The political marketing strategy

1. The political marketing strategy

2. Candidates • Motivations • Power • Respect • Ideology • Etc • 1946 a group of California Republicans pooled their resources to defeat an incumbent Democrat they abhorred • Their first obstacle was fundamental – they had no candidate. Democratic representative Jerry Voorhis, the hated incumbent, was believed to be far too strong for conventional Republicans to risk the race • The group undertook a very unconventional recruiting method: they place an “announcement” in the newspapers of the congressional district. Applications were invited from “any young man, resident of the district, preferably veteran, with a fair education, no political strings or obligations, and possessed of few ideas for the betterment of the country at large.” • The result yielded wide-ranging historical and political consequences. A young naval officer who was finishing his World War II military duty found out about the announcement and responded. • The young seaman’s name? • Richard Nixon • The committee had one main question for him. Was he a Republican? “I guess I am. I voted for Dewey,” Nixon reportedly said (Source: Powell and Cowart 2003)

3. Spatial competition Spatial competition • Although policy issues are not the main factor that determines elections, we would start with them for the following reasons • They frame the political system • They are pre-requirement • Analyzing them will lead us to some interesting non-ideology insight • Furthermore, in PMS you can either change perceptions (as discussed in length so far) or objective characteristics • You can hardly change the objective characteristics of a candidate • You can not change the objective attachment to a party • You can only change (to a limited degree) the objective position on policy issues

4. Game theory Game theory • Characteristics • There are at least two rational players • Each player has more than one choices • The outcome depends on the strategies chosen by all players; there is strategic interaction • Example: Six people go to a restaurant • Each person pays his/her own meal – a simple decision problem • Before the meal, every person agrees to split the bill evenly among them – a game • Game theory is a formal way to analyze strategic interaction among a group of rational players (or agents) who behave strategically Thanks to Xinming Liu

5. Game theory Prisoner 2 Mum Confess Mum Prisoner 1 Confess Classic Example: Prisoners’ Dilemma • Two suspects held in separate cells are charged with a major crime. However, there is not enough evidence • Both suspects are told the following policy: • If neither confesses then both will be convicted of a minor offense and sentenced to one month in jail • If both confess then both will be sentenced to jail for six months • If one confesses but the other does not, then the confessor will be released but the other will be sentenced to jail for nine months. Thanks to Xinming Liu

6. Game theory Nash-equilibrium • If there is a set of strategies with the property that no player can benefit by changing her strategy while the other players keep their strategies unchanged, then that set of strategies and the corresponding payoffs constitute the Nash Equilibrium • In the example: • If player 1 chooses “Mum”, the best action for player 2 is “Confess” • If player 1 chooses “Confess”, the best action for player 2 is “Confess” • Thus, playing “Confess” is a dominant strategy for player 1 • The same logic holds for player 2 • Thus, in equilibrium both players confess • Notice that if they could have coordinated, they would have chose “Mum” • Is such a solution reliable? • What can the do about it?

7. Game theory Pat Opera Prize Fight Opera Chris Prize Fight Example: The battle of the sexes • At the separate workplaces, Chris and Pat must choose to attend either an opera or a prize fight in the evening • Both Chris and Pat know the following: • Both would like to spend the evening together • But Chris prefers the opera • Pat prefers the prize fight. Is there a Nash-equilibrium in this game? Thanks to Xinming Liu

8. Spatial competition Hotelling and ice cream Is this an equilibrium? 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

9. Median voter The median voter theorem • The two candidates should have the same position • They should both adopt the position of the median voter • The median voter is the one that 50 percent of the population is to her left and 50 percent to her right • This is the only equilibrium of this game • The voters chose a candidate by flipping a coin (since there is no difference between the candidates)

10. Median voter Product differentiation • This model implies no product differentiation • But in reality we observe a lot of product differentiation. Why? • Because in the market of products the rules of the game are quite different. Specifically, the winner takes it all does not apply • In which commercial markets do we observe situations similar to the “winner takes it all”? • Is there product differentiation in such markets?

