Are Austrians Better Marketers?
tl;dr: Has behavioral economics inspired marketing run its course? The Austrian school of economists make the case that it has and offer an alternative.
I’ve been exploring the concept of “crypto-marketing” for almost five years now. All along, I thought I was on to something new.
Alas, like many of my other supposedly brilliant insights, they may have been new to me, but they aren’t as new as I might have originally suspected.
Essentially, what I was doing was combining two things…crypto+marketing.
That’s obvious, of course, but the “crypto” part of that is really just another way of saying “Austrian economics.”
Where Austrians Meet Marketing
I was trying to marry the principles of marketing as I understand them with the concepts of Austrian economics. The best example of this is probably in the Decentralized Marketing Organization e-book.
And that’s where the non-innovation seems to have occurred.
Loyal blog reader (there are only 3 and that includes my mom) Hans sent me a PDF from the Mises Institute called Austrian Economics In Contemporary Business.
I haven’t read most of it yet, so this is a first reaction, but the introduction and first chapter hit on my favorite points, starting off with Peter Drucker.
“The purpose of business is to create and keep customers.“
Peter Drucker
and going from there.
The Austrian 180 in Relating to Customers
Anyone can quote Drucker, that’s no insight.
Here’s the part that Hans highlighted for me.
“Marketing today is in the grip of so-called behavioral economics to explain consumer behavior (as opposed to Austrian subjective value).
Behavioral econ suffers from the aim to predict and to manipulate consumer behavior based on the results of experimental findings.
An Austrian approach to marketing would focus on understanding consumer ends and desires, and on facilitating their experience (as opposed to, for example, “persuading” them to buy).
Facilitation might result in consumers re-ordering their preferences as an emergent result of two-way interaction with them.
Marketing’s role is both to help the consumer to learn (the Value Learning Process) and to learn from them in return.
The marketing goal is to understand what the consumer’s life is like, and to learn how to fit in to it and contribute to better experiences.
Marketing would not be a function or a department in a firm, but an integrated understanding within all part of a firm’s structure, especially those that have interaction with customers. “
Austrian Economics In Contemporary Business Applications, Mises.org
The Value Learning Process, as they deem it, is critical.
Here’s why.
Companies Don’t Create Value, Customers Do
Every company out there and many other organizations (even people) say, “We/I are going to create value for our customers.”
The Austrians call B.S. on this for one simple reason.
“Value is subjective — an experience that takes place entirely in the customer domain.
Logically, no external force can create it or even co-create it.
Only those who ultimately consume can create value.
Value is not “created”by firms.“
Austrian Economics In Contemporary Business Applications, Mises.org
Read that again because it’s super critical in reorienting the marketing mindset….”only those who consume can create value.”
It reminds me of the example I tend to use when explaining that price and value are not the same.
The price of a ticket from NYC-London (pre-corona) may have been $800, no matter who buys it.
But the VALUE of the ticket is very different for the person going on summer vacation than the person going to close a $10 million deal.
It’s why some 11 minute phone calls are worth $30 million and others are not.
Understanding this is the key to unlocking great marketing.
“Very importantly, Austrian economics is a science of human behavior. Customers, entrepreneurs, managers, and employees are seen as people, and not as automatons or data series.
Empathy is a core business skill.
The purpose of business is to improve lives.”
Austrian Economics In Contemporary Business Applications, Mises.org
If these professors are right, we have the foundation of a more humane, thoughtful way of engaging with the market.
This is something that could truly be Different in a world awash in surveillance capitalism, invasion of privacy, and looking at every customer as a series of data points.
I am hoping these are.
I intend to read this paper in full and we’ll see what happens from there.