I like marketing. I market my website. I market myself to potential employers. I marketed myself to my wife and she fortunately bought. I believe marketing helps us gain knowledge of products, services, and opportunities that we might not have otherwise known about.

I believe marketers spend everyday trying to open our heads and rewire us to buy their stuff. I’m not cynical and I don’t think they are evil or bad people. However, as consumers we need to understand that they want our money and that it is Us vs. Them. My six reasons.

1) Discount pricing is a marketing ploy

I spent some time working at a major, national retailer. I’m not interested in pointing fingers, so let’s just call it Brand X. While working at Brand X, I was involved in many pricing conversations and observed the pricing process. We all know that stores use discount pricing as a means to incentivize you to buy now. I didn’t understand how deep that really runs though. For example, if a shirt or sweater costs the company $10 and they know from historical reports that consumers typically will only buy it at a price of $20, then they price it at $40. That way, they can discount it at 50% (oh my gosh! oh my gosh! oh my gosh!) and it will sell at the expected price of $20. Meaning, they don’t even expect you to pay $40! If you do buy it at $40, then you just lost. If you purchase at $20, not because you need the item but because you can’t pass up that great price, then you just lost.

2) They make us ask permission to buy from them

I’m borrowing this reason from Dave Ramsey and don’t take the credit myself. Banks, car dealerships, etc need us to buy from them in order for them to make money. And yet, we find ourselves asking them, and almost pleading at times, to take our business. They tell us that we’ve been “approved” so that we feel part of the club. “Honey, great news! The bank approved of us.” They put on a great dog and pony show to make us anxious that we might not get the “deal.” Stop and realize what is really being sold. Often, what’s being sold is enslaving amounts of debt. Liabilities, like cars, that masquerade as assets don’t make you happy. Money in the bank and peace of mind make you happy. Walk away next time someone tries to get you to say, “Please, can I have your stuff? Please, can I buy some debt?”

3) Research, research, research

Marketers spend a considerable amount of time learning their trade and then studying consumers’ behavior. Any good professional would. They track and analyze your buying and browsing behaviors, study psychology, and attempt to gain an intimate understanding of you. This is a double-edged sword. For example, Zappos.com is very customer centric. They are almost obsessively customer centric. They use an intimate knowledge of customers to better meet customers’ needs. But at the same time, these marketing departments use this knowledge to optimize the entire buying process to get you to buy. So what am I saying? Simply that marketers are constantly gaining new information about us and using that information to create extremely enticing advertisements. Just to put this effort into perspective, advertisers are expected to spend $242 BILLION on ads in 2009 alone. They have to recoup that investment and they expect to have us, the consumers, foot the bill. Don’t buy just because of the shiny ad.

4) They use fancy or technical names that confuse the issue

As the title suggests, a rowing machine is now a “1205 Precision Rower,” which sounds much cooler. Another example is the 12b-1 fee charged by some mutual fund companies. Rule 12b-1 was adopted by the Securities and Exchange Commission (SEC) in 1980 and allows fund companies to pay for sales and marketing activities by charging you a fee. This is in addition to the normal or stated expense ratio. It bothers me that fund companies charge consumers a marketing fee but don’t call it that. I understand that the name is derived from the SEC rule, but it is misleading to novice investors who are just starting out. Just call it a marketing fee so we can decide if we want to pay it.

5) “Where’s the pain?”

Another double-edged sword. A good marketer asks and answers the question, “Where’s the pain?” If a marketer can understand the problem a consumer faces, then he or she can develop a campaign or product that addresses that problem. Target pharmacy bottles are an excellent example of a marketer adding value to a product. Several years ago, Target redesigned its pharmacy bottle to make it easier to open, identify the prescription, and know to which family member the prescription belongs using color coded cap rings. The added convenience is worthwhile. On the other end of the spectrum, think about all of those late night infomercials. They offer solutions to common problems via their products. But stop and think to yourself, “Yes the Magic Bullet makes life a little easier for me, but my blender works just fine. So I don’t really need it even though it is newer, nicer, faster, etc.” In other words, they may be offering something that solves a problem, but you just may not really need the problem solved (at least not at the expense of your retirement). So next time you go to buy a product that you really don’t need, decide to put the money into your retirement account instead.

6) Illegitimate or illegal marketing schemes

I don’t want to dwell much on this topic since my purpose with this post is to address legitimate marketing efforts. However, there are a lot of marketers of ill repute out there attempting to bypass the law and cause you to lose your money. If you suspect that an offer is too good or just doesn’t seem right, please avoid it. Also, you can check sites such as Scam.com, ScamBusters.org, Snopes.com, or the Better Business Bureau to see if others have reported the offer as a scam.

Conclusion

Let me reiterate an important point – I have nothing against marketers. I know a lot of them. They have families, homes, dogs, and probably some consumer debt themselves. But buyer beware. Every institution, firm, corporation, etc must maintain a healthy revenue stream and that revenue has to come from someone. See it as a game. You are allotted X number of dollars each month to support yourself and your lifestyle. Marketers setup storefronts where you can choose to spend your dollars. At the end of the game, the person or store with the most dollars wins. The more you keep to yourself, the greater your odds are of winning.

Let me know in the comments if you agree or disagree.

