Math is All Around Us…Even in Marketing
A Company’s “Assets = Liabilities + Owner’s Equity” Equation can Influence Customer Behavior.
I was a tutor for Huntington Learning Centers, and my non-SAT prep students would always complain about math. They'd say things like, "I'm going to be a writer. I won't ever use math."
Math, however, is a fundamental aspect of every part of life. Woe is (was) my students, and woe is me. I am NOT a math person. Just ask my checkbook.
I am, however, a writer. A marketing and proposal copywriter.
Taking the "math is inescapable" theory one step further, corporate finance and accounting permeate every part of business, including my specialty, marketing. As a copywriter, I constantly examine financials and identify ways to turn potential negatives in the "Assets = Liabilities + Owner's Equity" equation into positives.
Why? Customers—meaning companies or individual purchasers—do not want to purchase from a financially unstable organization. A supplier's financial stability is a key influencer on customer behavior when making high-involvement—aka high-cost purchases.* In general, the higher the cost of something, the more heavily a customer is to research the product and the brand before making a purchasing decision.
I'm defining "supplier" as any company that produces a product or a service.
A common requirement in business-to-business (B2B) or business-to-government (B2G) competitive bids is Please provide your annual audited financial statements for XX number of years.
Purchasers want to know that the supplier is financially stable before making a capital purchase, such as a fire alarm system, an HVAC upgrade, or a specific model fleet vehicle.
The same is true for small businesses. Many organizational purchasers will ask for personal financial statements or tax filings in lieu of audited financial statements if they know small businesses will be bidding.
As a proposal writer, I see proof of financial stability requirements in roughly 85% of proposal requests (RFPs).
Possibly more. I can recite the introductory statement accompanying financials in a bid from heart: [Company] is a financially stable organization. In 20XX, assets were in liabilities. Total shareholder equity was $$.
Consumers will also look to financially stable companies when purchasing decisions and investments. For example, you might review a company's balance sheet before purchasing stock, research a bank's financial records before opening a checking account, or buying a major home appliance from a different retailer than the one you initially planned on because of a news article saying the company was in financial trouble.
To use a current example, JoAnn Fabrics, which just filed for bankruptcy a second time in 12 months and is closing stores, sells Husqvarna Viking sewing machines, which range in price from $400 to $9,000. I recently saw a Facebook post with a sign posted at one of the store's Viking Sewing Galleries saying, in a nutshell, We know JoAnn's is closing stores. Please buy a machine from us anyway.
JoAnn's knows that its lack of current financial stability means people will look elsewhere for a sewing machine.
Also, don't ask me why you need a $9,000 sewing machine. I've been quilting for 25 years and still have no clue.
The "assets = liabilities + owner's equity" equation also plays a role in building brand equity because of its relationship to customer trust . I love the staff at my local JoAnn's, but the recent bankruptcies have me a bit wary of the company as a whole these days.
As surely as math is inescapable no matter what you do in life, so are balance sheets.
Cheers,
Cris
**Yes, I know that widespread consensus is that dashes are evidence of AI-generated content. I was using dashes in my writing long before even predictive text was a thing. Old habits are hard to break. I assure you this is my writing.
References:
Mau, S., Cvijikj, I. P., & Wagner, J. (2015). From research to purchase: an empirical analysis of research-shopping behaviour in the insurance sector. Zeitschrift Für Die Gesamte Versicherungs-Wissenschaft, 104(5), 573–593. https://doi.org/10.1007/s12297-015-0310-1
Hyken, S. (2020). Now More Than Ever, Customers Want to Trust Companies They Do Business With. Forbes.com. https://www.forbes.com/sites/shephyken/2020/07/26/now-more-than-ever-customers-want-to-trust-companies-they-do-business-with/
Sidhu, B. K., & Roberts, J. H. (2008). The marketing accounting interface - lessons and limitations. Journal of Marketing Management, 24(7–8), 669–686. https://doi.org/10.1362/026725708X345461
