You You You It is Tuesday morning the 3rd of October 1961 Business leaders from all over the New York area have assembled in the grand ballroom of the hotel Plaza They are here to participate in a comprehensive discussion of marketing Representing the host company Leo H.
Shane Hoffman President of Container Corporation of America opens the seminar with an introduction of the day's theme On behalf of Container Corporation of America.
It's my pleasure to welcome you to this seminar We are honored to be able to present to you distinguished panelists who represent the management of companies functioning in several vital areas of American business The seminar is being held today to discuss marketing the word marketing since 1946 has become as important in the vocabulary of business as shareholder profit loss or taxes The one word represents a concept which includes all of a company's selling activities from the point of production to the point of purchase as Our moderator stated in a recent speech Marketing of all the functions of business makes business work for itself It's marketing that changes people's demands in the sense of bringing them up quicker than they would have developed spontaneously Marketing actually pushes the pace of things Faster so the dynamic circle of industry keeps spinning faster and faster Mr.
Shane Hoffman turns the proceedings over to Edward C.
Bursts professor of marketing Harvard Business School and editor of the Harvard Business Review Professor Bursts introduces the seminar panelists William T.
French president associated merchandising Corporation Harley v.
McNamara chairman of the executive committee national tea company Herbert M.
Cleaves executive vice president general foods Corporation Thomas B.
Adams president Campbell Ewald Company Our Lee waterman vice president and general manager consumer products division of Corning glass company and Marvin Bauer managing director of McKinsey and Company management consultants So now without any further ado.
I would like to simply read the paragraph which was Put together to try to express the problem that we're all attacking And then to turn the Discussion over to the panel.
Let me read this paragraph Today with narrowing product differentials and shrinking margins per unit of sales Top management must take an increasing part in marketing decisions for more and more companies Competitive leverage depends on marketing efficiency How can the company organize itself to adopt the marketing viewpoint as a way of life and put it into action? How can the company develop its marketing strategy to eat into competitors business while strengthening its hold on existing customers at the very time? competitors are trying to do the same thing the answer can only come from the top and Representing the top is your panel and so to lead off Bill French.
Will you please? start Thank you The day of strong consumer loyalty to advertise brands is past Today at best there is brand acceptance the giant retailers and not the advertised brands own what consumer loyalty exists I Think there are many reasons for this and I'd like to just list a few of them first The brands by and large have taken the safe route by copying the leader instead of seeking distinction And I think this is true both in product characteristics and in advertising Second with the countless advertising messages that are assailing the public's eyes and ears every day Even a distinctive message Is hard to register? third The giant retailers can and do establish strong local identity and acceptance fourth These giant retailers have strengthened their consumer franchise very shrewdly through their control of price shelf space promotional weight advertising emphasis so that they have played up their own brands and Minimize the national brands Now if the top management of companies distributing National brands don't get deeply into the thick of marketing action and orient their companies policies towards long -range marketing objectives They may find their company in serious trouble because of these retailer controlled brands.
I Submit the top management should divest itself of day -to -day operating problems and devote its primary efforts to providing marketing leadership Working through a task force of key marketing executives the chief executive of the company could then stimulate direct and strengthen his company's marketing plans and Strategy and most effectively discharge his responsibility for profit both short -range and long -range Thank you.
Thank you bill Mr.
