Philip Kotler's contributions to marketing theory and practice
An excerpt from Review of Marketing Research: Special Issue – Marketing Legends
Philip Kotler has published 147 articles in peer-reviewed journals. When Professor Jagdish Sheth invited him to be published as a Legend in Marketing, he proceeded to group these 147 articles into nine categories.
These nine categories are:
- Marketing Theory and Orientations
- Improving the Role and Practice of Marketing
- Analytical Marketing
- The Social and Ethical Side of Marketing
- Globalization and International Marketing Competition
- Marketing in the New Economy
- Creating and Managing the Product Mix
- Strategic Marketing
- Broadening the Concept and Application of Marketing
In what follows, Kotler describes the key articles in groups six, seven and eight, and their intended contribution.
Volume 6: Marketing in the New Economy
The rapid advances in technology leading to the computer; Internet; cell phone; social media such as Facebook, My Space, Twitter, and Linkedin; video viewing such as YouTube; and new devices such as compact cameras, electronic book readers, iPads, and others are bound to change the marketing world as we know it. These developments have introduced a whole online world where we get abundant information about any competing products and can order many of them online, thereby reducing the role of sales people and certain retailers (music stores and book stores) while expanding the ability of consumers to talk with each other and influence each other on brand choice. I wrote seven articles to envision the implications of the new economy for marketing theory and practice.
Professor Ravi Achrol and I wrote “Marketing in the network economy” to show the increasing role played by networks in shaping domestic and global activity. Drucker saw the future economy as a networked economy with knowledge workers at the helm. He saw the old hierarchical structures of companies giving way to disaggregated networks. In our article, we observe that companies do not compete; their strategic networks compete. We distinguished four types of networks: internal, vertical, intermarket, and opportunity networks. We described how networks have put power into the hands of consumers to become producers and sellers as well.
In “Marketing in the age of information democracy”, Professor Mohan Sawhney and I describe how the digital world has reduced the information asymmetry between producers and consumers. We say “(buyers) do not need to overpay out of price ignorance. They do not need to exert physical effort to consummate a purchase … the information-rich regime empowers customers with a new set of capabilities.” We call upon marketers to move from controlling exchanges to facilitating exchanges. Marketers must move from opaqueness to transparency. We argue for a change in the view of marketers from operating as hunters to being seen as gardeners. We describe the new roles of consumers in initiating reverse promotion, reverse advertising, reverse pricing, reverse product design, and reverse distribution. Finally, we show the rise of new “metamediaries” who help specific need groups to obtain all the inputs they need in one-stop shopping. Consumers will improve their shopping efficiency through patronizing these rising Internet metamediaries.
Volume 7: Creating and Managing the Product Mix
Companies face a number of decisions in developing a viable product mix. I will describe a few of the 10 articles in this volume.
Many companies carry some low-selling products too long through inertia or through not wanting to disappoint a few customers. My observation is that most companies have not installed a system for identifying their weak or weakening products and items nor taken steps to correct or eliminate them. I deal with this issue in “Phasing out weak products”. The system consists of periodically reviewing the sales of every product item and judging whether it is satisfactory or requiring correction or elimination. This article received a lot of attention from companies that realized that they needed some system to identify weaker products.
Getting rid of a weak product is not an easy task because of vested interests. In “Harvesting strategies for weak products”, I show how to handle a weak business unit or product that is destined for downsizing or elimination. I describe the processes of preparing, implementing, and monitoring the decision to apply a harvesting strategy.
"I have always urged marketers to put more time into strategic thinking before developing their tactical plans."
I was interested in testing and evaluating different strategies for launching a new product in my 1965 Management Science article “Competitive strategies for new product marketing over the life cycle”. It was one of my more mathematically intense articles. The first part describes the market model as well as the accounting model used by a hypothetical firm to compute its profits. The second part discusses nine conceptually different classes of marketing strategies (nonadaptive strategy, time-dependent strategy, competitive adaptive strategy, sales responsive strategy, profit-responsive strategy, completely adaptive strategy, diagnostic strategy, adaptive profit-maximizing strategy, and joint profit maximizing strategy). The third part reports the results of a duopoly confrontation involving various pairs of competitive strategies. The last part suggests additional variations in the market model and in the strategies that would increase the significance of the findings.
In “Targeting prospects for a new product”, Professor Gerry Zaltman and I explored new ways to define the best prospects for a new product. In “Flawed products: Consumer responses and marketing strategies”, Professor Murali Mantrala and I distinguished several ways to market a flawed product, including lowering the price, praising the flaw, and other possibilities. In “Design: A powerful but neglected strategic tool”, Alex Rath and I showed how creative design concepts can lead to a much more successful product than when standard design is applied.
Volume 8: Strategic Marketing
I have always urged marketers to put more time into strategic thinking before developing their tactical plans. I have also emphasized that strategies must adjust to the particular economic environment at the time, whether it is recession, inflation, stagflation, or shortages. I will describe a few of the seven articles in this volume.
