Hakuhodo Marketing Exective: Have the established companies lost their passion for new creation?

Jan. 17, 2018
  • Viewpoints

 

Philip Kotler
Distinguished Professor of International Marketing
After earning his master’s degree in economics at the University of Chicago and his PhD in economics at the Massachusetts Institute of Technology, he did research in mathematics at Harvard University and in behavioral science at the University of Chicago. His major publications include Marketing Management, Principles of Marketing, Marketing: An Introduction, and others.
In 2017, he published Marketing 4.0: Moving from Traditional to Digital.
Motohiro Ando
Hakuhodo/Hakuhodo DY media partners Corporate Officer, Executive Marketing Director
Joined Hakuhodo in 1988. Ando has received numerous awards, including ACC (Grand Prix), Asian Marketing Effectiveness (Best Integrated Marketing Campaign), and others. He has also served on the juries of ACC Marketing Effectiveness, Cannes Lions International Festival of Creativity (Media), and others. His significant publications include Marketing Nation Japan (contributing author) (Nikkei Business Publications, Inc.) and others. He earned his master’s degree at the University of Tokyo, Graduate School of Interdisciplinary Information Studies (Social Informatics).

The amazing progress of technology and explosive proliferation of digital devices such as smart phones are coinciding with a revolution in marketing. In this kind of age, how can companies expand their business without losing sight of their core values? Professor Philip Kotler, a worldwide business expert known as “the father of modern marketing,” offers an inspiring message to Japan.

 

The Key to Digital Marketing is Thoroughness in “Insight” and “Value”

Ando: Each day I feel we are approaching a huge revolution in marketing. Professor Kotler, in your recent work Kotler’s Marketing 4.0, you mention the transition from Marketing 3.0 to Marketing 4.0 and emphasize the importance of digital marketing.
However, if we look at the present state of digital marketing in Japanese companies, I think that their efforts are focused on simply pursuing efficiency. I am not satisfied with this approach.
This is because I believe that all marketing, including digital, should be about creating value.
Professor, what points do you think companies should focus on when they wish to implement digital marketing?

Kotler: My book which you have referenced has the subtitle ‘Moving from Traditional to Digital’. I believe there is nothing wrong with companies wanting to implement a smart approach in digital marketing. However, the cost of the transition to digital marketing is not cheap. It is not about regarding customers as large segments as was commonplace in the so-called mass marketing age, but rather about creating individual relationships which each individual customer.
In order to form these relationships, in addition to gathering massive amounts of data, you must thoroughly understand what it is that drives a customer to make a purchase. There are also colossal amounts of various tools that come with digital marketing.
The most important keywords are “insight” and “value.” As a marketer, you need to know how subtle a thing “value” really is, and there are so many reasons why. From terabytes of big data, dynamic interconnections are processed, pointing to new insights that lead to value creation.

 

Search For Needs That Even Customers Themselves Are Not Aware of

Ando: When trying to understand what drives a customer to purchase, you say that we should take such complicated and numerous approaches. In your previous book Kotler’s Marketing 3.0 (Asahi Newspaper Publishing) you explained the market as the collective heart, mind, and spirit of all people. At Hakuhodo we have had a concept of “the ordinary person’s daily life point of view (sei-katsu-sha)” since the 1980s and have maintained our dedication to this concept ever since. In Japanese, “sei-katsu-sha” does not imply a limited meaning such as “purchaser” or “consumer.” We do not try to understand people as consumers, but rather as members of a diverse society, and from insights gained by careful implementation of this approach, we try to develop new ways of offering value to them.

Kotler: Certainly. Day-to-day life is not just about making purchases. It is much, much more than that; it is about the people themselves.

Ando: Yes. So when we consider these people as holistic beings, and not simply as consumers, I think a different marketing approach is needed. We believe that growth in digital marketing expands our ability to market to customers as individuals. 4 years ago we developed a “Seikatsusha DMP” (Data Management Platform) which has been implemented by many companies.

Professor, it is said that in marketing, it is important to offer a solution to customers’ problems. However, not all customers are fully self-aware. In creating value which is not yet realized by customers, I think that digital technology and new data will become increasingly important.

Kotler: I think so too. In reality, customers themselves are not in touch with their own desires. This is new knowledge about the customer, and it is the key to making new discoveries.
We call this approach of searching for desires that customers are not aware of “neuro-marketing.” I have a colleague, Moran Cerf, who is a top expert in neuroscience. Professor Cerf is able to discover things about a person that even they were not aware of.

It really is amazing if you think about it. For marketers as well, every day they are working with people who do not fully understand exactly what they want.

Ando: Both the provider and purchaser must discover value together. I believe that this is the core meaning of marketing made possible by technology.

 

A Marketer’s Important Job is Determination in Deciding “What to Create?”

Ando: You once said that Japanese companies ought to create more CMO positions (the highest position for marketing professionals). Unfortunately, it is still true that this position has not become standard at all companies. We believe that a CMO is necessary in this environment of ever-advancing digital technology and that this person should be a leader who emphasizes digital marketing.

