A History of Marketing

• Sergio Zyman, Part 1: “The First Chief Marketing Officer”

  A History of Marketing / Episode 10 (Part 1)“Marketing is about selling more stuff to more people more often for more money more efficiently. That's what marketing is.” - Sergio ZymanThis week, I’m joined by a marketing iconoclast: Sergio Zyman. Wikipedia describes Zyman as being “best known as the marketer behind the failed launch of New Coke and the success of Diet Coke, Fruitopia, Surge, and ad campaigns such as "Coke Is It."Zyman rarely gives interviews, and the few that are available tend to focus on the New Coke saga, which is frequently described as one of the biggest marketing blunders of all time. But New Coke is only a brief, and frankly misleading, snapshot of Zyman’s career full of marketing milestones.This is the first of my two-part interview with Zyman. This conversation explores his unlikely journey from Mexico City to the C-Suite of the Fortune 100, with stops at Procter & Gamble, McCann Erickson, assignments in Japan (working on Nescafe and General Motors), and even becoming president of Pepsi in Brazil by age 30.Ultimately, Zyman's path led him to Coca-Cola, where he launched iconic brands like Diet Coke and Cherry Coke...and yes, New Coke.Listen to the podcast: Spotify / Apple Podcasts / YouTube PodcastsHe was eventually named Coca-Cola's first Chief Marketing Officer – and, according to Zyman himself, the first CMO in history, period. I've tried to verify this claim, and so far, I haven't found anyone holding that title before him. (Listeners, if you have evidence to the contrary, please reach out!)In part one, we focus on Zyman's incredible rise. I’ve included the transcript below, but I recommend listening if you can to hear it in Zyman’s own voice. He's brimming with personality – too much to contain in a single episode.Joining P&G’s "Cult-Like" Brand ManagementAndrew Mitrak: Sergio Zyman, welcome to A History of Marketing.Sergio Zyman: Hey, how are you?Andrew Mitrak: Great. So, you've had a legendary career in marketing, but I want to start at the very beginning. You were born in Mexico City. I'm curious, what are your earliest memories of marketing and advertising when you grew up in Mexico City?Sergio Zyman: You know, I wanted to get out of Mexico. Pretty much my family was in the clothing business and stuff like that, and I had no interest. I went to school in Europe. I traveled around the world a lot. And then I joined Proctor, you know, through a variety of coincidences.And then I worked for Proctor in marketing, which at the time was kind of almost like a cult. And then from there, I went into the ad agency, and then on and on – I traveled around the world, lived in Japan, lived in Brazil, and so forth.Andrew Mitrak: Procter & Gamble is legendary for implementing the principles of modern brand management. What was joining Procter & Gamble in their marketing department like? You said it was almost like a cult. What was it that made it cult-like?Sergio Zyman: Well, most of the people that worked at Proctor in Mexico were either sons or daughters of expats, and primarily sons. They were primarily guys. And, you know, we joined as a staff assistant. There was a very orderly progression. Then, after a while, they sent you to sales training, which everybody hated.It was a locked wing of the company. It was basically housed across the street from the agency. And marketing was about managing products – well, not managing products, but managing brands or launching brands. It was a lot of advertising and, you know, a lot of promotions and stuff like that.Marketing Ariel to Transform Laundry in MexicoSergio Zyman: I was part of the team that actually introduced a brand called Ariel, which eventually became the largest brand in the world for Proctor. It was an enzyme detergent. I'm going to date myself many times here through this interview, but in Mexico at the time, people used to wash clothes on a stone with a bar of soap.Then, after that, there was a product that Proctor introduced in Mexico called Rapido. The whole premise was that you could actually speed up – rapido means "quick" – you could actually speed up the process of washing your clothes. From then on, we wanted to launch a product like Gain in the US. And, I can't remember who came up with it, but the idea was that Ariel made every bucket a washing machine. We had this visual where you put the detergent into the bucket and the bucket would start moving like a washing machine. It was a huge success.Andrew Mitrak: I want to quote from your book about Ariel and Procter & Gamble."So P&G had just introduced a detergent called Ariel, and the challenge was to convince skeptical Mexican housewives, most of whom did their washing by hand and didn't own a washing machine, that a packaged detergent could get the family's clothes as clean as whatever product they were currently using."So, you're a young man, earlier in your career. How do you research skeptical Mexican housewives? How do you know what will persuade them, or what the real challenge is to be solved with this?Sergio Zyman: Well, I think it was more about barriers than anything else. Research was very rudimentary. I don't even think that we used – I mean, we probably used some form of focus group at the time or something – but it was observational. You'd actually go look at the market, and every building on top had a place where it has a stone with little indentations in it.All you needed to know was how the product was being used, right? And I think that was the genesis of a lot of the products at Proctor at the time. The positioning of Safeguard was that it eliminated bacteria, right? But there was really no big piece of research. We just hit onto something that was – I mean, it was probably when we asked people, "Why don't you buy a packaged detergent?" they would tell you that. And I think that's how we ended up getting into that. But it was very rudimentary.Andrew Mitrak: Now, Procter and Gamble was your first job in marketing. Did you know that you wanted to be a marketer before you joined them, or did you kind of just fall into it once you came to this job at Procter & Gamble?Sergio Zyman: My number one objective was to get an American Express card. And you needed to have an X amount of money, which was $200 less per year than what Proctor was paying. So, when I was looking around trying to get a job – I had actually, before that, become the major coordinator for the Miss Mexico contest. And that's how I met some of the Proctor guys.So, I didn't have a real career vision. I wanted to make some money. I knew I wanted to get out of Mexico. I wanted to work for an American company because, usually, American companies worked Monday to Friday, not Monday to Saturday, which is what Mexican companies did. So, there were a lot of criteria there that were kind of dumb, if you wish.And I met with a guy called Al Frost. My English was broken, even worse than today. And he asked me at one point during the interview, "What do you want to do when you grow up?" And I said, "I don't know. I just want to have the power of knowledge to be able to make the decisions that I have to make down the road." And he fell in love with that thought and hired me.And that's how I got into Proctor. I really did not fit the Proctor criteria for being hired. I didn't go to school in the US at the time, didn't have parents that were expats in Mexico, my English was so-so – but that's how I got in.When I got hired by McCann Erickson to go work on the Coke business, I remember sitting in my very first meeting at McCann and they were doing media planning, and I sat there in panic and I said, "I don't know anything about marketing. I don't even know what marketing is. These people are talking about something totally different."Marketing became advertising. That's what marketing was. And I guess for a lot of companies today, still, marketing is advertising. It's not real marketing. It's not linked to the bottom line.McCann Erickson & the Coca-Cola AccountAndrew Mitrak: You mentioned you moved from Procter & Gamble to McCann Erickson. And for listeners who aren't familiar with McCann, they're a major advertising agency. I think they had been the agency of record for Coca-Cola since the 1950s. And for those who've seen the show Mad Men, this is the agency that swallows and absorbs Sterling Cooper at the end of the series. So what led you to McCann Erickson? Why did you join after Procter and Gamble?Sergio Zyman: Money.The natural progression – I mean, I know it was more romantic – but the natural progression at Proctor is you were at Proctor, and then after about seven or eight months of just basically sitting around doing shipment analysis, they sent you to sales. They gave you the worst car that the sales department had and they sent you over to sell soap into public markets and little mom-and-pop shops.And, I did that, and everybody hated it, and I figured I was going to do a good job. I ended up winning the contest, the three and a half months that I was there. And I ended up getting hated by all the Proctor guys, the marketing guys, because everybody didn't want to do well in sales.I came back and then I became an assistant brand manager. And then I started getting offers. The natural progression was that we were the source of, quote-unquote, "marketing people." So I got a job from Kimberly Clark, and then McCann – I had met the guy at McCann during the Miss Mexico thing. And I liked them a lot, and I went to be an account executive on the Coke business, which was sexy. And that's why – and it paid me double my salary.Andrew Mitrak: That's a good reason to move on and move upward.Sergio Zyman: It is.Andrew Mitrak: So what was the culture of McCann like – this is probably the mid-70s or so, right? So what was their company culture like?Sergio Zyman: The Coke relationship was very difficult because it was imposed by Atlanta. So, pretty much, you couldn't go and choose your own ad agency. It was McCann or else. And the guys at Coke had come from sales. Most of the guys that were in “marketing” – VP of Marketing or Marketing Director role at Coke was a sales guy.It was about dealing with bottlers and stuff like that, and there was always an antagonistic relationship."Pattern Advertising" and Challenging the Status Quo of Marketing at Coca-ColaSergio Zyman: We adapted advertising that was created in Atlanta. It was called "pattern advertising." And we did a good job with it, but there was always tension between us and the Coke guys. It was not a happy relationship. It was just to do what you needed to do.Andrew Mitrak: Yeah.Sergio Zyman: I was thinking about this interview. And, you know, when did marketing come to these companies? If you go back and you look at fast food, Wendy's head of marketing was a guy called Bill Welter. The marketing guy at McDonald's was Paul Schrage. I don't know who the marketing guy at Burger King was, but pretty much what happened to these companies as they started opening up more stores, they realized that they needed to communicate with the consumer and explain to them why they should go and buy their stuff, right?There was not a lot of competition. And the powers that be in these companies, whenever they wanted a marketing guy, they said, "Wow, I think that we better get it out of the agency." So it was the ad agency guy. Welter was the ad agency guy. And so was the guy at Burger King.So that's where the guy at Coke who was the head of marketing at the time, Ike Herbert, was a McCann guy. So it was all about advertising. Advertising actually dominated the marketing function in a lot of companies. It wasn't about truly doing marketing the way we knew it. And I always felt very uncomfortable about it. I didn't want to be an ad guy. I thought that it was not a great label for me. I was not a businessman. So that's kind of where my formation as the challenger of the marketing function began.Coca-Cola’s “Hilltop” Ad: An Accidental ClassicAndrew Mitrak: I want to ask you about your impression of the ads that were created for Coca-Cola because McCann, of course, they had created the famous Coca-Cola hilltop commercial with the jingle "Buy the World a Coke," and it really is an incredible commercial and it's one of the most famous advertisements in history.But Coca-Cola almost became kind of a victim of this ad's success, and ads like it, where they internalized this – happy, smiley people with a Coca-Cola bottle in their hand – and this was the formula for them. And it sounds like you were questioning, "Was this actually driving sales? Was this actually working at the end of the day?"Sergio Zyman: Well, look, I think that there is a lot of mythology about advertising, and about advertising for Coke. So, there was a guy at McCann called Bill Backer, who eventually left and went and built Backer Spielvogel. And he was a really creative, artistic guy. And there was a music guy there called Billy – my God, I just forgot his last name. And Billy had actually sung with the Four Tops before he became the music director for McCann.They were going to do a radio spot called "I'd Like to Buy the World a Coke" and they wanted to do it – they went to record it in London, because that's how you did buyouts. And the commercial became an accident. It had no strategy behind it. And then everybody fell in love with it. And Coke sales kept on going south for a long time because Pepsi was really the marketing director for Coke. Pepsi was determining the dialogue; Coke wasn't.Andrew Mitrak: Yeah. I just looked it up, by the way – it must be Billy Davis.Sergio Zyman: Billy Davis, exactly.Andrew Mitrak: That's it. Okay.Sergio Zyman: Billy. Yeah. Good guy.Pepsi: “The marketing director for Coke”Andrew Mitrak: You mentioned that Pepsi was really the marketing director for Coca-Cola. And I'm going to quote from your book again:"This was the 1970s and Pepsi had just started with their 'new generation' approach. McCann's philosophy, which was the same as the rest of the industry, including Coke's, was 'grab their hearts and their wallets will follow.' So we kept coming up with ads that made people feel good, made them cry and won us awards."It goes on to say that these ads didn't really seem to be working as far as new business and sales were going.Sergio Zyman: Well, they were not.Remember, in the old days, Pepsi was not a viable choice for people who drank soft drinks. By the way, we didn't have 10,000 different options. Okay, you had Coke and you had Pepsi, and then it was all done by manufacturing. Sprite was created in the UK in order to be able to actually fill the bottling lines because they weren't selling enough – there was no strategy behind it.And Pepsi then decided, in order to – they said to get out of the kitchen and into the living room – that they needed to become a viable option to Coke. And they had a very good strategy because they started discounting in supermarkets, they started multi-packing. Coke just didn't believe in that. They believed that all they needed to be was this – "grab your hearts and their wallets will follow."But Pepsi basically said – and they never said, "Coke sucks." What they said was, "Pepsi's for the new generation." And the implication was that Coke was for the old folks. So they called it the Pepsi Generation. There was a guy at Pepsi that was very smart about that, Alan Pottasch.And then, after that, they did the Pepsi Challenge, where basically they said – by the way, they never said Pepsi tasted better. They just showed that people chose it. So they were always doing that stuff. And then when I became marketing director – and by the way, you can look at the quotes out there – I became, you know, Pepsi basically said that I snuck up on them because I said, "Enough!"I hired Bill Cosby at the time to do a bunch of advertising to basically say, "There wouldn't be a challenger if there was not a number one." We launched Coke Is It, which was a very successful ad campaign. That, by the way, McCann took credit for, but it was developed in Canada for the Canadian market. So there are a lot of secrets along the way about how these things came about.Andrew Mitrak: Yeah, we'll get to all of those stories, but I want to come back to while you were still at McCann – you said you're an account executive on the Coca-Cola account. And over time, I've become less impressed when someone comes up with a good idea and more impressed when someone can convince their client to get behind the good idea. And that's kind of the role of the account executive in a lot of ways, right?Sergio Zyman: Well, Coke had this thing, as I mentioned before, called "pattern advertising." So they developed a series of commercials. They did "Have a Coke and a Smile." They did, at the time, "It's the Real Thing," right? The advertising is the real thing. I mean, it was shot down to everybody around the world. Our job at the agency was to translate it and adapt it. And then we had to go and sell it to the client.But we were not coming up with a lot of original marketing ideas to grow volume. It was all about – we were implementing whatever was coming down from the north. And even at headquarters, and later on when I was at headquarters, it was kind of – the agency drove and dominated the whole communication or marketing thing. The Coke marketing folks were ex-salesmen. There was no strategy.Coke was a distribution company. They had a great product and a great idea, and then they developed a distribution network around the world. There were a lot of people that wanted a franchise, and that's how they ended up growing for a long time. At one point, they actually needed to go vertical, and that's when the company started changing. But it was all about launching bigger bottles, or different sizes, or plastic bottles, or stuff like that. You didn't really have a real marketing strategy coming out of the company.There was a group at McCann who went off into this quiet lab, and they'd come in and they'd make a presentation about how we're going to go to the next level. And we had this stupid piece of research, which was "13 elements of imagery." And it was about, "How much do the consumers love us?" Not how much do the consumers buy us, but how much they love us. And, you know, it was very frustrating.International Marketing: From Japan to New York to BrazilAndrew Mitrak: You were at McCann and eventually, of course, you went to have a very successful career at Coca-Cola. But before that, you actually joined Pepsi, their top competitor, in Brazil, right?Sergio Zyman: No, so I went to McCann in Mexico, and I saw Gene Kummel, who was the president of McCann, came to visit in Mexico. And I got a call – the president of the Mexican company called me up at McCann and said, "By the way, Jean is here. Would you like to see him?" And I said, "Yeah, great." Or, "He'd like to see you."So I went down to meet Jean. And he said, "What do you want to do?" And I said, "I want to go international. I want to get out of Mexico." I told him all the reasons, and three months later I got a call that said I was transferring to Japan. And I said, "Japan? Why Japan?" And they said, "Because if you can make it in Japan, you can make it anywhere."So I went to Japan as an account executive again, to work on the GM business. They had bought Isuzu in Japan, and they were trying to create a pattern model for advertising around the world. And I also worked on Nestlé.And in Japan, the Japanese are very methodical, as you know. And they were selling Nescafé, which was the number one brand for Nestlé around the world. But then when it came to the spring, the Japanese went and got a haircut, switched their suits from winter to summer, and stopped drinking coffee – just stopped. So we came up with a cold drink out there, and I worked on that. I was there for a year and a half – an incredible experience, living in Japan.So then I got a call saying that they wanted me to go back to the States. I went to New York, and they offered me a job as account supervisor on the Coke New York – the bottler in New York. And I said, "You know what? I need to get the New York experience. I got to check that thing." So I took the job, and it was a nothing job. All we did was take the client to dinner. We didn't do anything meaningful.Becoming President of Pepsi in Brazil at Age 30And then Pepsi started asking me to join them, and they offered me like five or six jobs. They were all kind of ad jobs, and I didn't want to be in that. And then eventually, McCann – I went to Central America to be general manager of the Central American company. And then when I was there, they asked me whether I wanted to interview for a marketing job in Brazil.And I had just gotten married, my wife was pregnant. And I said, "You know what? Take a free trip to Brazil. What the hell? I don't think anything is going to come out of it." I went to Brazil, and the job actually was to develop an advertising campaign, even though I was a marketing guy. And I said, "Well, I can do that. I know how to do that."So I took the job as head of marketing for Pepsi Brazil, and we moved to Brazil, which was a great experience. My daughter was born there. We lived there for three and a half years. About two years in, my boss gets transferred to Venezuela, and I get promoted, at age 30, to be President of the company. And I was over my head – beyond anything. I didn't know what I was doing.The Pepsi Challenge: Growing Pepsi’s Marketshare vs. CokeAndrew Mitrak: In your book, you write,"When I got there, I found out that Pepsi Brazil had the same advertising philosophy as Coke, but to make things worse, Coke was outselling us there 10 to one. Not good. I knew that with the odds so heavily against us, and with comparatively no penetration in the market, the only way we could dig ourselves out would be an ad campaign that provided a contrast between us and Coke. So we came up with the Pepsi Challenge."And I'm wondering, what were the origins of the Pepsi Challenge? You were at Pepsi when the Pepsi Challenge was launched. What did the rollout of that look like? How did that start?Sergio Zyman: Pepsi was doing some spectacular advertising with the puppies and the "Pepsi Generation" – great jingles and all that. And there was an agency in Dallas, Texas, that came up with the Pepsi Challenge. And in the old days, you didn't go negative, right? I mean, you basically came out and told people