In 1973, the U.S. economy moved from a period of abundant goods to a period of severe shortages in oil, chemicals, electricity, natural gas, cement, aluminum, copper, textiles, paper, and glass. I published “Marketing during periods of shortage” to provide a perspective on this new economic environment. The Age of Abundance was now moving into the Age of Shortages. Companies had to turn to demarketing because there was no need to build demand further. Some persons thought that marketing personnel and departments would be made redundant. Companies had to make hard decisions about which customers deserve to have their orders filled, how much higher the company should set its prices, and other issues. Much depended on the company's view of the expected durability and depth of the scarcity situation. Three schools emerged: the gloom and doom school, the return to normal school, and the new lifestyles school and each favoured a different response. Companies recognized that they had to revise their product mix, customer mix, and marketing mix. The article presented guidelines on the best adjustments to make. I added additional ideas about responding to shortages and inflation in my article, “Strategic remarketing: The preferred response to shortages and inflation”.
In discussions with executives, they always stressed the importance of increasing market share as if their goal was to reach a 100% monopoly position. Professor Paul Bloom and I critiqued this thinking in “Strategies for high market-share companies”. In reaching for more market share, a high market share company had to realize that the cost gets steeper as the company advances its market share because buyers who have not yet joined the bandwagon have good reasons not to join. The company also has to worry about a too high market share inviting government charges of unfair competition. Therefore, a company has to decide whether it is worth X dollars to buy Y more market share; when the answer is no, they should put X dollars into a different and better opportunity.
"I believe that I had a positive influence at IBM when CEO John Akers invited me to evaluate the marketing plans of different units and to develop a plan for IBM to become more customer driven in all of its departments."
Market share is of particular interest to challenger companies who by definition are challenging the leader in an effort to gain more share. In “Market challenger strategies”, I discuss three types of strategy: direct attack, coming in through the backdoor, or a “guppy” strategy of buying up smaller firms. Then, I discuss nine attack strategies: discounts, cheaper goods, prestige goods, product proliferation, product innovation, improved service, distribution innovation, marketing cost reduction, and intense advertising promotion.
In 1981, Professor Ravi Acrol and I moved to a higher level of thinking about attack and defence strategies using the framework of military strategies as developed by thinkers such as Carl von Clausewitz and Liddell Hart. We started with a quote from Albert Emery: “Marketing is merely a civilized form of warfare in which most battles are won with words, ideas, and disciplined thinking.” Our article, “Marketing warfare in the 1980s” described the power and risks of five attack strategies: frontal attack, flanking attack, encirclement attack, bypass attack, and guerrilla attack. Then, we reviewed the power and risks of six defence strategies: position defence, mobile defence, pre-emptive defence, flank positioning, counteroffensive strategy, and hedgehog (strategic withdrawal) defence. Our article received a lot of attention as well as a share of critics concerning the analogy of marketing to warfare. Not long after, Al Ries and Jack Trout published a short book called Marketing Warfare, and Conrad Levinson launched his popular set of books on guerrilla warfare.
Contributions to Executives
I have enjoyed wonderful relations with executives both in my consulting practice and in my seminars.
My consulting assignments included companies such as Abbott, Apple, Arthur Andersen, American Hospital Supply, AT&T, Bank of America, Brunswick, Ciba-Geigy, DuPont, Fireman's Fund, GE, Hart Schaffner, Walter Heller, Honeywell, E.F. Hutton, Hyundai, IBM, Illy Café, Kia, Kimberly Clark, KLM, LG, Masonite, Merck, Motorola, Playboy, SAS Airlines, Samsung, S.C. Johnson, and Sears. I met executives at these companies and enjoyed working with them to help solve their problems.
At Sears, their vice president of Marketing and Strategy kept a new edition of Marketing Management in his desk, and whenever a staffer did not know something, he would pull out my book from his drawer and tell him or her to read the right section and return the book the next day.
I believe that I had a positive influence at IBM when CEO John Akers invited me to evaluate the marketing plans of different units and to develop a plan for IBM to become more customer driven in all of its departments.
In addition to consulting, I have given numerous seminars and trainings around the world over a 40-year period. My early work was in bringing modern marketing thinking into Western Europe starting with the United Kingdom, France, Germany, and Italy, and then moving up to Sweden, Norway, Denmark, and Finland. Later, I was invited to teach in Brazil, Argentina, Chile, and Mexico as marketing became a buzz word in these countries. Still later, Russia, Ukraine, and other Eastern European countries wanted to catch up, particularly Poland, Hungary, and Czechoslovakia. Turkey and Egypt then grew interested. Then the interest exploded in Southeast Asia with the “Tiger” nations of Thailand, Malaysia, Singapore, and Indonesia. Following them, China and India wanted to learn everything they could about marketing. The latest part of the world showing a rising interest in marketing is the Middle East with Dubai, Abu Dhabi, Bahrain, Qatar, and Saudi Arabia. Today, I have particularly close relations with marketers in Sweden, Poland, Ukraine, Italy, Turkey, India, China, and Indonesia. In the last case, Indonesia recently issued a postage stamp in my honour.
Leaving my intellectual journey aside, I want to end this article by saying that I am blessed with a wonderful wife Nancy and three children and nine grandchildren. I travel around the world, speaking and learning new things, and meeting new and interesting people. Work has never seemed like work because of all the interesting conundrums and challenges associated with leading a scholarly life. Peter Drucker remains my hero, for whom retirement was never of interest or an option.
This excerpt was taken from “Philip Kotler's Contributions to Marketing Theory and Practice”, in Naresh K. Malhotra (ed.) Review of Marketing Research: Special Issue – Marketing Legends (Review of Marketing Research, Volume 8), Emerald Group Publishing Limited, pp.87-120, 2011.
The author is Philip Kotler.
The full book can be purchased in hardcopy from the Emerald Bookstore.