Setting the Stage

Back in the early 1990s, when I was making a good living as a marketing consultant, I asked my wife—a successful businesswoman and a retailing veteran—why it was that heads of corporate sales and marketing departments were always from sales people and not from marketing people. Her answer: “Simple: Sales is real. Marketing is bullshit.”

When I asked her to explain that, she said this wasn’t marketing’s fault. The problem was the role marketing was forced to play. “See, sales touches the customer; but marketing can’t, because that’s sales’s job. So marketing has to be ‘strategic.’” She put air quotes around “strategic.” She acknowledged that this was an oversimplification and not fair to all the good people in marketing (such as myself) who were trying to do right by customers. But her remark spoke to the need to distinguish between what’s real and what’s not, and to dig deeper into why the latter has become such an enormous part of the way we do business.

Most of what a customer sees of marketing is the advertising and promotional stuff we’ve been talking about for the last few chapters. But there’s more going on behind the scenes. Much more.

Here’s a list of arcane phrases, just from the patois of retailer-supplier interactions, back up in the supply chain:

• Advertising allowances. Flat fees or percentages of wholesale purchase prices, paid to the retailer by suppliers to help defray the retailer’s advertising costs.
• Buyback allowances. Provisions that allow the retailer to return old or unsold products to suppliers.
• Contests and prizes. Enticements offered by suppliers to retailers.
• Conventions and association meetings. Settings where suppliers and retailers meet to discuss new products or product lines along with promotional plans for them; where authoritative speakers talk about new industry fashions, trends, or concepts; where retailers can be trained by experts or by suppliers; and where the industry talks to itself, face to face.
• Co-op advertising. A form of reimbursement to a retailer by a supplier for advertising the supplier’s goods, using the supplier’s logo (or whole prepared ads), and for meeting other requirements of the supplier.
• Dealer premiums are prizes or gifts from suppliers to retailers and their salespeople when sales goals or other benchmarks are reached.
• Display allowances. Fees that retailers charge their suppliers for shelf and floor space where displays, counter stands, floor stands, racks, and shelf signs can be set up.
• Diverting. Purchasing by a retailer in volume from a supplier at a discount in one region, and then shipping the goods to another region where there is no discount.
• Forward-buying. Stocking up by retailers of products, usually when offered by the manufacturer in volume at a discount, in anticipation of a “sale” on the goods in the store, or of actual demand by customers.
• Push money or spiffs. Incentive money paid to retail salespeople for pushing particular products, product lines, or brands.
• Slotting fees. Also known as “pay-to-stay” fees or “allowances,” these are sums paid by suppliers to retailers for shelf or floor space.
• Trade deals. Short-term discounts and other incentives that suppliers provide retailers for “sales” and “specials.”
• Variable trade spending. Discounts and allowances by suppliers to retailers that create enticing price differentials between the suppliers’ products and those of competitors. These may be tied to sales volume and used to maintain that volume with a low price on the shelf.

Not all those things fall under the heading of marketing, but all of them are caused or influenced by marketing imperatives, mostly of the “strategic” sort.

Here’s another way to look at that list: customers asked for none of it. True, some customers like contests and enjoy playing the games retailers entice them to play—enough to justify the TLC Network’s “Extreme Couponing” show. (“Twelve of the best extreme couponers go cart-to-cart in a face-off to determine who takes home the title of America’s Biggest Super Saver,” says one promo.²) But what kind of store wants only Super Savers? Not even Walmart, as Lee Scott made clear above.

Computer programmers have a name for accumulated clutter that stays in code but has outlived its original purpose, which may not have been fully legitimate in the first place. The word is “cruft.” Within the narrow scope of marketing-as-usual, the list above might look fine; but within the scope of the whole relationship with customers, or the larger marketplace, a lot of it is cruft. Even if it plays on TV.

Needs versus Wants

One of the earliest bits of wisdom I learned about shopping for groceries is that most of what you need for staying alive is out along the walls, not in the aisles. It’s on the perimeter that you find the fresh produce, vegetables, cheeses, meats, and dairy products. The aisles are for the more durable stuff in bags, cans, bottles, and boxes: potato chips, boxed cereals, disposable diapers, soft drinks, light bulbs, and so on. Of the fifteen thousand to sixty thousand SKUs (stock-keeping units—distinct products) carried in American supermarkets, most are in the aisles.³ And many (if not most) of those are complicated by the promotional gambits I just listed.

The distinction between need-to-buy and might-want-to-buy is one that helps tease markets apart from marketing. Grocery stores don’t need to create demand for their goods. Humans need to eat, and in the civilized world, grocery stores are where humans go to buy food they can serve to themselves. But grocery stores want to make more money than selling need-to-buy goods alone can provide, so they’ve created sophisticated and complex ways of offering a mind-blowing variety of stuff, some of which is good-to-get (say, spices, soap, and toilet paper) and most of which you may not want or need (say, jars of pickles or floor wax).

The result is cognitive overload out the wazoo—for stores as well as for their customers. What are the costs of that overload? Is it even worthwhile to measure them, if the biggest question is still “Which complication works best?” Whatever the answer, it should be clear that we need less of it.