Is Marketing a Lemon Market? by Kolbrener, the lead generation experts

One of the most problematic “lemon markets” in society are those involving services, such as the labor market, as discussed in lecture and in the draft textbook.  I found this article entitled “Is Marketing a ‘Lemon’ Market” through the website of an unlikely source: a marketing firm.  In it, Justin Victor, a summer intern, argues that the reason that the most excellent marketing firms do not get very much recognition is due to the fact that there is so much marketing of poor or mediocre quality, that the overall perception of the market is that it is of low value.  This is in accordance with Akerlof’s work using Asymmetrical Information Theory because, as Victor explains, there is limited valuable information available to the public about the quality of marketing firms and their strategies.  Victor goes on to explain that the high reputation of an agency does not adequately describe its ability to serve a particular client’s needs, and that other indicators, like client portfolios and website profiles may exaggerate actual merit.  This information gap drives the overall market towards mediocrity, since low-performing firms will be over valued, and the best performing firms will be underrated.  Because clients don’t necessarily want to risk paying more than an average value for what *might* be better service, excellent agencies are at a competitive loss.  This brings down market expectations and inflates the general feeling of discontent that is commonly expressed in regards to marketing.

Victor feels that information, on both sides of the trade, is the best remedy for the adverse effects of the marketing lemon market.  He explains that when more reliable information is made available, clients feel more secure spending the extra money for high quality services, and firms will have a greater incentive to strive for excellence.  I feel that this is much easier said than done, and I also believe that it does not get to the heart of the problem.  If the marketing world feels that it is undervalued, then it is up to those firms that believe that they are truly capable of serving their clients’ needs to take the initiative to invest in experienced and talented personnel, successful vendors, training, and equipment.  The signaling effects of such actions would demonstrate to potential clients exactly which firms are dedicated to performing at a level that is satisfactory and beyond.  This would increase the demand for those few, yet dependable, agencies, and once this is observed by mediocre agencies, they will be forced to follow suit and competition should weed out those agencies that are unable or unwilling to cater to the higher level of expectations in the market.  Such equilibrium would be more desirable to society, and marketing would no longer be a “lemon” market.