At last someone is marketing marketing.

A review of "Greater Good" by John Quelch and Katherine Jocz. Well mostly a rant, but a bit of a review as well.

One of the peculiar features of capitalist democracy as an economic order is that it never spends a penny promoting itself. Dictatorships of left or right have always pumped out feel-good news stories and feature films explaining how young Masha's selfless labours at the tractor factory have benefited the whole economy. Our system, by contrast, is happy to spend $500m explaining a minor enhancement to a razor, but spends nothing on explaining how the system works to our collective advantage. I don't suppose the line "Gillette, the best a western free-market constitutional monarchy can get!" even made it into research. 

This leads to a peculiar kind of ingratitude among capitalism's beneficiaries. So whereas a few million Russians were happy to die defending their right to queue for a potato, we now live in a place where you can wander into Tesco at 3am and buy a microwave for £30 - and nobody has a good word to say about it.

In fact, until this book appeared, it never seems to have occurred to anyone that a commercial business is a far more democratic entity than almost any other. If by 'democratic' you mean something people can get kill off when they're sick of it, it's certainly true.

Let's consider a not-unfamilliar scenario: a BBC journalist, an MP, a representative from some Health Quango and an NHS Health advisor are all sitting round a glass table on television giving someone from, say, McDonald's, Tesco or KFC some gyp. As they all sanctimoniously witter on, it never for one moment occurs to anyone to point out that the corporation is the only vaguely accountable entity at the table. If we wished, we could close it down in a month - simply by not spending our money there. Indeed I am sure McDonald's would gladly adopt the business model of the BBC, whereby everyone in Britain would pay them £120 a year whether they ate there or not.

People vote for Tesco and McDonald's every day - and with their wallets. By contrast the MP almost certainly represents a safe seat handed to them by an unelected party clique; likewise the BBC, the Quangocrat and the whinger from the NHS are also completely immune from market forces (which perhaps explains why you can get a pizza to come to your home but not a doctor). In fact under democracy these self-annointed people are now more unaccountable than ever - at least under Stalin there was always the enlivening possibility that they might get shot.

As Quelch and Jocz point out in this badly-needed book Marketing (by this they mean Marketing in its broadest sense) is the space in which consumers and suppliers reach a happy and imaginative accommodation.

In fact it is a discipline whose astounding contribution to net value creation is unfairly overlooked by almost everyone, not least those who work in it.

Classical economists are liable to neglect marketing, assuming that businesses simply passively respond to consumer demand - assuming complete rationality and perfect information on the part of consumers. Cynics are likely to see marketing as merely the exploitation of human frailty. Marketers themselves are far more likely to look at what they do as a competitive zero-sum game, overlooking the greater good they create.

It seems to me that marketing is the means by which the inherent conflict between buyer and seller is resolved in the most efficient and creative way possible.  

For God's sake read this book now, and buy a spare copy to send to one of your unfashionable public-sector friends.

You yourself should read the first half repeatedly to reassure yourself that the business you work in is not a necessary evil but a very desirable good.  

your friend should read the second half of the book to realise that the absence of marketing thinking in the non-commercial sector is not a virtue but a failing.

On the miraculous power of 'free'

I have long been making the point that the simple behavioral experiments performed by the new breed of economists are daily producing more useful insights for marketers than the millions we spend on fatuous and self-serving research.

Here is a new and brilliant test mentioned in the blog of Libertarian Economist Tyler Cowen at George Mason University. Interestingly it does much to support Drayton Bird, Russell Davies and the Sales Promotion industry. Among others.

Drayton bird once told us that, after years working on a tourist account, his only useful finding was that heading the coupon with "free brochure" invariably increased response; he taught us that "free" and "new" were the two most compelling words in any advertisement. Russell Davies last week wrote on the immense power of Free and Pretty Good in the world of content. Sales Promotion has long argued that giving free stuff away with a product does not have the same devaluing effect as discounting.

Now there comes an intersting experiement performed by  Dan Ariely, author of Predictably Irrational: The Hidden Forces which shape our Decisions.

Details of the experiment appear here. Non-US readers should know that a Kiss is a Hershey's Kiss (not a physical one), a low-priced chocolate drop.

Those who believe the change in behaviour between cheap and free are attributable to transactional costs (the hassle of getting a coin from your pocket) are wrong - in that the experiment only offered the choice to people who were already queuing to pay for other items.

The fact that we perceive free things in an altogether different way to cheap things is highly significant. It justifies the wholly-advertising-funded model for content. It explains Drayton's findings. And it suggests that freebie-on is not the same as money off.

Incidentally, I happily predict that the two books Sway: The Irresistible Pull of Irrational Behavior, by Ori and Rom Brafman and Nudge: Improving Decisions About Health, Wealth and Happiness (this being a defence of the idea of voluntary paternailsm) by Richard Thaler and Cass Sunstein may be the Freakonomics of 2008. Preorder them now.