Mack, what do you have to say now? Well, first of all, I want to thank bill for giving national key preference This first time we've been ahead of the hay and pee for a long long time Speaking as a representative of the chain store industry Let me remind you that our industry is in its simplest form the mass distribution of food products Which is in essence marketing our top management's decision are made with marketing in mind always I Personally feel I've always been in the middle of a market revolution having been in this chain store field for seven forty seven years Perhaps herein lies the reason for the rapid growth in the undoubted strength of the supermarket industry today It has always been willing to accept new ideas new developments Change we have had to develop a flexible open mind attitude about almost every phase of our operations Ten years ago we faced a decision as to whether or not Shopping centers serve a real need in the distribution of food or whether we would be better off without those neighbors Who as it seemed to us then we're just trying to muscle in on our magnificent traffic getting system You know our decision and even though we have had some tough problems Shopping centers have been an integral part of supermarket But the shopping center concept is still in its development stage We are now faced with the arrival of the so -called discount houses We have given this serious thought and although we are not convinced that discounting is the answer to the future distribution of distribution of goods We do feel that there is some merit to this merchandising concept and that all manufacturers advertisers and merchandise retailers should Inter -expanding role of organizing for marketing action consider this most Jewishly Thank You Herb we'll take up the battle for the manufacturer now Today we have a new concept of marketing The best definition of it I've seen was written by a Theodore Levitt in the July August 1960 issue of the Harvard Business Review in an article entitled marketing myopia my quote The difference between marketing and selling is more than semantic Selling focuses on the needs of the seller marketing on the needs of the buyer Selling is preoccupied with the sellers need to convert his product into cash Marketing with the idea of satisfying the needs of the customer By means of the product and the whole cluster of things associated with creating Delivering finally consuming it and the quote With such a concept it's apparent that we are just as much in the business of creating customers as we are in the business of creating products So let's organize with this in mind To professor bursts question as to how the really productive marketing spirit is organized within a company William T.
French makes this response You talked about attitude and the attitude that he expressed in terms of marketing taking a consumer point of view Nothing more and more as corporations get big that you you can't really organize in the technical sense You can't organize in terms of laying out an organization chart and laying down policies and procedures and expect it to work You must organize an attitude and you have to organize this attitude that Herb said they're organizing in the general foods company Because I think today more and more success or failure in business depends on the attitude of an organization Much more than on its even its its technical abilities Tom what's your what's your experience as a as an advertising man? Do you find the people that you deal with have they come come to you with the with the right marketing attitude in hand? Well, it varies we have 38 clients and I would say there's 38 different approaches But I see some definite tendencies in the last four or five years within these organizations to Give more attention at the management level to these problems of marketing Marvin what's what's your experience and people come to you with problems.
So you ought to have an even Well, I don't think you can generalize about organization structure if that's what you're referring to and as far as attitude is concerned It's a matter of leadership and philosophy of the business Which is the philosophy itself emanates from some kind of leadership and acceptance of of an approach to the business As a whole so it doesn't seem to me that Attitude is a function of organization structure.
It's an it's a function of leadership and The leadership of course is controlled by the chief executive Thomas B Adams expresses the view of his advertising agency toward what he calls the marketing mix First of all a modern advertising agency no matter how much it prides itself on traditions of media shrewdness or creative ingenuity Must have the flexibility today to include marketing in its services and Increase the scope of its marketing as the times demand and certainly the times do demand It is in fact the constant change in the growing complexities of our time that make marketing services a must Traditionalists in our business would take exception with this pronouncement and still fall back on the adage that Making ad ads is our only business.
I Take exception to that Marketing knowledge and skills should be flexibly intermingled with all the other services of an agency With their main function to give intelligent guidance the flexibility of these other services and their main goal the same as the agencies the creation and placement of persuasive communication The agency which puts marketing by itself ahead of advertising as we think of it has forgotten what business it's in There's too much automatic on thinking reliance these days I believe on one method of research or another to get real information You have to be selective and to use whatever methods best approach the problem Sometimes you have to mix the methods together and always until something is developed that can't be faulted You have to be critical Thank You Tom Lee you want to carry it on please in 1930 There was spent in this country a hundred and fifty six million dollars for scientific activity and last year that was eleven billion dollars That's a sixty times increase in virtually one generation and it represents Something over a fifteen times increase in terms of the commitment of manpower.