11. Median voter A powerful concept • There are many reason to doubt the “median voter” result • For example, it ignores the fact that extreme voters are likely to abstain in such an equilibrium, thus, increasing the incentive of the candidates to move away from the median • However, it turns out that it is a very powerful concept • The most striking evidence supporting the median voter result relates to the size of the government

12. Median voter The share of government

13. Median voter Voters and share of government • Who usually likes a large share (of the government) and who dislike it and why?* • Usually as income increases the individual likes a smaller government • Thus, as the median voter gets (relatively) lower income, the larger should be the share of the government • In other words, as the median income gets smaller compared to the average income, the median voter theory predicts that the share of the government should increase • Did the median income of voters decreased (relatively!) in the 20th century? Yes, for two reasons • Inequality increased • African Americans got the right to vote in 1870 but practically started to vote during the 20th century. Unfortunately, African Americans income on average is much below the national average

14. Median voter Additional supporting evidence • The main two implications of the median voter result are* • Minimal differences between the two candidates • Election results should be close to a tie • In general we observe both

15. Median voter Clinton and the 1994 revolution • Many thought that Clinton could do little more than bide his time until inevitable defeated in November 1996 • …and that challenge would rise from within the Democratic ranks • In practice, not only did Clinton escape a primary challenge, but he held a consistent double-digit lead over Dole throughout most of 1996 • After 1994 there were two school of thoughts about how the president should proceed • The first was liberal • Why should the president move to the right? • Why should he cast himself as a Republican in Democratic clothing? • The other school (Dick Morris) took the moderate approach • Press against the Democratic left and simultaneously against the Republican right, find the center, and then rise above partisan conflict • “The president needed to take a position that not only blended the best of each party’s views but also transcended them to constitute a third force in the debate” (Source: Shea and Burton 2001)

16. Median voter Senators getting closer • Amacher and Boyes (1978): using rating given to Congress members by the Conservative Coalition, they observed each senator’s deviation from the mean rating of House members for that state • Senators with 5-6 years until their reelection campaign deviated by 29.6 percent • Those with 3-4 years deviated by 25 percent • Those with 1-2 years deviated by 19.3 percent

17. Median voter Are they really at the center? Bush Kerry Gore Bush Clinton Dole No Clinton Bush Bush Dukakis Mondale Reagan

18. Median voter Why aren’t they at the center? • More than one dimension • Different perception about the location of the median voter • Primaries • “Mrs Clinton will probably face a much more formidable field of competitors than Mr Bush did in 2000 (when John McCain was pretty much it). Her repositioning has already opened up space to her left which is being filled by Russ Feingold and John Edwards.” (The Economist, January 12, 2006) • The primaries are public. If you have a strong competition, you might need to move away from the median voter. How can you move back after you won the nominee without loosing your credibility?* • Vagueness • They have policy preferences • The threat of a third candidate entering the race • Differences in risk

19. Median voter Policy preferences: evidence • Both candidates adopt a similar non-popular position • Nixon and Humphrey opposed the popular move of increasing the bombing of North Vietnam • Both resisted the popular demand for a Medicare plan which would cover the whole population (Source: Wittman 1983)

20. Median voter 33% 26% 48% 26% 33% Threat of a third candidate entering C A A C 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% B B

21. Median voter Incumbent and challenger • In many elections we have an incumbent and a challenger • US presidential elections • Congress • Europe and many other democracies • There are many differences between the two. The most important one is “knowledge about the candidates” • We know a lot about the incumbent, since we have observed not only his promises but also his actions during the last four years • In most cases, we know very little about the challenger • For example, “Jimmy who?” 14.8 percent knew his positions on Taxes in February 1976 (compared with 60.1 percent for Ford); 13.7 percent on Defense (65.7 for Ford); 10.0 percent on Abortion (48.9 for Ford) • What are the implications of this difference?

22. Median voter Risk versus familiarity • Since we are familiar with the incumbent we have a sense of ease with him (as discussed earlier in the semester), even if we do not appreciate him too much – he is the devil we know • Since we are uncertain about the challenger, he is a riskier choice for us • Thus, this dimension gives the incumbent an advantage over the challenger • There are additional advantages such as • Setting the agenda • More contributions • etc

23. Median voter Flexibility versus rigidity • Since we know the incumbent, we have a clear perception of his attributes, priorities, and policy positions. This means that he cannot easily change his perceived positions • Remember that Clinton start moving toward the median voter in 1994, two year before the elections • When George Bush realized (in 1992) that he needs to refocus his presidency (from foreign policy to domestic issues) he faced a lot of difficulty in convincing the public • I will change America as I have changed the world • Jim Baker will be the domestic Czar • On the other hand, the challenger can adopt almost every position • For example, Clinton in 1992 and Bush in 2000 • Thus, this dimension gives the challenger an advantage over the incumbent

24. Median voter Risk versus flexibility • The analogue of this tradeoff is the risk versus expected return with respect to stocks • In which cases the advantage of the challenger is more salient and in which cases the incumbent advantage?* • When the country experiences a significant change since the last elections, the challenger’s advantage is more salient. In such a case the incumbent finds it hard to convince the new median voter that he shift gears • Indeed, an example of such a change is the fall of the Communist countries in 1989 and the victory in Iraq in 1991 • Thus, when the median voter moves between elections, the challenger is likely to win and if the median voter did not move, the incumbent is likely to win • This (a) can explain the deviation from the median voter theory, and (b) suggest an interesting insight into PMS

