Somehow I through undergraduate and grad school without taking a marketing class.
I’ve read a lot, took some classes, and volunteered at a conference. I even got a couple of posts featured on LinkedIn’s Marketing & Advertising channel.
I’m struggling to make sense of it all. But if there’s one thing I’ve learned from marketing, it is to go out there and ask questions of your market.
So here goes…questions from a confused econ major-turned-business analyst:
Why so demanding?
Most of us have a lot more experience being consumers than producers, so we tend to view things through the lens of demand rather than supply. We need to have an appreciation of supply factors trained into us by economists. — Levitt & Dubner, When to Rob a Bank
Supply and demand is the framework of economics. In marketing, things seem to be demand…and demand. Aren’t we literally missing half of the equation?
In the above example (full essay here), the Freakonomics authors posit why consumption of shrimp has increased. Almost everyone but economists focus on the demand side. Consumer tastes and preferences have shifted.
Marketers do this, too, focusing on consumer behavior. While it’s helpful to consider consumer buying habits, what about the supply factor?
This is very powerful to explain pricing, yet few examine this side of the equation. For example, why would someone pay $500 for an Uber ride on New Year’s Eve?
The usual answer is that the customer has few options and values a ride more on NYE than another night. That is, demand drives the price.
But what about the driver? It would take me $500 to drive a bunch of strangers around on New Year’s Eve. The high price motivates more drivers to come out.
Neither of these approaches are wrong — they are truly part of the same equation. But why does marketing only look at the demand side? You’ll learn elasticity of demand in marketing — but there is such thing as elasticity of supply, too. Better analysis comes from checking both.
Where is my toolkit?
More on supply and demand… did I mention I was an econ major?
Whether you’re a first semester econ student or a PhD, this is the place to start when analyzing economic behavior. It is a tried-and-true toolkit.
What is the supply and demand of marketing? I am thinking of the bedrock for all developments, something that acts like gravity so that everything else is possible.
I guess this could be the 4 P’s. Maybe it is and I just don’t know because I never took a class.
But a quick Google search shows that there is some debate about how useful of a framework this is anymore.
So is there a GAAP or CAPM of marketing? The likely objective is that marketing must be more fluid and qualitative than accounting or finance. But economics manages to be creative while still maintaining a solid framework.
Where is the margin?
I think this is where economics holds the mantle as “queen of the social sciences.” All other social sciences must pay their dues… including marketing.
When I started my MS in finance after a BA in economics, I quickly concluded that finance was really just an applied field of economics. Econ is the allocation of resources, finance is the allocation of capital, econ spawns finance.
Maybe I am coming to the same conclusion with marketing. In the most loose sense, it’s about optimizing how you deliver value to the market. So we can look at elasticity of demand, industrialization, and advertising.
Thinking at the margin is foundational to economics. So what is the marginal payout of thinking like a marketer? What insights can I get that I would not find in economics? Where is the basic framework that anchors subsequent ideas?
If it is just thinking like and learning about the customer, well, I am already a customer… so what is the benefit? Is it to get more blog traffic or increase conversion rates? Marketing then turns into more of a set of tactics than a true social science that can explain human behavior. And that just doesn’t seem as interesting!
Remember, I am confused
They say that accountants exist to make economists seem interesting. So if you, fired-up marketer, can help me out in the comments, please remember that I am a confused stick-in-the-mud, waiting for the words that make marketing make sense.
And if you ever use Excel or analyze data… check out my blog. Marketers and data guys can be friends.