preload preload preload preload preload preload
0 Comments | Jul 04, 2010

Marketing 101

resources_moneyWhen a complete stranger voluntarily spends enormous amounts of time and energy working to convince you to spend money on something you neither need nor want, that’s marketing. It is the very essence of capitalism, as vital to the free flow of wealth (from you to them) as the invention of cash[1] itself. And no matter how you feel about marketing—supportive, jaded, or ambivalent—it is absolutely critical that you understand how it works, because whether you acknowledge it or not, it is taking place all around you, every minute of every day. In fact, it is being done to you, whether you want it to be or not. And the people who are doing it to you aren’t only the professionals, though there are certainly plenty of those. It is also being done to you by your friends, your family, your colleagues at the office, everyone you know. There isn’t one damned thing you can do about it except to understand how it works and be as vigilant as possible. And while you’re at it, with a fair degree of self-awareness and a bit of creativity, you can also have yourself a bit of fun.

First, though, a word about terminology and semantics. Many perfectly serviceable business texts and academicians go to great pains to distinguish marketing from sales. I will not draw, nor even acknowledge, that particular distinction in this discussion, except to say that sales is the purely mechanical front-end of marketing. The salesman is simply the individual who presents to you all the marketing-derived reasons for why you should want to acquire something that you don’t currently have. Put bluntly, sales is nothing but the process by which money gets transferred from your pocket into someone else’s, none of which would be remotely possible without all those forces that are created and stirred up by marketing, many of which we will explore forthwith.

So, what exactly is marketing? It is, plainly put, the science of making you want something. It is as vital to commerce as oxygen is to life, because if you don’t want something, then as a practical matter there is no force compelling you to purchase it[2]. And it is important to distinguish want in this context from need. There are very few things we as humans truly need aside from air, food, water, and shelter. Need is about survival. But once we start distinguishing one sort of food from another, or declaring one person’s shelter superior to another, then we are squarely in the realm of marketing. Go all the way back to day one and you will discover that God himself started the whole marketing thing there in the garden, employing one of the most effective techniques of all time, i.e. making the first man and woman want something by telling them they couldn’t have it[3]. There was no surer way of getting Adam and Eve to eat from that tree than telling them it was off-limits. If he hadn’t said a word about the tree, they never would have known the difference and history would be very different today[4]. Steve Jobs knows his history[5], and he knows that the surest way to generate hysterical demand for the newest iPhone is to spread the word that you can’t get one.

To frame things a bit more scientifically, marketing is all about creating or enlarging what I will call your perception gap, i.e. the gap between how you feel now about a particular product/service and how you will (presumably) feel when you’ve acquired the product/service in question. There may be no gap at all initially; you may be perfectly content with your current cell phone, car, or hamburger. But then along comes a newer, better model and suddenly the gap begins to appear, widening a bit more each time you see the new item and then have to look back at your increasing pathetic and inadequate one. Or there may be an existing perception gap you’ve been nursing or trying to ignore for some time. You may know perfectly well that your infant’s stroller is kind of lame. You feel it on every play date. Then along comes that ad for the newest model (“Doesn’t YOUR child deserve the very best?”), and the gap begins widening, quickly[6]. It takes a strong will indeed to ignore the gap between what you have and what you could have[7]. It is the exploitation of this gap that gets marketers up in the morning.

So how can the marketing professional widen the gap and make you feel that unavoidable urge to replace something perfectly functional[8] with a new version that does more or less the same thing? Case in point—even as I write this, I am glancing periodically at the cell phone next to me, an item that has served me reasonably well for three years and which continues to work fine. These days though I am bombarded with marketing messages about new G4 networks, high-resolution cameras, multi-party video-teleconferencing, and downloadable apps. The unstated message is clearly that I am a world-class loser if I do not possess these features on my phone, and an even bigger loser if I’m not willing to freely admit how very badly I want these features. The gap has begun to grow already, and I can scarcely walk past an Apple store these days without feeling that less-than-subtle tug.