I Don't think any of us know exactly what this portends But it seems to me that it makes no sense at all Unless it results in a tremendously increased flow of new concepts new materials new processes new products and new potentials And it seems to me that there also follows from this the fact that The average lifespan of a product which is what we're concerned primarily about has to be shorter We're going to have less time to develop it To get it into the market to make it a profitable thing so in the background of the picture You have on one side a rapidly accelerating rate of change And on the other a continuously increasing cost of creating new products Putting it another way.
It's costing much more in terms of men Skill and money to bring a new product to market which on the average will have a shorter life Now in the middle of this picture I would put marketing Saying rather casually that four out of five new products fail in the marketplace.
I Don't know whether this is so or not My retail friends give me no particular reason to doubt it It's a matter of fact Nine out of ten is sometimes used but whether it's four out of five or nine out of ten is probably not significant What is significant is that has been it has been accepted? It's usually stated and approximately the tone of voice that you might say it's going to rain tomorrow As something that was foreordained by some divine law of averages and To the degree that it's true It's something with which management has to be concerned because it's economic waste And it seems to me that it is a problem to which Foreway from management is going to look to market From his position as a professional marketing man Marvin Bauer sees a deeper meaning in the term marketing strategy any discussion of It seems to me must be concerned with the means for arriving at some kind of an objective and I think as a student of management that one of the Difficulties that we have in having marketing start at the top is because we get tangled up in feeling that the Objective of business is a profit.
I think this is a an unsound and in fact a dangerous concept The objective of a business is to serve consumers better than your competitors serves them so as to become entitled to a profit and if we could get the chief executive of any business to accept a philosophy that the objective of his business is not to make a profit but to serve Consumers or users if you're in the industrial field so as to become entitled to a profit Then you get an approach To serving the consumers accepted within the business and you get the leadership That would flow from the top and put the marketing function in its proper perspective if everybody in the business concentrates on Producing products that will entitle that business to a profit a lot of these things will fall into place And a lot of the differences of opinion that we've been talking about here this morning will fade away Because everybody will then be concentrating on what it seems to me has been the great Productivity of the profit and loss system and that is serving people After the luncheon recess during which Martin Mayer addressed the seminar the panel reassembles to answer questions from the audience and each other Mr.
Mayer who has joined the afternoon panel is asked by professor Bursts to clarify an earlier point When you said in your talk that there's no doubt about who is responsible for the growth of the discount houses I Take it.
I hope I'm not wrong.
I take it that you meant that manufacturers themselves Yes, we're responsible for these discount houses because they have Encouraged the practice by what they've done not necessarily openly or perhaps even consciously But I wish you to expand on that a little bit I think that they've encouraged it relatively openly I don't think there's been too much secrecy about all of this their job is to move what they make and of course we we were up against a Remarkable situation where the entire markup structure of the retailing business was based on ladies dresses Which were very expensive to sell so that there was a considerable opening for people who were not dealing primarily in dry goods to to move in and to Set up what was for them a profitable markup And the manufacturer once he discovered that these people could sell a lot of good Was extremely happy to have them around as a matter of fact the year as it's no great secret that the credit term some of these People have got are at least as good as those which have been made available to more Established stores now while this has been happening quite a number of manufacturers have been making pious comments at the forums like this one But at the same time are and I would and this is this is to me a very fundamental point if you're dealing with a market You're dealing with a reality.
You are not dealing with moral consideration I'm Alfred plant and I'm responsible for advertising and marketing at the block drug company, and I want to open up a different can of worms The topic of today's seminar was top management's expanding role in marketing and I came here frankly Hoping I would hear something about that how far should top management go Does marketing call for professional experienced executives or is it just a seat -of -the -pants operation? That can be done by so -called good judgment or by mother -in -law surveys taken by the president There are companies where the chief executive is a marketing oriented executive There are other companies where the chief executive is far removed from this Are there's a panel any suggestions have they any? rules of the road to suggest in this area because I think that Obviously as a marketing man, I believe that I'm a professional I believe that many chief executives are not professionals in this area and I would resent if this were the case They're telling me how to do my job.
I Think like any question that you can ask in this in a situation like this.