why you were the right candidate or the right product, but you never went negative. The only time you went negative is when you had nothing to say.And Pepsi had tried everything to get out of the kitchen and into the living room. And all they were trying to find was a way to be equally considered by consumers. In Brazil, I had no money. I had no budget. And, you know, I didn't come up with the Pepsi Challenge. It came out of Dallas. But then we started doing it in Brazil. It didn't go as well as it went in the States because, in Brazil, people frowned at negative advertising. But all that changed over the years.Andrew Mitrak: At a tactical level in Brazil, when you're doing this, was it pop-ups in supermarkets and public areas where people could try them both? Were you filming these and putting them on TV? What were the mechanics of the advertising campaign rollout look like there?Sergio Zyman: We basically did taste tests, right? Blind taste tests. And you did a not-blind taste test until you won. The moment you won, you stopped. You didn't have to do any more. So you kept on filming these very rudimentary spots. And then once you got to the number where you could claim that more people prefer the taste of Pepsi to the taste of Coke, you didn't have to do any more.Andrew Mitrak: If you ever lose, you can just stop that ad and not run that one.Sergio Zyman: No, no, you don't. You never – you won't lose because the chances of a sweeter product, which is what Pepsi was... Eventually, you didn't have to win by a large margin. You could win. All you needed to do is have 51%. "More people prefer the taste…" – all you needed to say. "In taste tests in Rio, more people prefer the taste of Pepsi to the taste of Coke." That's it.Andrew Mitrak: Yeah.Sergio Zyman: And I would do things like, when we would launch a new flavor or something, I would take all the trucks and I would do a parade through the cities of Rio or São Paulo, as a way to do that. I didn't have any money. And I learned a lot.And then they decided to restructure Pepsi down in South America. They put together a group with Bolivia, Argentina, and everything else, and they brought in a guy called Roger Enrico. And Roger arrived in Brazil, and – the flight arrived at 5 o'clock in the morning. I sent a car and a driver and a letter saying, "Welcome to Brazil. I'm at your service. Let me know – I'm sure you want to rest." He got all offended about it. Hated me from day one. He came into the office; he wanted to take my office because he was now the guy for South America.Anyway, so he fired me a year later. So now I am in Brazil with my wife. She's pregnant with my second kid, and I'm fired. So I said to my wife, "We're going back to Mexico." She said, "I don't want to go back to Mexico." I said, "Guess what? That's the place that I can actually retool and figure out what I'm going to do."But then John Sculley, who was president of Pepsi North America, heard what happened, and he said, "We're not losing Sergio." So they moved me to New York against Roger's desires, and then I went to be director of marketing for Brand Pepsi in New York. But it was a nothing job, too, because it was all about advertising.Andrew Mitrak: I've got to ask you about – you mentioned John Sculley, of course, later became CEO of Apple. Did you work with John Sculley, and what were your impressions of him?Sergio Zyman: John was an incredibly cerebral guy. Very introverted. And I worked with him, and I worked with “Ted” Glover, who had then moved to New York as well.And then I got a call from Brian Dyson, who I had competed against in Brazil, and he said, "By the way, I'm back in the States. I'm running Coke North America. Do you want to have lunch next time I'm in New York?" I said, "Sure." And we went to have lunch at the Bar Americain at the Waldorf. And then as we were sitting having lunch, suddenly Don Keough, who was the president of North America, by accident, shows up at the window and waves at Brian. He comes in, sits down, and pretty much starts grilling me about what I thought about Coke.And I said, "I think you guys are screwed up. I think you've had so many advantages, and you're just giving more up." And I gave him a bunch of examples. And he said, "Well, we're not that bad." I said, "By the way, I'm not here – I'm just having lunch with Brian." I didn't even think that they were interviewing me. And then later on, Brian offered me a job to go down to Atlanta, and I went down to Atlanta. I got an offer – a very good job – and then from then on, lots of stories.Andrew Mitrak: Lots of stories. So, you joined Coca-Cola in 1979. To quote your book, you say,"That's when I found out exactly what happened after those ads I'd worked on at McCann were sent off to the media and aired 20,000 gazillion times, and I was shocked. Nothing happened. All those beautiful, heart-grabbing, award-winning ads that were supposed to be getting people to buy Coke weren't having much of an effect."So, was this really the time when you learned that the advertising wasn't really working at all, once you had moved in-house at Coca-Cola?Sergio Zyman: Yes. I mean, there was – Coke was really – I found out when I got hired, the reason they hired me was to pick up the secrets from Pepsi. And they really didn't treat me well when I got there. It was kind of almost like a joke. I was the token Pepsi guy and kind of a spy. And Coke was such a fraternal, "belonging-only," non-performing company.And all of a sudden, I started doing things which were so bad – like, I went down to lunch one day, and I'm an avid runner, and I was running a lot. And the only thing they had in the cafeteria was chili dogs and really fat stuff. So I convinced them to put in a salad bar. And I became like this terrible person. They'd scratch my car in the parking lot. It was awful.Andrew Mitrak: Do you think that you being from Mexico had something to do with that? Do you think it was prejudice?Sergio Zyman: No question. For sure. But, for me, being Mexican was kind of – I knew that I was in the minority. I knew that people didn't see me correctly. Even at McCann in New York, my own friends in New York were always kind of saying, "Why do we need a Mexican guy to be in New York?" There was always discrimination, but I just took it as part of the course. I had to work through it.But the advertising was very garbage at Coke, and it was managed by a whole different group, kind of corporately. You were not allowed to touch anything, do anything. I remember when, after a while, there were all kinds of people who left, and I was named director of marketing for the US. And I tried to hire people, and I had a couple of marketing people from Procter and other places.I remember there was a guy called Richard Ternowski, and he came to see me one day and he said, "Look, I tried to talk to the product guys about what's going on with the product, and they said I'm not allowed because that's a corporate thing. I tried to talk to advertising, to this guy John Gillen, who is kind of a protégé of the president and the son of a cousin, and I'm not allowed to talk about advertising. The packaging is done by corporate, and I'm not – what am I doing here?"That was the issue. So, the thing that – I started then becoming the guy that would come up with challenges. "How do we break this? What do we do in order to do something totally different?" We wanted to sponsor Hands Across America, and we did all kinds of things that were stupid in today's world.But then the thing kept on growing that way. Eventually, I became the head of marketing for North America. I ended up being the project manager on Diet Coke. It got canceled twice. And I did New Coke and Diet Coke and things like that, but it was so hard. It was really hard. It was counter-cultural.Launching Diet Coke: “Just for the taste of it”Andrew Mitrak: I want to ask you a little bit about some of these launches during this period. Can you share the story of Diet Coke? You kind of take it for granted that Diet Coke is one of the options today, but it didn't exist until you were there and really oversaw some of the launch of that. So how did that go?Sergio Zyman: Remember, I was Attila the Hun. I was there to destroy the status quo. So anytime Brian would call me up and say, "What do we do now?" I would come in with these cannonball things. Tab had a 3% share. Pepsi had two brands, Pepsi Light and Diet Pepsi. Together they had 4.1%. Anything that we did to grow Tab was just tough because Tab had been positioned as a diet drink. And the number one benefit of Tab was that it tasted sh****. Because of – I mean, it had saccharin, right? So people saw it as a way to punish themselves so they could go in and have three hamburgers.When I started the project initially, I started doing a lot of work on it with only two guys. I was actually semi-being the executive assistant to the president of the company as well. We went to Brazil – we were in Brazil. That's the time that Paul Austin, who was the chairman at the time, they discovered he had Alzheimer's, and there was a change in management. And then we got an email saying, "Stop all work on Diet Coke." And then the project got canceled.They had agreed with me that I was going to go to Harvard for the 13-week post-grad. And then I was leaving. So I was going to go to Harvard. Then Roberto Goizueta gets named CEO of the company. The project gets reinstated, becomes "Project Harvard," and I said, "I want to have a different ad agency." And they said, "Okay." Literally, after that meeting, I went to the airport, I went to New York, and I hired Lintas before McCann had a chance to react. And of course, that made me persona non grata. Remember, at the time, Madison Avenue saw me as destructive. I mean, they named me the “Aya-Cola.”Andrew Mitrak: So, Aya-Cola being a pun on Ayatollah, right?Sergio Zyman: Right. Exactly. And my view about it at the time was advertising needs to sell product. And they're saying, "No, no, no, no. Advertising needs to do these great commercials and entertain people. Look at the success of “Mean Joe Greene” and 'I'd Like to Buy the World a Coke,' and blah, blah, blah." And I just – I mean, we got into a massive fight for years about it. And I still believe today that the thing is all broken.But I just kept on going about it. And then, I got introduced to Goizueta, and I said, "Sir, I'm going to go away. And if I come back with a proposition to you, you're going to have no choice but to approve it. Because it's going to be an unassailable proposition." We walked out of the meeting, and Keough says, "You almost got fired there by talking like that to the chairman." I said, "What did I do? All I said was I wasn't going to just go play with this thing, that if I found out that there was no viability for the project…"So we went and we hired a design company – a very – I mean, I went non-traditional on everything. And we hired this guy, Alvin Schechter, who was really smart. He had done a lot of industrial stuff. I wanted somebody that had not done consumer products. That was – every time I tried to kind of do it sideways.And in one of the meetings, he was talking about the fact that the thinness of the lines on the Diet Coke can had to be enough to have the equity of brand Coke on it. And I was kind of rolling my eyes, and suddenly I said, "Wait a minute. We cannot launch a diet drink. We need to launch a regular drink with no calories." And everybody looked at me like an idiot."Wait a minute. We cannot launch a diet drink… We need to launch a regular drink with no calories."And I said, "It has to have all the imagery" because a brand is made up of five components of imagery: product imagery, user imagery, brand imagery, usage imagery, and trademark imagery. So eventually, making a long story short, we ended up with a product that was sweetened with saccharin initially. But basically, we launched it on a platform of taste, with a big jingle. Say, "You want to drink it just for the taste of it." And we launched it in Radio City Music Hall with the Rockettes.So that's how we got around the thing. And that's – I left. I went to Harvard, and then they, kind of corporate, took over the product. They tried to launch it around the world, and it failed miserably everywhere around the world. And the reason for that is because they were launching it as a diet drink. When I came back to the company, I just changed the nomenclature from Diet Coke to Coke Light, and volume went through the roof. And that's – I mean, Diet Coke, there's a lot of stories behind Diet Coke and a lot of insight about it. Same story with New Coke.Sergio Zyman: “I was the first-ever Chief Marketing Officer…”Andrew Mitrak: Yeah, there's a lot of stories, and we're at time for our interview today. We're going to do a follow-up because we've covered a lot of your career – from Mexico to Japan to the US, to Brazil, back to New York and Atlanta. But we're still… there's decades and decades of the rest of your career. I want to talk about Tab Clear and the takedown of Crystal Pepsi, of course, New Coke, the founding of the Zyman Group, your advising to politicians on political campaigns, also some of your consulting work with Microsoft. Just so many stories to keep going through your career. So I'm going to follow up with you and we'll schedule part two of this conversation.Sergio Zyman: Well, let me finish with one comment only. Remember, my philosophy is marketing. And I learned it over the years. Marketing is about selling more stuff to more people, more often, for more money, more efficiently. That's what marketing is, right?Marketing is about selling more stuff to more people, more often, for more money, more efficiently.And it's not just a moniker. It's selling more stuff, which is volume, or more money, which is profit, more efficiently, which is spending as little as you can. And then it's about penetration and usage. And I think that when we talk again, we've got to talk about those philosophies, which are still not embedded in companies today.I was the first-ever Chief Marketing Officer, and the reason I became the Chief Marketing Officer – and we can talk about it as well – is because I wanted to have a seat at the table. Now, everybody's a Chief Marketing Officer. They're not. They don't have any responsibility for the bottom line. So we'll talk some more.Andrew Mitrak: Absolutely. Well, I'm really looking forward to it, Sergio. Thanks so much for your time. This has been an absolute blast. I really enjoyed this conversation so much. So thank you again, and we'll talk again soon.Sergio Zyman: All right. Take care.**End of Interview — Tune in Next week for Part 2.**A Special ThanksI want to extend a very special thank you to two people who were instrumental in making this interview happen: Mark Kroese and Joe Michaels. I'm incredibly fortunate to count them as mentors and as friends. They both independently recommended I speak with Sergio Zyman for the podcast, and their insights were invaluable as I researched and prepared for this interview. And it was Joe who actually put me in touch with Sergio, making this conversation possible. Thank you for your support, Mark and Joe! This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit marketinghistory.org

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• Dr. Robert Cialdini: “The Godfather of Influence” on the Seven Principles of Persuasion in Marketing

  A History of Marketing / Episode 9This week, I sit down with Dr. Robert Cialdini, a NYT bestselling author and Regents Professor Emeritus of Psychology and Marketing at Arizona State University. Cialdini is regarded as “The Godfather of Influence” and The Harvard Business Review describes him as “the foremost expert on effective persuasion.”This is a special conversation for me. Cialdini’s 1984 book “Influence: Science and Practice” is a book I’ve revisited over my career, and I’ve recommended it to several marketing colleagues. Speaking directly with Cialdini was a true honor. He’s given a handful of podcast interviews in the past, but I haven’t come across one that’s specifically focused on the marketing applications of his research. Listen to the podcast: Spotify / Apple Podcasts / YouTube PodcastsWe'll also explore Cialdini’s 2016 bestseller Pre-Suasion, which is all about how to prime audiences to be persuaded before a marketing message is delivered. Along the way, we’ll ground these principles in case studies, with examples of McDonald’s, Coca-Cola and the New Coke launch, Bose, Norwegian Cruise Lines, and Berkshire Hathaway. We’ll hear how Cialdini’s principles helped Warren Buffett and the late Charlie Munger — and had reciprocal benefits for Cialdini himself.Now here it is, my conversation with Dr. Robert Cialdini.Bringing the psychology of persuasion to marketingAndrew Mitrak: Dr. Robert Cialdini, welcome to A History of Marketing.Dr. Robert Cialdini: Well, thank you, Andrew. I'm looking forward to our conversation.Andrew Mitrak: So, you are the Regents Professor Emeritus of Psychology and Marketing at Arizona State University. That word “Marketing” is officially in your professor title. That stood out to me because I think of a lot of your work as primarily psychology. So, I'm curious about what your relationship has been to the field of marketing over the years.Dr. Robert Cialdini: Well, it's always been an interest of mine because of my larger, broader interest in the psychology of influence, and of course, marketers are influencers in many situations and ways. So, I've always had an eye toward what marketers are doing, what's been successful, and what isn't successful in the marketing arena.But my role as an academic with a marketing title comes from the fact that on a sabbatical leave, I went to Stanford. I was going to write a book, a new book, the book called Pre-Suasion, and I was asked by the Associate Dean if I could teach a marketing class. I was in the business school, the GBS, because I wanted to get the advice of various professors there about my ideas. And so, they gave me an office in the business school, and they asked me to teach a course to MBAs on effective business communications. So, inside that is, of course, the marketing element, and I began teaching that course, and it was very well received.When I came back to ASU, my marketing colleagues said, "Hey, Bob, how about if you join us, get a joint appointment, not just in psychology, but also in marketing, where you can teach that course, this time sharpened to effective marketing communications?" So, that's how the joint appointment developed, and I was very glad for it because the marketing students that I would teach would give me a side of the influence process that psychologists just didn't have a deep experience in. And so they were great sources of information for me.Andrew Mitrak: I would have loved to have taken that course at some time. I'm sure that marketers brought a new lens onto it that you weren't getting in psychology, but on the other foot, I'm sure you were bringing concepts that aren't really taught in marketing programs usually. Were there any notable reactions to some of the ideas that you recall from this time?Dr. Robert Cialdini: One of the things that was especially riveting for the marketing students was the idea that I was claiming that although we live in what is known as the Information Age, it's never been known as the Knowledge Age.Information has to be processed. It has to be structured. It has to be prioritized. And then, people will take it in, resonate with it, and then employ it in ways that lend themselves to assent if you're interested in influence. And so, that idea that information, no, we have to really think about how we construct it for marketing purposes rather than just sending it out there and expecting it to land in a favorable way. That's just naive, so the course was really reimagined in terms of that difference. We have information. We have a case to make. We have the merits of our offer and so on. That's not enough. We have to arrange it in psychologically strategic ways to make it knowledge that people will take with them and employ.Early Influences: Coke, McDonald's, and "The Hidden Persuaders"Andrew Mitrak: Let's go back to the beginning. You grew up in the Midwest. I think I have that right. And I'm curious about what your first encounters were with marketing as a young person.Dr. Robert Cialdini: Well, what I remember is Coca-Cola ads. I remember McDonald's ads and so on that had an emotional component to them that employed some of the things that I talk about in the universal principles of influence.The idea of unity that we're a community, we're a Coca-Cola community, a McDonald's community. Then information like we're the widest selling brand, McDonald's, ex-millions sold, and all those kinds of things that they were allowing us to recognize about their product that didn't have to do specifically with the features of it, just the response to it, the emotional response that people would have to knowing those, those facets of it. And that struck me as very interesting.I remember being interested in a couple of books back in those days. One was The Hidden Persuaders by Vance Packard. Back in 57. I was just 12 years old, so I didn't read it then, but a few years later, that whole idea of elements that you could put into an ad or a marketing appeal that would resonate with fundamental motives that people had, but they didn't even recognize them. You didn't have to be explicit about it. You could lay them into the background of the ad, for example, there was this great example of a set of ice cubes in a glass, a whiskey glass, and if you look close, you could see kind of racy images within the ice cubes that they laid in there and generating this desire for the product because there was desire that was coming into consciousness, although under the radar.And, Ernest Dichter, too, with The Strategy of Desire. I think it was his idea of underlying consumer motivations that weren't just about the product, but were about the things that people are looking for, striving for attainment and recognition and affection and so on. Those kinds of factors when aligned into the messaging were very effective, even though they were outside of the particular features of the ad, they were connected to it in terms of those fundamental drivers of human conduct.Going undercover to find the secrets of persuasionAndrew Mitrak: