Philip Kotler is the master of marketing. Many a book that has been written by him has been hungrily gobbled up by eager marketing students. In one of his more recent books on Modern Marketing, Kotler explains how traditional marketing tools are no longer as effective as they were in the past.
Not that a revelation like this was a shock to me. In today’s world with the proliferation of the Internet as a major channel in terms of getting customer attention, brand building, product sales and customer management, the marketing playbook has changed. Drastically.
Kotler writes about how a firm can engage in a certain set of activities to influence buyers to purchase their product or service. This set of activities is referred to as a marketing mix which is typically based on the four P’s:
· Product: Products manufactured and sold today must be better or different in some way to engage customers to purchase it.
· Price: Standard cost-based pricing, which simply adds a markup to the cost of a product, is no longer effective (maybe for a generic product but otherwise not). Instead, he promotes value-based pricing, where prices are not based on their cost, but based on their value to the customer
· Place: The rules of the game have changed with the Internet. Newer channels means newer ways of thinking on how to add value to the product selling process and newer places of selling it.
· Promotion: Use the right mix of delivery and communication tools to deliver a message that resonates with potential buyers.
Bottom line - companies can no longer rely on their former business practices to sustain prosperity. Busines assumptions and practices that were practiced ‘then’ with the ones being increasingly practiced ‘now’ are detailed by Kotler as follows:
Then
1. Make everything inside the company. (Fully owned)
2. Improve on one’s own.
3. Go it alone.
4. Operate with functional departments.
5. Focus domestically.
6. Be product-centered.
7. Make a standard product.
8. Focus on the product.
9. Practice mass marketing.
10. Find a sustainable competitive advantage.
11. Develop new products slowly and carefully.
12. Use many suppliers.
13. Manage from the top.
14. Operate in the marketplace.
Now
1. Buy more things outside (Outsource).
2. Improve by benchmarking others.
3. Network with other firms (Collaborate).
4. Manage business processes with multidiscipline teams.
5. Focus globally and locally.
6. Be market-and customer-centered.
7. Make adopted/or customized products.
8. Focus on the value chain.
9. Practice target marketing.
10. Keep inventing new advantages.
11. Speed up the new product development process cycle.
12. Use few suppliers.
13. Manage up and down and across.
14. Operate in the marketspace.
The checklists above are clear indicator of a firm’s approaches to managing profits. The elements of the ‘Now’ list are viewed as more effective modern approaches to managing profitability. A company can almost tell how much it has adopted contemporary business practices by placing a check in each list on either the ‘then’ or the ‘now’.
If most of the checks are on the ‘then’, then that company is trouble. How does one know that? Well, declining market share, loss of customer confidence, negative buzz in online and offline channels, lower production outputs and hemorraging costs should be a good indicator.
