5 Lessons from Philip Kotler

The problems for marketing? "It has become a one-P discipline. Selling," Philip Kotler declares. Maybe he means "peddling", because the guru is clearly unhappy with the stop-gap approach many managers adopt these days: "Marketing professionals lack accountability and hence take short term decisions."

Kotler recommends that CEOs should get a pay-out several years after they leave an organisation, which may engender more long-term decision-making.

Some lessons from the day-long seminar:

Lesson 1: R&D must be market-ready

Kotler had a poser for his audience. His question: "If you were the chief marketing officer of your organisation, who would you prefer to be close to? The CEO, CFO, CIO (chief information officer) or the CRO (chief research officer)?" There was no single opinion, so Kotler decided to have the final say. He would have had it, anyways.

According to Kotler, the CMO needs to be close to everybody from the CEO to the CRO. Typically, the CFO does not see logic in investing behind brands because he is not close to marketing. And, there is an 80 per cent failure rate in new products.

"The R&D is farthest away from customers, hence they often get it wrong," he explained. Now, even in research-focused organisations like IT giant Microsoft, "marketing has become the front door and their new product success rate has become higher".

Lesson 2: Number-crunching is more than just calculating market shares

"In B-schools most students choose marketing because they did not like accounts," quips Kotler. He recommends that instead, most marketing professionals must be "clued into finance" so that the other functions in the company take marketing seriously.

"The CMO must demonstrate the return on marketing investment," he says. Kotler recommends the creation of a marketing scorecard that captures the number of new customers added every year, measures the satisfaction level of current customers and indicates the brand health.

Lesson 3: The co-creation mantra

"Make your business a workshop where your customer can draw what he wants," recommends Kotler, adding "marketing is the delivery of experience". His example is the Four Seasons hotel chain that customises hotel rooms for its guests. Whenever possible, the next time the guest visits the hotel, he gets the same room.

"While the aim of business is to create satisfied customers, the truth is companies continue to lose unsatisfied customers."

The message: plug the leaks by exceeding customer satisfaction and customer delight, moving to a higher level - customer astonishment. Kotler feels that iconic brands like Harley Davidson and iPod reach these higher levels.

What else? Devise a net promoter score to track customer satisfaction levels. Round up your most loyal customers. Ask them if they would recommend your products to others and become promoters for your brand. If the number of those promoters is increasing, it's a good score. Otherwise get the point.

Lesson 4: Expand market size

Kotler begins this lesson with the story of Jack Welch, the legendary CEO of General Electric who made it a thumb rule that GE would only operate in businesses where it was a dominant player.

When Welch asked his managers about GE's market share in their business, the executives would give impressive numbers in the range of 50 per cent.

Welch would reply, "I think it's only 10 per cent. We have not tapped the rest of the market." Kotler's point: in your rush to hit the bull's eye, don't miss out on the markets that surround the sweet spot. The dart board is bigger. There are more places to hit.

Lesson 5: Strategic trajectory for Indian brands

Indian companies face two challenges - defending their markets against the invasion of foreign labels. The second is to develop strong global brands themselves.

According to Kotler, the trajectory for Indian brands is to move from being seen as low-cost average quality products, to low-cost superior quality and finally to higher-end products.

He gives the example of Haier, the Chinese consumer durables company, which has successfully acquired a global brand status. In its first stage, Haier fixed quality. In the second stage, the company diversified its product basket from just making refrigerators to mcrowaves, dishwashers, vacuum cleaners and other products.

The third stage was to globalise. Most importantly, Kotler recommends that Indian companies must lean on research. "Instead of reducing marketing to advertising and selling, it makes sense to stick to research," says the 75-year-old, with child-like enthusiasm for his pet subject.