So you were really interested in the science and psychology behind persuasion from a very young age. And I'm going to read an excerpt from the introduction of Influence that speaks to a pivotal moment in your career as a researcher. I'm going to quote."For nearly three years, I combined my experimental studies with a decidedly more entertaining program. I systematically immersed myself in the world of compliance professionals, sales people, fundraisers, marketers, recruiters, and others."So, this period of being undercover in this immersion with these compliance professionals, I'm sure you have a lot of stories from this period. It sounds like a lot of fun. Do you recall any of your favorite interactions with marketers or public relations people while you were undercover for a few years?Dr. Robert Cialdini: Well, you know, I'm going to give you an example that I think is important, not because it took place in a marketing or PR setting, but because of its implications for the way as marketers and marketing professionals, we need to take this lesson into account.It has to do with the importance of establishing trust in our audience before we launch into trying to convince them to come in our direction. And in modern communication technology, we are separating ourselves in terms of human connection from our audience. We're using technology that allows people to buy or learn about our products and so on with no human connection, where you have experience with people, you've come to like them, you've come to trust them. And so, here was an example.So I was taking training in a sales program for very expensive heat activated fire alarm systems in the home. And I was undercover. I was incognito. I would just enter their training programs. I would learn what they were telling me was most effective in getting people to say yes. And I did this across a whole range of industries and programs and so on.In this particular one, there was one salesperson who, after you would get an invitation on the phone, you would recruit people to allow a salesperson to come into their home, and it was usually a couple, and tell them about this new fire alarm system that was superior to all the smoke based systems. And there was one guy who was always at the top of the sales lists. Every month he sold more than anybody else.In their sales training program, we were allowed to accompany the old pros on sales trips, and sales visits, to learn what they were doing. And I was especially interested in this one guy. Let's call him Jim. It wasn't his name, but let's call him Jim. And to see what he was doing. And it turns out he was only doing one thing different and it was designed to establish trust before he ever said a word about the products.Because if we, if we have that human connection with someone we trust, our defenses come down and we're more open to that person. There’s less skepticism and so on.So, what we would do with all the other sales people, there would be a big ringed folder of information about the product and all the benefits. And everybody would bring it in with them, introduce themselves and then start walking through this bit.This guy, Jim, left that binder in the car and would introduce himself and then everybody was all the sales people were asked to give the customers a little test of their home fire danger knowledge. So, and they would have, it would be a time test. They would only have five minutes. Okay, and so you give that to them and they're taking the test.And Jim would say, “Oh, wait a minute. I forgot some important information. Do you mind if I let myself out and back into your home while you're taking the test? I don't want to interrupt your test.”That often involved giving him a key to the front door of their home or to say, sure, let me unlock it for you and go ahead and leave and come back at your discretion. We did three separate calls that night and he did the same thing on all three calls.“Oh, I forgot the, do you mind if I get it and get access to your home?”And I asked him about it on the drive back to the office and first of all, he wouldn't ask, he wouldn't answer me. He said, he didn't want to reveal his secret.Finally, at the third time, he said, "Listen, Bob, what kind of person do you allow into and out of your house on their own with a key that you've given them? Only somebody you trust, right? I wanted to establish myself as a trustworthy individual before I began my pitch."It's the only thing he did differently. And he was at the top of the sales team. So, the importance of establishing trust before you launch in, right? How do you do that?Bose case study: Establishing trust with testimonialsDr. Robert Cialdini: Well, one piece of evidence that I have recognized from a marketing campaign from Bose. Bose Acoustics: you give them testimonials of experts on this topic on, it was the Bose wave music system. So, experts in acoustics and audio technology and so on.They used to have those expert testimonials buried in the message down below or you have to press a button to get to the to the testimonials to another page and so on. And we asked them to put the testimonials first. So they had the power, the trust that came from expertise of not, not the, not the marketer, but people outside of Bose who were recommending it. They now were able to get that trust in what was being said before they said a word, right? And it increased purchases by 16%.Now, the other thing about it is to optimize that trust from expertise, we didn't just put one testimonial. There will be a lot of advertising agencies that will tell you, no, no, just put your best testimonial first because the only, put that in there first. The others will just dilute its impact. That's not what the research shows. The research shows that subsequent testimonials, as long as the best one is in there, don't dilute it. They reinforce it. They reinforce what the best one said. They validate it. So that you can be you can trust that this wasn't just a cherry picked testimonial. They say that it's the only one that really raves about. No, there are several. So they put three up there, right? First thing. And that's what got them 16%. And the thing is it was the same material. It's where it went. It went in a place that established trust first, then led to compliance.Andrew Mitrak: There's so much to unpack with that. That example of Bose and the one best rating versus the multiple testimonials. I think today also of Google reviews and Yelp reviews where, which one do you trust? Do you trust the restaurant that has one single five-star review or do you trust the one that has 200 reviews that are 4.9?Dr. Robert Cialdini: Well, you're exactly right. Well, that 4.9 actually seems more authentic and it's better. And there's research to show it. The best conversion is not all five stars. It's a range between 4.3 and 4.7. Because you don't trust that person who's giving you just blanket positivity.Andrew Mitrak: You don't trust it, exactly.Dr. Robert Cialdini: No. Oh, and by the way, one of the things I'm going to recommend, because I think it's so important to build human connection back into our marketing even though technology is separating us. When you say there are “200 reviews,” right? Say “200 reviewers.”Those are people. We want people, not words on a page. We want people these days because we're, again, we're we're being drained of human connection through technology where we are just interacting with people separately from them, just pressing buttons.Influence: unpacking the seven principles of persuasionAndrew Mitrak: Let's, let's jump into your book Influence to ground some of this conversation, these ideas in the principles you lay out in the book. And when I first read Influence, there were six principles of persuasion you outlined. But this interview spurred me to purchase the new and expanded edition, which is not just a light, you know, rewrite with a new chapter here or there. It is a beefy, 400, 500 page book with a lot of material.Dr. Robert Cialdini: No, we added 215 pages. Yeah.Andrew Mitrak: Oh my gosh. Yeah. Well, knowing I was going to interview led me to purchase and read this new copy, which is just a delight in itself. And so, highly recommended to listeners. And so there were six principles initially. In this new book, you added a seventh principle, unity. Can, can you briefly walk through what the six principles are and why you added unity as a seventh principle?Dr. Robert Cialdini: Sure. Let's do that briefly.The first is reciprocation. People say yes to those people who have first given to them when they get a request from that person. We say yes to those we owe. So, we ought to be giving first, information. We should be giving various kinds of benefits, advantages and so on before people sign or or buy. Because they then feel appreciative. They feel grateful. And one of the things is to just, for example, there's research to show if you, if you just show people the amount of effort that you went through to provide this information to them, they're more receptive to it. They give effort back for having received that effort. That's the essence of the rule of reciprocity. What you give first, so you give benefits, advantages, information, evidence of your efforts and goodwill and so on. So that's one.Next is liking, the liking principle. Nobody would be surprised that we prefer to say yes to those people we like. Well, how do you get liking online, for example? How can you possibly do that? You don't know those people. They don't know you. They have no familiarity, no history with you. Well, there's a study of 6,700 online commercial sites, right? And they looked at AB tests to see which were the things that cause people to be more likely to go from visitor to purchaser, right? They convert. And the, the, fortunately, the principles of influence that we talk about are at the top of the list, but how do you get “liking” in there, right? Turns out that if you include on your landing page a welcoming statement, you get more conversion. You just establish, like, you approve of those people. You welcome them the way you would welcome somebody into your home. So on my, you know, we have a startup called the Cialdini Institute, where we teach ethical influence, and we have on the landing page, a welcoming statement, where it's said, well, welcome to our site. We're so glad that you're there. And then to make sure that it's personalized, I don't just have my name typed out in machine font, I sign it with my, I want a, I want them to see a person there. And there's a photograph of me. So, again, a person. So, those are the kind of things that bring, again, human connection in, increase liking and lend themselves to yes.Andrew Mitrak: It's not the “Institute of Influence” or “Institute of Compliance.” It is “The Cialdini Institute” and it's you–and you're a likable guy! So it's personalized.Dr. Robert Cialdini: And there's a, there's a photograph there, and. And you know how in, well, I'll give you an example, in marketing, two of the things that have shown the greatest increase over the last decade, influencer marketing. There's a person there. Somebody you know, somebody you were com- you're comfortable with, somebody you're familiar with, right? Big increase. And the other is handmade products. 37% increase. Why? Because there's a person there at a time when we're being separated from human connection, right? So, that kind of thing, anything you can do like that is gold. Yeah, so that's the liking principle.And how about social proof. The idea that if a lot of people are doing this, it must be the right thing to do. In our information overloaded world there are so many choices, so many options, so many challenges that we're dealing with, we're uncertain of what we should do. And people are looking for ways to reduce their uncertainty.We've already talked about one of them: authority. You give them evidence before you give them anything else, that of testimonials from genuine experts or, and here's the principle of social proof, which says people want to follow the lead of multiple comparable others. If a lot of other people like me are doing this thing or have done this thing, then it's probably the right thing for me too. Again testimonials or star ratings or quotes of one sort or another from others, a lot of others, multiple others will lend themselves to success. And we've already covered authority.Another is commitment and consistency. People want to be consistent with what they have already said or done. Okay? So, commitment and consistency.We've talked about scarcity. That people want more of those things they can have less of. So, the more we can give them evidence that what we have is unique, uncommon, rare, that Yeah. you can't get this from anybody else, not in combination. A lot of times it's not one thing that distinguishes us from all our rivals. It's a suite of things that together nobody else can match. That would be the thing to make very clear to people at the outset.Then finally, there is the new principle of unity, which says that people want to say yes, not just to those who are similar to them, but to those who are one of them, who share an identity or share a set of values or goals or or or category memberships. So I'm one of them. And how do you do that? Well, you, you can let people know if you know what their identities are, and you happen to share them, let them know that. But the way that works for me, we remember we were talking about getting people to feel connected. One of the great marketing advances of the last couple of decades, I think, is co-creation, where you ask your existing customer base to create with you the next generation of products or services. And the research shows that that not only increases favorability toward your brand, it increases loyalty. They're more likely to stay with you, even after there's been a stumble of some sort or another, right? If they've co-created something with you, they feel of you, part of you, of your brand.Now here's the latest research: One of the things we are doing with the Cialdini Institute is focusing on what we call small bigs. What are the smallest changes we can make to an appeal, an influence appeal, that will have the biggest impact on its persuasive success. Like, can you change one word and have that. Here's an example:Suppose you want to get your, you want to get co-creation and you're going to ask your customer base or your most important clients or customers to help you in this regard, and you will ask them for their opinion, can you give us your opinion on what we can do? Or you'll give them an outline or a summary or a blueprint of a new thing, can you give us your opinion on this? It's exactly the right thing to ask for that unity there.Right? Be, be one of us in this. Join us with this. Be our partner. It's a mistake to ask for their opinion. Because when you ask for an opinion, you get a critic. You get someone who does the opposite of unifying with you. They step back from you and they go inside themselves to provide a critique of your idea or your new initiative, let's say. Instead, if you substitute the word advice for opinion, you get significantly more favorable responses to your idea, right? Yeah. Because they're part of it. And here's the evidence that really sells the case for me. They give you better input into how to improve it, to change it or to emphasize features within your idea, right? Because they're one of you now. Yeah. The word advice asks for collaboration, partnership, unity, right?A small big for how you generate unity is not to ask for an opinion. And the newest research shows that's exactly the same thing for asking for feedback, which is the other thing we typically say. No, ask for advice and you get a better outcome.Andrew Mitrak: That's super interesting. There's this concept of the net promoter score and it's a question that's always asked by either product managers or marketers always using the same, the same text. It's it's, it's something to the effect of, “How likely are you to recommend this service to a friend?”And it's always that way. I think they always want to be consistent. In fact, I don't think they want to change it too much because they want to track it over time.Does that speak to unity in that you're bringing in friendship or do you the net promoter score could be improved upon?Dr. Robert Cialdini: Yeah, I think I would change it a little bit and say, what would be the single most positive feature of our product or service? Yeah. That you would tell a friend about. Now, they imagine themselves advising a friend, right? About this positive feature, that would be, I think, the most streamlined way.Andrew Mitrak: Yeah.Dr. Robert Cialdini: To get to the unity that we want. But I think that your point is very well taken that that general kind of questioning does that. It's an attempt at that.Andrew Mitrak: Right. Yeah. Well, you're inspiring my next listener survey for this podcast. So, just to recap, we've talked about:* Reciprocation* Liking* Social proof* Authority* Commitment and consistency* Scarcity* UnityInfluence through the agesAndrew Mitrak: This podcast is called A History of Marketing and so I'm very curious about how concepts and tactics and strategies have evolved over time.When you think about these principles, do you see them all as something that's innately human that's existed as long as humans have communicated and had something to sell to each other or or do you think of them as something that have culturally developed over time and that and that they've that they've changed over the years?Dr. Robert Cialdini: I think the majority of them have evolved over eons of human development. These are the things that if we, if they're truly in the situation, authority, social proof, we should want to move toward them, right? They will have evolved.There are a couple that have a very strong socialization component. Commitment and consistency, for example, the idea that you want to be consistent with what you have already said or done. Well, that's really about a reputation that you're spreading to people. That's the sort of thing you learn how to do. You don't get commitment and consistency effects in small children until they're maybe in fifth or sixth grade that they recognize that. So it's probably not innate. It has to be socialized into them. The other is reciprocity.All of these other principles, like scarcity and liking and what other similar others are doing, social proof and what, you'll see those even in non-human animals, that but reciprocity, especially a particular kind of reciprocity where the receipt of a gift or favor or service, piece of information, beneficial information, lends itself to future compliance with that gift giver. Animals don't have that. They don't have the ability to hold that sense of gratitude in their minds or obligation in their minds. I think this is something that is socialized into us.It's true in every human society. There's not a single human culture that fails to train its members in the rule for reciprocity. You must not take without giving in return. Because if you do, you're isolated, you're shunted off to the side. You're not somebody who will do well in that culture. The society benefits from people who receive to give back, which increases the likelihood that somebody will want to give in the first place, which increases human interaction and cooperation. I think those two, commitment and consistency and reciprocity are heavily socialized. The others are there already.Persuasion in marketing vs. salesAndrew Mitrak: You highlighted earlier the examples of the salesperson selling fire detection systems and then Bose, the audio system. And I think you were highlighting the differences between how salespeople can apply these and marketers and brands can apply these. And I think of marketers as they're influencing usually through the voice of a company or they're a voice of a product or a brand. They're kind of representing an entity that's like a non-human entity.This is different from a salesperson who's usually being more direct and personable and one-to-one with the person they're trying to persuade.How do you see these principles as being different? Or do you see them as being different for someone who's a marketer speaking on behalf of a brand or a sales person who's more taking an individual one-to-one approach?Dr. Robert Cialdini: Yeah, I think you're exactly right that they're different in that respect, but marketers would be well advised to bring those principles like liking, unity, reciprocity, that that produce a favorable connection, bring that into their marketing efforts, right? Let people know what you've already done for them or the effort that you've gone to present this information and so on.There was a study done in England where they were trying to get people to attend a particular meeting. And a lot of people just, it wasn't in their best interest. But if they were told how much trouble had been undertaken to set the meeting, find the location and get the schedules of everybody. They got a significant increase. Since, simply using reciprocity in terms of what we've already done might be something to do.The other thing about reciprocity, I think that's new over the years is not just material gifts, favors or services, but information, valuable information that's not designed to sell them your product because then it's a sales device. It's not really seen as a gift. Information in general about how to best proceed in this general area that you're working in, or just information about safety or whatever it is, that's the sort of thing that we can provide first and in a marketing context, we don't have to have a face-to-face interaction with people that can develop and has developed over the years. It's not just, you know, free samples.Coca-Cola: Comparing case studies of “Hilltop” and “New Coke”Andrew Mitrak: I want to ask about examples of companies and brands that have where their principles of influence have gone right and they've done it really successfully, then an example about where it's gone wrong or where maybe the lessons of influence weren't successful. And I think Coca-Cola could be a fun example to kind of compare and contrast.You mentioned Coca-Cola as one of the advertisements that made a big impression when you were a young person and of course, when I think of