guerilla

Is Advertising a Sham? - Ludwig von Mises

The consumer is not omniscient. He does not know where he can obtain at the cheapest price what he is looking for. Very often he does not even know what kind of commodity or service is suitable to remove most efficaciously the particular uneasiness he wants to remove. At best he is familiar with the market conditions of the immediate past and arranges his plans on the basis of this information. To convey to him information about the actual state of the market is the task of business propaganda.

Business propaganda must be obtrusive and blatant. It is its aim to attract the attention of slow people, to rouse latent wishes, to entice men to substitute innovation for inert clinging to traditional routine. In order to succeed, advertising must be adjusted to the mentality of the people courted. It must suit their tastes and speak their idiom. Advertising is shrill, noisy, coarse, puffing, because the public does not react to dignified allusions. It is the bad taste of the public that forces the advertisers to display bad taste in their publicity campaigns. The art of advertising has evolved into a branch of applied psychology, a sister discipline of pedagogy.

Like all things designed to suit the taste of the masses, advertising is repellent to people of delicate feeling. This abhorrence influences the appraisal of business propaganda. Advertising and all other methods of business propaganda are condemned as one of the most outrageous outgrowths of unlimited competition. It should be forbidden. The consumers should be instructed by impartial experts; the public schools, the "nonpartisan" press, and cooperatives should perform this task.

The restriction of the right of businessmen to advertise their products would restrict the freedom of the consumers to spend their income according to their own wants and desires. It would make it impossible for them to learn as much as they can and want about the state of the market and the conditions which they may consider as relevant in choosing what to buy and what not to buy. They would no longer be in a position to decide on the basis of the opinion which they themselves have formed about the seller's appraisal of his products; they would be forced to act on the recommendation of other people. It is not unlikely that these mentors would save them some mistakes. But the individual consumers would be under the tutelage of guardians. If advertising is not restricted, the consumers are by and large in the position of a jury which learns about the case by hearing the witnesses and examining directly all other means of evidence. If advertising is restricted, they are in the position of a jury to whom an officer reports about the result of his own examination of evidence.

It is a widespread fallacy that skillful advertising can talk the consumers into buying everything that the advertiser wants them to buy. The consumer is, according to this legend, simply defenseless against "high-pressure" advertising. If this were true, success or failure in business would depend on the mode of advertising only. However, nobody believes that any kind of advertising would have succeeded in making the candle makers hold the field against the electric bulb, the horse drivers against the motorcars, the goose quill against the steel pen and later against the fountain pen. But whoever admits this implies that the quality of the commodity advertised is instrumental in bringing about the success of an advertising campaign. Then there is no reason to maintain that advertising is a method of cheating the gullible public.

It is certainly possible for an advertiser to induce a man to try an article which he would not have bought if he had known its qualities beforehand. But as long as advertising is free to all competing firms, the article which is better from the point of view of the consumers' appetites will finally outstrip the less appropriate article, whatever methods of advertising may be applied. The tricks and artifices of advertising are available to the seller of the better product no less than to the seller of the poorer product. But only the former enjoys the advantage derived from the better quality of his product. The effects of advertising of commodities are determined by the fact that as a rule the buyer is in a position to form a correct opinion about the usefulness of an article bought.

The housewife who has tried a particular brand of soap or canned food learns from experience whether it is good for her to buy and consume that product in the future too. Therefore advertising pays the advertiser only if the examination of the first sample bought does not result in the consumer's refusal to buy more of it. It is agreed among businessmen that it does not pay to advertise products other than good ones. Entirely different are conditions in those fields in which experience cannot teach us anything. The statements of religious, metaphysical, and political propaganda can be neither verified nor falsified by experience. With regard to the life beyond and the absolute, any experience is denied to men living in this world.

In political matters, experience is always the experience of complex phenomena which is open to different interpretations; the only yardstick which can be applied to political doctrines is aprioristic reasoning. Thus political propaganda and business propaganda are essentially different things, although they often resort to the same technical methods.

There are many evils for which contemporary technology and therapeutics have no remedy. There are incurable diseases and there are irreparable personal defects. It is a sad fact that some people try to exploit their fellow men's plight by offering them patent medicines. Such quackeries do not make old people young and ugly girls pretty. They only raise hopes. It would not impair the operation of the market if the authorities were to prevent such advertising, the truth of which cannot be evidenced by the methods of the experimental natural sciences. But whoever is ready to grant to the government this power would be inconsistent if he objected to the demand to submit the statements of churches and sects to the same examination. Freedom is indivisible. As soon as one starts to restrict it, one enters upon a decline on which it is difficult to stop. If one assigns to the government the task of making truth prevail in the advertising of perfumes and toothpaste, one cannot contest it the right to look after truth in the more important matters of religion, philosophy, and social ideology.

