08/22/13 - Forbes - Fantasize About A World Without Advertising? Try Cuba
Surveys routinely show that consumers hate advertising. If given the
option, I'm sure a super-majority of consumers would choose a world where
advertising simply didn't exist. As it turns out, that world does
exist-it's called Cuba. However, Cuba's lack of advertising highlights
some important tradeoffs.
When I say Cuba doesn't have advertising, I'm obviously exaggerating a bit.
I just didn't see much advertising. No billboards. No television ads (as
far as I could tell-though cable channels originating outside Cuba did have
ads). No Internet ads (few Cubans can even afford Internet access). No
leafleting. About the only "advertising" I encountered was store signage
and oral pitches.
This ad-free environment may sound utopian, but consider the principal
reason why advertising is so scarce: because there aren't a lot of things
to buy, and not many people can afford to buy them. In effect, the lack of
advertising is correlated with the Cuban economy's consumer activity. With
only a thin layer of consumer activity, advertising isn't needed and rarely
could be profitable.
Cuba also doesn't have much advertising because there's little competition
in Cuba. The government effectively runs all of the retail stores (other
than mom-and-pop knick-knack stands), so there's no inter-retailer
competition and no need for retailers to advertise against each other. The
most visible private sector are the tourist services like privately-run
restaurants and transportation. Even then, most of these services aren't
high-margin or differentiated enough to support advertising.
Just like Ford's Model T: "Any customer can have a car painted any color
that he wants so long as it is black"
Manufacturers also don't advertise in Cuba. There aren't that many
domestic Cuba manufacturers of consumer goods, and due to government
control, they rarely compete with each other-and unless the government
subsidizes them, most Cubans can't afford the goods anyway. Foreign
manufacturers have little incentive to advertise as well; even when they
crack the tiny domestic market, often retailers only carry one choice. So,
for example, I visited a couple of government-run stores selling appliances
like refrigerators and dishwashers. Although the range of different
available goods was better and more technologically current than I
anticipated, typically the retailer offered only one manufacturer's option
for each good. (See photos 1 and 2). Thus, a Cuba consumer who wants
a 30 cubic foot refrigerator may only have one choice-and the
manufacturer's guaranteed sale eliminates the need for advertising.
Further, because of the lack of competition, the low sales volume and the
costs of importing the goods (none were manufactured in Cuba), prices were
high-at least as high as prices in California, and far out of reach for all
but the wealthiest Cubans.
So, how do you really feel about advertising? Consider two options:
o Option A: an economy where advertising is unnecessary because there are
limited product choices, no competition either at the retailer or
manufacturer level, and a tiny consumer class able to buy the goods in the
market. o Option B: an economy overrun by advertising, much of which
creates false distinctions between products, manipulates consumer
preferences, creates consumerist anxieties about their perceived
deficiencies, and increases consumers' costs for the branded goods. At the
same time, it has a robust competitive market with a wide range of
high-quality goods at attractive prices, where advertising informs
consumers of new product offerings and features and helps competitors
differentiate between marketplace offerings so that consumers can find what
they're looking for and determine their reservation price accordingly.
I imagine many consumers would prefer a hypothetical option C, where
consumer get all of the benefits of a fiercely competitive market without
the "costs" of ubiquitous and sometimes-manipulative advertising. But
option C may be oxymoronic; one possibility is that advertising is a
precondition to fierce competition.
If Option A sounds attractive to you at all, get to Cuba pronto. Cuba seems
destined for Cancun-ification, in which case any advertising-free charm it
currently has will be erased completely.
[This is the final part of a three-part series of posts about my March 2013
visit to Cuba.]
More about Cuba:
* Part 1 of the series: Havana, Cuba And The Dead Hand Of The Municipal
Planner * Part 2 of the series: Cuba Is A Tough Place For Vegetarians -
And That Won't Change Any Time Soon * My wife's post, Reflections on
Visiting Cuba * My wife's post, Want Vegetarian Food or a Spinning Class
in Cuba? Tough * My photos from Cuba. A smaller gallery of my
favorite photos. Specific galleries: vegetarian food, old cars,
propaganda, Havana stores * My wife's photos from Cuba * My
videos from Cuba
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