the concept of unity, I think of commercials like “I'd like to buy the world a Coke” and people holding holding hands. What did Coca-Cola do well with with these advertisements?Dr. Robert Cialdini: Yeah, they did exactly that. They made their product part of your upbringing, part of your youth, part of your history, part of your family experience. Even notice their ads for Christmas. There's a Christmas ad and Santa is drinking. I mean, just making it part of something that you've experienced that's a positive aspect of who you are. And that brand gets blended into that, right? They did a terrific job. Now, they also did a mistaken job on one thing, New Coke.Andrew Mitrak: Yeah.Dr. Robert Cialdini: Remember New Coke?Andrew Mitrak: Yeah, I wanted to ask you about this because I actually just last week I interviewed a man named Sergio Zyman for this podcast. He's the former Chief Marketing Officer of Coca-Cola and he's the marketer who's most associated with the New Coke launch. He did a lot of great things in his career, like involving the launch of Diet Coke, but we talked a lot about New Coke. So I want to hear you have a few pages on New Coke in Influence. What are your impressions of it?Dr. Robert Cialdini: So what they failed to recognize is the consequence of taking the old Coke away. So people couldn't have it anymore. And they produced what's called reactants where people reacted against the loss of this valued thing. It wasn't just that they introduced New Coke as another brand version or flavor with a little sweeter. No, they took it away. It produced a fire storm of protest. I mean, there were marches in the street. There were communities that developed with people raging against it. There were suits filed in court to bring back the old Coke because of loss aversion. That's part of scarcity. We want more of those things we can't have.Coke did this great job of establishing itself in the sense of self of their customers. And then they took that thing away that had been associated, that flavor, that taste, you can't have it anymore. And it produced this massive counter reaction to it. And actually Coca-Cola had the evidence in their testing data that this would happen, but they interpreted it wrong.New Coke: A lesson in loss aversionDr. Robert Cialdini: For three years they did taste tests, blind taste tests, the New Coke versus the old Coke. And the New Coke was rated more favorably by about 55% to 45%. They like the sweeter taste. Okay. And they thought, okay, well then people are and then they took away the thing they had established for decades and decades and decades and people and produced this fire storing. Okay, what was in their data that could have told them that this was going to happen? Some of the taste tests were not blind. They said, this is your usual Coke and this is the New Coke that's not yet on the market, right? And preference for the New Coke went up by 6%. And Coca-Cola said, this is great. This means that when we bring them something new, they will choose it. What it really said is when you give them the choice between something they can have, the classic Coke, the regular Coke, and something they can't have because it's not on the market yet, they liked it even more.In both cases, it was loss aversion. The thing that you couldn't have was the one that was elevated in preference. And then Coke went ahead and said you can't have our product anymore. The one that's, you know, embedded in yourself, we're going to give you this and that produced the reaction.So, in both cases, I think we can find evidence of a good marketing strategy and a poor marketing strategy in the history of Coca-Cola.Andrew Mitrak: That's right. The word you brought up a couple times is loss aversion. I think it's this idea that if I was to take something away from you and give something to you, the pain you would feel about your loss is actually greater than any positive feeling you'd have about what you gained.And people really felt that pain with Coca-Cola Classic that was now gone. What's more scarce than, “You can't have it”?Dr. Robert Cialdini: You're exactly right. Loss is the ultimate form of scarcity. You can't have it anymore.Andrew Mitrak: Yeah. To Coca-Cola's credit, when they brought back the classic Coca-Cola, they made sure that everything was exactly the same, that there were no changes to it. This is the same packaging, the same color, the same brand, everything that was there before. It's just the way it was.Dr. Robert Cialdini: So what's the implication for marketers, right? Here's one. Don't just tell people what they will gain, what they will receive from choosing your product. Tell them what they don't want to lose. Loss aversion is stronger than desire for the very same thing.Daniel Kahneman (and Amos Tversky) won the Nobel Prize in economics for his prospect theory that showed that the prospects of gaining something are significantly less motivating than the prospects of losing that very same thing. So, in that Bose ad I was telling you about where we added multiple testimonials of it, so that was the authority principle. We also had the scarcity principle when we changed the title of the ad from "New," the new Bose wave music system to "Hear what you've been missing in the new Bose wave music system." That produced a significant increase in sales. So tell people not just what they will gain, but what they will forgo. It's more powerful.Andrew Mitrak: That's a great line: “Hear what you've been missing.”Pre-Suasion: Setting the Stage for "Yes"Andrew Mitrak: Another book of yours that's a favorite of mine is Pre-Suasion. And speaking of great lines, I love this word, "Pre-Suasion." And did you coin this word yourself? and do you remember the moment you came up with it?Dr. Robert Cialdini: Yes, I did coin it, “Pre-Suasion.” The initial title of the book was “Moments of Power.” I was looking for moments when people were especially susceptible to a marketing or influence-based appeal. And they were always first. Almost always first.It's what you did first that changed the mindset of people to be more receptive to the message they haven't yet received. So, it was possible to increase people's agreement with a message that hadn't been sent to them yet. How could that be? Well, it's because if you put people in mind of a concept that is central inside your message, they have been readied for it when they do encounter it. Here's a great example, the Norwegian Cruise Line, one holiday season, had a marketing campaign where they were sending emails to all of their former customers that there was a great bargain for cruises during the holiday season of that year, right? But it was a limited time offer. So inside the email, there was a ticking down digital clock of how many hours and minutes you had to do it. Everybody got that. But half of them got that message with two ticking clock emojis in the subject line. So they were primed for scarcity. They were primed for potential loss, dwindling opportunity, before they encountered dwindling opportunity, which, according to the Norwegian Cruise Line, significantly increased purchases of cruises as a result. Yeah. So what do you do first? And how do you find those opportunities for mentioning something? We already provided one. Put, for example, a welcoming statement on your landing page before they get any information. You've established liking for them.Andrew Mitrak: That's exactly right. Recalling our conversation, almost everything you've mentioned is all about Pre-Suasion or or that's that initial moment, whether it's the welcome message on your your website, the salesperson who's selling the fire safety system, you know, he doesn't ask to leave at the end as he's signing the paperwork. He does it right at the beginning to build trust.Bose elevating those testimonials right to the top. It's both taking all of these principles of influence and persuasion and recognizing that, hey, often these happen right at, right at the beginning of an interaction and enter Pre-Suasion.Dr. Robert Cialdini: You're well advised to structure them for the beginning.Warren Buffett's Masterclass in Pre-SuasionDr. Robert Cialdini: You know who's the best at this is Warren Buffett. Okay. Maybe the greatest financial investor of our time. I get his annual letter to shareholders every year. Here's what he does on the first or second page of that letter. He mentions a weakness, something that went wrong that year and says, you know, we're human. We make mistakes, but this won't happen again because we've learned. We've made changes now.Every time he leads with a mistake, I say to myself, “Wow, this guy's being straight with us. What's the next thing he's going to say?” I'm especially interested. I'm focused now. I'm primed for trust. Then he mentions the strengths of Berkshire Hathaway. And why you should hold your shares and buy new shares because, and I am diving into that new. But it's not, he's waited until he's established his trust before he presents the strengths. Wow. What a brilliant guy.Andrew Mitrak: Very brilliant guy. And if I was to go down the principles of influence, the principles of persuasion and think of Warren Buffett, commitment and consistency. Is there anybody more consistent than him and the late Charlie Munger? Scarcity, they still have the class A stock and there's it class B? So there's like two stocks. There's one that I could probably afford and there's one that's like several hundreds of thousands of dollars and there's -Dr. Robert Cialdini: It's between six and $700,000 a share.Charlie Munger and the rewards of reciprocityDr. Robert Cialdini: Now, I'm going to tell you a story.I got one of those A shares 25 years ago in an envelope that had Charlie Munger's name on it. Charlie was Warren's long standing partner. It was worth $75,000.And he said, "Your book has made us so much money by understanding human behavior because we know that the markets are not made up of econometric models, they're made up of people. By the principle of reciprocity, you are entitled to this share."And I was sitting in a chair that had rollers on the back and I read this and it knocked me back and the chair hit the wall behind me. I was so shocked by this.Okay, so I've kept that share and it's recently, it reached $700,000 for that single share. That's how good these guys were not just at financial investing, but telling people about financial investing and how they did it and how and by establishing trust first. I mean, it's just brilliant.Andrew Mitrak: That's amazing.Will marketing internalize the lessons of Influence?Andrew Mitrak: So, your books have had so many answers to how marketers should position products and persuade audiences, and why do you think there's still so many marketing campaigns that fall flat and aren't persuasive? Is it just that more people need to read your books and sign up for the Cialdini Institute? Or why is it not fully known? Because the answers are there.Dr. Robert Cialdini: Yeah, I think it is that they think that my book is, well, “That was developed before the internet. Well so why would I pay attention to it?”And so actually, the book has been called the Bible of online marketing. It was written before there was online marketing and people have asked me, “How did you see ahead? How did you look ahead to see that it would be so successful in this new platform?”I said, "I never looked ahead. I looked in us.”I looked in us. What are the drivers of yes that have always existed across platforms, across populations, across situations. Those are the ones we need to.You have to think about not just the latest technology or approach. Look to the factors that have always driven. There's a Chinese saying, "The years tell what the days can't say.”Look to what has always worked. Don't get swept away by what happens to be the most novel or the newest. Go to the most primal features. Those are the ones that are going to drive behavior.Andrew Mitrak: I, of course, couldn't agree more. That's part of this whole podcast. I feel like everybody is is looking to the future of marketing or the latest tips and tricks today and I think a lot of the lessons are in history and they're they're from experts like you, like Dr. Kotler, like so many others who have gone through all this before and I couldn't recommend enough for listeners if they're in marketing to, you know, pick up a copy of Influence.It made Charlie Munger and Warren Buffett a lot of money, so definitely recommended. And Pre-Suasion as well, which is also just a delightful read. So, Dr. Cialdini, thanks so much for your, for your stories, your time, your wisdom. I've really enjoyed it.Where can listeners find you and learn more about you beyond purchasing these books to learn more about your work and to and to support you?Dr. Robert Cialdini: I think the easiest way would be to go to cialdini.com and then there's an array of possible options that they might want to partake of.Andrew Mitrak: Yeah. Well, Bob, thanks again for being on the show. It's been a lot of fun.Dr. Robert Cialdini: I've enjoyed it. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit marketinghistory.org

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  52:48
• Dr. V. Kumar: Marketing Research and the Data Revolution

  A History of Marketing / Episode 8“Anytime there was a budget cut, marketing was cut first. So I took it personally to make executives believe marketing is an investment, not an expense. The only way you can prove that is to show the ROI of marketing.” - V. KumarThis week, we have a marketing titan joining us: Dr. V. Kumar, also known as “VK.” He's among the most cited and influential scholars in the field of marketing. He has published over 300 scholarly articles and 35 books. VK’s has been recognized with over 20 Lifetime Achievement Awards, including being inducted into the Analytics Hall of Fame and being named a Marketing Legend as part of the "Legends in Marketing" series, alongside the Philip Kotler and Jag Sheth. He was Editor-in-Chief of the Journal of Marketing and is the Goodman Academic-Industry Partnership Professor, Goodman School of Business, Brock University.In our conversation, we trace VK's journey from his engineering roots to how a talk by Philip Kotler sparked his passion for marketing.We also dive deep into the evolution of marketing research and analytics, from surveys and diaries to scanner panel data and the rise of database marketing and CRM. VK shares a behind-the-scenes look at his work measuring the Customer Lifetime Value of Coca-Cola consumers, revealing insights about Coke vs. Pepsi.Listen to the podcast: Spotify / Apple Podcasts / YouTube PodcastsWe'll also explore VK’s paper, "Evolution of Marketing as a Discipline," charting how marketing organizations have adapted, using Coca-Cola as a case study.Finally, we'll discuss the relationship between marketing academia and practice, highlighting VK's extensive collaborations with companies like UPS, IBM, P&G, Comcast, Home Depot, Wells Fargo, and Pitney Bowes, and how this work has helped demonstrate marketing's value as an investment, not just an expense.Now here it is, my conversation with V. Kumar.Early Influences: Philip Kotler and the Journey into MarketingAndrew Mitrak: Welcome, Dr. Kumar. It's an honor to have you here.Dr. V. Kumar (VK): My pleasure, Andrew. Thank you.Andrew: So, before we get into some of marketing's history with you, I wanted to talk about your history. Before you were a marketer, you studied at the Indian Institute of Technology, and you earned your master's in engineering and industrial management. So, I'm curious, how did you make the jump from engineering into marketing?VK: Both my undergraduate bachelor's in technology as well as my master's were from IIT. In the master's program, there was a segue. I majored in industrial engineering and industrial management, whereby we still continued with some engineering classes, but predominantly focused on the management of the engineering function. That was the time that Phil Kotler had come to India to give a few talks and meet with a few people. And I was blown away by the influence of him in the business field in general, particularly in marketing.And so, I started reading about what it is, and it was his textbook that we used in marketing in the master's program. So, when he came, and as well as I heard his talk, and I followed his book, I said marketing is what I'm going to do. And I reached out to him and he said to join Northwestern, but then I chose the University of Texas at Austin because they gave me a full scholarship, and it's a warmer place. I grew up in Southern India, Chennai, and, Texas being warm, it was a natural liking for me to join the University of Texas at Austin. There, I did both marketing and a minor in statistics. So, I brought in the engineering expertise throughout my life, even majoring as a minor in statistics. That's the segue that happened.Andrew: So, you came to the US to start studying marketing. What were your initial impressions of marketing as a consumer, versus an academic? Were there advertisements that made an impression on you when you were young? Were there specific brands or examples that stood out to you?VK: The first thing is, when you land in the US and start watching television, you see a plethora of advertisements. You get glued to that as to how colorful it is, how beautiful it is, and what the message is. We have this AIDA model: awareness, interest, desire, and action. So, I used to evaluate each of these ads as to where they stop. Are they just creating awareness, or are they going through the process till the end to make me go and buy that product?So, that was very fascinating. But the one ad growing up that really caught my attention, which for many people and the whole ad world talks about it, is the renaissance of advertising, the Apple 1984 Macintosh ad in the Super Bowl. That transformed Super Bowl ads from then on, and also the ad industry in terms of how to be creative and catch the attention of the consumers. So, that was there. Then after that, a series of Coke ads and Budweiser ads all followed through, but this was like a moment to reflect, and that still stands in the mind.Andrew: Yes, I think we can all envision that ad, almost frame for frame in our heads. It made quite an impression.VK: Definitely.Andrew: And so, you mentioned Philip Kotler, of course. Who were some of the other individuals that first shaped your understanding of marketing as you were first entering the field?VK: So, I was admitted to the University of Texas at Austin, and my advisor throughout my stay was Bob Leon, Professor Bob Leon. He was a significant influence then, and till now. He's the best friend, he's the mentor, guide, everything. So, he prepared me for life saying that there's only one thing you need to remember. You just put in your hard work, and if the expected outcome doesn't come, don't give up the hard work, keep persisting, putting it in.That was great advice because as an academic professional, you would see that when we submit manuscripts, rejection is the norm. So, every paper we write, we keep rejecting it. So, we cannot give up. So, he prepared me well. And then also in terms of quantitative marketing, he is a great quantitative marketer. So, he taught me some of the basic statistical techniques as well as advanced. I was his research assistant.But I was the one who was fortunate upon graduation, and then even before I got promoted to associate in the '90s, Dave Aaker and George Day adopted me and said, "V. K., we want to write this marketing research book with you. We have done something so far, but we want you to take over from here."I was like, is this a dream? And then I took it over and wrote the book, as the fourth edition or so was the first one that we co-authored together. And now, it's the 13th edition, and we'll release the 14th edition very soon. It is the standard. And then in the middle, somewhere, Jag Sheth also influenced me significantly, adopted me and said that the work that you do, make sure you also give back.You know, I was adopted by many people at different stages. So, what do I do? And now, fast forward to today, I've had 40 doctoral students I could mentor. And it was the most rewarding experience I have seen, and probably one of the largest numbers among the academics, to mentor, and they are all doing very well in the academic field. Most of them in the academic field, some in the practitioner world. They keep switching back and forth.The Evolution of Marketing Research: From Surveys to Scanner Data and BeyondAndrew: You've clearly taken these early lessons of hard work to heart because you've had a very prolific career. Of course, you've contributed to virtually every field of marketing in some capacity, but one area that stands out is marketing research, and you mentioned the book, Marketing Research, which is now in its 13th edition and the 14th edition's on its way. Can we dive into marketing research as a category? What was the evolution of marketing research, and how did it change and what was your role in shaping it?VK: This is a great point to reflect. So, when I came to the US in the '80s, we had one of the companies of marketing research was Marketing Research Corporation of America, MRCA. And they, prior to them, marketing research was survey research. Semore Sudman who was the pioneer of survey sampling and how to sample correctly and do the survey. So, surveys were the most common thing.From there, the evolution came with MRCA into giving diaries to people. You write what you buy and then mail the diaries on a weekly basis so that they don't forget. In the survey, there could be telescopic bias. I forgot what I bought, and so there could be errors, so diaries minimize those errors. And then, from there, we had A.C. Nielsen and IRI Information Resources Inc. introducing the scanner data, scanner panel data in the '80s, in a few test market cities. Port Washington was one of them.And one of my first jobs was after graduating, although it was short-lived, I was at the University of Iowa, and I joined there because the co-founder of IRI, Information Resources Inc, Jerry Eskin, was a marketing professor at the University of Iowa. He said, "If you join, I'll give you all the scanner panel data. You can build the models, whatever you want, and we will share it with the companies."I did that. He took me from Iowa