While we’re exploring this notion of a perception gap, it’s worth noting that there exists a slightly different, more nuanced sort of gap as well, which I will call the applicability gap. It’s that awkward, borderline-embarrassing feeling you get when a new product is released and you have no idea what it even does, despite which you nonetheless feel compelled to own one anyway[9]. In these cases, it doesn’t matter in the least that no one else knows what the new widget does either. You cannot be sure of that, and so you’re left to fret over the possibility that you may be the only cretin around who doesn’t instantly grasp the myriad and obvious wonderful uses for the new item. The poster child for this phenomenon is the new Apple iPad. No one, so far as I can tell, including many industry experts, can authoritatively state what this $500 device is for. Yet despite this inconvenient fact, more than three million iPads have already been sold. And the beauty of the applicability gap, if you’re a marketer, is that it’s rather like a slow-motion nuclear reaction. The more people who purchase the object whose purpose no one comprehends, the more inexorable is the force on the rest of us to do the same.

So a critical part of the marketer’s job is to create a feeling of inadequacy or discontent in your mind about some aspect of your current life. This part of the job turns out to be startlingly easy, because all that’s necessary is to make you aware of the very existence of a newer better alternative, or one that you will assume is better by virtue of its being newer than yours. The hard part is in the hands of the engineers and product developers who are tasked with actually conceiving and creating the newer better product. Once it exists and it works, the marketing challenge boils down to communicating its existence to the masses. As an engineer, the challenge is not only to make the new item functionally better in one or more demonstrable ways, but, more importantly, to make it look newer[10]. That way, each time the owner of the previous model sees someone with the new one, it matters not at all that they haven’t even touched the new one, or that they are in no way even familiar with its improved capabilities. Merely the fact that there exists a new one creates an overpowering sense of desire to own it, without the slightest regard for the continuing flawless functionality of their current model. This effect works perfectly well with strangers, but it is especially powerful among the peer/friend group of the affected individual. There is no sicker feeling than sitting down over drinks with one’s friends and watching as one of them whips out the latest model widget while you’re still using the previous one. Many people will stand in lines overnight or spend far in excess of retail price to avoid experiencing this feeling of hopeless inadequacy.

Indeed, if the marketer is doing his job proficiently, he will be skilled at making you feel however he wants you to feel. As we’ve discussed, the most common manifestation of this skill will be to make you feel inadequate or, in some less tangible way, unfulfilled. Alternatively, it can be just as successful to make the unwitting individual feel simply overwhelmed and confused. Consumer confusion takes many forms, the most common and powerful of which are technological terminology/features[11] and sheer volume of alternatives. Confusion can be a particularly effective technique, particularly insofar as it gets consumers to make purchasing decisions that are ill-informed and, ultimately, of benefit to the marketer.

When I stand before the shampoo aisle at my local grocery, it is hard not to be intimidated by the magnitude of choices[12], particularly as many of the options distinguish themselves on the basis of some arcane knowledge that it is assumed I possess, which lack of knowledge engenders on my part, yet again, a feeling of inadequacy (sometimes even anxiety) that is the stock in trade of the profession. In this case it is expected that I will know, first of all, whether I have dry, normal or oily hair, whether it has split ends, is straight or curly, frizzy or tame, etc. I am also expected to intelligently evaluate the relative palliative capabilities of a variety of organic and synthetic substances ranging from aloe, cocoa, honey and butter to dimethicone, sodium citrate, and polyquaternium. I am expected as well to know the optimal pH for my hair and to have an actual preference regarding how I want my hair to smell[13]. Finally, to seal the matter, I face the decision of whether to purchase separate shampoo and conditioner or opt for the combined product, the latter of which I am made to feel bad about by marketers, since the two-in-one product shows less commitment to the quality of my hair care and is invariably less expensive than buying shampoo and conditioner separately. The primary force at work throughout this ordeal is that of confusion, the working assumption being that absent the graduate degree in chemistry required to actually understand most of these choices, the typical consumer will opt for the time-honored approach of assuming that the most expensive product must be the best one and will act accordingly. Shampoo is a particularly troubling product to think about in these regards, as the vast majority of what we purchase ultimately ends up being washed down the shower drain[14].