Several months ago, the CEO of the company I work for sent out an email chastising many of the individuals in the company. Our current product had several design flaws that were creating problems for our customers and sales efforts. One of the issues was the mainboard in our device. An unknown engineering flaw relegated approximately $880,000 worth of inventory to shelves marked unusable. Desiring to move forward and forget the existing problems, many individuals internally were lobbying to design a completely new product. Our CEO’s rebuke effectively stated, “We need to stop looking for the next new and sexy thing and focus on fixing the existing problems.”

An Unlikely Champion

The overall tone of the email was frustration and I recall writing it off. In fact, most of us did write it off. However, the most unlikely of employees took that one line as a  call to action – a mantra really. Luis immigrated from Peru several years ago. Having earned a degree in engineering in Lima, Luis left behind him a successful company. Working as an hourly employee back in our repair shop, Luis approached his manager and asked what our CEO meant in his email. Our manager outlined several of the problems that our product was facing. A few days later, Luis asked his manager if he could please start a project aimed to recover the $880,000 worth of defective inventory. He was given permission.

While Luis worked, several of the high paid, American educated engineers poked fun at Luis’ efforts and repeatedly commented that there wasn’t a possible fix. Lucky for Luis, his English is pretty broken and I don’t think he understood the criticism.

Luis implemented a well designed, step-by-step approach to isolating the problem areas on the mainboard. He then analyzed later versions of the board that did not exhibit the same problems. Within just a few weeks, shy and quiet Luis produced the necessary fixes salvaging every single board! With an upgrade costing the company only a few dollars per board, hourly Luis saved the company almost $1 million. The salvaged inventory is now invaluable since it has already been paid for and can be sold in future devices that would have required purchasing new boards.

His Humble Report

In our mid-year review, Luis’ manager gave him ten minutes to explain to all of the department heads (including the doubting engineers) what he had done. Luis’ professionalism was simply astounding and earned him at least my greatest respects. Luis had spent time after hours preparing not only two slideshows outlining the problem, his process, and the solution, but Luis wrote a witty and well structured dialogue (even though he kept his head and voice low while presenting) and called our products a family. He described the need to help an ill member of the family and his determination to follow the counsel of our CEO. Previous to this presentation, none of us knew what had motivated Luis’ efforts.

The Fred…er, Luis Factor

Our mid-year review lasted two days and one evacuation due to a natural gas leak (the gas company 100 feet from our building told us it would be an hour before they could get to us?!). Out of countless presentations, numbers, analysis, strategic plans, and opinions, nothing struck me as hard as Luis’ simple act of championing a cause. I was immediately reminded of “The Fred Factor” authored by Mark Sanborn. Mark stated that our mission should be to:

“…continually create new value for those you live and work with through dedication, passion and creativity.”

The Fred in Mark’s book was a postal carrier dedicated to a sincere relationship with the individuals on his route. Luis is an hourly repair technician dedicated to finding solutions through creativity. Also, when we all shrugged off our CEO’s email as an emotional rant, Luis saw an opportunity to move the company forward. Imagine a world full of people like Fred and Luis. People who care about building relationships and working hard to achieve common goals. Imagine an entire company, charity, church group, or family full of people like that. And dare I say it…imagine a government full of people who aren’t politicians but relationship oriented champions of change dedicated to the common good and not personal agendas (and I’m talking to both parties). I’d like to live in that world.

Know any Luises yourself?

Steven R. Covey taught that we should focus on living a principle centered life. As we align our actions and purpose with correct principles, we set a firm foundation for success and happiness.

So what principles will help guide you through the financial jungle that affects our daily lives? Although the optimal number of principles that will best help you may vary, you should at least include two longstanding tenets of both religion and law.

The first principle is Stewardship. Whether through good fortune or the sweat of your own brow, you have a certain amount of financial assets. Your assets may include automobiles, money in the bank, investment accounts, real estate, or insurance policies, to name a few. No matter the amount of financial assets or the source (assuming legal means of course), you have the obligation to oversee your assets with responsibility. Considering your assets as the opportunity to act responsibly is acting as a good steward. The use of stewards is millennia old. Kings would place a steward over sections of their land and the corresponding subjects. Each steward held the responsibility to wisely use the resources over which he presided.

In today’s world, we are not assigned stewardships via a kingship, but by the very nature of having financial assets. Let me give you several examples.

In order to make this important paradigm shift, I have to fundamentally believe that the assets I have are not mine, but rather, have been loaned to me for a time and I have to use them wisely. This is why I always tell my wife, “I’m glad I don’t have billions of dollars. I don’t want to have to be responsible for appropriately handling all that money.” Most would probably disagree with me.

The second fundamental principle in building a secure financial house is Accountability. Under the premise that I am a steward over assets that I have been allowed to use for a time, I must answer to someone at some future moment. If you are a God fearing individual, then you may believe that all things are created by God and are therefore His. You will then have to answer before Him for how you handled the assets He loaned you during life. If you are not a God fearing individual, then you are a temporary being on this earth and share in the obligation to responsibly use its resources. Therefore, you will have to answer to society and your fellowman for how you handled the assets afforded you during your life. Did you prepare adequately for future financial events? Did you overextend yourself and require outside assistance? Were you generous with others and give back on a regular basis? How you answer those questions might give you some insight into what type of steward you are and how you would be judged today if held accountable for your decisions.

As I stated at the beginning, there are many principles that if practiced consistently will lead you to financial success. Among your governing principles should be the understanding that you are Steward over loaned goods and you will one day be held Accountable for the decisions that you make. Once you start making decisions around those two principles, you will find yourself seeing money as a privileged tool that enables success and freedom instead of a right that can be squandered.