we are not meeting each other as we used to in the older
days it's a very interesting treatment I like to quote Will Rogers with this remark if advertising if
advertising spent the same amount of money that they on improving the product as they do on
advertising they wouldn't have to advertise it and that's by the way that's a very profound
observation because within in the age of the Internet it's so much easier to talk about a product you
like to others and and also about a product you don't like and in a sense if this goes far enough
there will be no bad companies anymore it would be not possible for a company to be a bad
company because the word of mouth will will sink it so he's sort of touching on that point make
make it do a good job and and don't and others will advertise the good job you did now I want to
add another group and this is a group of visionaries and I'd like to call them our best marketers but
they're they're not necessarily the chief marketing officer they're CEOs but what they're kind of
their contribution has been the kind you want from your chief marketing officers so who do you
see here do you know any of those people yeah you got you got to know some of them but you
probably don't know the first one in vark him fraud it's very even hard to remember his name but
he's Swedish person who who invented IKEA who said I must bring down the cost of furniture
and I can do that by taking the air out of it and just selling knocked down furniture and now people
can afford to have some nice things in their home Richard Branson is phenomenal he's not only in
self-promotion he's one of the best self promoters possible I don't know if you know that he was
in Times Square some years ago to introduce his new cell phone the Virgin cell phone and he said
he was going to drop off of a building a 30-story building and not wearing any clothes or something
so everyone showed up then I don't know why they would want to show up but they showed up in
Times Square and sure he did jump down but it was on a rope and he's carrying a huge version of
his new cell phone and so everyone not just in Times Square the reporters were covering it all of
New York knew about the new there was a new virgin cell phone so he's very good at that but right
now he told me something I couldn't believe I was in Dubai and he gave a speech and we were just
chatting and he said where you from I said Chicago he says you know there will be a time when
you can go from Dubai to Chicago in half an hour what is this a time machine you're inventing
says no it's just a rocket ship so the rocket ship takes off from Dubai just goes right up in the air
and lands in Chicago so he's working with some people on the new spaceships basically and you
want to watch him of course Walt Disney great great visionary Herb Kelleher thanks to him we
have Southwest Airlines which started the whole class of low-cost airlines and then we've got
Anita Roddick who ran the body shop where she said I'm not selling hope I'm selling good skin
lotion all the others sell hope that was a famous remark by Revlon in the factory we make lipstick
in the store we sell hope but she had wrestled with that one then you got Bill Gates Steve Jobs and
Jeff Bezos and Jeff let's see we gotta make sure he gets in there Jeff is is extraordinary if there's
anyone who has consumer thinking in his mind warning the conciliate the consumer to to really
order or reorder or return or anything like that and then to buy more than books to buy electronics
to buy clothes he's done a marvelous job he's very exemplar in that sense we're good we're running
out of time and I'm gonna want some questions from you but let me just refer to a few more things
this is a chart I use in the book marketing 3.0 basically to say that every company should define
its mission its vision for the future and its values what it really cares about and if you are a 1.0
marketer it's a good job you're doing I mean of course you're trying to deliver satisfaction make a
profit and and make a good product be better if you're a 2.0 marketer you want to help people
realize their aspirations you want to deliver things that they might aspire to have they will return
frequently to buy more and your product is different than the others not only better but different
and suddenly you move from mind to heart to spirit its what spirit it's that small set of companies
that say we're compassionate we have compassion for the state of the world we want to get
involved we want the companies to be a machine for improving the lives of people you could say
you could reduce that to just some charity work they're doing or it could be a real fundamental
strain in the way they do their business we can name some companies that really have felt that they
want to help reshape the world into being the better world so that is here's one of my favorite
companies that illustrate the cells in that picture the SC Johnson company and Racine Wisconsin
whose products are shown over here you probably have purchased some of their waxes or some of
their insect repellents or other things but they're just winning awards for being a very caring
company incidentally a book that you might want to read was called firm it's called firms of
endearment which is a fancy way to say companies we love firms of endearment and I love the
subtitle how world-class companies profit from passion and purpose and it's based on asking
audiences random meaning of people is there any company that you like that you like a lot now let
me ask that question name a company that you would dearly miss if it disappeared vanished Apple
say always Apple I thought you were gonna say Harley Davidson but that's that's another one
Amazon I wouldn't miss a Mazon I I really would I would even subsidize it to continue which one
casco of course and with you and Cosmo Nike okay well you see what happens is these are the
names of the companies that came up again and again I don't think there's any surprises there I've
