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It's actually not zero-sum unless their marketing is misleading customers into buying products they actually would want less given perfect information. If their

by ditonal 13y ago

It's actually not zero-sum unless their marketing is misleading customers into buying products they actually would want less given perfect information. If their marketing introduces new customers who prefer their product, then it's positive sum. Even if those customers are spending money on this instead of something else, they are spending it on this because they derive more utility (of some type) and therefore there's more economic value. Economists don't consider marketing zero-sum - read the article you linked more closely.

dsr_ 13y ago
In a mature market, marketing/advertising is zero-sum because it shifts demand from one supplier to another without altering the overall demand or supply. The obvious case is a commodity, like wheat or soybeans or oil, where nobody bothers branding it at all until they get to a retail product. In the retail marketplace, the primary differentiation between one kind of cleaning product and another is the marketing, advertising, and associated superficial differentiations: coloring, fragrance, and so forth. That's why the largest advertising budgets are for companies with similar competitive products: GM/Honda/Ford/Nissan/Toyota/Hyundai; Procter&Gamble, L'Oreal, Estee Lauder; Samsung/Sony/HP; Progressive/Allstate/State Farm. They aren't advertising to get new customers into the market: they're advertising to shift customers to competing suppliers. Samples pulled from adbrands.net list of top 100 US advertisers. There are many, many more clusters there to illustrate the point.
- jpadkins 13y ago
  you make good points but I think you are over-simplifying great marketing companies down to companies that spend a lot on advertising. Going back to the stanford example, great marketing companies understand user problems and design products that solve that problem in a scalable way. Awareness (via advertising) is only one aspect of marketing. So while advertising in a commodity market might be a zero sum game, I contend that true marketing is not.

by ditonal 13y ago

dsr_ 13y ago

In a mature market, marketing/advertising is zero-sum because it shifts demand from one supplier to another without altering the overall demand or supply. The obvious case is a commodity, like wheat or soybeans or oil, where nobody bothers branding it at all until they get to a retail product. In the retail marketplace, the primary differentiation between one kind of cleaning product and another is the marketing, advertising, and associated superficial differentiations: coloring, fragrance, and so forth. That's why the largest advertising budgets are for companies with similar competitive products: GM/Honda/Ford/Nissan/Toyota/Hyundai; Procter&Gamble, L'Oreal, Estee Lauder; Samsung/Sony/HP; Progressive/Allstate/State Farm. They aren't advertising to get new customers into the market: they're advertising to shift customers to competing suppliers. Samples pulled from adbrands.net list of top 100 US advertisers. There are many, many more clusters there to illustrate the point.

jpadkins 13y ago
you make good points but I think you are over-simplifying great marketing companies down to companies that spend a lot on advertising. Going back to the stanford example, great marketing companies understand user problems and design products that solve that problem in a scalable way. Awareness (via advertising) is only one aspect of marketing. So while advertising in a commodity market might be a zero sum game, I contend that true marketing is not.