Not only do marketers work from an assumption of scientific ignorance on the part of the consuming public, but an equal level of mathematical ignorance as well. There are very few consumer products to which I would say I am truly dedicated, but one of them is unquestionably Diet Coke. Each time I go shopping for soda in my local grocery store, I am struck by the pricing decisions that confront me. I tend to buy twelve-ounce cans, which come in either twelve- or twenty-four packs. Simple enough you say, the larger pack ought to cost twice what the smaller one does. If only. Two interesting things happen with stark regularity in the pricing of soda. The first is a tacit collusion thing[15], whereby on any given day either Coke or Pepsi will be on sale, but absolutely never both on the same day. One wonders if they signed an agreement for odd and even days, or exactly how this phenomenon came to be. The technique though that I find absolutely intriguing is the one in which the twenty-four pack of twelve-ounce cans costs something other than double the cost of the twelve pack, an occurrence that is almost always the case. One might reasonably think that in order to function in modern society, one would need to possess the mathematical acumen to determine whether a twelve pack at three dollars or a twenty-four pack at five dollars is the better buy. Yet, in the selfless interest of social research, I have stood before this aisle for minutes, watching as consumers fret over which purchase to make. Of course this phenomenon is happening all over the grocery store, but it’s at least reasonable that one might find momentarily challenging the comparison of a seven-point-five-ounce bottle of spaghetti sauce for a dollar twenty-nine versus the sixteen-point-two-ounce bottle for two seventy-five. When one package is precisely double another, the mental struggle is a bit tougher to accept in one’s fellow consumers.

In fact, there are something like six[16] different sorts of containers one can purchase the same soda product in, and comparing unit prices one to another can be as mentally challenging as keeping track of one’s stock portfolio. In a rare bid to reduce consumer confusion, many grocery stores have taken to printing a per-ounce price on their shelf labels, which takes most of the sport out of the thing and is doubtless frowned upon by the brand marketers.

Before we leave the subject of soda, it is worth venting a bit about one of the more underhanded marketing ploys attempted from time to time in the effort to introduce to the public new products. I am about to wade into the dangerous area of marketing trickery, which topic could easily merit an entire essay of its own[17]. I will limit this discussion to a single example and leave it to readers to reflect upon similar painful experiences of their own. When Coca Cola rolled out its new Vanilla Diet Coke[18] some years back, I, along with countless others, fell victim to a form of trickery that relies on brand loyalty, particularly as it translates to packaging. Because I am a loyal Diet Coke customer and hence used to the coloring and design of the regular Diet Coke twelve- and twenty-four packs of twelve-ounce cans[19], and because they are always in the same spot on the grocery store shelf, I will pick them up with relative thoughtlessness and deposit them into my cart. Through the simple expedient of designing the new Vanilla Diet Coke packaging to look exactly like the already-popular Diet Coke packaging (the only difference being the word “Vanilla” in single-point font in the lower corner of the package), and by rearranging the shelf layout a bit, they were able to trick many consumers into accidentally buying the new Vanilla Diet Coke, not realizing the mistake until they get home and actually open one. The subterfuge in this particular example was so complete that even the cans looked the same, with the identity of the imposter not fully revealed until one actually opened a can and took that first awful unexpected sip.

There is an underlying assumption implicit in all of these examples, i.e. that the consumer is an idiot. What’s even more disturbing, based on the time-honored success of some of these techniques, is that the assumption may, while cynical, in many cases be accurate. If people weren’t perpetually purchasing products marketed in the most inane ways, then one might reasonably expect the inanity to cease. A particularly stunning example that has been perpetuated for decades by car dealers across the country goes something like this:

If we can’t beat the other guy’s deal, we will give you a new car!!”

In order to give any sort of credence to a nonsensical statement of this sort, one has to believe that the dealership would prefer to give away an entire automobile rather than lower their price by a couple of hundred dollars.

And in an especially ironic twist on the whole affair, a well-known men’s clothing chain has, for many years, had as its tag line:

“A well informed consumer is our best customer.”

…an assertion so demonstrably untrue as to be laughable.

