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  • On behalf of our President and CEO, Greg Case,

  • and our chief marketing officer, Phil Clement,

  • it's a real honor for Aon to be the sponsor of this event today.

  • And for many of you, you might know that Aon

  • is now a UK-based company, but it's also important for you to know

  • that the Aon Foundation, for the past 25 years,

  • has made it a priority to support educational activities and

  • cultural institutions like the Chicago Humanities Festival

  • and the Charter Humanist Circle, that does so much to enrich

  • the lives of all of us in this room and everybody in Chicago.

  • And even though we're now in the UK, I want everybody in this room to know

  • that we intend to continue this commitment,

  • and it will remain high on our priority list for the things we do

  • to support the community of Chicago for many years to come.

  • [applause]

  • On behalf of my colleagues at Aon, I want to thank

  • the Charter Humanist Circle and its members

  • for their very valuable support, and I also want to thank

  • Northwestern University Law School for allowing us to use

  • the auditorium today.

  • At Aon, we believe in the mantra "If we can't measure it,

  • we don't do it."

  • And because of that, it's a real honor for us

  • to be here supporting and introducing Dr. Philip Kotler.

  • Dr. Kotler has defined marketing as "the science and art

  • of exploring, creating, and delivering value to satisfy

  • the needs of a target market at a profit."

  • He is recognized around the world as one of the foremost experts

  • on business, of marketing, and for his insights on

  • how exemplary marketing has the creativity and the power

  • to influence global consumers every day.

  • In that spirit, I hope you'll join me in welcoming Dr. Philip Kotler.

  • [applause]

  • Now before I turn the microphone over to Dr. Kotler,

  • in the spirit of marketing, maybe many of you in this room know

  • that Aon does a great many things globally, but one of the things

  • that we've done that has created tremendous brand awareness

  • for our firm is our sponsorship of Manchester United football team,

  • which by today won 2 to 1 versus Arsenal

  • [applause]

  • We're at-- Right now we're

  • at the top of the premiere league.

  • So in that spirit, [laughter]

  • I would like to present Dr. Kotler with his very own, personalized

  • Manchester United shirt. [applause]

  • [Kolter]: Thank you.

  • David, thank you very much.

  • And I will wear this, in a fantasy way.

  • [laughter]

  • May I say, I really appreciate your introduction.

  • Of all the introductions I've received, yours is the most recent.

  • [laughter]

  • Nation, nation...

  • Oh, you may know of Steven Colbert,

  • so I can't pull it off the same way.

  • There will be two groups, with respect to marketing.

  • There will be a group that doesn't like marketing,

  • and I'm going to give you why they don't like marketing

  • and the justifications. I will also tell you

  • there's another group who loves marketing, so before we're through,

  • you will be totally confused, or at least opinionated.

  • So, what I want to do is tell you that--

  • These are called confessions of a marketer.

  • That's, by the way, borrowed from David Ogilvy,

  • who wrote a wonderful book called "Confessions of an Advertising Man."

  • And let me move on and say why is marketing a topic

  • for the humanities?

  • And we would say that there's a couple of reasons.

  • One: I regard marketing as a humanistic subject

  • because marketing has affected our lifestyles;

  • has created, not only affected a lifestyle, but created lifestyles,

  • and we should be, from a point of view of popular interest,

  • interested in that.

  • And it really--

  • I want to say that marketing is very American,

  • that it's beginnings are very American.

  • That doesn't mean there weren't manifestations of marketing earlier,

  • and as a matter of fact, I'd like to give you a very short history

  • of marketing, so that you understand what we mean by the word.

  • As a matter of fact, if you took a dictionary, a Webster's dictionary,

  • in the year 1900, and looked up the word marketing,

  • you would not find it in the dictionary.

  • Yes, you would find the word market, but not the word marketing.

  • If you then picked a dictionary... 1910. You would find the word

  • marketing in it, because marketing is about 100 years old.