The idea that business propaganda can force the consumers to submit to the will of the advertisers is spurious. Advertising can never succeed in supplanting better or cheaper goods available and offered for sale.

The costs incurred by advertising are, from the point of view of the advertiser, a part of the total bill of production costs. A businessman expends money for advertising if and as far as he expects that the increase in sales resulting will increase the total net proceeds. In this regard there is no difference between the costs of advertising and all other costs of production.

An attempt has been made to distinguish between production costs and sales costs. An increase in production costs, it has been said, increases supply, while an increase in sales costs (advertising costs included) increases demand.[1] This is a mistake. All costs of production are expended with the intention of increasing demand. If the manufacturer of candy employs a better raw material, he aims at an increase in demand in the same way as he does in making the wrappings more attractive and his stores more inviting and in spending more for advertisements. In increasing production costs per unit of the product the idea is always to increase demand. If a businessman wants to increase supply, he must increase the total cost of production, which often results in lowering production costs per unit.

Discuss.

__________________
-
Great content HERE

Quod non apparet non est

turbolapp

guerilla

Did you read the entire article Turbo?

__________________
-
Great content HERE

Quod non apparet non est

LogicFlux

Jesus that's a long ass article.

Cliffsnotes: "fuck the FTC".

guerilla

I read 50 of those a day.

I figured since Turbo reads about marketing, the length of the article wouldn't be an obstacle, but I think her offhand response indicates that she probably didn't read it.

Thank you. Precisely why I posted it on a marketing forum at a time when the FTC is starting to give involuntary colonoscopies to marketers.

__________________
-
Great content HERE

Quod non apparet non est

AdExhibitJason

I actually am going with Turbos response. I think sh did read the whole thing.

Advertising is used in so many ways. This article seems to only look at the surface of advertising and none of the underlying tactics.

It compares a fucking candle to a light bulb. Are you serious in a situation like that no fucking advertising is needed. Not to mention most people used Kerosene Lamps back then and not even candles. The comparisons it makes saying that people who advertise are not able to manipulate and individual are wetarded.

I mean and this is a true story. If you can give a group of housewives some laundry detergent that is exactly the same but in different packaging and the majority like the "nicer" package and say it cleaned their clothes better. I mean come on.

In some situations in most in fact. Advertising is the intial stepping stone yes. The product has to do things after the sale. However, that is a different form of marketing and something most of us really do not deal with. You think Mcdonalds being the number fast food chain in the world is because they have good food.

guysmy

this is what happens when a scholar tries to write about advertising.

__________________
“Eighty percent of success is showing up.” - Woody Allen

guerilla

It was written in 1949. Mises has been dead for around 30 years or so.

It's not about tactics. It's about the economic value of advertising from a utilitarian perspective.

You are the last person who should be lecturing people on business models, right?

McDonalds got where they are originally by innovating, and mastering the franchise model. You might not think the food is good, but people like it, and will go out of their way to get it. Sure it's low quality, so is pizza. Cheese and tomato sauce on bread. Not exactly ground breaking.

But it is branding, and product differentiation, advertising, quality control, and customer service. There is a lot to running a business (as you well know) and if only advertising was enough (as the article states) then the candle makers might have been able to hold off the lightbulb.

__________________
-
Great content HERE

Quod non apparet non est

guerilla

When a scholar tries to defend advertising.

__________________
-
Great content HERE

Quod non apparet non est

Midas Touch

HowStuffWorks "McDonald's Real Estate"

__________________
VVVVVVVVVVVVVV

"Chance favors the prepared mind." --- Louis Pasteur

Some people dream of success, while others wake up and work hard for it.

Midas Touch

When a manufacturer increases overall production costs (Advertising not included.) it is for one of two reasons.

1.) He wants to make a better quality product as stated.

or

2.) Demand has increased for the product or a demand increase has been PROJECTED due to past performance. The increased demand can come from advertising, the utility of the product, how in Vogue the product is, or the quality as in longevity/durability of the product. In this case the cost increase comes from increased unit output numbers.


This is not entirely true. If the increased costs per unit are to improve quality this is certainly true. BUT, a lot of times increased production costs are directly related to the demand created by advertising/salesman and not the utility or durability of the product. These cost increases do not come from the units themselves, but the processes necessary to produce more of them.


This not always true either. If the manufacturer were to go to cheaper materials/components, like in computer system building, he could increase production and keep his expenses close to where they were with the lower output. If the demand still increases he could save more money on production by getting his materials/components in larger quantities. So, again production increases but the costs for that production do not change too much.

