Can Marketing Improve Capitalism?

by Philip Kotler

In an article on titled Phil Kotler on the Relationship between Marketing and Capitalism, I showed that marketing plays a vital role in keeping modern Capitalism going.

Capitalism did not need much marketing in earlier times when products were scarce and people waited in lines to buy something. Today products aren't scarce, they are superabundant. Today it is customers who are scarce. Customers either don't have enough income to buy things or they lack motivation to buy.

Marketing's unique's task is to supply motivation. An old marketing formula, called AIDA, says that customers have to pass through four stages: Awareness, Interest, Desire, Action.

  • Marketers can do an outstanding job in creating product or brand awareness. Just pay an advertising agency to put out 30 second commercials, or run a direct mail campaign, or use the social media.
  • Marketers are also quite good at developing interest in a product or brand by creating strong images that trigger pleasure, hope, or fear.
  • Marketers will stimulate desire by showing how the product will make the consumer's life better, simpler, safer, richer.
  • Marketers real challenge is to turn desire into action. Here marketers employ a number of tools such as sales days, discounts, coupons, rebates, guarantees or warranties.

Marketing's task does not end with producing a purchase event. Marketers have a more sophisticated and comprehensive aim: to get a customer, keep a customer, and grow a customer.

Marketers use AIDA to help produce the first purchase. If the first-time buyer is satisfied, he or she may buy again. If the purchase delights the buyer, he or she will buy it again and again and even tell friends.

Growing a customer requires further work. What else can you sell to the same customer? McDonald's can't base its future just on fast and tasty hamburgers. Customers want new things, such as a tasty salad or chicken or fish. Growing the customer's purchases calls for continually monitoring the target customers changing needs, wants, and lifestyles.

A smart company will go further. It will not only add more existing products to its offering. It will even try to imagine new products that don't exist but that could satisfy the same customer. Apple didn't rest on its just selling computers and making them better each year. Steve Jobs noticed that people like music and would like to have many songs immediately available wherever they are. The iPod was born, then iTunes, and then the iPhone came along, all products that came from sensing what customers might wish in their dreams.

Capitalism gets its power not from simply being efficient. It gets its power from upgrading and enriching the lives of its customers. It gets its legitimacy from raising everyone's standard of living. Capitalism succeeded admirably in America in the 1950s and 1960s to build a growing middle class. Then in the 1970s and even more so in the 1980s, wage growth slowed down. Productivity did not slow down, however, and it led to higher profits, most of it going to those who were already rich. The union movement had weakened as a countervailing force to business decision making. Factories started to move out of the U.S. to take advantage of cheaper labor and taxes abroad. Instead of the Old Capitalism producing a rising tide for all, it produced a rising tide for only a few.

To earn enough in the New Capitalism, many husbands took on a second job. To live a reasonable life, many mothers also started to work. This meant that families would have fewer children and their school age children will have carry a latchkey to get home at 3pm before their parents got home. American lives under the New Capitalism became less satisfying. The husband and wife and children were becoming wage-slaves.

Most individuals and families still do not earn a living wage. Many remain poor and face the need to get a pay-day loan to cover their bills and make it through the next week. The government has to issue a growing number of food stamps and run a growing number of social benefit programs to help people get enough to eat and pay their rent and their health bills.

It is not surprising that one of today's Presidential candidates, Bernie Sanders, proudly runs as a socialist on the Democratic ticket. His view is that the latest stage of Capitalism isn't working for the majority of Americans. He wants to see a higher minimum wage, a higher tax on the rich, a path for illegal Americans to become good citizens, lower costs of a college education, stop imprisoning so many people, start improving our schools and health system, and don't trade out our factories to other countries.

It seems to me that these measures are simply the next stage of Progressive Capitalism, or Capitalism with a Heart. No need to call it Socialism. This stage preserves the benefits of a dynamic marketing mindset driving companies to center their attention on improving the lives of their customers while it also calls for government and nonprofit agencies to meet other consumer needs that the private sector does not cover. is dedicated to saving Capitalism from itself. Visit us at to join the debate. Follow us on Twitter and Facebook.

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