Marketing Or Manipulation? How Companies Mislead Us

This is a guest post about marketing or manipulation by the Lean Life Coach who writes at Eliminate the Muda! [mooda]. He writes about how to improve life and personal finance through the application of proven business management techniques that originated with great Americans such as Henry Ford and Benjamin Franklin.

At the end of the day, everything is marketing. But sometimes it’s hard to differentiate between marketing and manipulation.

Fighting to Survive

Would you gargle with a floor cleaner?

Originally invented in 1879 as a surgical antiseptic, Listerine was later diluted and sold as a floor cleaner. The Lambert Pharmacal Company, maker of Listerine, was not a wild success, selling a little more than $100,000 per year of their concoction. In 1921 Jordan Wheat Lambert initiated a new marketing campaign advertising Listerine as a cure for “cronic halitosis.” In less than 7 years annual revenue exploded to $8 million.

Just as a small side note, “Cronic Halitosis” was a fake medical term! No doubt, a few of us have an occasional issue with bad breath, but it was not considered a major societal issue until this groundbreaking marketing plan. Not only did the Lambert Pharmacal Company create a new product they even created a new medical term that is commonly accepted to this day.

The objective of any business, big or small, is not only to make a profit but also grow. Doing so requires a focused approach towards obtaining and more importantly retaining a customer base. This of course requires marketing and advertising.

Years ago a company would develop a single marketing campaign and blast it to the world at large; “Buy our widgets.” A successful campaign might be profitable for decades while a failed effort could doom a company.

How Far Will They Go?

Companies are always looking for an edge to increase their market share and profit margins. To find this edge, businesses spend millions analyzing everything consumers do and think.

Over time corporate America has learned that not all buyers are the same. They began dividing their markets into select demographic groups, casting several wide nets, each with more targeted bait. McDonald’s Big Mac Combo for adults and Happy Meals for kids is a great example of this.

Both meals contain hamburgers, fries and a drink while each is presented to their targeted consumer in a completely different way. For you and I, it is about value and good edible food for a reasonable price. For our kids it is about toys and fun.

However, even within a given demographic each customer’s tendency to purchase may be triggered by different cues. With modern technology, scientific and psychological research business is learning to focus on ever smaller slices of the population.

Finding The Truth

Thanks to Google, you and I can view the same website on our computers but we will be served completely different advertisements based on our previous surfing history.

A variety of approaches can be easily tested until the most effective message can be identified. Depending on the market they are in or the products that they sell, the methods a company employs to market and sell their wares vary widely.

The range of strategies to encourage customers to spend is really quite amazing. Some of the more interesting things include techniques such as aroma therapy. Disney, for example, pumps the smell of popcorn into the area around the park entrance.

Some hotels and car dealerships have done the same, with their own custom brand aromas, to encourage customers to be in a more relaxed mood. Could it be the smell that draws the Financial Samurai back to the BMW dealer so often?

Companies test market colors of their stores and product packaging. Ever wonder why so many fast food restaurants and grocery stores feature orange in their color scheme? Orange makes you hungry!

Smart Marketing

Unless you have been living under a rock, surely you have noticed that most prices end with .99? While the effectiveness has been debated since this approach began in the late 1800’s, the sheer volume of practitioners indicates a strong belief in the studies that revealed that you will perceive an item as more affordable if it is priced at $19.99 vs. $20.00.

Marketing does not end with advertisements and commercials. When face to face with a salesman, they will use variety of methods called “closing techniques” to increase the likelihood that you will buy. They increase urgency; “the sale is only good till 6:00.”

They will not give you a chance to say no by using an either/or close; “would you like me to delivery it or should I package to go?” They will play on your emotions; “certainly you want to provide the safest transportation for your children, buy this car and you’ll have it.”

Fighting Back The Manipulation

Welcome to the world of capitalism, this is business and these techniques have been developed over decades. Some call it marketing and merchandising while others see it as manipulation.

Consumers have expressed disgust when company’s unnecessarily bundle products to force them into purchasing more than they need (think cable). We have all felt “taken” by a slick salesman that convinced us to buy something we didn’t really want or need. The nickel and dime games from some company’s have also caused much chagrin (what, we have to buy a plane ticket for our luggage now?)

Businesses have been developing these and many other techniques over decades and will continue to develop new, more targeted and more sophisticated strategies to separate you from your money. As they say, “the best defense is a good offense. ” Learning about how companies market their products and why these strategies work will help you evade their traps.

Readers, as a consumer, have you ever felt a company took advantage of you? What pricing or marketing techniques anger you most? It may not feel good to be “played” but do we not have a society of caveat emptor or should company’s behavior be regulated? Is it mostly marketing or manipulation?

Here are more top financial products to help you achieve financial independence sooner, rather than later.