Now is when he has a decision to make, he can either keep the profits from the use of cheaper supplies, larger supply orders and the increased number of units sold or he can pass the savings onto his customers which will most likely increase demand again.

This cycle is pretty much self perpetuating so long as the quality of the product and it's usefulness remains within the consumer's perceived value vs. the price point. At some point if demand is high enough that it reaches the manufacture's physical limit to produce sufficient quantities then YES overall production costs will increase by the way of expansion. But this too can actually cut costs in the long term in other areas like distribution and advertising depending on where and how they expand.

Now, if the demand for the product is low due to an INFERIOR product, then YES the increased cost of better materials or designs and tooling would be incurred with the PERCEPTION that this will increase the demand. I agree that at this point advertising will not overcome the substandard product with any longevity.

I was in manufacturing and outside sales for a little over 15 years.

The number of units produced were only increased when either the demand from the consumer in the form of orders warranted it OR sometimes if forecasted demand based on previous sales increases over a set period of time.

The car manufactures have BROKEN this supply and demand rule for WAY TOO long and this why they are being hit so hard now. They have ALWAYS over produced in relation to the actual demand. Their production costs have gone up over the years as well. Having more of a certain model car come off the production line did NOTHING to increase the consumer demand. It was through advertising and price breaks (Which KILL your bottom line if used in a long term strategy like the automotive industry did.) that the industry was able to keep their noses just above the water up until now.


I liked a lot of what Ludwig said, but he was not covering all aspects of supply and demand. Heck, he left out one BIG component and that is "Competition" from a another company in the same industry. This will affect production costs & advertising as well as demand.

Any stable business bases their production costs on demand. Which of course is also affected by the price point and whether the targeted consumer feels that it's value is reflected properly in it.

Heck, even the "Pitchmen" check the demand and price point of a new product with consumers before even looking into the costs to manufacture and supply said product. If ANY of the 3 are too far out of line then the product is basically still born. Unless they can change any of the 3 points enough to get it in line for a profitable endeavor.

1.) Demand - Consumer dependent

2.) Price - Consumer dependent

3.) Cost of production - Must be reined in to allow enough profit to run the business and still meet the consumer's demand.

.....a.) Cost of Distribution & Advertising - Ditto for this as well.


Well, that was more than I intended to get into. lulz!!


Thanks for the thread Guerilla.



Oh, and FUCK the FTC!! Those crooked bastards are formed from the same TURD as the FDA!!!

__________________
VVVVVVVVVVVVVV

"Chance favors the prepared mind." --- Louis Pasteur

Some people dream of success, while others wake up and work hard for it.

Roundabout

Midas Touch

........^^^^^ I concur!!! lol

I've been awake for 28 hours and I just started prattling on. Sorry.

__________________
VVVVVVVVVVVVVV

"Chance favors the prepared mind." --- Louis Pasteur

Some people dream of success, while others wake up and work hard for it.

outperform

I agree. The issue was oversimplified by the author.

Advertising's effects are like a formula. There can be infinite variables.

Advertising = A(x) + B(x) +.... = outcome

It's effect depends on the audience, timing, environment, peer pressure etc.

Also, the author's statement that "Advertising can never succeed in supplanting better or cheaper goods available and offered for sale" is incorrect because the word "never" used. Any one example can prove it wrong such as

1) Lack of information
2) Need for public perception
3) Highly inconvenient etc.

turbolapp

I did read it. I found it pretentious and verbose without really saying much of anything.

I'm sorry...I thought my video clip said that for me

crestind

I still think advertising can convince people to buy whatever. This article would also suggest that there are many people who believe in weight loss pills.

vinny lingo

I direct your attention to Freud's nephew, Edward Bernays, author of "Propaganda," published in 1928, and father of modern day manipulation of public perception. Er, I mean public relations.

Propaganda by Edward Bernays (1928)

Edward Bernays - Wikipedia, the free encyclopedia

This is advertising. No decision is made in a vacuum, with the decision maker armed with perfect intel. Most of our choices are unconscious and automatic. But the majority of people believe themselves to be conscious, rational people. So it makes sense that an intellectual would argue that advertising can not supersede our ability to think for ourselves. The evidence says otherwise.

guerilla

I'll remember to critique your posts.

__________________
-
Great content HERE

Quod non apparet non est

guerilla

I think within the context of what Mises worked on, re: Human Action (the book from which this article is from), the idea is that we never stop thinking for ourselves, even if we make what seem to be irrational decisions from the perspective of others.

