What Comes First, Marketing Or Manufacturing?
Perhaps the fourth quarter is not the best time to pose this seemingly simple question, but does marketing drive manufacturing, or is it the other way around?
Back in 1776 Adam Smith, in his book Wealth of Nations, wrote that mass production, or the division of labor, was driven by “the extent of the market.”Â Essentially, if demand was small, then production was limited. Â Back then, the concept of marketing wasn’t fully realized. Â Marketing is all about creating a sense of desire irregardless of need. Â Let’s take a look at a few different examples of how marketing is used.
Manufacturing Driving Marketing
When there is a surplus, many retailers will run deep discounts or sales to reduce inventory. Â If there was no surplus of goods, there would be no need to run a marketing campaign (we’re not going to examine branding or traffic campaigns in this piece. Â The focus is on the relationship between manufacturing and marketing). Â However, there is a limit to what marketing efforts can do.
Take a look at the domestic auto industry. Â Very simply, when demand for new cars decreased, factories were shut down. Â It didn’t matter how much marketing muscle was behind those American-made cars. Â It didn’t matter how many promotions or incentives were offered, there simply wasn’t a need. Â Manufacturing trumps marketing.
Marketing Driving Manufacturing
Wouldn’t it be more efficient to manufacture goods to meet demand? Â There would be no surplus, no need to sell goods at a loss, no customers complaining because someone else got a lower price. Â We could, essentially, find a pricing equilibrium before the powering up the factories.
This concept is somewhat in use, manufacturers have been known to stagger production days as orders come in, firing up equipment to fulfill existing demand, and then converting lines over to other products while future orders trickle in. Â Marketing drives manufacturing.
Another example of marketing creating a need: hand sanitizer. Â I’ve been alive 30-some years, and when I was a kid, good ol’ soap and water did the trick. Â Since when did we need to constantly apply antibacterial gel? Â Marketing gods somehow convinced us that we simply were not clean enough. Â Next thing you know, sanitizing stations are everywhere, schools, offices, museums, churches even. Â I never know if I should be offended when someone offers me a squirt of hand sanitizer after shaking hands.
And then of course, there is the Snuggie. Â You may laugh at the mere mention of the product, but it is an excellent example of marketing driven demand. Â Truly, the first time you saw that commercial, did you absolutely think that you needed one? Â Yet, after perhaps the fifth viewing, and after hearing your friends talk about it, and after seeing the organized Snuggie pub crawls that sprouted up all across this great nation, did the thought of acquisition honestly never cross your mind?
I wonder what Adam Smith would have thought about today’s market. Â Would he have been offended by marketing futzing with his clean equation?