Monday, March 24, 2014

Euvoluntary Marketing Part 1 of 4: Product

Brock C.: "What's the Euvoluntary view on marketing practices that take advantage of known but unconscious heuristics the brain uses?"

Challenge accepted. This is a post in four parts, each installment dealing with one aspect of marketing.

First, a clarification. I think when many people hear the word "marketing", they think "advertising". To be sure, advertising is a function of marketing, but it ain't the whole enchilada. The marketing apparatus of a firm answers at a minimum the following questions:

  1. What do we produce?
  2. How much do we ask?
  3. To whom do we sell?
  4. Where do we sell it?
These are the 4 P's of marketing: product, price, promotion and place [location]. Of course, there are other models of how marketing works, but the idea is that marketing department exist to match the wants of consumers with the capabilities of producers. 

And vice-versa. 

Which is where the rub is for many folks. Drumming up demand where none existed before: isn't that predatory? You're bilking people out of their had earned cash for something they've gotten along without perfectly well their whole lives! How can it possibly be that developing new products is euvoluntary knowing full well that humans have a proclivity towards novelty? 

Here's how I see it: try to think in terms of underlying, personal, subjective value. Consider two people, Angela and Bart. Angela is a novophile: she likes new things independent of their instrumental value. She bought a CD player in 1982 and a betamax player in 1975. What appeals to her is the novelty. Contrarily, Bart is a stodgy late adopter. He still has a land line in his home and uses paper boarding passes at the airport. NB: there are no solutions, only tradeoffs. Angela gives up some certainty for the privilege of being an early adopter (she ends up owning a small pile of movies on dead beta tape), and Bart is stuck with the hassle of standing in insufferable lines at the airport because he's too stubborn to change.

But even if Angela believes Bart to be irrational, she'd be wise to conclude that forcing Bart to hop on the novelty train would not necessarily make him better off. Similarly, Bart knows that Angela's silly heuristic of "it's new, I have to have it" is wasteful more often than not, but he also knows that he is in no position to exercise the virtues of temperance and prudence on her behalf. He might be worried if the costs of her intemperance are made public, but then it becomes a matter of analyzing the institutions that make private costs public, not so much the pseudo-problem of accidental, innocent regret.

So is product innovation euvoluntary? Do we really need a hundred different kinds of toothpaste? Consider your cost accounting. If you don't use but one type of toothpaste, ask yourself if the extra burden imposed on you for having to sort through the choices is really so awful that you'd be willing to deny others the opportunity to find a product that truly appeals to them. 

Thankfully, the answer in most market settings is "no, it's not that much trouble." It's mostly just in politics that choice sets are curtailed by the use of force.

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Do you have suggestions on where we could find more examples of this phenomenon?