City to Chicago over the weekends. We got a lot of data, built a lot of models for P&G and Kimberly Clark and published them in Journal of Marketing Research and JMR subsequently. But that is the revolution, from survey research to diary panel to scanner panel data. Then the revolution came in the '90s of database marketing, that we could really have databases of customers. The scanner panel is one part, the retailers collect, but also, manufacturers also started collecting data, buying data from the retailers, as well as with the credit card, they were also registering us. The loyalty programs emerged in a big way.So, they had not only what you buy, but who you are, and also through the models, we were able to generate why you are buying. So, that part came in the database marketing, and then, of course, the birth of 2000, the CRM came into the revolution, that is, which customer is buying what. So, what should I be showcasing to this customer in terms of ads, in terms of customization and personalization, that was the goal, but the goal was materialized later on in the 2011 to 2020 time period.And today, with the advent of new-age technologies, we are able to easily do that, the personalization, customization. But the question is, is every company venturing into this path or are some of them lagging behind? Still, if you take P&G, the majority of their products are all mass marketing. They are in many categories and multiple brands all over the world, and it's mass marketing. World of Coke, the same thing, Coca-Cola is mass marketing.Unlocking Customer Lifetime Value: Insights from the Coca-Cola Case StudyVK: Having said that, even Coke came to us and said, "can you tell me what is the lifetime value of a Coke consumer?" You know, never thought of it, because to measure the lifetime value, you need customer transaction data, exactly what it is, but then, who tracks it? A.C. Nielsen tracks how much you buy over a weekly period, but also the competition. So, we had to come up with a very new model. Me and one of my former doctoral students, Saran Sundar, we came up with measuring CLV of Coke, Pepsi, all soft beverages and published in JMR, which won the best research in JMR and the Donald Lehmann award as well as the best doctoral dissertation award for my doctoral student.So, this marketing research is the one that you can clearly see the barriers and then how we overcome these barriers.Andrew: Can we dive into that Coca-Cola example, just in a little more detail, because this is far before the age of really digital advertising as we know it today, as well. So, how did you approach that?VK: The data comes from A.C. Nielsen scanner panel. So, they had 20,000 people in the panel. They track over a six to seven year period as to, you know, what soft drinks that they buy. And so, we have like, if Andrew bought Coke in week two, three, four, and then switched to Pepsi in week seven, eight, then came back to Coke. So, we have all these switching as well as sticking to the brand.And some people are variety seekers, some people are die-hard brand loyal, some people are promotion sensitive, we call them deal-prone customers, and some customers are rational customers. They look for a coupon, cut the coupon, and go to the store and take it. So, we look at the buying pattern of a Coke, and then among these 20,000 panel members, you have a wide range of age.Then you segment also by, if you're a 20-year-old versus a 30, 40, 50, 60, how is the consumption pattern varying? And in this process of this data, we use something called a structural model. People often confuse with structural equation model. No, this is structural model, which facilitates what is the utility for consuming Coke at this instant by an individual. And so, we model the functional utility, and then see that at what time interval, because they buy and how often they switch.And if you can model this steadily, in the observation period, then you can project it across age group, so that what will be the lifetime value of Coke. The interesting thing in the study is, if I ask you this question, which would Pepsi have a higher customer lifetime value, or Coke will have a higher customer lifetime value?Andrew: My best guess would be Coca-Cola.VK: If you look at how much as a consumer, a Pepsi consumer consumes more Pepsi than a Coke consumer is consuming more Coke. So, the customer lifetime value was higher for Pepsi. But the overall consumption and profitability and the share was higher for Coke.Andrew: Right.VK: So, after this study, the plan was how to increase the customer lifetime value of Coke. How can we make a customer drink more Coke?And one of the ways that you do that is to introduce a lot of variations, of Coke, diet Coke, caffeine-free, zero, cherry Coke, zero, Coke, and all those things. So, that's the way you keep them in the family. So, overall, if you look at the family structure, then Coke manages that very well.The Evolution of Marketing as a DisciplineAndrew: I want to turn attention to a paper you published called "Evolution of Marketing as a Discipline." This is a long, dense paper, but if you were to take the 30,000 foot high-level view of marketing, say over the last hundred years or so, how would you describe its evolution from the highest level?VK: So, if you go back to 1936, and then, I will go like a decade, one decade, marketing was viewed as applied economics. Then from there, it became marketing as a managerial activity. And then the third decade, it became marketing as a quantitative science. Then after this, something happened that we started looking at consumer behavior. It became a behavioral science.And then how do they make decisions? And so, decision science followed. And then after decision science, it became an integrative science. And this is a very interesting period that integrative science between 1986 and 1995. Why? Because we borrowed a lot of theories from psychology, sociology, anthropology, to better understand the consumer's behavior. Why do they behave in a certain way?We were able to explain much better. So, and also the economics field was always infused, but then, statistics became very dominant. Prior to that period, prior to 1996, most of the research done, when you have multiple customers data on buying behavior, you would just run a regression model and get one coefficient for price, across all customers.And what is the assumption behind it? Is basically saying that every Andrew or V. K. or Phil Kotler or Jag Sheth, they all have the same price elasticity. But you and I know that's not true. So, in the mid '90s, where prominent modeling, unobserved heterogeneity, that's a technical term, in layman's term, all that means is that there are groups of customers who behave similarly.And so, all these latent class segmentation became so prominent, how to model that at the segment level, and at the individual level, we have advances in statistical models, through random effects model. So, we were able to really understand each customer at the individual level, what is their elasticity. And then market to them. So, that was a revolutionary period as to why my elasticity is different from yours. That's because maybe I belong to some socioeconomic class different from yours, or my lifestyle is very different from yours. So, we were able to explain all those things with the borrowed theories from psychology, social psychology, and sociology.Then marketing became a scarce resource, like people anytime there is a budget cut, marketing was cut first. The notion was that it's an expense. And so, I took it personally from 1999, 2000 onwards, for the last 24 years, to make executives believe marketing is an investment, not an expense. But how do we prove that? The only way you can prove that is to show the ROI of marketing expense. Whenever anybody invests, so, I invested, I give you $30 million, the CEO might tell the CMO, "Show me the return."So, when you do mass marketing, the famous saying, "Half of it goes wasted," I don't know which one. So, but when you do it individual-level marketing, who's buying, who's not buying, based on the marketing that you're doing, we are able to directly link the spend to the outcome. And so, that is what we did from 2000 onwards to measure the birth of customer lifetime value, came in terms of measurement, concept, definition, and implementation.IBM and Wells Fargo were the two companies that were the initial companies that we started working with. And then, I had students from Europe, so they also, roped in a Spiegel catalog company, and then, through marketing science Institute here, we got many member companies of marketing Science Institute, also share data and built a lot of models, fast forward today over 150 companies, implemented some of the models we have done, and they're all showcased as either practice price in inform society, and they're also available as practice price videos on my website.So, that is the investment part of it. To complete the story of this evolution, then, marketing became an integral part of the organization, that no decision can be made in isolation. They have to be even if it's an information systems or finance or operations, we'd say how we are going to market it, if you're going to change the operations.Example, rather than delivering the product from warehouse, you are now going to deliver it directly through mail. So, how will you market it? Because there could be a lot of delays in the mail system. So, what do you do? Or the vice versa from mail to warehouse, what can you do that? A famous example is Amazon also touted two-hour delivery window, but that didn't go far because that was impossible to implement.So, marketing promise has to collaborate with the operations. And then, in the late part of 2015 to 2020, we had the engagement marketing, and today, we are standing as transformative marketing.How Marketing Organizations EvolveAndrew: I want to come back to this early period, though. You started by citing the year 1936, and at the time, it was a field of applied economics, and you went from there to today. I'm curious how this would have impacted, say, a marketing organization. Take a company like Coca-Cola or Proctor & Gamble, or a company that existed from 1936 to the present. How did their marketing organization develop? What are the key changes or milestones? If I was a CMO and I was hiring a team, what did my team look like in 1936, and then what does it look like today, or what are the major changes in between?VK: This question is the right question because just four days ago, I was at the World of Coca-Cola in Atlanta, seeing the evolution of ads that they showed in the 15 minutes cinema that they screened.You know, that is one part. Just the evolution of Coke itself, the product formulation pretty much remained the same, in terms of selling it, they were in a situation where the more bottling plants, the more places they were present, they could sell more. So, the distribution era was the 1920s, '30s, '40s, and all, '50s. So, as they increased the distribution, then became the product era. So, they had variations of the product. Then they had like Fanta, Coca-Cola, Sprite, and a few other lime-based drinks all started evolving, the product era. Then the selling era, then they had competition.So, the salesperson went and said that why should they go through the selling era. But the commercials, if you look at it in parallel with this, they were showing colorful ads, colorful people, good-looking, attractive, and all those things they were showcasing that. Two benefits-based advertising in the '70s and '80s. That was a good shift that they followed through. Like what is the benefit of drinking Coca-Cola?And how often you should drink, and when you should drink, occasion-based drinking. So, all these expanded the scope for Coca-Cola in terms of advertising. And then with us tag teaming with A.C. Nielsen and IRI, using the scanner panel data, they found out which type of customers are buying more and less over as they age through, is the consumption dropping or increasing? And we find the consumption dropping.It's maximum when you're a teenager, 20s and 30s, and then it drops. So, what can we offer as a substitute drink to keep them in the family at that age, then they brought all these SmartWater and tonic water, all these water-based things came about. So, they were very clever in keeping a member of the household within the Coke family, Coca-Cola family with this understanding.And today, the biggest talk is about the AI-generated Coca-Cola advertisement, all over the world that we are seeing. And die-hard Coca-Cola fans, love it and saying that, oh, what, how colorful it is. And the critics are saying, "Oh, they've gotten down to this low level of using AI, they don't want to spend money, just AI." But if you focus on the ad itself, it is just combining the benefits, the occasions, and people all over the world.They are one company that throughout from 1896 have steadily done very well.Andrew: Yeah, it's such an iconic brand, of course, but you were mentioning how you tie it to a time. And we're entering, at the time of we're recording, we're starting to enter the Christmas time, and they're a brand that somehow is associated with things like Santa Claus and polar bears, but then their classic "I'd Like to Buy the World a Coke" ad, it's very summery, and it's part of the hippie movement. I'm sure that that was controversial to some extent at the time. And now, they are doing it again with AI.VK: But that's the objective, Andrew. That is everybody is talking about it. Good or bad, the awareness and what it is. So, it makes people curious to go and see.From Mass Marketing to PersonalizationAndrew: Another paper you wrote, along these lines is called "Conceptualizing the Evolution and Future of Advertising." And the paper describes how advertising has evolved from a one-way broadcast to a two-way conversation between brands and consumers. And advertising was focused on selling, but now it's more focused on engaging. And so, stepping back on this, what were some of the major milestones in how advertising has changed over the last century? And if you want to continue with Coca-Cola as an example of how their advertising has changed, that might be a useful framing for us too.VK: Yeah, Coca-Cola is one, but this study was done with Professor Shefali Gupta from India. A lot of thoughts went into this in terms of culturally how it has evolved, in an individualistic culture versus collectivistic culture, like India and China, or Singapore versus Europe versus America, North America, and so on. So, that was the thing. If you look at the traditional way of persuasion, advertising has got three objectives, inform, persuade, and remind.So, every ad focused on measuring it. Did I inform, how many people are aware, how many people intend to buy, and then how many people recollect the ad. So, those three objectives still, they would say that. But what the evolution has seen in advertising is that there was a mass advertising in television or radio, broadcast advertising was all there. Then came this beautiful media convergence, where you could have the confluence of the technology, multiple proliferation of media, and the ability to understand each customer's preferences.So, because of this media conversion, we had this split cable. Meaning like, if I and Andrew are neighbors in a city, in a zip code, we both are watching Jeopardy, and I will be seeing one ad, and you will be seeing another ad. And that was the media convergence, the technology allowed. Because I like to eat, say, Lays chips, or some chips, I don't eat that much chips at all, but some product that I'm eating, or maybe drinking Coca-Cola, the ad would be for Coke, and you consume Pepsi, then the ad would be for Pepsi for you.So, that is the way with the scanner panel data giving insights to the manufacturers and ad agencies that they buy this data, they can customize it.Andrew: So, if I was to go back to our Coca-Cola example, for instance, if I was in 1896 or so, I'm somewhat limited to print, or maybe out of home. And then radio comes along, and television comes along, and as a marketer or as a brand manager, how do these changing technologies change how I'm approaching advertising my products.VK: That's where advertising was always viewed as a creative component. And it was a mass marketing component. So, how can we infuse science into advertising? It is the messaging. So, advertising is nothing but creating a message to the audience, the relevant audience that they are targeting. Now, from mass marketing, general message, creating awareness or either to create an interest in that category, or the product, and to desire the product, I want to consume it, to actually buying it.The general-purpose advertising is to create awareness. So, what is the next step that they can do to induce interest? Then they focus on the benefits of consuming the product, the interest. Then what what can they do to make them consume, go to the desire, this is the one that I want to consume. I'm interested in this category, but I want to consume Coke, desire.So, for that, they'll say, "It is easily available and an attractive price, affordable." Affordability and availability became the message in the advertisements to create the desire. And the action is, there is a store next door to you. So, that is the completion of the circle or the cycle of advertising in terms of what it is. The reason I said circle is it has come back now to the beginning with the new technology again, they do the digital advertising, starting with like, how many people click, so that they become aware of it.Then how many people are now asking for more information, like not only seeing the ad, but clicking it to get additional information. And then, from additional information, what are, where is it available? So, which, so put your zip code and see where all it is available. So, then, you go to the desirability part of it, where affordability and availability is done in the digital world, and finally, you order from your home base. product gets delivered.So, the same cycle has repeated in the digital world, through the click through and conversion rate and so on.Applying Marketing Research to Inform MessagingAndrew: You brought up this relationship between marketing as a creative act, and marketing and advertising as a science. And it feels like there is, of course, a little bit of a natural tension here between being data-driven and being creative, but of course, marketing is, as you mentioned, it's strongest when measurement and creativity work together. And I'm curious if you have any thoughts on how the relationship between data and creativity and marketing has evolved over the years.VK: I can give you, explain this with one very nice example that we did with UPS. What happened there is that they have almost 4 million small businesses that they cater to, shipping packages. And they were communicating with them, sending them messages. So, they know they have to send them messages at some intervals. And the messages they varied are one is a relationship-oriented message, meaning like we can help you grow your business. If we come and spend a day with you, we can customize like what kind of shipping is good for you, for your business to grow. So, they, there's a relationship message.There is another message called economic message, which is, says that if you ship 10 packages, you get 20% discount, or 10 packages, pure economic discount. So, the creative part was done there. That is what what should be the creative economic message, what should be the creative relationship message. Now, the measurement part comes in where, who should get the economic message, who should get the relationship message, that's first question.Then for how long they should be getting that message, and when should it flip back to a relationship to economic. Or, they should bring both to some other group of customers. And that's where using the historical data for each of the 4 million small businesses, what messages they received in the last three, four years, how did they respond to each of those messages?And for how long they were responding. So, we built something called a time-varying parameter model, a dynamic model. Each time they get an ad at different times, the effect of that ad varies over time. We capture that. Using this historical data of measurement, we have the insight which small business should get economic message for how long, and then what should happen after that.We did this for them, and it was implemented very successfully, and we were able to also report. And some of the things that at that time, the CMO was Mr. Kevin Warren, and we also did a Harvard Business Review article of a variation of this, and he came and commented that how CMOs are when they are given strategic discretion, operational discretion, and financial discretion, that they can take decisions like this to move forward, that creativity and accountability or measurement part can go together, and they are very successful.Marketing Academia and Practice: Building a BridgeAndrew: Through this interview, you've cited several examples of how your academic research has closely collaborated with businesses. You mentioned Proctor & Gamble, you just mentioned UPS, Coca-Cola. I'm curious if you have any thoughts on how the relationship between marketing as an area of academics and scholarship and research has collaborated with marketing practitioners and CMOs. How has that relationship evolved over your career? And do you think that relationship could be even tighter than it is today?VK: Yeah, this is something very close to my heart. As I said to you, around about 2000, around that time period, marketing was relegated as an expense, it's not an investment. So, we went on a crusade, me and my team of doctoral students over the next 20 years to prove marketing is an investment. And we have done that. So, there is an organization called MASB, Marketing Accountability Standards Board, like FASB, MASB, which the focus of that board is to show marketing as an investment. We were all founding members, founding directors, and we did that.Now, what happened simultaneously at that time, because marketing was not able to prove its worth, CMOs were the most frequently fired executives in the organization. Their stint was less than two years, less