The master of marketing

MARKETING:Philip Kotler, one of the world's leading marketing gurus, advises against sacrificing marketing in the rush to cut costs and says the original principles of marketing have not changed despite a myriad of communication channels and a more cynical public

THERE HAS been a seismic change in the media and marketing worlds, with fragmentation of the channels and pro-active avoidance by the public of all forms of marketing. In the midst of all this change comes a global economic downturn and subsequent pressure on company budgets. Just how can a firm hope to create an effective marketing and advertising strategy in this climate?

Businesses and their marketers are facing a perfect storm. Channels of communication and channels of distribution are undergoing fundamental changes. The economic downturn is putting pressure on firms to cut budgets, with marketing and research and development (R&D) among the first to go.

Marketing and R&D are long-run investments in building a company's standing and strength. Companies should be very careful about trimming these investments and risking the loss of some marketing assets and personnel.

This is a time for a company to hunt out inefficiencies in product, service, pricing, channel coverage and advertising. It is a time to re-examine whether they are still delivering customer value to their target customers.

Customers will redefine customer value and companies need to create new values to meet these changing definitions.

Since the advent of the internet in all its guises, which of the original principles of marketing, many of them outlined in your book from 1967, still apply today?

The advent of e-marketing and m-marketing do not change the original principles of marketing. The major principle - to create, communicate and deliver superior value to your chosen target customers at a profit - does not change.

Neither do we give up the principles of segmentation, targeting and positioning. The four P's of marketing - product, price, place and promotion - remain a robust framework.

The real issue is how much of our funds should stay in traditional channels and media and how much should be moved into e-marketing and m-marketing channels.

Some firms are focusing solely on internet marketing and are choosing to ignore newspapers and television. Does this spell the deathknell for traditional print and broadcast media, as the closure and cutbacks at newspaper groups, particularly in the US, suggest?

A company that has been using traditional media would be foolish to abandon it wholesale. Most companies move some funds into newer media to learn its potential.

It is true that newspapers are in a decline stage and that people are paying less attention to television commercials, given the emergence of the computer, internet and cell phones.

However, certain audiences are effectively reached by traditional media. Older people still like to read the newspaper even though younger people seem to care less. Many women are wedded to certain afternoon soap operas and they view the television commercials.

To what extent is product parity leading to public cynicism of marketing and how can firms overcome it?

We have moved from a scarcity economy to an economy of abundance where more is produced than we can normally consume. Every competitor has the responsibility of creating a distinctive offering for a distinctive target market. Obviously many are not successful at this and their offerings only confuse customers and the category.

Today we have our choice of hundreds of cameras, cellphones and shampoos and naturally very few will stand out. The main hope for a company is to be skilled at building a strong brand that offers real and distinctive benefits.

With easier access to public forums through blogs, forums and the like, businesses are under much more public scrutiny. How can a firm protect its reputation, even when a problem or issue may not be their direct responsibility?

Today's companies operate in a fishbowl where one can use the internet to learn many things about a company, tell many others of any good or bad aspects of this company, and even start a blog that gathers and circulates bad news about a company. A company must monitor everything that is being said about it, its products and its competitors.

There are now firms that specialise in monitoring internet talk and selling this to subscribing companies. Once a company hears of negative comments, it has to decide on whether it is extensive and important enough to go on the defensive, or to let the talk decay over time. Most large companies presumably have crisis readiness for handling major problems.

How do you define "innovation" and how can a company go about implementing it in their everyday business?

Innovation ranges from creating incremental improvements in a product or service to creating radically new products such as the computer, the cellphone, the catscanner or new services such as pet psychiatrists and pet cemeteries.

Companies spend most of their time on incremental innovation because it can be done faster and costs less.

However, usually it has a high failure rate because it is not very different from what exists and it enters already crowded markets.

A company would be smart to include some budget to support far-out thinking about new products, services and business models.

Every company should try to imagine what customers will want three years from now in their homes, cars and towns.

Local or national brands - especially in the fast moving consumer goods sector - are having a rough time at present in small countries like Ireland. Having faced down the threat from better resourced multi-national or global brands over the last 20 years, they are now faced with exclusion from multinational retailers who prefer to opt for bulk orders from bigger suppliers, often in the retailers country of origin. What can these local brands do, accepting that most don't have the capacity to offer global supply to a multinational even if that were an option?

The question is whether David can beat Goliath? There are many instances where a local brand outperformed the multinational brand either due to the loyalty effect, patriotism, the local brand being priced lower or the local brand having features more appealing than the multinational brand.

But it is also true that globalisation has produced world citizens who are conscious of world brands and think that they are well-made.

Local companies must focus on their core strengths and attack the vulnerabilities of the global brands in constructing a truly sustainable business strategy.