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.”  Essentially, if demand was small, then production was limited.  Back then, the concept of marketing wasn’t fully realized.  Marketing is all about creating a sense of desire irregardless of need.  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.  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.  The focus is on the relationship between manufacturing and marketing).  However, there is a limit to what marketing efforts can do.

Take a look at the domestic auto industry.  Very simply, when demand for new cars decreased, factories were shut down.  It didn’t matter how much marketing muscle was behind those American-made cars.  It didn’t matter how many promotions or incentives were offered, there simply wasn’t a need.  Manufacturing trumps marketing.

Marketing Driving Manufacturing

Wouldn’t it be more efficient to manufacture goods to meet demand?  There would be no surplus, no need to sell goods at a loss, no customers complaining because someone else got a lower price.  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.  Marketing drives manufacturing.

Another example of marketing creating a need: hand sanitizer.  I’ve been alive 30-some years, and when I was a kid, good ol’ soap and water did the trick.  Since when did we need to constantly apply antibacterial gel?  Marketing gods somehow convinced us that we simply were not clean enough.  Next thing you know, sanitizing stations are everywhere, schools, offices, museums, churches even.  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.  You may laugh at the mere mention of the product, but it is an excellent example of marketing driven demand.  Truly, the first time you saw that commercial, did you absolutely think that you needed one?  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.  Would he have been offended by marketing futzing with his clean equation?

About Carolyn Tang Kmet

Carolyn Tang Kmet is the director of affiliate marketing for Groupon.com, a site that features a daily deal on the best stuff to do, see, eat, and buy in a variety of cities across the U.S., Canada, Europe and soon beyond (read: Space). Prior to joining Groupon, she led the client services team at ShareASale.com, an award-winning affiliate network. On the merchant side, she’s managed affiliate programs at Orbitz.com and CollectiblesToday.com; and on the affiliate site, she helped build the MyPoints Shopping portal. Carolyn is also an adjunct lecturer with Loyola University of Chicago, where she teaches both undergraduate and MBA level e-marketing courses.

Carolyn received her MBA from Loyola University Chicago. She holds a Masters of Science degree in Journalism from Northwestern University and a Bachelor of Arts degree from University of California, Berkeley.You can find Carolyn on Twitter @catango.

2 Responses to What Comes First, Marketing Or Manufacturing?

  1. Pat Grady says:

    Nothing to do with your story really, not directly anyhow, but my favorite Adam S quote:
    "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest."

    Another great one, still not relevant to your story:
    "The real tragedy of the poor is the poverty of their aspirations."

    Now, to a relevant Smith quote:
    "Science is the great antidote to the poison of enthusiasm and superstition."
    You asked a question, a good one. The answer is in testing and analysis, and the tools we have today to estimate market interest are more powerful and widely available than ever before! Here's the conundrum though, predicting anything necessitates having data, which necessitates pre-existing competition, direct or nearly direct. And things like hand sanitizer, at the start, would have been data-less. Market studies can be conducted, but at the end of the day, somebody has to take a chance on their hunch, their belief, in order to innovate (rather than incrementally improve). So there are two mechanisms… people branching into closeby products, and dreamers betting their future on their wild ass hunch. Once aware of this, I think business minded people, for both profit and the shear joy of chasing it, need to look for opportunities of both types. So while analysis is very important to me, once in a while, I go all Farragut wit my bizzie! And say…
    "Damn the torpedoes! Full speed ahead!"

  2. yes i agree! as far as suplus and shortage are conserned but there is another angle!
    It may also depends on the type of need in the market…
    if it is a core and immediate need then manufacturing drives marketing with little or no effort..
    but if the category is new or there is no awareness about the need.then marketing drives the manufacturing..