All Commentary
Wednesday, December 14, 2016

Santa vs. the State: The Free Market Miracle on 34th Street

Turns out that Santa is a marketing genius.

As a Millennial, I will admit that I’ve never seen the original Miracle on 34th Street. However, the 1994 remake of the film holds a special place in my heart. While watching the film again for the first time in almost 15 years, I realized something I had never noticed before: the film is a wonderful lesson in human action and the basic principles of free market economics.

The story focuses on a struggling Manhattan department store, Cole’s. Having just narrowly escaped complete financial ruin, the department store is now indebted to a nameless big bank and must find a way to repay its debts while also making enough of a profit to stay afloat.

Shopper’s Express chooses to do what many companies do when they cannot compete; they turn to the government.

However, the store’s path to success is blocked by Shopper’s Express, Cole’s rival department store. Shopper’s Express is rooting for Cole’s failure so it can swoop in and buy out the store. To save the business, Cole’s needs nothing short of a Christmas miracle.

Luckily, our “department store in distress” happens upon on the real Santa Claus, who, coincidentally turns out to be a marketing genius.

After being hired to play Cole’s Santa Claus, the real Saint Nick begins telling parents where they can find all the items on their children’s Christmas lists for the most affordable prices. Unfortunately, this means Kris Kringle  is often sending parents to Shopper’s Express and other department stores offering lower rates. While this seems counterproductive to Cole’s holiday sales goals, Santa has a trick up his sleeve.

Before upper management has time to crack down on this rogue Santa’s act of marketing treason, a Cole’s executive is approached by a stern customer, determined to give him a piece of her mind. While he is expecting a verbal beating, he is surprised when this confrontation goes in a completely different direction.

After a lecture about Cole’s outrageously expensive prices, this typical, everyday mother explains that Santa’s behavior demonstrates the store’s willingness to put the customer ahead of the “almighty dollar at Christmas,” and for this, she is pledging her consumer loyalty to Cole’s. She completes this sentiment by adding, “I’ll be coming here for everything but toilet paper and bananas.”

A Risky Move

By listening to its consumer base and realizing that consumers value something more than just low prices, Cole’s seizes this opportunity and launches a campaign centered on the theme: “Our Santa will find you the best prices, even if that means sending you somewhere else.” As it turns out, this risky business endeavor works in Cole’s favor and business begins to boom thanks to Jolly Old Saint Nick.

As a result, Shopper’s Express begins rapidly losing customers to Cole’s. However enraged this makes Shopper’s Express, it has only itself to blame. By failing to acknowledge other market incentives that might appeal to consumers beyond just low prices, Shopper’s Express has failed to adjust its model to market demands.

Infuriated that Cole’s has managed to avoid financial ruin yet again, Shopper’s Express stoops to desperate measures to ensure Cole’s demise.

By taking a risk, Cole’s saved their store, Kris Kringle, and ultimately, Christmas.

Rather than compete with Cole’s incomparable Santa Claus and his brilliant, parent-friendly campaign, Shopper’s Express chooses to do what many companies do when they cannot compete organically in the free market; they turn to the government in order to stomp out the competition, a perfect illustration of cronyism.

A plan is set in motion and Mr. Kringle is setup by Shopper’s Express to appear violent, and is then prosecuted by the state on the grounds that he is mentally unfit to live outside of the state’s custody. A dramatic court case ensues and the state’s attorney asks the court to condemn Mr. Kringle to life in an asylum, all thanks to Shoppers’s Express.

In the end, however, Cole’s consumer loyalty pays off tenfold as all of Manhattan rallies behind Cole’s and Kris Kringle, who miraculously wins his case just in time to deliver presents to all the world’s children on Christmas Eve.

While Santa was able to avoid spending the rest of his days in a state asylum, the real winner in this story is Cole’s. By taking a risk and trying an unconventional campaign centered on the market’s response to consumer demands, Cole’s was able to save their store, save Kris Kringle, and ultimately, save Christmas.

Republished from Generation Opportunity.

  • Brittany is a writer for the Pacific Legal Foundation. She is a co-host of “The Way The World Works,” a Tuttle Twins podcast for families.