Dipak Jain -- The Future of Marketing

Rotman Marketing Association Session, Rotman School of Management, January 20, 2005

These participant's notes were created in real-time during the meeting, based on the speaker's presentation(s) and comments from the audience. These should not be viewed as official transcripts of the meeting, but only as an interpretation by a single individual. Lapses, grammatical errors, and typing mistakes may not have been corrected. Questions about content should be directed to the originator. These notes have been contributed by David Ing (daviding@systemicbusiness.org) of the Systemic Business Community.

[Dipak Jain, Dean, Kellogg Graduate School of Management, Northwestern University]

Tsunami

• Elephants knew, ran, in right direction

Background in math, operations research

• Interviewed at Kellogg
• Kotler asked:  is this marketing?
• • Reply:  it's the future of marketing

Now Kellogg, 18 years, 4 years as dean

Kotler asked Jain to speak in his place at the conference

• Introduction, as Phil Kotler's boss.

The field of marketing, started from psych, social psych, cognitive psych

• In 1970s and 1980s, starting having good data
• • Also in health care, e.g. IMS with physician's data
• How do we put marketing in an analytical foundation?

Teaching:  important to bring academic rigour, combined with business relevance

• If no relevance, no support -- not only financial, but data

What are the challenges in the field, and how are we dealing with them:  2005 to 2015.

1.  Nano-second culture

• Things are happening too fast, changing too rapidly
• No luxury to wait and analyze to come back with a solution.
• Urgency in the world

2. Hypercomptition

• Internet, world competition

3. Demanding customers

• Related to hypercompetition, have more choices
• Expect more, and have more access to information about those choices

Have to act faster, lots of competitors, and have more demand customers.

• As consumers, choices are becoming more similar
• e.g. cell phones, all providing the same features
• e.g. laptops -- all coming out of the same factory, with different brand names

Real challenge:  how do we go about creating meaningful differentiation in the minds of more discerning customers?

A.  Change from product-centric to customer-centric approach

• Doing business the way that the customer wants to do it.
• • Spend a day in the life of a customer
  • Experience
  • e.g. on the board of directors for United Airlines: try not flying in business class
  • On the board of John Deere, decided to spend some time with dealers.
  • • When the farmer comes, what is he looking for?
    • Can we listen to the voice of the customer?
  • It's not that customer-centric is new, but need to dig deeper, more thoroughly to what they're really asking for
• Need to be close to customers and ahead of competitors
• • Proactive, now reactive
  • Need to take market leadership:  close to customer, with a pipeline of information from them, and using that to be ahead of competition
• Building capabilities in companies, in attracting and retaining valuable customers, to realize that our true assets are customers
• • Business is about people, products come and go
  • Include internal customers, employees
  • At business schools, teach a lot of "putting structure to unstructured problems", but the time has come to deal with leadership skills
  • • Make people move up
  • Thus, at Kellogg, it's not MBA that is the product, it's the experience of the students
  • Story: person wanted to do an in-depth analysis, decided to work at the home office.
  • • 6-year son at home, excited, came every 5 minutes.
    • Tried to give son things to distract, but son wouldn't cooperate
    • Had a map of rhe world on his desk, tore it up, and gave it to the son.
    • In a short period of time, the son came back, and said he had done it.
    • On the back of the map, there was a person on the back:  when put the person together, he put the world together.
    • If we have to look at marketing, the product or service is the catalyst.
    • It's our people against the people we're working with.

Jean-Claude Larreche, (Markstrat) with Jain writing a book on customer centricity