than 24 months. So, how to reverse this? So, from then on, we took up the role of what should we give to the CMOs as ammunition for them to use?One of the questions that was asked by a company like Pitney Bowes was that if I give $10 million to my marketing CMO, they had, I think, director marketing or so. Should it be spent on building customer relationships, or should it be spent on building the brand?How do you answer that question, like, should you build the brand, or should you build customer relationships? It's like a chicken and egg problem. And so, to answer that, we started this journey of linking brand perception to actual customer lifetime value at the individual level. What Andrew as an individual thinks of Coca-Cola's brand awareness, brand trust, how much emotional attachment he has got, and how much he's willing to pay for that.And if the store next door closes, would, are you willing to go to the next street and buy it, and are you willing to advocate this, are you willing to repeat buy this? So, we came up with eight attributes to link it, and then showcase this branding, all these attributes to customer lifetime value. What you think of the brand today, link it to the customer lifetime value, which is the next three years value that you're likely to give to this brand.So, when we connect all these dots together and work with, here is where we work with the marketing practitioners, give it to them and say, "You have a tool here, and you can showcase to them, if you give me money, I can do both. Build the brand as well as build customer relationship." And that blossomed into working. And then down the line, we did another study which was published in Sloan Management Review as well as Journal of Marketing, is that if a CMO focuses on maximizing customer lifetime value, would that increase the stock price, share price.We did a field experiment with a B2B company and a B2C company, and Wall Street analysts observed it, and we showcased that maximizing CLV, customer lifetime value, results in increasing stock price or the value of the firm.And then Sloan Management Review immediately published this in saying, "This is great news for the marketers, the marketing field." So, that happened. Then, another five years later, we took a 10-year data, longitudinal data to study, help the marketing practitioners that if the marketing practitioners are given what decisions to make strategically, and which markets to enter, and how to enter the foreign markets, like operational discretion, and then how much to spend, doing the financial discretion, if you give strategic operations and financial discretion, then they can show global growth for the companies.So, 10-year data, and that was published in, it was an international study, so Journal of International Business Studies, but most importantly, it was published in Harvard Business Review again, repeatedly. So, everything we do, we get coverage from either Harvard Business Review or Sloan or California Management Review, because they have direct relevance to the practice. So, I feel that the close tie-ups that I have with the marketing field and the marketing practitioners to help them grow, this has worked out magically for us.Learn More and Connect with Dr. V. KumarAndrew: Dr. Kumar, I've really enjoyed this conversation. Your insights have been so valuable. So, thanks for sharing your experiences and your wisdom with us. And for listeners, what's the best way for them to learn more about your work and connect or follow your work online?VK: It's all documented in my website, drvkumar.com, and for all the the engagement work and the customer lifetime value work is all in vkclv.com is all there. But most importantly, they can Google search me and write to me directly. I'm a public figure, like everybody can find me easily.Andrew: Dr. Kumar, thank you so much. It's been so great meeting you on this podcast, and look forward to staying in touch.VK: My pleasure. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit marketinghistory.org

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• Dr. Jagdish Sheth: Buyer Behavior and the Evolution of Marketing Theory

  A History of Marketing / Episode 7“Consumers don't make choices. They reduce choices.” - Jag ShethThis week my guest is a marketing legend, Dr. Jagdish Sheth. Dr. Sheth is a renowned scholar and has published more than 300 research papers and over 30 books. He’s the namesake of the Jagdish Sheth School of Management and recipient of the Padma Bhushan—the third-highest civilian honor awarded by the Government of India.In our conversation, we dive into the influence of psychology on marketing, Jag’s contributions to consumer behavior, and Sheth’s incredible life and career. Dr. Sheth co-authored a landmark 1969 book called The Theory of Buyer Behavior with one of his mentors, John Howard. This laid the foundational framework for what became known as The Howard-Sheth Model of Consumer Behavior. We also cover Sheth’s book, Marketing Theory: Evolution and Evaluation which chronicles the evolution of marketing theories and the rationales behind them.Listen to the podcast: Spotify / Apple Podcasts / YouTube PodcastsRead the interview transcript, enhanced with links and images:Dr. Jagdish Sheth’s Early BiographyAndrew: Dr. Jagdish Sheth, welcome to A History of Marketing. Thank you so much for joining me.Jag Sheth: Thank you, Andrew.Andrew: You've lived a remarkable life. You were born in Burma, now known as Myanmar, and your family immigrated to India when you were a child. You moved to the United States in your early 20s to enter business school at the University of Pittsburgh. What were your initial impressions of Western advertising and marketing?Jag Sheth: Quite a shock, because I came from a country where branded products were not as popular yet. For example, you had to make your shirts by buying the cloth and taking it to a tailor. Nothing was really branded except a few shampoos or Western company products, like Unilever products. I came to America, and everything was branded.Andrew: Everything was branded. Were there any other differences that you noticed in marketing or advertising?Jag Sheth: My first major encounter was that in India, in a tropical climate, you don't wear white shirts; you wear more colored shirts. So you could buy cloth material. All my shirts were in color – blue, yellow, and so on. There was a dress code at my university that said you have to have a white shirt and a tie, and wear a suit. But I needed to buy a white shirt.So, I went to a store and said, "I need a white shirt." The sales clerk was a young man. He showed me the white shirt, and I said, "How much?" He said, "$5." My immediate reaction was, "How about $2.50?" I said, "Look, $3, take it or leave it," because my friend was waiting in the car to go back to class. Then my friend educated me that in the consumer market, especially, prices are fixed. He said, "No negotiating." That was my first major encounter with a cultural difference.Andrew: That's right. We don't haggle too often here in the United States. I've been on the other side of that. When I've grown up here and then traveled internationally, haggling is part of the culture. It's something that's totally unfamiliar to me, and I need to get better at.Becoming an "Accidental Scholar" and MarketerAndrew: Your 2014 autobiography is called The Accidental Scholar. So, I take it that your career in academia and your specialization in marketing was not part of your original plan. Can you share what initially drew you to marketing as a field of research?Jag Sheth: It came by accident. My original intention was to learn production management because my brother had a factory that needed to be mechanized more and more, with a shortage of labor, especially skilled labor. So I said, "I'll go to America, get my MBA, learn the practical side for one year, and then come back and join the family business." That was my intent.But I got turned on by psychology. The most influential professor, by reading his material, was Maslow and his hierarchy of needs. I resonated with it. Because of that, I said I would like to go and do my doctorate in Behavioral Sciences, not in marketing. Behavioral Sciences. My minor was in social psychology, and then my applied field was marketing, which is understanding the psychology of customers rather than marketing a product.I needed money to bring my family. I was earning $287 as a monthly stipend; we needed $400. So I looked around, and by accident, John Howard, who was a marketing professor, had funding, and he gave me the extra assistantship. That's how I went into marketing. Otherwise, I would have been in management.Andrew: I suppose extra money is as good a reason as any to get into marketing.The Intersection of Psychology and MarketingAndrew: When it came to researching marketing, do you think that your status as an outsider, somebody coming from India, gave you any advantages compared to your peers who were born and raised in America?Jag Sheth: Absolutely. Having a different perspective, coming from a different culture and context, became an asset for me. I could see things in a way that others did not see. It's very much as if there's a galaxy out there, but you look at it, and some discover things, and some don't. The same thing happened to me. That has been an advantage, plus traveling all over the world as part of the academic career, consulting, and advising gives you multiple perspectives. So that has been an advantage.Andrew: You were studying psychology and marketing at the same time. When I spoke to your friend Philip Kotler, he told me about how marketing emerged from economics, but of course, psychology also played a major role. Can you share who the leading thinkers were in marketing when you were a student and describe how psychology came to play a bigger part in marketing?Jag Sheth: There was a whole body of writing by one single author called Wroe Alderson. He was a brilliant theorist, and he came out with a theory which he called functionalist. I still don't understand it; he used very complex language, even for academics. Pretty much like reading Greek or Sanskrit. But I had an expert who knew Alderson. There are brilliant theories that came out where they talked about sorting things, warehousing, in his own language.Andrew: I've come across Wroe Alderson in some of my research, and at some point, I'll have to do a full episode on his biography because he seems like a really fascinating person. Can you ground us – what time frame are we talking about here?Jag Sheth: This is all in the late '50s. Up to this time, then in the late '50s to early '60s, marketing began to shift toward a behavioral perspective, a non-economic perspective. Economics itself embraced behavioral economics much later; in marketing, we did it very early. That led to buyer behavior – let's understand the psychology of customers, not the offering of the market, essentially. That was a key aspect.And so that led to the buyer behavior school, that led to the whole consumerism movement. Ralph Nader was the world-class activist. The school of thought about the role of marketing with society began much more. Society and marketing – how can they coexist as true institutions?The Theory of Buyer Behavior and John HowardAndrew: You mentioned buyer behavior, and you and John Howard co-authored the 1969 book called The Theory of Buyer Behavior. Before I ask you about buyer behavior, can you share more about who John Howard was and what influence he had on you and your career?Jag Sheth: John Howard was an economist. He got his doctorate from Harvard University, and his professor was Joseph Schumpeter, who was a very well-known economist – "creative destruction" or "constructive destruction." John was heavily influenced by his own professor's writings, mostly about innovation creating competition.The main reason Howard became very important in the discipline is that he got a Ford Foundation grant to study the evolution of marketing. He published a book on this called Marketing Theory. And John was actually creating a theory of buyer behavior before I joined him. I joined him in '62, and he had a chapter on loyalty in his own textbook. He was very serious about loyalty.Then I began to work with him. A great human being, because all great scholars are great learners; they absorb knowledge from their own students. He became a very good listener. We would debate all the time, but he was a good listener. He said, "Do you have a cultural perspective that I don't? You have a psychology background," because my minor was social psychology, my major was economics, and I'm applying it to marketing. So we became very good partners in balancing economic perspectives versus non-economic perspectives.The fundamental message was that consumers don't make choices; they reduce choices. Think about economics: the trade-off between what's positive and what's negative, the money sacrifice you make – a typical managerial or economic perspective, the "rational economic man". Reducing choices requires a learning theory, a totally different theory. So we anchored to learning theory, and through learning and experience, you reduce the choices.We came out with three phases of learning. The first time you are buying anything, it's extensive problem-solving. You don't even know what criteria to use to evaluate a brand or a product, or the selection of the brands themselves.But with one-time learning and reinforcement, you reduce the choice from extensive problem-solving to limited problem-solving, and then ultimately routinized response behavior.John wanted to call it "habit," which is the right word, actually. I said, "No, don't do it, because 'habit' was criticized at that time." I said, "You will get into the trap of negative criticism because of the word you're using." So we called it "routinized response behavior," but habit is ultimately what we ended up doing.Andrew: That seems very academic – to take a simple word like "habit" and turn it into "routinized response behavior" so it's harder for lay people like me to understand.Jag Sheth: The second thing we added: I said, "There's a point of learning where you get satiated." I was studying psychology – novelty-seeking, variety-seeking. Dan Berlyne is a giant of the University of Toronto. So I borrowed his idea, and I told John that there is a psychology of simplification, to habit and learning, but then afterward, you have a psychology of complication from habit.That you have been using the same toothpaste, using the same shampoo, so you say, "I'll search for new brands, new experiences." I created a psychology of complication, which means don't take loyalty for granted. People may shift because they're just bored, satiated, looking for a change of pace. "We drink coffee; let me drink tea once in a while." It's a cyclical time.The Howard-Sheth Model of Consumer BehaviorAndrew: So what exactly was the conventional wisdom at the time you wrote this paper? You mentioned the idea of people reducing choices versus making choices. Was that the primary new contribution you made with this paper?Jag Sheth: One was clearly the economic trade-offs between what you are getting and what you are paying. But the second thing was that each decision a consumer made was ad hoc. We make it again and again – repeated consumable products, grocery products. We go and buy every week – milk is one of them, meat is another one, vegetables are there, shampoo is there. So economics never thought about repeated purchase behavior, which means there's a previous choice which has a huge influence in guiding the next time. Virtually, the previous choice will be the most predictive way of forecasting what choice you will make today. We call it consumer data mining, consumer insights. So in a Bayesian approach in statistics, conditional probability would be what you purchased last is what you will purchase again.Andrew: This has become known as the Howard-Sheth Model of Consumer Behavior. What was the reaction from businesses and marketing departments at the time? Did this have an impact on how companies performed their market research and marketed their products?Jag Sheth: What happened is that for the book that we were writing, he was able to get great publicity, which began to influence companies. At that time, there were several industry leaders, mostly from consumer packaged goods, who came out with the idea that we should take a consumer perspective, not a marketer perspective – from a product to a customer. Since this is repeated purchase, there was interesting panel data – longitudinal panels. And one large corporation at that time was called Market Research Corporation of America (MRCA). General Electric then started their own consumer durables panel, with a frequency more than every week; it's about three months, six months – dishwashers. So the market began to shift to having panel data. So that was a key change.Marketing Theory: 12 Schools of ThoughtAndrew: The Theory of Buyer Behavior was published in 1969. I want to flash forward nearly 20 years to your book Marketing Theory: Evolution and Evaluation. And in this book, you take a look at marketing history, and you identify 12 schools of marketing, buyer behavior being one of these 12 schools. What inspired you to take on this project?Jag Sheth: It was again by accident. At the University of Illinois, my department head was Kenneth L. He was a brilliant guy. He taught a marketing theory Ph.D. seminar, and unfortunately, he died suddenly. I was on vacation, and I got this call in December saying that Ken is gone. So they said, "Can you come back sooner than what you are planning to?" So I came back immediately.So I had to teach marketing theory. I like theory. I loved Robert Bartels' writings – a brilliant writer about the history of marketing thought, and I really enjoyed that. So given that interest, I said the best way to learn is to teach. So I designed this evolution…Andrew: So you designed this evolution of marketing theory, and it's a lens of viewing marketing history, which is what this podcast is all about. So I'm curious if there were any misconceptions of marketing history, or if there were parts of marketing history that seemed overlooked or underrated as you were writing your book?Jag Sheth: Three different areas are overlooked. The classical literature – many people did not even know that marketing began in the '50s with the managerial school, not realizing there were world-class thinkers before, mostly coming from either agricultural areas because marketing began in agricultural marketing, selling commodities. So going back, that literature was ignored by scholars and practitioners. It was a lot the functional school. Eventually, Michael Porter, through the value chain that he created, became more popular. So the old literature was missing. That was one, in practice. And there was also a pricing literature on psychological pricing – at what price, 79 cents versus 99 cents, makes a difference. Elasticity – very practical.The second thing that was missing, surprisingly, was taking multiple perspectives. In other words, there's a dealer perspective, there's an economic perspective, there may be a sociological perspective, an anthropological perspective, from the same entity called "consumer" or "customer." That was missing in the literature quite a lot.The literature had, in general, literature of industrial marketing, but industrial marketing was becoming more and more account management. Relationship marketing came later on. So, early history about how do you manage your sales organization in a B2B or industrial marketing area? There are journals for that one, but they were not in the mainstream. So that literature was generally not known.But most important, the conspicuous lack of understanding was the rise of consumerism. President Kennedy actually had a Bill of Rights for consumers. I was advocating consumerism, organizing social marketing as an area.Philip Kotler and Sid Levy began to write about the generic concept of marketing – marketing can equally be important for nonprofit organizations, not just for-profit organizations. That began to change as a new area came in. So those are the areas that were neglected in the mainstream literature.The Rise of the Consumer MovementAndrew: When it comes to the consumer movement, you mentioned President Kennedy's Consumer Bill of Rights, and earlier you mentioned Ralph Nader and his book Unsafe at Any Speed. So it really seems like the consumer movement had its renaissance in the 1960s. I'm wondering why the 1960s? Why didn't this start earlier? I'm thinking of figures like Upton Sinclair and his book The Jungle, and I think that's from back in the 1920s (Note - Andrew was wrong here. The Jungle was published in 1906). So it seems it took several decades for the consumer movement to emerge.Jag Sheth: Very true. If you look at the movement toward consumerism, it goes back to the days of mass production, the way you treated your employees, who had no life. Agriculture is the hardest work, but factory work is supposed to be more humanistic. So that whole area – a reaction by critics or thought leaders saying, "This is not acceptable. You can't treat humans like animals" – that literature began.Similarly, it happened with the consumer side. "We are offering products which are not qualified; adulteration is possible. We don't care about what happens to the consumer in the process; they're exploiting them." So that literature was coming back. By Kennedy, for example, J.K. Galbraith was a very influential economist at Harvard that President Kennedy relied on. He began to write in this area. So even the economists were questioning the traditional price theory, marginal utility theory, for example. Alfred Marshall was a giant writer at one time for consumer surplus in economics. Marshall was a deep person; we all studied Marshall. The other side was more macro – Keynes' foundational books in economics.Some of that thinking of consumer surplus began to spill over into the marketing area. And that all led to, basically, talking about: the consumer is defenseless, the marketer is so powerful, there's an asymmetry of power. How can you create consumer protection agencies, law that protects the consumer? Which led to – truth in lending, for example, came out. Truth in advertising came out. Eventually, legislation…you had the FCC, in communication, but the FTC became a very, very important agency.Four New Schools of Marketing ThoughtAndrew: You published this first edition in 1989, and that version had 12 schools of marketing thought. And you just recently published the second edition, and you added four new schools of marketing thought that have emerged over the last 35 years or so. Can you share more about these new schools or speak more broadly about the changes in marketing since 1989?Jag Sheth: One of the key new schools that came in, with its own perspective, is a focus on services industries. Everything was organized around manufactured products – its branding, its distribution, warehousing. And lots of consumer services, because America was becoming a service-driven economy. And that led to a whole start of services marketing being different than product marketing.For example, services are perishable. Services cannot be stored. Services are co-produced between the consumer and the provider. In healthcare, the patient has to cooperate, for example. In airlines, the passenger has to cooperate along with the flight attendants. So experiential marketing came eventually as the dominant force that we are experiencing now.Services marketing became a very large body of knowledge, and there was a journal that came out, Journal of Service Research, because traditional journals didn't think about services. It really took off when telecommunications became an interesting industry, from a regulated monopoly to a competitive one, especially wireless technology. So services marketing became one major school of thought, with hundreds of articles. So that's what we identified as one.Our second one had to do with relationship marketing, which I led. Back in that '89 book, I mentioned that what's more important in advanced economies is retention of customers. 