There is an especially nefarious aspect of marketing that merits serious discussion, and that is the shameless exploitation of young children. This comes in two flavors. The first is self-imposed by adults, specifically parents. It involves the endless assortment of things one can purchase for kids two and under, i.e. the age below which children haven’t yet developed their own marketing muscles, as it were. Included in this area are a wide range of clothing, strollers, toys, diaper bags, etc., which every responsible parent is expected to purchase and which are endlessly compared to the analogous purchases of other parents. And woe be upon the parent who arrives at a play date pushing a stroller that doesn’t feature the latest microprocessor-controlled child restraint technology, independent carbon fiber front and rear suspension, myriad storage areas, and self opening/closing structure. The all-too-clear message behind such an ill-equipped arrival; I am scrimping on my child’s upbringing. You might as well take out a full-page ad in your local newspaper admitting that you are enrolling your child in public school.

The far more evil marketing ensues once the child reaches the age of media comprehension, the age at which they become both susceptible to marketing messages and at which they begin to understand the mutually beneficial concepts of peer pressure and parental manipulation[20]. This is the age at which the child begins interacting and communicating regularly with other children of similar age, and at which children begin actively comparing what they have and do with what other children have and do. Once again, the marketer’s work is simplicity itself. All that is required is to state in a firm declarative tone of voice that everyone has a particular new item or that everyone is attending a certain event, and the marketing happens pretty much automatically, i.e. the children take up the mantle and happily do it themselves.

I once had a neighbor who several times each year would spend an entire day driving to every McDonald’s within a twenty-five-mile radius in search of a specific Happy Meal toy that his child absolutely had to have in order to complete a set or whatever, in order to restore some semblance of domestic tranquility. This same parent routinely spent hundreds of dollars buying children’s concert tickets so that his daughter wouldn’t have to go to school and explain why she was the only one who hadn’t attended the latest event in their town. Parents willingly subject themselves to these travails for two distinct but related reasons. First, it will shut the kids up (which is, after all, the principal goal of every parent’s existence). Second, it will negate the need for them (the parents) to have to explain to their parental counterparts why their kid wasn’t at the event or wasn’t in possession of the particular new item that every other kid has. There is no marketing more powerful than that which peers do to each other every day.

In the foregoing example, it is important to keep in mind that there is, in addition to the direct benefits of the product—real or imagined—intrinsic benefit as well in having spent more than others for an identical item, particularly if it is an incredibly scarce item, possession of which conveys some special status on the owner. Not only does having overpaid signal a strong willingness to participate in the one-upmanship game that modern society demands, but over-spending also discreetly conveys socially valuable information about one’s ability to over-pay, i.e. income level.

It is worth digressing at this point to discuss briefly a couple of germane microeconomic concepts. Everyone who made it past junior high school is familiar with the basic notions of supply and demand, the most basic tenet of which is that demand rises for a product or service as the price falls and vice versa. This simple and intuitive maxim does not, however, take into account the notion of status, the explicit acknowledgement of which gives rise to an economic oddity known as the Veblen Good[21], i.e. an item for which demand rises the more expensive it becomes. Typical items inhabiting this recondite corner of the microeconomic world include exotic automobiles, rare wines, and high-end artworks, all of which convey value less from their direct utility and more from the status they impart, which utility hence rises with scarcity and increasing price. While it is difficult to construct an argument for an equivalent status being conveyed by a baby stroller or pair of designer shoes, there exist nonetheless a similar set of forces compelling otherwise rational adults to at least keep up with if not outdo their peers for these items.

At risk of ranging even further afield from our original line of discussion, it is illustrative to expand on the Veblen Good construct and its relevance to marketing by introducing to the discussion a couple of concepts borrowed from social psychology: cognitive dissonance, and its close cousin, adaptive preference formation. There are actually two varieties of cognitive dissonance that apply to the discipline of marketing. The first is the better known, illustrated by the Aesop fable in which a fox, unable to reach a bunch of grapes hanging from a tree branch, concludes that since he can’t reach them, they must in fact not be desirable and thus he doesn’t really want them anyway[22]. This is a risk every marketer assumes in deciding how available to make their new item. For while scarcity tends to make things more desirable, futile levels of scarcity can engender the sort of cognitive dissonance demonstrated in the fox example, in which consumers rationalize away their desire for a product, or reduce their willingness to pay a premium[23].