  • And it's much more than selling. So let me show you...

  • Let's start... Let's start biblically.

  • [laughter] Let's start biblically.

  • Who is the marketer in this picture?

  • This is the biblical narrative. Who was the first marketer in the world?

  • I hear Eve...

  • The snake.

  • I hate to admit it, because snake sounds like sneaky, and so on

  • and so forth.

  • But the fact is that it was the snake who sold Eve

  • on getting Adam to eat an apple. So it goes way back.

  • At least selling goes way back. Now let's go further.

  • Here is the father of marketing.

  • Wow, what an insult to him! [laughter]

  • I mean, that's Aristotle.

  • Recently I was at a group, little party, and we were speculating

  • who we would like to meet most if we had an hour with such a person,

  • and it boiled down to Plato, Socrates, or Aristotle.

  • That's a hard one.

  • It turns out that my vote went for Aristotle.

  • Aristotle was Google, at the time. He knew more about everything

  • than anyone in the world. He wrote on science, politics,

  • economics, rhetoric, art, and everything.

  • Now, why do I say that he had some marketing impact?

  • Let me read the definition of rhetoric. He's not the founder of rhetoric,

  • by the way. The founders were the sophists, around 600 B.C.

  • They were a group who wanted to use selling and speech and persuasion

  • for their own devious ends. But Aristotle put the i--

  • the discipline of rhetoric on its feet.

  • Rhetoric is the art that aims to improve the facility of speakers or writers

  • who attempt to inform, persuade, or motivate particular audiences

  • in specific situations. It is the faculty of the observing,

  • in any given case, the available means of persuasion.

  • So, in a sense, he could be the father of selling.

  • The idea of getting someone to do something that they might

  • not have done otherwise. So, let's move on, about other

  • early manifestations of marketing. I know many of you cannot necessarily

  • read this, so I will read it, but the first department store

  • opened when, and in what country? Normally if you're in France

  • and you ask the question, they would say of course

  • we invented the department store. It was about 1845.

  • The same time we invented paperweights and some other things.

  • But it turns out that the first department store was in Japan.

  • Mitsui company, which is still alive and well.

  • So that's where one of our retailing forms started.

  • The next one is the first newspaper that carried an ad.

  • There were newspapers early, but the first ad appeared in England,

  • in 1652, and it advertised coffee. And then, the first ad agency

  • started a little later. Well, much later.

  • N.W. Ayer, which is still a prosperous advertising agency.

  • First time a brand was put on a commodity, the commodity being soap,

  • the brand name was Pear's soap.

  • And then the first packaging appeared a little later,

  • and finally we had a marketing research department formed.

  • So, now the word markets has been around all these years.

  • The Middle Ages had markets. In fact, whenever--

  • I would even say the agora, in ancient Greece--

  • that means the marketplace-- In ancient Greece,

  • people would come on a particular day to sell things.

  • In the Middle Ages, there were market days.

  • The word marketing wasn't there. It was just market.

  • And trade was always there, because trade, through history,

  • has taken place between people and regions and countries.

  • So all that is there, and it was in the decade of the 1900s

  • that marketing books first appeared. And the interesting thing is

  • who wrote those first marketing books. Were they sociologists?

  • What was the discipline of the people who wrote the first marketing books?

  • Any guesses?

  • They weren't physicists or chemists.

  • They were economists.

  • So why would economists start a subject called marketing?

  • And the answer is: they were disillusioned economists.

  • [laughter]

  • They couldn't find any mention of advertising in the discourse

  • of economists. In other words, never did Adam Smith,

  • Thomas Malthus, David Ricardo, even Alfred Marshall, and so on,

  • they rarely talked about other forces that shaped demand.

  • The only force that shaped demand in their mind was price.

  • You know the famous curve. Raise the price, demand will go down,

  • lower the price, you can sell more. Price was the only thing

  • that affected demand. So these economists,

  • or institutional economists, said "Hey, you've got to factor in advertising."