90% of the consumers are the same as who were there yesterday. A new customer is... so market the acquisition. It's... consumers, you convert them into consumers from unbranded consumption or home-making things. So I said, in the advanced economies, we need to focus on relationship more – key account management, or in consumer banking, having a relationship manager. That was a second school of thought.The third school of thought that came in in the '90s was actually marketing strategy, or strategic marketing, as they call it. Michael Porter was coming in a big way. His Competitive Strategy book in 1984 launched a whole new discipline altogether. All of that led to strategic marketing, but marketing is an asset; brand is an asset. There's a value of the asset. Think about the future; do the SWOT analysis – strengths, weaknesses, opportunities, threats. For example, the Boston Consulting Group framework of cash cows, dogs, became very popular in marketing, because each brand could be positioned into one of those categories. So there's a whole new literature that arose around strategic marketing or marketing strategy. So we have a new chapter on that.And the last one is international marketing. International marketing was always there, but not in an organized way. In the '90s, when trade became the driver of economic growth, not GDP… so we abolished the GATT agreement – General Agreement on Tariffs and Trade – we instead created a WTO. Trade blocs and groups like NAFTA were created, where the EU… the EU started out with common market countries. ASEAN block was created. So trade became the dominant factor, and because of that, international marketing took a new approach to, basically, international business. So we have a separate chapter on international marketing.Learn more about Dr. Jagdish ShethAndrew: Wrapping up, I see on your virtual background you have a bookshelf that's full of your books. For listeners or viewers who have not read your work yet, where would you point them? What is the best way for listeners to find out more about you and your work?Jag Sheth: The best place is to go to my own website, jagdishsheth.com. Most of my articles and books are listed there, and I update it pretty regularly. This has been my bumper year in terms of publications. Several books have come together.One that just came out is Purpose-Driven Pricing. How Can You Use Pricing to Serve Societal Problems While Making Money? Pricing is the most powerful weapon; very immediately, I can do it. I can manipulate or change it instantly if I want – dynamic pricing. So I have a colleague, a young colleague, she's a pricing expert, and we worked together on this book – about three years to find case studies, interview executives. It has resonated very well with the nonprofit sector – their pricing mechanism, subsidizing, supporting – corporations, and also policymakers. So that just came out.My second book that came out is very different. It is India's Road to Transformation. In India, what matters is leadership. People talk about resource advantages, location advantages, historically, about the rise of a nation. This is what matters is leadership – managing a country as an enterprise. So we did transformative leaders historically, about all of them, from Genghis Khan to Kemal Atatürk, Also FDR, Lincoln. We found a common denominator: it takes 15 years of political continuity, a minimum requirement, to bring about a transformative change. It takes the same political leadership – not a leader, necessarily, like a party. And then you need a leader who knows how to execute as well as imagine. They have to be both a visionary, aspiring people about the future of the nation – positive view, ambition, aspiration – but executing on that. And then we compared, in India, three leaders historically among 14 prime ministers: Jawaharlal Nehru, the first Prime Minister; his daughter, Indira Gandhi, in the '70s; and now, Narendra Modi. And Narendra Modi scores very high on several dimensions. That's the second book.The third book that is coming out – it's a book that I'm writing with Can (John) Uslay called Navigating Brand Activism. We had a book out called Firms of Endearment with Raj Sisodia, which led to conscious capitalism, where John Mackey, from Whole Foods, embraced the idea. His company said, "I'll do the same thing." So that conscious capitalism… same idea we have taken to: Brands can serve society, but get active. But there is a double-edged sword. So we have stories after stories about how brand activism actually destroyed the brand because it was managed so badly, or how it actually enhanced the brand. Called Navigating Brand Activism.Andrew: Dr. Sheth, thank you so much for joining me for this conversation. I've really enjoyed it a lot, and I appreciate you sharing your wisdom, your insights, and your stories with me today.Jag: Thank you. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit marketinghistory.org

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• Shelley Spector: Early Public Relations & Pioneers Who Shaped the Field

  A History of Marketing / Episode 6This week we are joined by Shelley Spector, founder and director of the Museum of Public Relations. Shelley's journey into PR history began with an unlikely friendship with the legendary Edward Bernays, the "father of public relations" and nephew of Sigmund Freud.In our conversation, Shelley shares personal stories of Bernays in his later years, and we use the Museum of Public Relations as a lens to explore PR's early history.I'm releasing this episode right after last week’s conversation with Larry Tye on the historic life of Eddie Bernays. If you haven't heard that one yet, I suggest listening to that one first, as it will give you richer context for Shelley Spector's personal stories about Eddie Bernays later in his life.But this conversation isn't just about Bernays. Shelley also highlights the often-overlooked contributions of women to PR, such as Doris Fleischman, Barbara Hunter, Inez Kaiser, and more.Listen to the podcast: Spotify / Apple Podcasts / YouTube PodcastsRead the interview transcript, enhanced with links, images, and videos:Note: This text is from a recorded conversation transcribed with AI. I have read it to check for mistakes, but it is possible that there are errors that I missed.Andrew Mitrak: Shelley Spector, thanks so much for joining me.Shelley Spector: Thank you for having me, Andrew.Edward Bernays and Founding the Museum of Public RelationsAndrew: To start, what inspired you to found a museum dedicated to public relations?Shelley: It's kind of a long story, but it grew out of our friendship with Eddie Bernays. He lived until 103 and a half, in a mansion outside of Boston, a mile from Harvard. One day, I happened to ask, "What are you going to do with all this stuff when you need to leave?"He immediately said, "I want to turn it into a museum. I want to turn my house into a museum." He was picturing what Freud's family had done in London. When Freud passed away, his children made his entire house into a Freud Museum. We've been there, and it's wonderful.I said to Eddie, "I understand where you're coming from, but, no offense, PR is not recognized as broadly as psychology is. Your uncle Freud was a little more famous than you were." He looked really sad when I said this. So I said, "How about we build a museum of public relations in New York?"He said, "Will you?" And I said, "Yes. It's not going to be an Eddie Bernays Museum; it will be a museum for the whole field."When Eddie died, the family called us. We came up and walked around from room to room to select those items and papers that we thought were important to have in the museum. We loaded up the truck and drove home, without having a home for the museum yet.Andrew: We released an episode where I interviewed Larry Tye about his book, The Father of Spin, which was all about Eddie Bernays. For listeners who haven't heard that episode yet, he's just this fascinating person who had all this impact on the world. It sounds like he inspired your Museum. The reason we have bacon for breakfast, bookshelves built into homes, UPS trucks being painted brown, and calling multiple sclerosis "MS"—all these things, including your museum, originate from Eddie Bernays' brain.You mentioned his being inspired by his uncle, Sigmund Freud. He had a very interesting relationship with Freud, and he was also Freud's nephew in two ways: his mother was Freud's sister, and his father's sister was Freud's wife.Shelley: Exactly.Andrew: Can you share more about what inspired him about Freud's museum? Had he visited it before?Shelley: No, he never went to the museum because he only visited with Freud while Freud was alive. The Freud Museum was built in 1938, after Freud had died. But while Eddie was still a child, his parents would go on vacation in the Austrian Alps. We have pictures of Eddie at age nine with Freud, who had a brown beard, which you don't really get to see.You can imagine growing up in a household where all they're talking about is Freud and his crazy theories of psychoanalysis. Psychoanalysis wasn't yet adopted in the US. Eddie and Freud were very close; they wrote letters back and forth. Those letters are now preserved at the Library of Congress.At some point in the 20s, after World War I, Freud wrote to Eddie, "I need a way to make some money. I don't have any money" because of the hyperinflation. He wanted Eddie to perhaps send him some money. Eddie did manage to send him cigars from Cuba, brought over by another PR pioneer named Carl Byoir.But Eddie proposed to Freud, "Why don't I get your book, Introductory Lectures on Psycho-Analysis, translated? And have you come over here? We'll do a media tour." It's a classic response from a PR person. It was very much Eddie's work that got Freud to be known as much as he is known now.So, he had the book translated by a disciple of Freud named A.A. Brill. The book was very popular. Eddie wanted Freud to write byline articles that Eddie would help him write for the popular press, but Freud was saying, "Americans are not going to get it. They're not going to get psychoanalysis. We're talking to an audience of people that are really not that smart and cultured." He really looked down on the US.Eddie could not get him to come here and sit for interviews with the Times or with Life magazine or Fortune. However, the ideas, because they were so big and relevant at the time, those ideas of Freud spread. And behind the scenes, you have the nephew, always behind the scenes.Befriending Eddie Bernays: A Personal Connection to PR's PastAndrew: Eddie is this fascinating character, not just in PR, but in history in general, in the 20th century. You met him and knew him before you founded the museum. What was it like first meeting him? What was his personality? Any stories or anecdotes about meeting Eddie Bernays?Shelley: You have to remember that during that time—this was the mid-80s—there were trade publications in PR that frequently covered Eddie and his gallivanting around the city with various women. This is how everybody got to know who he was, besides knowing his campaigns. On one side, you had all these campaigns that were being taught in the schools, and on the other side, you had this 90-something-year-old man who was said to be quite an adventurer with women in Cambridge.The series of events were that I was asked to give a seminar at the Doral Hotel, where there were a bunch of PR seminars being given on that day. One of them, right next door, was Eddie's. He had been giving these seminars called "Two Days with Edward L. Bernays."After the first day of the seminar, I went, stood outside his class, and I introduced myself. One of the first questions he asked me was, "Do you want to have dinner at the Waldorf?"Of course, I would love to have dinner, but I also don't want to wind up in the trade publication, being seen by paparazzi.Andrew: Just to remind, Eddie at this point is probably in his 90s, right?Shelley: He's 94.Andrew: 94, wow. Okay.Shelley: And so I said, "Can I call somebody to join us for dinner?" And he said, "By all means."The previous Sunday, I was on a bike trip, and I met this guy that I kind of liked. I had his phone number, and I called him from a pay phone. The fellow that I called was a graphic designer, knew nothing about Bernays. I said, "But he's very interesting. He's very historical. He's 94. He's worked with every president of the century. Please come to dinner at the Waldorf."So he was intrigued. Well, that guy turned out to be my husband and business partner all these years, Barry. Barry just could not—his mouth was agape while listening to Eddie talking about working with Calvin Coolidge's reelection campaign and bringing Al Jolson down to the White House. Stuff that made somebody who didn't know him question, "Is this guy senile?"Barry and I said, "No, all this stuff is true." And so Barry then said to me, "If this stuff is true, then we've got to go up to his house and do an oral history." So I said, "Yes."So it all worked out. We went that April to his house and started doing these oral histories. He had never seen a video camera before. We were using VHS—this is antique equipment; it was brand new, but look at it now—and it was really not anything that was sophisticated compared to what we have now.But it was fascinating. I remember that conversation was about Eddie's role in World War I with the Committee on Public Information and George Creel, and going over and working on the press release for the Treaty of Versailles. You're sitting next to somebody who's talking about something that happened...He wasn't just PR; he was a part of history.He was a part of history, and he was also an influencer in historical events.Andrew: Seeing footage of Eddie from this time period is strange because there's a clip of him on the David Letterman show from the mid-80s around this time, and it is this funny, uncanny feeling of almost seeing a time traveler or some sort of anachronism, telling stories from growing up with Freud and his family in pre-World War I, doing PR in World War I, and here he is talking to Letterman, who's still a person who does interviews today. It's just wild, his longevity and how early he got a start in his career and his impact.I also didn't realize how intertwined your life was with Eddie Bernays. I'd seen, based on some research, that he was a figure that influenced the museum, but not only your marriage and lifelong partner, your dedication to the museum, your career in public relations—all influenced by Eddie Bernays. That's really remarkable.Shelley: It was very fateful. We found him to be absolutely charming and brilliant. And you're right, it was time travel. To him, he's talking about events in the early 20th century, the teens, pre-World War I and post, and the whole period in the 20s, and he's talking about it like it was yesterday. It was like you and I just talking about maybe the financial crisis of 2008. The memory was spectacular, and he was so charming in the way he told these stories.So Barry and I ended up going up there three, four times a year until his last birthday at 103. Barry and I always had him sitting in front of the camera or just having the camera roll. Some of the footage that you see in documentaries is from Eddie just sitting at the table with food, not planned with questions. We would just plant the camera on a tripod and capture whatever we would capture.Andrew: He seems like somebody who kind of had his greatest hits and had his stories and told them so much, he really had them down, just every PR professional should.Inside the Museum of Public RelationsNow, we could spend hours just talking about Eddie Bernays, but I want to go back to the museum and cover more of it, use that as a lens to cover more of PR history. Just to ground listeners, can you describe what the Museum of Public Relations is in detail? Is it a building they can visit? Is it an online catalog? What exactly is the museum?Shelley: The museum, from its first day, was online. In fact, it was noted by USA Today to be the first museum to be online, which we had no idea. We just put it online because we knew that people would not necessarily come to see it, but the material we had was so important that we put it online in the 90s.Andrew: In '97?Shelley: Yes. So it's pretty old.So the museum today is in a large space at the PRSA, which is the Public Relations Society of America. They invited us in because we were outgrowing the space we had been in. At some point, we were at Baruch College for four years, and then we had to leave because of renovations they were doing. And so we were at various offices. Then we moved to, which we hope is our forever home, at 120 Wall Street.We have frequent visits from students, classes, educators, scholars. And it's amazing. At the beginning, most of the people who would contact us would be people who I've heard of or who I know. And now the people really are from all over the world, asking questions about the past and some of the early pioneers.Andrew: Listeners might also be thinking, what actually is in a museum of public relations? Is it just a big wall of press releases? I know it's not that. (Laughs) Can you describe what makes up the museum and some of your favorite artifacts?Shelley: When I think about the walls we have and what we've hung up, we only hung up one press release, but it was a very historic press release. It was written in 1952 by Harold Burson about the beginning of the firm Burson-Marsteller, which became the largest firm in the world. Harold Burson himself was a noted pioneer who started, several others, after World War II. They got trained in news writing, etc., during World War II, came out, started working in PR, and then eventually built their own agencies.So we do have this press release that was written by Harold, and we have the carbon copy of it, which we think is significant because nobody knows what "cc" means anymore. But this was the original press release that Harold typed himself.Andrew: And just for listeners, also for those who don't know, "carbon copy"—when you see "CC" on an email today, it's "carbon copy." And if I understand, you type something on a sheet of paper, there'd be a sheet behind it, and that would imprint with carbon, and that would be kind of the backup or the additional one, and that would be the “carbon copy” of it, which, 70-plus years later, we still use today in our emails every day. And that's what it is, right?Shelley: I'm glad you explained that because kids today have no idea. I do ask them about, you know, what is a CC? What is an inbox, for instance?And so I'll segue over to something else. They have no idea what an inbox is—a physical inbox. They only know the inbox on their email. But we have Eddie's inbox from when he died, and we have in there everything that he had. Because when you used to look at people's physical inboxes, it was papers that were important to them. And he kept the papers that were important to him in this inbox, on his desk. We've since put plastic around them, but I think it's fascinating to look at what he had in there. He had in there articles about himself, yes, but he had a lot of articles about Freud, and he had a lot of articles written about and written by his wife, Doris.Andrew: It's so fascinating how, when computers developed, they sort of used the analogies of the past, of the physical world. And I think there's a term for it in computer graphic design called skeuomorphism, where you take something from the real world and you put it in the digital... If you see, on my desktop, I still have a trash can, and it looks like a wastebasket. And the "save" might look like a floppy disk, even though floppy disks haven't been used in 30 years or so. And you kind of take things from the past, and you have them preserved in your museum, that are now still part of the digital world. It's just we think about them so differently.Shelley: You're absolutely right. When kids come to the museum, I go through things —I don't remember the word you just said...Andrew: Skeuomorphism. (Laughs)Shelley: ...and show them things that they had no idea existed, Edison's original phonograph, the cylinder phonograph. We have that there. Music didn't always come from a computer; it wasn't always MP3. Sometimes it was a scratchy cylinder.Ivy Lee: The Other “Father of Public Relations”Andrew: We've talked about Eddie Bernays. One of the other founding figures of public relations is Ivy Lee. Can you share a little bit about his impact? I'm curious if