1466: Marketing Creates Value by Isaac Morehouse

[00:00:00] This is Optimal Work Daily. Marketing Creates Value by Isaac Morehouse of IsaacMorehouse.com

[00:00:08] Near the end of the classic movie It's a Wonderful Life, George Bailey saw reality in a whole new light.

[00:00:15] He glimpsed a world in which he was never born and realized just how important he was to those around him.

[00:00:21] This experience instantly and dramatically changed George's outlook on life.

[00:00:25] In a matter of minutes he transitioned from attempted suicide to pure joy at the fact of his own existence.

[00:00:31] No material facts changed. George Bailey was still stuck in Bedford Falls, he was still hard of hearing,

[00:00:37] he was still in deep legal and financial trouble.

[00:00:40] The angelic clearance did nothing to improve the external condition of Mr. Bailey's life,

[00:00:45] but he saved it nonetheless. He saved it with marketing.

[00:00:48] Marketing is often criticized as being deceptive, slimy or at least economically wasteful.

[00:00:54] How could anyone justify a $2 million Super Bowl ad about a bottle of Coke?

[00:00:59] Skepticism of marketing springs from an overly narrow and simplistic view of value.

[00:01:04] In the real world, the line between the real and perceived characteristics of an economic good is all but non-existent.

[00:01:10] Our knowledge of and beliefs about goods are just as much a part of their value as anything that can be weighed or measured.

[00:01:16] Economists have long understood that value, in the economic sense, is subjective.

[00:01:20] There is no universal formula to determine how much a good or service or experience is worth

[00:01:26] because each person has different tastes, preferences and needs

[00:01:29] and each will value things differently with changing circumstances.

[00:01:33] This means that how we feel about a good and what the good is made of are equally important in determining its value to us,

[00:01:40] how much satisfaction it brings.

[00:01:42] If making a better mousetrap can make lives better, so too can making people feel more confident in their mousetrap.

[00:01:48] This is not trickery, it's value creation.

[00:01:52] Confidence in my mousetrap might help me sleep better at night and enhance my quality of life in a very real way.

[00:01:58] We've all seen news stories about blind taste tests.

[00:02:01] They are meant to reveal consumer stupidity and branding smoke and mirrors.

[00:02:05] I recall reading about customers given a cheap beer and told it was a more expensive brand.

[00:02:10] They reported that it tasted much better than what they were told was the cheap beer,

[00:02:14] but was in reality the more costly one.

[00:02:16] When they were told the opposite, the results reversed.

[00:02:20] The report was framed as some kind of gotcha moment as if a great hoax had been revealed.

[00:02:25] Why should these results be surprising?

[00:02:28] If you've ever picked up a glass of milk thinking it was water and taken a swig, you'll understand.

[00:02:33] Even if you like milk, you're likely to spit it out.

[00:02:36] Your beliefs about what you are consuming prepare your brain and your taste buds for a certain experience.

[00:02:41] The knowledge you have about what you ingest literally changes the experience of consumption.

[00:02:46] Try smoking a good cigar while stressed or in a hurry and see if it tastes even remotely similar to the same cigar when you have an hour to kill with nothing on your mind.

[00:02:55] They say marketing is all about the sizzle, not so much about the steak.

[00:02:59] Why shouldn't it be?

[00:03:00] Steak without sizzle is little more than raw meat, carrion fit for vultures and wild dogs.

[00:03:06] Steak beautifully plated and garnished creates more value for the person consuming it.

[00:03:11] Sight, sound, smell and taste are all part of the experience and the brain is the crucial interface.

[00:03:16] Even if you have a purely utilitarian approach to eating and care only for the sustenance, you can't ignore the mind.

[00:03:23] What you believe about your food actually affects how much it satisfies you.

[00:03:27] My father suffered a closed head injury many years ago which affected, among other things,

[00:03:32] the communication channel between his brain and his digestive system.

[00:03:36] His brain always tells him he is hungry no matter how much he eats.

[00:03:40] It is a near full-time job to convince him that he is full and doesn't need any more food.

[00:03:45] That's some serious marketing.

[00:03:46] In fact, a great many people without head injuries resort to all kinds of tricks and techniques to convince themselves of the same thing in order to stay trim.

