Failure Is A Learning Phase In Marketing

Failure Is A Learning Phase In Marketing

The learning phase is the period when the delivery system still has a lot to learn about an ad set. During the learning phase, the delivery system is exploring the best way to deliver your ad set – so performance is less stable and cost per action (CPA) is usually worse. The learning phase occurs when you create a new ad or ad set or make a significant edit to an existing one. Early educational reformer John Dewey said it best: "Failure is instructive.

The person who really thinks learns quite as much from his failures as from his successes." At Envision Education, we embrace Dewey's notion of failure, believing it to be essential to learning.

I'm not talking about dead-end failure, the kind that results in loss of opportunity, regression, or stagnation. See failure as an opportunity to receive feedback on strengths as well as areas of improvement -- all for the purpose of getting better. When reframed as a good, constructive, and essential part of learning, failure is a master teacher. Always have the end game in sight, but put a first goal out there, too.

Take smaller steps, and learn as you go. Nothing proceeds according to plan 100 percent of the time, so expect to have a few failures along the way. Use those failures to learn. I’ve been on the front lines of marketing for more than 25 years, and I can tell you quite sincerely that for me, the best lessons have come from things that initially didn’t work out as expected.

What Are Common Types of Market Failures?

The main types of market failure include asymmetric information, concentrated market power, public goods and externalities.

Information Asymmetry

Efficient markets require high levels of transparency and free flow of information. When one party in a transaction has better information than the other party involved, then there’s opportunity for exploitation. A classic economic example is the “Lemon problem.” In the market for used automobiles, information asymmetry occurs when sellers know more about what they are selling than consumers do.

The consequence is that buyers may unknowingly purchase cars with defects (lemons) at a higher price than they would have been willing to pay if they had information about the defects. Today, warranties and online information services, such as Carfax for the auto market, help address these problems and mitigate the “Lemon problem” for consumers.

Concentrated Market Power

In markets with high levels of competition, companies and organizations have an incentive to produce goods and services that consumers value, at low cost. If they do not meet consumer demand or fail to keep prices low, then the company or organization will lose money or go out of business because consumers can easily find substitutes elsewhere. Agricultural crops, such as corn or soybeans provide an example of highly competitive markets.

Many farmers produce similar crops. Farmers who produce bad-tasting corn or who price their corn too high will likely lose customers because those customers can easily find other corn that’s better or cheaper elsewhere.

Public Goods

The delivery of public goods by private companies or organizations can lead to the “free-rider” problem. The free-rider problem can happen when enough people can enjoy a good or service without paying for the cost to supply it that there’s a danger that, in a free market, the good will end up under-provided or not provided at all by a private company.

The assumption is that private companies and organizations won’t supply something if they know they will lose money on it. In that case, many economists believe there is a role for government, rather than private companies, to provide or subsidize those goods or services using taxpayer dollars.

Externalities

Externalities, sometimes called “spillovers” or “neighborhood effects,” occur when a transaction generates a benefit (positive externality) or cost (negative externality) on a party not directly involved in the transaction.

Externalities pose problems for markets because the price of a good or service associated with an externality do not reflect the total societal benefits or costs from those goods or services. As a result, companies or organizations will produce too many or too few goods or services, depending on the externality. 

Things You Need to Take Care in Business to Avoid Marketing Failure

The things that needs to be avoided are not defining the customer first, not tracking the results, ignoring the products, failing to look at the holistic strategy, lack of consistency, Too Much Experimentation Without Research, thinking You Need To Spend Big To Get Results, Focusing Solely On Digital, trying to everywhere, analysis paralysis, not testing the strategies, forging ahead without market fit proof, investing on the basis of assumptions, expecting to tell your story for you, giving up after one failure, etc.

Worst Marketing Fails of In the Market

Kendall Jenner Pepsi ad:

This long commercial from 2017 follows along with a marching protest and features popular model Kendall Jenner watching and then joining it. In the end, she walks to the front of the protest line and hands a can of Pepsi to a police officer as a peace offering. He takes the Pepsi and everyone cheers.

According to Pepsi, the ad was a move to promote global unity, peace, and understanding, but it achieved exactly the opposite. As soon as the ad came out, it received a storm of backlash and criticism. People found the ad insensitive and tone-deaf. Further, the ad supposedly trivialized the Black Lives Matter movement and made the protest seem like a fun party. 

Pepsi pulled the ad from the air and YouTube within 24 hours and apologized saying the company “missed the mark. Never use controversial topics or social issues to promote your products or services. If you want to capitalize on a trending topic, do your research to make sure there is no risk for polarizing your audience and losing customers.

What Are Potential Solutions To Market Failures?

Market failure can be caused by a lack of information, market control, public goods, and externalities. Market failures can be corrected through government intervention, such as new laws or taxes, tariffs, subsidies, and trade restrictions. Using the broad, perfect-competition definition, market failures are corrected by allowing competing entrepreneurs and consumers to push the market further toward equilibrium over time.

Markets tend toward equilibrium constantly, never quite reaching it. This is because of limitations in human knowledge and changing real-world circumstances. Some economists and policy analysts propose a litany of possible interventions and regulations to compensate for perceived market failures. 

Tariffs, subsidies, redistributive or punitive taxation, disclosure mandates, trade restrictions, price floors and ceilings, and many other market distortions have been justified on the basis of correcting inefficient outcomes.