There is, as well, another version of cognitive dissonance in which a consumer, having been cajoled into overpaying for an item, either due to scarcity or gouging, rationalizes having been taken advantage of by increasing their post-purchase regard for the item to match the exorbitant price paid. As in the prior example, the consumer adapts his/her preference level so as to minimize the discomfort that would otherwise attend the realization of having overpaid, or having purchased something that is in fact not worth the money, or both. No one wants to feel like an idiot, and consumers will go to great psychological lengths to minimize such feelings. It goes without saying that the mutual goals of the marketer are to create enormous desire for an item while also making the consumer feel good about the purchase despite having been demonstrably manipulated into its purchase by peers and marketers working in close if unwitting cooperation.

All of the foregoing is predicated on the marketer’s skill in addressing a customer’s expressed need for a new or better product or service. But the single greatest marketing challenge of all is the creation of need where none has previously existed, and of course developing the new products to then fill that need. Most of the foregoing has focused on the replacement of existing widgets, purportedly better ways of doing things that we already, at least tacitly, admit to needing or wanting to do. It takes true genius to convince people that there exists some new activity we all desperately need to be doing that we’ve never done before, or some new thing we should be carrying around that we’ve never carried around before[24]. Or, most astonishing of all, and a tribute to marketing curricula in business schools the world over, convincing people to suddenly start paying for things that have, for prior millennia, been available for free. Which brings us to water.

There can be no greater marketing triumph than the creation and marketing of bottled water, sales of which are forecast in 2012 to exceed $94.2 billion[25], a 41% increase from 2007[26]. Never mind that something like 70% of all bottled water comes directly and unapologetically, without being changed in any way, from municipal systems (i.e. tap water), or that bottled water is almost certainly less healthy than tap water by virtue of residing for months in plastic bottles, potentially absorbing all manner of petrochemicals that leach from the plastic, or that while the safety and quality of municipal water is closely regulated, there are no analogous regulations at all for bottled water. All these realities notwithstanding, people the world over have, in less than a decade, like so many sheep, voluntarily begun handing over as much as two dollars a bottle for something that is available for free in unlimited quantities[27]. There is no plausible explanation for such a fantastic turn of events save for marketing. By tying notions of your personal image and self-worth to the brand on the bottle of water you carry around, marketers have succeeded in convincing people not only that they cannot do without the bottled product, but that there is actually something wrong with drinking the free variety.

But rest assured, the marketing profession is not sitting back on its collective laurels celebrating this brilliant success. Rather, they are hard at work on the next logical extension of the idea, i.e. figuring out how to get you to pay for breathing. Yes, the very last of the purely free necessities of life will, someday soon, be collected, put into containers of some sort, and charged for, with as many brands as exist today for water[28]. And, like water, since the free variety cannot be made to go away, they will instead have to work hard to convince you that the air circulating all around you is, in all sorts of ways, inferior, and that, further, allowing your family to breathe free air is tantamount to buying a used car or kicking one’s dog. It has begun already on a small scale in the form of oxygen bars, which while a novelty item at present, offer a small taste of what can and will be achieved in the coming years.

The practical implications of all this are many. We inhabit a world filled with clever marketers who are keener than ever to transfer money from your pocket to theirs, and who are willing to do whatever it takes to make that happen as expeditiously as possible. And, truth be told, while many of the products and services being marketed with such fervor are so much snake oil, many others are in fact perfectly functional and, indeed, capable of improving your life, even if only marginally so. It’s easy to become jaded in this sort of world and assume that anyone who tries to convince you to buy anything is a lying money grubber. The trick though comes in knowing how to separate the wheat from the chaff, being able to see through the hyperbole and discern what we truly need, and to then distinguish these needs from the wants that assault us every day and from every direction.

[1] Cash has no innate raison d’ etre unless there exists as well a system of commerce, i.e. a series of inter-related forces that cause that cash to move from one individual or entity to another, which is where marketing enters the picture.  In actual fact, marketing predates the existence of cash by a considerable period of time. Even when early man was still bartering and trading rocks, there needed to be a compelling reason to give up one’s time or one’s rocks. Watching someone demonstrate why his spear or his chicken is superior to yours is marketing in its purest sense.