the museum has any artifacts from Ivy Lee.Shelley: We have plenty. We have also republished his original official biography from 1966. So we have a biography of Ivy Lee.He's a fascinating character. Both he and Bernays are noted as fathers of PR, and there are some countries that look at Ivy Lee and not Bernays; there are some countries that look at Bernays and not Ivy Lee.It was fascinating to study Ivy. He worked with the Rockefellers, and he also represented railroads. He eventually represented the introduction of the IRT subway. Now, imagine, at the beginning, subways were competitive. So one of the things that he did, which was masterful—remember, this is the time of the flu and tuberculosis—so he would put up customer posters where you see advertisements now: "Don't cough too closely," "Don't sit too closely," "Wear a mask." It was the first customer communications of its kind.But more importantly, he was counseling the Pennsylvania Railroad. One day, they had a derailment around Atlantic City. You can see pictures of this, with cars literally hanging off of this bridge, and people were jumping out of the windows. So the CEO of Penn Railroad said to Ivy Lee, "You've got to keep this quiet." Because that's what was done during the day, during the Gilded Age. Vanderbilt said, "The public means nothing," right? "The public be damned" is what Vanderbilt said. And the CEOs of the time would disregard what the public would think. "The best thing is, they're too dumb to understand it anyway. Don't let them know."Ivy Lee said, "You cannot do that. The press is going to find out about it eventually. If you don't talk to them, they're going to write a very negative story." So he wrote the first—what was not yet called a press release—it was called a "Statement from the Road," about what had just happened. He wanted to get the company's position out there. He wanted to look open. That was a very important concept back then; people just hid the news. But Ivy Lee said the best way for you to come off looking trustworthy, as a company that deals with your customers all the time, is to take preemptive action. And this became a founding principle of crisis communications.Andrew: There are so many firsts to unpack in that story: the first example of crisis communications, the first press release itself. Folks who aren't intimately familiar with PR might think of PR as, "They're just spinning things on behalf of companies. They're just trying to tell the best version of the story." And, of course, to some extent, you have to represent your clients in the best way possible. But also, this is a founding example of, "No, compared to what was before, this is actually a lot better." Before, they'd sweep it under the rug, try to hide an awful tragedy with a train derailment, and instead, they're bringing it to light. They're kind of understanding that this is a new age in communication, and you need to not sweep it under the rug but actually tell people about it.Shelley: Exactly. You've got to preempt the reporter. So the reporters are taking the information from your release, and they're going and interviewing the CEOs. And Ivy probably trained them beforehand to be honest and forthcoming. So it was a whole different way of looking at the relationship of what was then known as a publicist with the press.Doris Fleischman Bernays: The Unsung Partner in PR's Early EvolutionAndrew: I want to move on to somebody you brought up briefly, which is Doris Fleischman Bernays. You mentioned that when you looked at Eddie's inbox, he had letters and communications from Doris, who had passed away 15 years or so before Eddie. So he preserved these for years. And Doris was not just Eddie's wife; she was also a really important contributor to PR in her own right. I understand she was sort of more behind the scenes than Eddie, but they were equal partners. Can you describe more about who Doris was and what her contributions to PR were?Shelley: I'm very sorry I never got to meet Doris. And I think that PR history would be very different if Doris were able to be more visible at the time. She was not the first professional public relations person who was a woman—it was actually a woman two years before, who we only just discovered; her name was Zelda Popkin. And there were probably many others in the teens. But she did some very sophisticated work and writing. She was a tremendously good writer. She had ideas, but back then, women were not allowed to share those ideas. If Eddie had clients in the room, the only woman allowed in that meeting would be a stenographer.Doris stayed away from the main stage; she was behind the scenes. Now, a lot of people have asked me, did she have any impact on his big campaigns? I don't know. I have asked the family about this, and they say no. I've asked Bernays about this, but I think that for two of the campaigns, he had to have been influenced by her, even if it wasn't so obvious.So Doris was part of the Lucy Stone Society, which are a group of feminists of the time, suffragettes, former suffragettes, who believed that women should be independent and use their maiden names. Which is something that is a legendary story—that she insisted on keeping her maiden name on her passport.And on the first night after they got married, on their honeymoon, which started out at the Waldorf, here she is signing in as Doris Fleischman, with a fellow named Edward Bernays, and it doesn't look very kosher to these people in 1919.Andrew: And you mentioned her passport—she was the first married woman to have her maiden name on her passport in the US, right?Shelley: That’s right.Andrew: It's a lot of firsts in this group.Shelley: And Eddie instinctively knew that that would make news. As much as Doris herself really wanted to do this, Eddie also knew that that would be news-making. But he wouldn't send out a press release about it; he would just let the press find out themselves.So that the press feels that they were uncovering a piece of news.Andrew: And I think you were stating that there were certain major campaigns that she may have influenced behind the scenes. And, of course, there's the Torches of Freedom campaign.Shelley: That's the one.Andrew: That's the one that very prominently used women and turned lighting a cigarette into a statement about women's empowerment. Do you think she was sort of behind the scenes in that one, potentially?Shelley: Yes, I do. I have felt, even if she didn't work on the campaign directly, just who she was—she was a liberated woman. She smoked very heavily. And I guess when she smoked, she felt liberated. Now, at the time, it wasn't about making more women into smokers. Women were not allowed to smoke in certain theaters and restaurants, concert halls, all over the country. That's a crazy thing, that there would be signs and posters inside restaurants: "Women cannot smoke here." That's nuts.And so it was encroaching on women's freedom. And so that's why there was an appetite at that time for the Torches of Freedom, part of the Easter Parade. And it wasn't just these women in a separate parade; it was part of the Easter Parade, where everybody's already dressed up. And there's some marvelous pictures of debutantes and these men, these high-class men wearing these top hats, walking in the Easter Parade.But the brilliance of Eddie was that, again, he didn't announce it. He didn't send out a media alert and say, "If you get to the parade in time, you're going to see these women with cigarettes out in the open." That didn't happen. He knew that there would be photographers there shooting the Easter Parade, but when they started seeing women smoking out in the open, in public, that made news. But nobody knew who was behind it.Andrew: So he was kind of a magician in the background.Shelley: Absolutely.Andrew: That sense of showmanship and how to create a spectacle and a scene. And you suspect that... Doris was an equal partner at his firm, she was a smoker herself, they used the guise of women's liberation to break barriers, let them smoke more, and, of course, if they can smoke in more places, they can smoke more products for their client, Lucky Strike or American Tobacco. So it all kind of came together that way.Researching Doris, I saw she edited and published a book in 1928 called An Outline of Careers for Women: A Practical Guide to Achievement. And this, in itself, just that she edited and published a book all about women's careers, says a lot about her. And in it... It's all available online at this point; I think it must be in the public domain or something. And in it, she wrote a chapter herself on public relations. And I want to just quote the introduction:"The profession of counsel on public relations is so new that all who are engaged in it, men as well as women, are pioneers. No traditions have grown against women's participation in it, and women will share the responsibility of developing and shaping this new profession. It is so new that its ultimate possibilities for women lie in the future."I just think this is so prescient, that now PR today, I think, has—depending on what you read—it's 65 or 75% women who are in it and who lead it. Do you have a reaction to this quote? What's your take on it?Shelley: It's very prescient. I wish that Doris was alive in the 80s, 90s, to see women rising to the top of agencies. Because back then, she's talking about women who are doing the work of PR. She's not talking about women who are leaders of PR agencies. In her mind, she could not imagine how big agencies would be one day and how women would have a role in those agencies, and running those agencies, being CEOs. She could not imagine this because it was unheard of, just unheard of.But she was offering up her own experience as a public relations counselor. Now, one of the important things here is that it was Bernays and his wife who came up with the phrase "counsel on public relations." Before then, it was just "publicity."When Ivy Lee would just call it "publicity"—even though he could be talking about crisis management—"publicity" did not become a kind of low-class word until much later. But "counsel on public relations" sounded like a lawyer.Andrew: Exactly.Shelley: So, but she was pretty much saying, women can and should be part of this growing profession. But back then, there were no professional women. And the only professional woman that I know of during that very time, in the 20s, was a woman named Belle Moskowitz, who was a political consultant to Al Smith when he was running for presidency. And you can see in some of the old documentaries of Al Smith, there is Belle, a rather big woman with a hat and a feather in it.But yeah, it's really something that she would be so prescient, and she would be such a fan of women. And she wrote a book—I don't know if you've researched this—called A Wife Is Many Women, which says it all. A wife is a mother, a wife entertains in the home, a wife is a wife to her husband. We play so many roles. And this all came out, I think, in the 80s, when women—they were called "super moms"— when there was a front page of Newsweek with a working mom carrying a briefcase on one hand, in her business suit, and her baby on the other hand. That's what Doris was envisioning.Of course, Doris had the means to hire a lot of help raising her children. Most people don't. And we still have to juggle, as women, we still have to juggle, but we're doing it.Barbara Hunter and the Fight for Female Leadership in PRAndrew: So Doris Fleischman was the first woman to be a 50/50 partner at a firm, and I want to also ask you about Barbara Hunter, the first woman to own and lead a major PR firm. And before I ask, I also want to acknowledge an unfortunate coincidence in timing. We're recording this in December of 2024, and just yesterday, we learned the sad news that Barbara Hunter passed away at the age of 97. And in her obituary, the last line reads,"Donations and tributes in Mrs. Hunter's name could be made to the PRSA Foundation or to the Museum of Public Relations."First, amazing that Barbara Hunter had such a close relationship with you and the Museum of Public Relations; clearly, it meant a lot to her. And if you're able to, just share who Barbara was, what impact she had on the industry, and what your relationship was personally with Barbara Hunter.Shelley: Well, yes, I'll take the last question first. She was very active. She sold the agency, Hunter PR, which she created after working at another agency called Dudley-Anderson-Yutzy, and she had sold that off and created Hunter PR.So the founder of Hunter PR—or the person she passed the torch to—is named Grace Leong, current CEO, marvelous CEO. And we had worked with Grace for years—"Let's get Barbara on the panel," because... There were a few women who are of an age where, you know, you want to get them while they're still very sharp. Barbara continued to be sharp until the very last day. Amazing.But she would tell stories about what it was like to work in a very anti-feminist world. The business world was... If you look at Mad Men, that's what the world was.Even though Mad Men was set in an advertising agency, it's the same kind of interactions between men and women, and how men saw women, and what was allowed in the office, right? So despite all that, Barbara Hunter and her sister, Jean Schoonover, managed to work with the respect of men and actually bought an agency, renamed it Hunter PR, and managed a thriving business—thriving. It's amazing.Andrew: Yeah. Well, you mentioned how Barbara was sharp right up to the end. I listened to an interview that must have been recorded within the last year or so, where she tells this story. And she tells the story of how she and her sister bought the PR firm that was then known as D-A-Y, right? And the amount of sexism they were up against was just shocking to listen to. Of course, you've seen it portrayed in things Mad Men, but hearing it firsthand from somebody...And she said that when she bought this firm that she had been working at, and she purchased it, the men who worked at the firm, they all left. They didn't want to work for a woman. They took their clients with them. And then sometimes they'd get meetings with clients, but they just wanted to listen to them almost as a novelty, where they just said, " We just wanted to say we listened to the first women-led PR firm pitch." And they didn't really give them serious consideration, which just seems so rude and a waste of time.What she was up against then, it's kind of gross to hear about. It makes you sad. But then seeing what she kind of overcame and what she accomplished and what she built it into is so remarkable.Shelley: I think we have people like Barbara to thank for the industry allowing women to do the same job as men and for allowing them to rise to the heights, as far as they can go. As you mentioned, it transformed sometime in the 80s and 90s to a dominantly woman field. But, unfortunately, the top of the industry are all men, still—the CEOs of the holding companies who have bought a lot of the agencies.But Barbara was out there. She just didn't give a damn. If she had the best idea, that's the... If you look at all her ideas, they came up from her brain. During agency selections for new clients, you'd have to come up with a unique idea. And it wasn't good if the client prospect would hear an idea and then go to another agency. I'm sure that did happen. But with her, they came up with brilliant ideas, mostly about food. She introduced the idea of food product PR.And some of those products... Tabasco was with the agency—currently with the agency. And the last time I saw Barbara, on Founders Day, I got a whole souvenir bag of different kinds of Tabasco, which I still have. But yeah, it forced them to come up with unusual ideas and not just the standard way of doing things. I think it made women work harder and stand out and realize the value of big ideas. When I came into the business, there were no women professionals. I didn't know how to even find them.Andrew: Wow.Shelley: Because we didn't have an internet back then. So I'd see an occasional woman at an industry conference or a lunch, but usually, I was the only woman in the room. Like Peggy…Andrew: Like Peggy in Mad Men. Right.Did Barbara Hunter... Did she run her firm differently than other firms of the day? Did she lean into the fact that it was woman-led and as a sort of competitive advantage, or attracting brands that marketed to women as their clients? What was her approach to that?Shelley: Well, considering that she was handling food PR, she knew the consumer much better than the men did.And that was really what set her apart. That was her USP. She was... It wasn't like she was running oil... She was handling oil and gas companies or electric utilities or steamship firms. She really knew the consumer, because she was a woman herself. She was a mother. She ran a house, so she got it. And it was very smart for them to pick this category of client—of food—that they knew much better than the men did. It wasn't until years later that women started handling things that were not fashion and all this kind of stuff, which I personally hated, which is why I went into a niche part of PR, in financial PR, because there weren't many women doing it. And that, to me, was a very serious subfield of public relations—the financial services industry.Inez Kaiser: Breaking Barriers in Public RelationsAndrew: There are a lot of women to cover in the history of PR that are leaders, but one that I wanted to specifically highlight was Inez Kaiser. Can you share the story of Inez Kaiser with listeners?Shelley: Let me, just take a step back, because I think this is an interesting story. We had, as I mentioned before, we had the whole museum set up on the library floor of Baruch College and hosted a lot of student classes. And so one of the classes comes in one day, and they're a diverse class, and one of the young women was walking around and looking at the exhibits and shaking her head. And usually, people like this stuff; I didn't understand why she didn't like it. And she sat down and raised her hand, and she says, "How come no one here looks like me?"And so this was October of 2016, and I was just dumbstruck because she brought up such an important point, and I didn't know what to tell her exactly then, except that I was going to fix it. And I told her and the whole class... I made a promise to her class and the professor: we were going to change things. So from October to Black History Month, February of 2017, we started researching Black and other people of color and their role in public relations history. So that now, half of the museum is about diverse people in PR history, because that is one way to bring more diverse people into the industry.So Inez is one of those people. But she was the first woman, as far as we know, the first Black woman to open a PR firm. Now, it wasn't she opened it in New York or LA; she opened it in Kansas City, Kansas, where it was tough to be a woman, and it was tough to be a Black person. But one day, she decides she needs her own office to open up this firm, and none of the landlords of commercial property in downtown Kansas City wanted to rent to her, not only because she was Black, but because she was a woman.And so she said, "I'll tell you who's going to be interested in this story: ABC, CBS, and NBC. And if you want, I can go give them a call later this afternoon." Next thing she knows, all the brokers are coming in, giving her tours of various offices in downtown. To her, it made no difference if she was a woman or she was Black. "Give me an office."And this is during the Jim Crow era, 1957. That's what's most spectacular about this story, is that she just didn't care. She just didn't care. But for consumer product companies, she was a great bridge to the newly affluent post-war country, and the affluence also was part of the Black communities around the country. So they took advantage of that. Various consumer brands hired her to find a way to communicate with them, and she did that. She was also a Republican and worked for the Reagan administration as far as promoting the idea of Black people starting up their businesses, and this became part of the Small Business Administration.So the day I found out about her, somebody had called me, was writing a paper about her, wanted to know if she was still alive. I had no idea; I never heard of her.So a person in my office decided to Google her and found out that her son, Rick Kaiser, was living—and living in Kansas City. And so she just picked up the phone and called him.And she says, "How is your mother doing?" And he said, "Mama is doing just great. She's in the next town over, in the assisted living place, and she's 96. And would you like to talk to her?" And we said, "Are you kidding?" And so we have this two-hour phone interview with her that's on our website that, to my knowledge, is the only recording of her telling her life story.Andrew: Wow, it's amazing that you have that oral history from Inez. It seems like a treasure. I think that that kind of work is exactly what's inspiring me to do this podcast as well... so many marketers don't know the history of marketing. I myself am still just learning, at the beginning of this journey, and I think it's such cool work to capture voices, capture these stories, so they're not lost to history, and that listeners can find them, and that those who are curious can learn about this.Supporting The Museum of Public RelationsI've just really enjoyed this conversation, Shelley. How can listeners support the museum, follow it online? Where would you point them to?Shelley: I would say go to PRMuseum.org. There's a donation page there, there's listings of our events that are coming up, or events we've done in the past. We've done 37 events, programs, panels, mostly regarding DEI and history, and there's a lot of videotape up there, and oral histories. And I encourage everybody, whether you're a student or not a student, or whether you're a PR person or not a PR person, it's interesting in history regardless.Andrew: Yeah, absolutely. Well, I'll post a link to that in the show notes with this podcast. So, Shelley, thanks so much for your time. I really enjoyed the conversation.Shelley: Thank you, Andrew. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit marketinghistory.org

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