[00:03:54] I recall talking to a friend who had no taste for coffee.

[00:03:57] I convinced her to try a sip only after closing her eyes and letting me describe step by step the growth, cultivation, harvesting and roasting process.

[00:04:07] She admitted that while she still didn't love it, she began to enjoy the taste a good bit more and understood why I love it so much.

[00:04:14] I know of people who can no longer stand the taste of meat because they observed the operations of a meat packing factory.

[00:04:20] The meat did not change yet its taste changed with their knowledge and feelings about it.

[00:04:24] The value of the product radically shifted with a change in perception.

[00:04:28] If marketing makes us love a product more and therefore makes us happier, it has indeed created value.

[00:04:34] Love for a new car comes not only because it is red, weighs 2,500 pounds and has four doors, all things that can be measured objectively,

[00:04:43] but also because it is safe, one-of-a-kind and edgy, all subjective to the person experiencing it.

[00:04:48] The purely informational role of an advertisement is no more valuable than its ability to make us proud of what we purchase.

[00:04:55] But how valuable is it?

[00:04:57] We can get a rough idea of the minimum value created by marketing in dollars and cents.

[00:05:02] This does not, of course, measure the subjective value to each consumer,

[00:05:07] but it reveals how much value consumers placed on the marketing in money terms.

[00:05:11] If a marketing campaign costs $10 million and it results in an additional $11 million of revenue,

[00:05:17] we know that it has created more than a million dollars in value as judged by those who willingly spent money on the product.

[00:05:24] If the campaign made the product more valuable to more people and induced them to buy more or buy at a higher price,

[00:05:30] that is a reflection of the fact that the consumers felt the product and associated satisfaction created by marketing

[00:05:36] was worth more than the money they gave up to get it.

[00:05:40] Real value was created.

[00:05:42] If it was not, people would not have willingly parted with their money in exchange for the good.

[00:05:46] Better marketing can often be a cheaper and more effective way of improving a good

[00:05:50] and making people happier than altering the product itself.

[00:05:54] Goods and the knowledge and feelings that come with them cannot be separated.

[00:05:58] New tile floors and soft lighting may be just as important as variety and good service at a clothing store.

[00:06:04] An inspiring ad campaign may bring just as much happiness as new features on a smartphone.

[00:06:09] This is no scandal, but a fact of the human experience of reality.

[00:06:13] Rather than denigrate it as some kind of fraud or waste, we should applaud good marketing.

[00:06:19] Not only does it enhance the value of the products we buy,

[00:06:22] it enhances our quality of life even when we don't buy the products being marketed.

[00:06:26] TV ads are often funny and entertaining.

[00:06:29] Billboards and magazine ads are sometimes works of art.

[00:06:32] Good marketing is a free gift to all and it makes all our lives better.

[00:06:37] A world without marketing would be dull and far less fulfilling.

[00:06:40] Altering our perceptions of reality is one of the best ways of improving our quality of life.

[00:06:45] It's powerful stuff.

[00:06:47] Clarence saved George Bailey's life with a recasting of the facts

[00:06:51] and set him out with a full heart ready to take on the world.

[00:06:55] The creative efforts of marketers everywhere have the same power to make our lives richer and better.

[00:07:04] You just listened to the post titled, Marketing Creates Value by Isaac Morehouse of isacmorehouse.com

[00:07:10] This show is sponsored by BetterHelp.

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[00:08:12] And thank you to Isaac.

[00:08:14] He's actually a podcast host too on a show called Office Hours

[00:08:17] with co-host T.K. Coleman, who's another author that I narrate here,

[00:08:21] and they both worked at Praxis.

[00:08:23] T.K. is still there but Isaac has since moved on after founding the company.

[00:08:27] He's now an advisor.

[00:08:28] Today, he's the founder and CEO of Crash, the career launch platform.

[00:08:33] He has a ton of great content on his site, which is IsaacMorehouse.com,

[00:08:37] so come by his site to show him some support,

[00:08:40] and again you can check out his podcast, Office Hours, for career advice.

[00:08:44] And that'll do it for today.

[00:08:45] Thank you so much for being here, and I'll see you back here tomorrow

[00:08:48] where your optimal life awaits.