It is impossible for man to act without thinking. Thought and human action are intertwined. Propaganda or advertising, aims to inform our thinking in a manner that influences our ends. And since we are rational animals, he doesn't dismiss that when someone acts irrational according to your or my perspective (buys Acai Berry products) it may be perfectly rationalized by the person based upon their unique objectives and their interpretation of information.

An example might be showing 100 overweight people Acai berry landers. Then showing that same 100 people information about rebills and placebos. Both are advertising and propaganda, but they have decidedly different effects.

So to put it simply, Mises isn't saying that advertising can't influence decisions (or that we always have perfect intel, far from it), he's saying that advertising cannot supplant the decision making process which is internal and rational. Advertising can only seek to inform it.

Vinny you might want to check out Human Action. I think you would enjoy it.

__________________
-
Great content HERE

Quod non apparet non est

turbolapp

Well I'm often verbose and rambling, so feel free. I really try not to be pretentious though, especially when there's nothing to be snooty about. (ie that particular article.)

But honestly, guerrilla, I really meant no offense to you personally. I had no idea you were so attached to it.

vinny lingo

I will definitely check that out. I probably will enjoy it.

I don't think Mises was wrong, per se. But...

You're talking justification of decisions after the fact. Everyone does that.

I'm talking about carefully weighing options before making decisions. Few do this.

define:rational - Google Search

define:rationalize - Google Search

vinny lingo

I'm pretty sure Turbo was commenting on Mises writing, not you.

fm1234

Mises can make your head throb in pain but many of his works are sheer brilliance. Got a shelf full of them here. Fellow Austrian School father Friedrich von Hayek was the first writer I ever literally had to stop reading and go get a dictionary, which at the risk of seeming snooty or pretentious like Mises was the first and to date only time that's ever happened. The Austrians just couldn't write for the masses (one reason they never caught on, imo, despite the best efforts of Rothbard and Hazlitt to dumb it down a bit.)


Frank

LogicFlux

Maybe advertising has changed a lot since then and has become more of a science, but these days a lot of advertising is specifically targeted to the irrational mind.
There is more to our mind than the part that assesses, calculates, judges, etc.

There are parts of our brain that evolved before the parts that work rationally, and some of those parts even effect our actions/behavior.
So I agree with the fuck the FTC part, but think this article is naive in its confidence of people's ability to make rational decisions.

Another thing to consider is that when Mises wrote that there probably wasn't a huge middle class that depended on an economy where people buy and sell each other stupid shit.

riddarhusetgal

exactly - esp. if a large part of the actor's cost structure is fixed, i.e:



Midas,
You might enjoy this book - How We Decide:

Acclaim for
HOW WE DECIDE

"Explaining decision-making on the scale of neurons makes for a challenging task, but Lehrer handles it with confidence and grace. As an introduction to the cognitive struggle between the brain’s "executive" rational centers and its more intuitive regions, "How We Decide" succeeds with great panache.
- New York Times

__________________
Every man or woman is my superior in some way. In that I learn from them. - Emerson

AdExhibitJason

To me all the situations you have mentioned actually are a form or avenue for advertising.

Branding - How do you brand a product. Get it well known and sought after.

Product Differentiation <-- fuck thats a long word - You have to show and market the difference between your products and others

Quality Control - No to sure where you are going with this. Let's say it is the intention to give an item a better perception of quality. To accomplish this again you need to market to the person.

Customer Service - Even though good customer service should be a given. The presentation of the experience being attempted is a form of advertising. You think they where the retard white shirts and ties because Mcdonalds is some upscale place.

I am by no means a scholar on these things. I hate reading long winded, self pretentious crap.

I have failed in the past, I know. I will continue to do so in many things. There is one thing that puts me apart from most. I refuse to give up and learn from the mistakes.

I respect you let's not get that twisted.

HarveyJ

Couldn't find the original article on Stanford's database, so here's another: Arch Pediatr Adolesc Med -- Abstract: Effects of Fast Food Branding on Young Children's Taste Preferences, August 2007, Robinson et al. 161 (8): 792

Cliffnotes: Children prefer food wrapped in McDonald's packaging, saying it's tastier, even when it's the exact same food as the non-McDonald's packaging, and even when it's not even food made by McDonalds.

The reason I mention this is because in the 40s, you can sure as shit assume that children were not being marketed to directly in the ways that they are now. TV was basically non-existent, radio was something for adults.
My point is that children are nowadays actually being taught to be consumers. Especially so in light of the number of corporations "sponsoring" school curriculum so they can actually pay for teachers and equipment

Not making a moral judgement on that issue, just pointing out that people actually are being taught to "obey".

__________________
After 10,000 years I'm free!