[2] Notable exceptions to the otherwise obvious idea include college text books and things that come packaged with other things you actually want (which used to apply to music albums until iPods came along, web browser software until Microsoft got sued over it, and which still includes cable television packages).

[3] Actually God was presented with quite a marketing challenge even before that business with the forbidden tree. The creation of woman was no slam dunk in the early going. History records Adam’s initial reaction, upon first seeing Eve, as something along the lines of “What’s that thing good for?” Of course, once God explained the many features and benefits of the new arrival, Adam caught on quickly, the first-ever victim of a sales pitch. Only later would he also become the first customer to suffer from buyer’s remorse.

[4] I will endeavor to steer clear of excessive Biblical references in this treatise, though it is challenging since the Bible is positively rife with examples of both good and bad marketing.

[5] Far be it from me to equate Steve Jobs with God, though he has been known to do a bit of that himself.

[6] How quickly depends on the sort of friends you have.

[7] It takes true cluelessness to not even perceive the gap, i.e. to actually be truly happy with what you have even in the presence of constant reminders of how outdated and inadequate your stuff is.

[8] Note that the assumption throughout this discussion is that marketing is about the replacement of more or less functional/existing items rather than the replacement of things that are demonstrably worn out, broken down, or otherwise non-functional. Of course marketing plays a role there too, except that it isn’t nearly as challenging to get someone to replace something broken as it is to convince someone to replace a product that works perfectly fine as it is.

[9] Some products survive this difficult phase; many do not. Notable failures include the Apple Newton and every tablet computer released in the past ten years prior to the iPad (of which there have been dozens).

[10] Not to put too fine a point on it, the actual challenge is to make the previous item look old.

[11] Pity the luddite whose flat-screen television doesn’t have 1080p, 240 Hz refresh rate, and a full-array local dimming LED back light.

[12] In the case of my local store, 417 choices – I counted.

[13] Lately I find myself partial to the fruity varieties, particularly anything in the melon family.

[14] The foregoing discussion applies with equal effectiveness to toothpaste, toilet paper, cake mix, or any of the 50,000+ other products available in the typical suburban big-box grocery store.

[15] Patently illegal and beyond the scope of this essay.

[16] Cans—8, 12, and 18 ounces. Bottles—20 ounce (in six-packs) and 1 or 2 liters.

[17] Favorite techniques include changing simultaneously the size and price of an item in the manufacturer’s favor, offering rebates that require you retain and mail in a voucher of some sort (the explicit assumption being that many will lose the voucher and thus not receive the rebate—an effect known in the industry as breakage), and blaming partially filled containers of product on “settling.” If you’ve ever accidentally opened a piece of junk mail deceptively designed to look like a check, you will be familiar with the technique.

[18] One of no less than twenty-five varieties of Coke extant, including Regular Coke, Coke Classic, Coke Zero, Cherry Coke, Blak, Cherry Vanilla, Coke with Lemon, Coke with Lime, Coke with Raspberry…and, of course, Diet and/or Caffeine-Free varieties of each of these.

[19] Silver box with red lettering in Coke’s own trademarked cursive font, thank you very much.

[20] Somewhere between two and three years of age, depending on your child’s precocity.

[21] Not to be confused with a Giffen Good, an item for which demand also rises with increasing price, but for arcane non-status, non-marketing reasons that are beyond the scope of this analysis.

[22] The origin of the notion of sour grapes.

[23] Each holiday season reveals one particularly graphic example of this phenomenon once it is determined what that season’s “hot” toy will be, i.e. the toy that every kid will want and no parent will be able to find without quitting their day job and searching for it full-time. Examples from past years have included Cabbage-Patch dolls, Tickle-Me Elmo’s, and various and sundry video games. Manufacturers play this game of balancing availability against desirability at at their peril though, because once Christmas has come and gone, the impetus for these purchases vanishes almost instantly.

[24] Can anyone remember what life was like before cell phones? texting? ATMs? Microwave ovens?

[25] With a “b”

[26] Bottled Water: Global Industry Guide, Datamonitor, 2009.

[27] At least in the developed world.

[28] Probably more actually, since there are plenty of other things you can drink besides water, whereas your only breathing option is air.

Leave a Reply

* Required
** Your Email is never shared