Last year, I took a class in microeconomics, which makes me sound way more technical and impressive than I actually am. However, in the middle of production functions and indifference curves and trying to figure out what on earth a derivative is, I found myself scribbling down some notable quotables that applied directly to my day job as a marketer. Lessons in marketing from an economist? Lessons in marketing from an economist who refuses to share personal information with any company so they can’t determine his preferences and sell to him more effectively? Preposterous…but true.
So let me save you from a challenging eight weeks of trying to determine what an individual consumer’s alpha and beta are (don’t ask).
Here is the snackable version of what a microeconomist taught me about marketing.
There is No Such Thing as a Completely New Product
Ok, not entirely true. My professor said we’ll be able to Harry Potter-style apparate and disapparate in the near future, which is as close to a new product as you can get. However, on the whole, we all like to think that what we’re marketing is the latest, best, first—but in reality, it has most likely been done before. So how do you make what you’re doing seem fresh? A little creativity, a little innovation, a little bit of believing that what you offer really is better than what’s already out there. Market what you believe in and make your product live up to your aspirations.
You Can Be Wrong, Just Be Precise
I particularly like this one. Why? Because I interpret it as giving us the room to make mistakes but encouraging us to use data to arrive at our conclusions. Marketers are moving so quickly today, and digital means that we’re sitting on mounds, HEAPS of data (another quote: “We are in the Gold Rush of data with algorithms”). If you’re not paying attention to it to best inform your activities and decisions, you’re doing it wrong. That doesn’t mean that we’ll get it right every time, but the more you rely on data to drive your outcomes, the closer you’ll be to your desired goal.
The Best Thing You Can Do Is Learn About the Customers of Your Customers
OK, this one had a slightly less altruistic punchline. My professor posited that understanding the customers of your customers is the best way to negotiate with them on price because you’ll understand what they value and at what cost. Valid. However, I like to think of this less as cost-driven and more because as marketers we need to know how best to serve our customers’ needs. Our customers have their own customers and their own goals they’re trying to accomplish. At the end of the day, if you’re not helping them to make their own customers happy, we’re not providing any value.
Culture Must Affect Your Production Function
I’ll get pedantic for a sec. A production function is how much output you get when you factor in an organization’s capital and labor. However, my professor claimed—and rightly so—that an organization’s culture will also affect its production. So, if marketers own the brand from the inside out, then marketers must also consider how to imbue their org with a positive and productive culture that maximizes their outcomes. In my case, this is why I order my team emergency milkshakes when we’re having a particularly rough week.
If All Consumers Don’t Like You, You’re Doing Something Wrong; If All Consumers Like You, You Are Also Doing Something Wrong
In microeconomics, this is all about consumer preferences and competitive markets. In marketing, this serves as a reminder that you can’t please everyone. What you market will never be the product that meets everyone’s needs, and why would you want to be? A little competition and friction keeps it interesting, and keeps us marketers on our toes and focused on audiences and customers that our products and services are best suited for.
Sunk Costs: That’s it, Move on. How Much You Can Gain Moving Forward is All That Matters
Preach, microeconomist, preach! Sunk costs are what has already been spent and cannot be recovered. I like to keep this in mind for projects that didn’t go as planned—we’ve all spent on something before that didn’t drive the results we were looking for. But I like the philosophical sentiment behind this: just look forward. It’s over, it’s done with, focus on the future and what you CAN do tomorrow that will help your organization to be successful.
And One More Thing…
There you have it. Six very sage lessons from an economist. He also said that the CEO of a competitive firm should just earn minimum wage, but I’ve opted to leave that out of the core of this post because I value my job and my relationship with my CEO.
Have you ever gotten marketing inspiration from an unlikely source? Let me know by leaving a comment below! Or better yet, use code Lyman450 to get $450 off your registration for Marketing Nation Summit, and tell me in person! Hope to see you there.