<p>Marketing is obviously relevant. We can observe that firms spend money on marketing. If it had no effect, they wouldn't do it. Whether it is a "factor of production" depends on your definition. </p>

<p>In my book, a factor of production is any input that <em>directly</em> contributes to the production (creation) of the good or service. That is, it enters some production function <span class="math-container">$f$</span> that maps "factors of production" into "output", a quantity of the produced good. In that sense, marketing is <em>not</em> a factor of production, because it has no <em>direct</em> effect on how many goods are produced. In my eyes, marketing is supposed to influence the <em>demanded</em> quantity, not the produced quantity. Of course the two are related, but not directly.</p>

<p><a href="https://www.cambridge.org/us/academic/subjects/economics/industrial-economics/industrial-organization-markets-and-strategies-2nd-edition" rel="nofollow noreferrer">Belleflamme and Peitz</a> have a nice subsection on adverstising (6.1), where they discuss three distinct aspects of how advertising (which I use synonomously with marketing) affects demand: it can be persuasive, informative or complimentary. Such a distinction matters, because the welfare effects differ. For instance, informative ads may increase welfare as consumers can make better-informed choices, whereas persuasive ads may decrease welfare as it distorts consumers' real preferences.</p>

CC BY-SA 4.0
2019-05-25T01:16:04.877Z
Agreed. If there were an exogenous positive shock to demand, would that *necessarily* require increased use of advertising to produce more supply as we move up the supply curve? Clearly not.
dismalscience
CC BY-SA 4.0
2019-05-24T13:24:59.147Z
2019-05-24T13:24:59.147Z
Bayesian
<p>Why not? Production factors include any human input by definition, and thus marketing efforts are included, needless to say.</p>

CC BY-SA 4.0
2019-05-24T12:41:07.543Z
2019-05-24T12:41:07.543Z
Tom M.
<p>This is a sightly unconventional question, but I want to know whether marketing efforts can be considered as a factor of production. After all, if no one knows about your product, you can't make a profit. Also, marketing efforts may, in some or most cases, show diminishing returns. It is a kind of labor.</p>

<microeconomics>
Can marketing efforts be considered to be a factor of production?
Joebevo
# Can marketing efforts be considered to be a factor of production?

(Asked by: username_0 on 2019-05-24)

This is a sightly unconventional question, but I want to know whether marketing efforts can be considered as a factor of production. After all, if no one knows about your product, you can't make a profit. Also, marketing efforts may, in some or most cases, show diminishing returns. It is a kind of labor.

**Tags:** microeconomics


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## 2 answers

### Answer by username_1 on 2019-05-24. Score: 2

Marketing is obviously relevant. We can observe that firms spend money on marketing. If it had no effect, they wouldn't do it. Whether it is a "factor of production" depends on your definition.

In my book, a factor of production is any input that *directly* contributes to the production (creation) of the good or service. That is, it enters some production function $f$ that maps "factors of production" into "output", a quantity of the produced good. In that sense, marketing is *not* a factor of production, because it has no *direct* effect on how many goods are produced. In my eyes, marketing is supposed to influence the *demanded* quantity, not the produced quantity. Of course the two are related, but not directly.

[Belleflamme and Peitz](https://www.cambridge.org/us/academic/subjects/economics/industrial-economics/industrial-organization-markets-and-strategies-2nd-edition) have a nice subsection on adverstising (6.1), where they discuss three distinct aspects of how advertising (which I use synonomously with marketing) affects demand: it can be persuasive, informative or complimentary. Such a distinction matters, because the welfare effects differ. For instance, informative ads may increase welfare as consumers can make better-informed choices, whereas persuasive ads may decrease welfare as it distorts consumers' real preferences.

> **Comments:**
> **username_2**: Agreed. If there were an exogenous positive shock to demand, would that *necessarily* require increased use of advertising to produce more supply as we move up the supply curve? Clearly not.  

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### Answer by username_3 on 2019-05-24. Score: 0

Why not? Production factors include any human input by definition, and thus marketing efforts are included, needless to say.


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