Kotler: A CMO’s responsibilities are vast. The first three that come to mind are quite standard types of work: advertisement, sales team management, and sales promotion. Most standard companies are doing these types of work. There is a sentiment that as long as these three divisions are managed properly, that that is sufficient. This type of thinking is a mistake.

What a CMO does is take all of this to the next level. A CMO must be able to support everything from the background. Another important skill of the CMO is digital technology.

The way we look at marketing is rapidly changing. Previously, marketing was defined simply as how much of a product you were able to sell. How about now? A determined answer to the question “What do we create?” is now an important part of marketing strategy.

In other words, marketing work has changed from a focus on selling more products to helping the company grow as a whole.

Do you understand what I mean?
Without exception, all companies must change. A company that places proper emphasis on change is the ideal company.

Think about it. Can there be a company that operates on the belief that customers never change? If there were such a company, it would be extraordinary.
Everyone should be alert to change. Whether or not you are alert to change affects not only what products you create, it also affects what value you will be able to offer in the future. This is called innovation.
In 2016, I wrote a book called Marketing Recommendations with a renowned business expert from Japan. The book discusses both marketing and innovation. The two cannot be separated.
Japanese people have learned much from Peter Drucker, but Drucker also always said that marketing and innovation are the only two things that can make it possible to create great companies. According to Drucker, everything else was just a matter of costs.

In our book, marketing and innovation are what form the foundation. A company’s marketing department should focus precisely on marketing and innovation – this is what we wanted to say.

 

CEOs Should Learn About Marketing

Ando: Lastly, if you could offer any words of advice to businessmen, what would you say?

Kotler: CEOs are essential to a company’s success, because they are at the very top of everything. However, they don’t always understand marketing. Many CEOs come from a background in finance or law.
I’d like to ask you a question. In a company of just one person, would you rather that one person be a financial expert, or a marketing expert? Which would you choose?

Ando: The latter, of course.

Kotler: Exactly. When it comes to taking a risk, a person with a background in finance will say “no.” As a result, opportunities for company growth are squashed. For reasons like this, I believe that marketing programs for CEOs are important.

Ando: I believe that the sentiment that marketing is at the forefront of business has become stronger in Japan over the past few years.

Kotler: One thing I can say is that I want CEOs to more proactively learn about marketing.
The important thing is that passion and volition are both important. Great CEOs have a desire to make life better for all people. They also have the passion to make their goal a reality.

Ando: Today our discussion topics ranged from the advancement of digital technology and ended with the passion of creation. I think we received a valuable message for business experts. Thank you.

 

After the Discussion (Motohiro Ando)

“Digitalize or die.” Professor Kotler made this powerful statement in front of an audience in Japan nearly two years ago. To be honest, it felt strange. Many marketers, myself included, started their careers by reading Marketing Management by the “Father of Modern Marketing”. This world-class expert is now well over the age of 80. He’s certainly not what I would call a trendsetter. This is the thought that floated to my mind. I should feel ashamed for thinking that. In our discussion, I was reminded of the professor’s recent writings and statements, which describe how technology is changing the marketing environment, in addition to revealing how voracious and earnest a fighter the professor is.

But why is it so important to talk about change? Is it because the skills of targeting and policy optimization have improved through digital technology? That’s not it. He is referring to the state of marketing itself. In a digital environment in which it is possible to constantly face a consumer base that is always changing, the focus of marketing will also change. The important thing is not how many products you can sell, but showing the world what you can make. Creating value is the new core of marketing.

Using methods in this new technological environment and talking with consumers changes you. You take what you provide and change it now and into the future. Global players who do not fear change and have their own visions of where the world should go have taken every new trend as a chance to grow stronger over the past 20 years. Making efforts toward reform requires the energy to face your own weaknesses and take a step forward. Is that kind of energy still remaining in Japan, even though it was said a while ago that we lost our brilliance? Can we still experience new growth? The professor says that it’s possible. Japanese society, which has been denounced as only being good at imitation and improvement, will discover the “sprout” of creation and be inspired.

The professor, who took the time out of his crowded schedule to sit down with me despite being tired, discussed the evolution of marketing with me non-stop, speaking confidently and clearly. He is a man of passion and creation. “If you could choose between a society full of people in the finance field and a society full of people in the marketing field, which would you choose?” This question was certainly the passionate Professor Kotler’s way of saying that marketing is a job which requires us to question the values of society and make new creations.

I agree that marketing is at the core of corporate activities. As a person involved in marketing, I want that to mean continuously creating new value in the economic society between corporations and consumers, and progressing with a focus on our effectiveness.

After our talk, during the short time it took the staff to put away their equipment, the professor whispered into my ear after learning that I was involved in marketing from the viewpoint of an advertising company. “By the way, what do you think of the future of advertising? I’d like to hear your opinions.” The “Father” seemed voracious as always.

I wonder if we can live up to his passion.

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