There is no simple yes or no black and white answer, but my own feeling on this which is of course all any of us can express is that Today with everyone facing many serious competitive problems and marking their own products Are you gentlemen wouldn't be here today? That the chief executive can no longer completely delegate the responsibility For the whole marketing problem to his marketing experts but isn't there another facet to it also Marvin our laboratories and our business schools have yet to produce the product called instant knowledge and There has got to be some mature experience Somewhere in this organization I see the young Tigers as we call them coming out of the business schools filled with the marketing case studies Dashing into the problems and making exactly the same mistakes that I made 20 years ago Arbor herb I think probably would also be true that the young chemists charge into the laboratory and make the same mistakes that the chemist made 20 years ago, too.
It seems to me the top management function Is quite clearly to see that managing rather marketing is staffed with people with the background the aptitude and The desire for marketing and just exactly the same sense that it's their responsibility to see that the laboratory is properly staffed with chemists physicists and Nuclear scientists if they happen to be in that particular area Yes, sir Bob Gordon with Time magazine.
Mr.
Mayor made a statement at lunch and sort of depreciating that Stereo FM manufacturers for jumping into what seems like a marketing opportunity It seems to me the timing is a terribly important factor in getting into a market and marketing a new product successfully Now my question is I'd like to hear some comments possibly from mr.
Cleaves on what industry is doing to more scientifically And more quickly identify consumer taste trends and capitalize on we try in various ways to identify such trends I'll give you an example.
It will probably illustrate Most easily the answer your question Our consumer service people girls from the kitchens of home economists are constantly out in the field talking with women Women's clubs church groups, etc.
May report back to the marketing people the trends that they found now a few years ago Three or four years ago and one of our marketing meetings ahead of this department Said that there was a growing trend if you can believe it to the less convenient Products that and then she went on to identify it that the woman wanted to associate herself with Doing something herself.
She didn't want everything done for she wanted a little pride of authorship We pretty much ignored it, but I noticed today that out in the supermarkets You'll find big displays of plastic rolling pins.
You'll find Cake pans and all kinds of biscuit pans big displays of them in their Non food sections There is a definite trend on the part of a small segment towards the Do it from scratch idea rather than is the cake mix served up as a cake? May I make one comment on that particular kind of consumer research now? I don't know for a fact either way on it But I have a hunch that when a woman says that she wants to put her own egg into the cake mix This does not mean that she feels that she's a bad mother and guilty and all of that Because she isn't making her own cakes.
It may mean that she doesn't think the cake mix is very good and it needs an egg that There is a good deal of product criticism involved in this sort of we don't want the kind of the convenience factors anymore and that you can draw either conclusion from the evidence a Physiologist or psychologist invariably draws the conclusion that we've got something deep -seated and highly emotional here my own tendency is to believe that this represents a feeling which may have this kind of Psychological root At its at its base it may not it it may not be an objectively true situation But it represents a feeling that the product isn't as good as mother used to make it and it isn't as good as I used to Make it when I had my own ingredients around it isn't this it isn't necessarily as certainly ab initio the kind of profound matter that your Research people sometimes make it appear to be I think I'd agree with you and and again as I said it It's a very small segment of the market still And from an operator's point of view, I'll tell them that those the cake pans are not selling I think I think we've probably come to the point where we should Should disperse I would like to just say two things one I agree with everything and everybody said I Also agree with something that some things that haven't been said and I I think it's worthwhile taking this thought Away with you We need to be aware of the important Function we perform marketing man and a marketing training and marketing position.
It's a kind of an approach to the problems of business Which is the creative approach in which does say we're not going to take the world just as it is We're going to do something about it We're going to do something about it so in the end we are entitled to a profit But we're also doing something about it and as we do something about it We actually we actually do succeed in in changing the world and making it a better world for everybody Thank you panel and thank you all for coming It's I hope you've enjoyed it as a much as much as I know all of us have up here and thanks to and Thanks to container for making it possible Quite a bit thank you well