asked other countries to do this too because it it would be a different mix of companies that would
come up but the main thing is these firms of endearment are so much more profitable than the ones
that have not been dear to us one of the things is that they they're nine or ten times as profitable
but let's see why and without going through the everything here look at the last one these are the
attributes of that set of that set of companies and the last attribute is they spend less on marketing
than rather more because I bet you thought that the companies that were gonna be in dear to us are
the ones who are just advertising all the time they're so familiar we see coca-cola all the time all
the time no they spend less on advertising so who's doing the advertising the customer you guys
are so that's where you should put your money create a love affair create fans with others now I'm
going to end with two slides this is I'm a downer a little bit the end of work this is Jeremy Rifkin's
book it's now about nine or ten years old and he says because of the slowdown in population growth
automation of factories and computers robotics 3d printing can the nation create enough jobs can
the world create enough jobs for the population and so on and it raises a question about marketing's
role a marketing role normally you seen as to sell you some things the basic role of marketing is
to create jobs it is the job creator namely it gets you to want something that someone has to produce
so there's a basic question does marketing really create new jobs as it or does it only create shifts
in the shares like if I switch from Brand X to brand Y that's not creating Brand X loses a job in
brand Y gets a job so but it is true that if it if we're talking about a new product marketing will help
accelerate its recognition the awareness of it and intensified the drive to purchase it in other words
we buy our iPads and other things that come along partly because that they're there one if they're
there they are desired objects and marketing accelerates of which growth takes place with those
new products the other book and I'll end with this is another downer the death of demand and what
is the relationship between marketing and demand and is he uses the term saturated finding growth
in a saturated global economy I've been wrestling with that problem and growth is the issue today
growth is the issue growth means jobs and so on and the fact is there are eight ways to grow a
business so the title of the book is market your way to grow eight ways to win and you know all
of them you know that we can go to two places where there is growth we can sell in China even if
it's a low growth here or Brazil we know we can grow by acquiring other firms we know we can
grow by innovating inventing something new we know we can grow by taking business away from
someone else and so on and so forth so one of the things we're wrestling with is how do you as a
firm grow and by coincidence another colleague of mine at the Kellogg School of Management
Tim he just wrote a book called defending your business and it's so nice that his book came out
with mine because the first job is always defend what you've got hold on to the customers you
have then you start worrying about some more gorillas so we both as members of the department
are wrestling with how to ignore these books and say they're wrong and that there is a bright future
ahead so let me stop here and take any questions you might have [Applause] [Music] [Applause]
okay we have time for a few questions for professor Cutler is there anyone on this side of the
auditorium that would like to ask a question hands up yes I see you over there and now might
season magically come down here and if there's any other people and there's a person over there
would you introduce yourself please my name is iris Witkowski and I've been coming to the
humanities festival as long as it exists and I very much appreciate your talk today my him making
a statement what really drives me nuts as far as saturation is concerned is the placement of products
on television programs it used to be that in a movie you'd say oh I saw that brand and seemed to
be accidental now it's all over even the anchor men have l.l.bean jackets you know that's that's the
field called product placement and we first got conscious of it with the James Bond films where
each time there was a different car he drove an RD or he drove something else because it was a
matter of what car company would pay the most for the next film to hit feature that car and now
does the person speaking pick up a coke bottle or a Pepsi bottle and things like that most of us
don't notice it that it's not yet that intrusive but it is it has been discovered as a way to get some
visibility for certain products product placement I'm Co Diego I'm Charter humanist again thank
you I'm evening national news 75 to 80% of the ads are for pharmaceuticals this may say awful
things about inclusion and I believe there was a change in legal requirements some years ago and
what are your thoughts about that because clearly that advertising is driving demand driving costs
yeah it's called over-the-counter advertising too but maybe it's also prescription but basically you
can make a case for it by saying consumers should know what they might think would be the right
thing for them otherwise the only one who could tell them what's right is the doctor and the doctors
don't like it of course the doctors in some cases are offended by by the patient saying what he
wants as a prescription but you know this has happened with lawyers who are advertising now and
the doctors are advertising themselves even if they don't like that the expert is of prabha Sinha who
runs a firm called CES and he's always working with the doctors and the pharmaceutical people
and could help answer that any other things that bother you about advertising hi my name is Bob
Michaelson Thank You professor Cutler it is a pleasure to hear you in person you've been a big