Major shift in thinking

• Realize marketing is not product or service, but it's the total customer experience
• • Shouldn't not be in the business of selling business class seat, but business class experiences
  • Airlines, not doing very well
  • • Reason:  all optimizing price, or filling seats, rather than focusing what business they are in.
    • There are airlines that know this.
    • Flying Chicago to London:  7 hours with 2 meals, mean 3 hours, not enough sleep.
    • If have business class meal in lounge, then get 5 hours sleep.
    • Then when you arrive, the business class passengers need to get off first.
• Focus not on product life cycle, but customer life cycle
• • The customer you acquired 3 years ago is not the same customer you have today.
  • • Customer's knowledge level has increased.
    • Need to realize the customer is more sophisticated.
  • Customer needs:
  • • Opened account as a single associate professor, now a dean with children
    • In marketing terms, need to help customers realize value
    • Price is transparent, value is opaque.
  • Demographics:
  • • United Airlines Hong Kong - Chicago
    • As of September 14, 2003, there are 23,000 people in Japan over 100
    • • Woman had 56 years of social security
    • Soon, there will be a customer segment of 65+ to 85
    • • Have time, money and energy (given advances in health care)
      • Companies should figure out how to deal with this set.
    • Update:  more people in Japan
  • Industries that will do well: 
  • • Customer well-being, as health care and wealth care
    • • Health care as prevention, not cure.
      • Doing a study on branding Thailand
      • Thainess:  respect, hospitality (treat visitors as messengers of care), care
      • Thus, first industry tourism, not just coming once, but healthy tourism so that people come to spas and massages, come to be restimulated
    • Also will do well, media and entertainment
    • • Have to keep the customers engaged
      • Airlines have it wrong
      • • Few movies in coach, more in business class
        • Business class customers aren't taking flights for movies, will sleep or work.
        • How you use customers as co-creators of the experience
    • Third, hospitality services:  tourism, travel, hotel, restaurants
    • • ROMEOs:  Retired Old Mea Eating Out
      • Got a chance to meet Milton Friedman
      • Customers need respect, and would to spend 2-1/2 for lunch
      • • Two sides to restaurant, where Friedman's special fish was offered, and then the other side for Silicon Valley Types
• Need to think about unarticulated needs
• • Ethnographic research
  • Sometimes need to drive customers
• Branding:  a promise you make to your customers, the delivery of the promise.
• • e.g. FedEx, absolutely overnight
  • e.g. Nike, the athlete in you
  • How to define the brand of a school?
  • • Common branding is discipline, e.g. Kellogg marketing, Harvard strategy
    • But similar faculty
  • Convert the branding into a customer metric that you can show them the value of the brand.
  • Business schools:  in the management of talent
  • • Input (admissoin), process (faculty), output (placement)
  • First working day at Kellogg, on September 11, 2001, orientation
  • • Message should be, you've made the right decision
    • First, came for learning
    • • Provided with opportunities to achieve dreams, aspirations
      • Values, 30% from different cultures, should try to be ourselves
      • Ethics
      • Feel the LOVE@Kellogg
    • In the business of providing socially responsible leaders, need a sacrificing attitude
    • In difficult time, the people who come to help you ...
    • • Stars, you may not know them, but you know they're there.
  • Business Week 2002, best 2 schools were Northwestern and U. Chicago
  • • Around the world, people never think about this.
    • Created a branding Chicago project with 14 students
    • e.g. Silicon Valley, creating a pull
    • • Winter?
      • Things kept in a cooler environment stay fresher long
      • Two ariline hubs, and sense of community
    • Use the sharing, create a differentiation
  • 5 segments to deal with:  students, faculty and staff, alumni, corporate partners and media
  • • Need to make lifelong learning a reality

Don't think of marketing as a discipline, it's a mindset

• The more we think in terms of customers (as partners and people),, we'll be farther ahead.

[Questions]

In financial field, relationship marketing?  Customers can be with you 75 years.  Educating, first

• Financial services industry is more about educating.
• Trying to teach financial stability, because the person doesn't know the risk.

IT services, challenged with real ways of building the relationship.  All are built in trust.  How do you get to know customers in marketing, because it's usually sales people

• Marketing:  need to understand the customer's business.
• Sales person will facilitate what it is you've learned.
• Should know which dimensions you should understand their business.
• Microsoft:  not sales people, but Business Productivity Advisors
• FedEx:  not delivering packages, time management for customers.
• From customer needs, to customer resources

Manufacturing industries?  Boeing or Airbus?  Customer centricty of larger companies.

• Looking at aviation industry
• • Customer centric:  for whom are you making the product?
  • e.g. Boeing 777 with 2 engine efficiency, compared to A-380 4-engine
  • Have to provide metrics
  • A-380 has room for a gym:  keeping customers engaged
  • Thus, Airbus on size; Boeing is on efficiency
• Embraer takes a customer centric approach

Competitive advantage of employees; work in organizational effectiveness, on engagement.  Leadership lip service.

• Multiple levels
• Employees, need to differentiate between motivation and inspiration
• • Motivation, there's only so much you can do.
  • Need to inspire them:  need to give more responsibility:  empowerment
  • • People like empowerment most
  • Give more tasks to fewer people, which gives greater sense of responsibility
  • Let people make mistakes

Quality, originally seen as inspection, with statistical process control.  Now seen as encompassing the whole business.  Convergence of quality with marketing?

• Who defines quality?  It's defined by the customers.
• Six sigma and others are necessary conditions.
• e.g. healthcare or financial services -- sometimes overprotection