  • You've got to factor in retail stores, whole sales, jobbers, agents.

  • And it was the neglect of the classical economists

  • to not really texture the marketplace and the way an economy worked

  • that led to marketing. So marketing is technically

  • a branch of economics.

  • Now who helped developed this field of marketing?

  • Now, probably you don't recognize maybe anyone here.

  • There's one person you might recognize.

  • I don't know if you can see some of these faces,

  • but someone recognize anyone there?

  • Yeah.

  • Dale Carnegie. Dale Carnegie is here,

  • and his book was "How to Win Friends and Influence People,"

  • because in doing this, I wanted to find out

  • who was the exemplar of the selling method.

  • "How to Win Friends and Influence People"

  • But let me give you the whole picture.

  • Ernest Dichter. Some of you may know of.

  • He was a motivational psychologist, and he could explain why people

  • didn't like to eat prunes, why cigars were offending some people,

  • and all kinds of things. And his book called

  • "The Study of Desire." He apparently studied with

  • Sigmund Freud, and he brought that kind of mind to marketing.

  • But he had an opponent named Alfred Pollitz, who was not

  • a head shrinker--We call him a... a nose counter.

  • The expressions we would use if you were very psychological,

  • you were a head shrinker, and otherwise, you were a nose counter.

  • Namely, a surveyor. You surveyed-- You found out what percentage

  • of people were of a certain age and why did they buy a particular product.

  • Julius Rosenwald was very much behind the formation of

  • the Sears company, which was a important episode in

  • the development of our retail chains.

  • Lester Wunderman deserves credit as exemplifying the use

  • of direct mail and catalogs. That you can sell more directly.

  • You don't have to be in the store. You can get people to order goods

  • by mail and phone.

  • David Ogilvy is the exemplar advertising person,

  • then Stanley Marcus, of Neiman Marcus,

  • was a fella who could walk into any retail store and give them

  • 100 suggestions on how to improve the layout, the size of the aisles,

  • and make a difference in the voulme of business.

  • Edward Bernays is the father of public relations in the United States.

  • His name has sort of become obscure, but he really was

  • a very important person. The word propaganda

  • was often used in connection with his work, because people thought it was

  • a model to motivate you to feel a certain way about anything,

  • regardless of the standards involved. And then there's Dale Carnegie.

  • In any case, how did marketing get its start?

  • Marketing got its start in sales departments.

  • Every company has a sales group. And the sales people really want

  • to be in the office of a customer, because that's the only way

  • something happens. So they don't want to do a lot of homework.

  • For example, three things they didn't want to do.

  • They didn't want to do consumer research in a systematic way,

  • because that's taking their time away from selling to customers.

  • Secondly, they would've liked someone else to find leads.

  • Now a lead means a prospect. In fact, we distinguish between

  • a hot lead: "Oh boy, he's ready to buy. He even called us to buy."

  • a warm lead, a cold lead, so on. Someone else should do that

  • for the sales people, so they don't waste their time making calls.

  • And the third thing was someone had to prepare

  • brochures and ads. And the salesman is not skilled.

  • The salesperson isn't skilled at communicating through advertising

  • and brochures. So sales departments added three people, or hired them

  • from time to time. Later on, it exploded

  • to the day today, when we have multinationals running--

  • with marketing-- In other words, marketing--

  • Those three people split from sales and became big enough to become

  • its own department. And so, some people

  • in the audience here may be a chief marketing officer.

  • The old name was Vice President of marketing, but I like the name

  • chief marketing officer because that person now is part of

  • the chief officers. Chief information officer, chief financial officer,

  • chief innovation officer, and the status has moved up.

  • Some of you may be brand managers, may have been in your past experience.

  • Category managers, market segment managers,

  • managing distribution channels, like retail or wholesale things,

  • pricing manager, communication manager, database manager,

  • direct marketers, internet people, and so on.

  • So, marketing is well-