influence to so many people myself in particular for so many years my question one second how
many of you read any of my books well thank you very oh thanks to you my question is in regards
to social media and you start off your presentation talking about so much of marketing was defined
at the beginning of the 20th century we're a hundred years into it as you look at social media do
you see across a continuum of marketing this being a short term phenomena or a radical change
and as we do marketing for the next century that's part 1 and part 2 do you see the ability to apply
an ROI to social media yeah those are excellent questions I this is not a fad we are in the digital
age we passed analogue and and there's no turning back that means that I see the following
happening every company I talk to says we're gonna go digital too but slowly we're gonna rely on
our traditional which is newspapers which are disappearing by the way radial TV billboards and
magazines so at best they will say this let's turn ten percent of our next budget over to digital which
means set Facebook Twitter and YouTube and Linksys is on and let's see what happens let's hire
a 12 year old give them a budget and and hope they come back saying look what I did with
Facebook look at how many mentions and so on now that goes to your second question how do
we measure the impact of using Facebook or something like that progress is being made but
remember we'd never measured advertising right either I mean traditional advertising was a waste
was first of all the basic notion of traditional advertising is is you know that half the people will
never see the what did Wanamaker's say I know that half of the money I spent on advertising is
wasted it's just I don't know which half basically we we bait we judge things by how many people
were in principle exposed costs per thousand people exposed when we make an advertising budget
and frankly many of them were in the bathroom or the kitchen when the ad appeared so and
increasingly people are more on their TVs on their computer screens and they are necessarily
watching ads and I think the advertising industry is making a mistake of sachit putting too many
ads now I mean there's little content left on some programs with the number of ads that flash by
they're all 30-second things so now about measuring if you read Advertising Age you'll see a lot
of statements and claims that there is measurement going on one thing I would say is is this don't
take your ad budget and take 50 percent and switch it to digital which one firm did and it was it
was a terrible result because until you know what each social medium does what you want is ten
percent of your budget going that way and then when there's some proof to put in another five or
ten percent into that particular use of the social media okay we've got time for just one more
question I know a lot of our attendees are going to other so we have one right here oh okay please
mark Gruen is my name I've been in direct marketing my entire career and so it's interesting that I
should follow up a question about measurement and advertising yes because I've lived by my
metrics now my question is this um I've always guided my marketing decisions according to them
so called four peas or 5 peas depending on where you're coming from and in terms of the p4
placement I mean the Internet has certainly flattened the world and our distribution channels have
changed but how do you see the evolution of the other piece in this digital age okay first of all let
me say I'm so glad you're in direct marketing direct marketing people are much more accountable
for the results they could actually experiment with trying to release different direct messages and
seeing and testing and and then going with the one and knowing what it costs to do the campaign
what the the sales were and it's just a pure P&L kind of exercise which we couldn't do with just
the normal commercials on TV now are you asking where the other three P's are going in a sense
like what's happening to product thinking and pricing and place see there will be new distribution
channels all the time I didn't ask this question when I wrote the book marketing 3.0 which is really
the case that some company should be socially responsible as well someone would ask me what
are you going to come up with 4.0 and I don't really have an answer because when you go from
the mind to the heart to the spirit I don't know how much further you could go but I I am thinking
that 4.0 is going to describe companies in the future that are building ecosystems and platforms
where we get involved with them in such a way that everything is being supplied that we want as
an individual think of iTunes think of the iPhone iTunes the host setup of creative think of harley-
davidson if I buy a harley-davidson I'm a member of what they call them the Harley the Hogs I'm
a hog a Harley owner owner droopy and not only that not only that I can take my motorcycle and
just go and meet people I don't know some have beards others have beards but they're fake they
they're wearing leather jacket these are our business people there may be see financial officers but
they want to be macho so they'd supply a host system to fit into that more and more companies
might sort of begin to think about that now let's take what's the one who's making shoes now is it
TOMS shoes or the other ones apples they're creating a system that's going to go behind the shoes
that you buy it's gonna go into clothing it's so some companies as one evolution for certain
companies by the way it's not different in business-to-business we're a company that supply Boeing
supplies 747s and other planes they have to create a whole system so you can't even leave it you
know once you get involved once you get with IBM you're not going to leave for Honeywell or
something like that so this is maybe what 4.0 thinking will do in other words it won't be product
centered it will be system centered a whole system I think we're out of time thank you very much
[Applause] [Music]