25. Median voter The deviation from the median voter • Case 1 – the median voter moved significantly during the last four years • The incumbent will remain close to the previous location of the median voter, while the challenger will position himself close to the new location of the median voter – thus, they will hold different positions • Case 2 – the median voter hardly moved since the last elections • The incumbent is both less risky and located well. He will win. Who will be willing to compete against him (from the opposite party)? • An ideologist: an extremist who find it as an opportunity to raise the ideological flag • Thus, the candidates’ positions would be differentiated Median Voter Median Voter Incumbent Challenger

26. PMS: specific aspects Insight for PMS • The incumbent should always build on his advantage by reminding voters the risk associated with electing the challenger • Indeed, such an approach is almost always used by incumbents • Bush 1992 • do not gamble by electing Clinton • You do not really know this guy • Flip flopper • Bush 2004 • The same thing? • When the challenger has the advantage he should be promoting a sense of “change”, “hope”, “new future” etc • There are many examples of this • The best one is obviously Clinton 1992 • Don’t stop thinking about tomorrow • Peter Hoekstra (R-Michigan) in the primaries of 1992. He rode (in a parade) a 1966 Nash Rambler, made on the same year that his opponent was first elected. The sign on the car read: “Isn’t it time for a change?”

27. PMS: specific aspects Another case where the campaign can only ride the wave: security • The sense of security is critical in elections • When voters feel secure they tend to keep the incumbent • When voters feel insecure on economic issues, they tend to vote for “left-wing” parties • When they feel insecure on foreign affair issues, they tend to vote for “right-wing” parties • Examples: consider the US, and also the European countries during the last ten years

28. PMS: specific aspects Vision • Leadership is one of the most important characteristics of a candidate • Thus, presenting candidate’s vision for the future is a critical aspect in PMS • One of the best positive example is Clinton 1992 • One of the best negative example is Dole 1996 • He constantly switched messages and was not able to track down the USP • “The Better Man for a Better America” • This is also relevant in Congress • The best example is the Republican party in 1994 – Contract with America • shrinking the size of government, promoting lower taxes and entrepreneurial activity, and both tort reform and welfare reform • The worse example, so far, the Democratic party in 2006

29. PMS: specific aspects – dynamic The dynamics of a campaign • Salespeople strategy • In the first phase: building identification, identity and a sense of belonging • In the second: give a “reason” to vote • In man-Out man strategy (Chotiner against incumbents) • Start with a negative campaign • “If you do not deflate the opposition candidate before your own candidate gets started, the odds are that you are going to be doomed to defeat” • Only then positive image building • Starting date • Escalation

30. PMS: specific aspects – dynamic Starting date • As Maarek points out, there is no “golden rule” • However, an unknown candidates should probably start early (subject to budget constrains) • Still, a counter example, Ron Lewis (R-Kentucky) • McConnell (Sen. R-Kentucky and chief strategist for the party) “A key part of this was keeping quite. We said to everybody, ‘We can’t alert the other side early’. It was important they think as long as possible that this was a chip shot.”

31. PMS: specific aspects – dynamic When to escalate?* • Progressive escalation • It relies on a corresponding increase in voter interest • ‘blitz’ • Gets a lot of attention while it is “aired” • Step-by-step • My favorite • Stop-and-go • When the politician lacks adequate funds

32. PMS: specific aspects – communications Communications • Rallies • Aren’t we convincing the convinced? • Proximity and likeability (also walkabout) • Rock stars are using concerts to stimulate CD sales • Prestige supporters • Information and imitation • Posters, buttons, tee-shirts, key-chains etc • Why is this important?* • Competency • Bandwagon effect • PR and media • Soon • Get out the vote • Canvassing, Leaflets, direct mail, phone banks, emails, etc • Activists • The should all be on the same page • Either by meeting or by internal messages • Soon

33. PMS: specific aspects – communications Political advertising* • Voters learn from ads • Exposure to campaign ads produces citizens who are more interested in the elections, have more to say about the candidates, are more familiar with who is running, and ultimately more likely to vote • Targeting • Most of the money went to states that were decided by less than four percentage points • “the Kerry campaign is more likely to put its ads on a show like Judge Judy, which is targeted at women and older women, and where the Bush campaign differs a bit from the Kerry campaign is the Bush campaign is more likely to put ads on shows like Law and Order, NYPD Blue, Jag, shows that tend to target men and younger men.” • Negative • Let others do the dirty work for you • More in competitive markets • More toward the end

34. PMS: specific aspects – communications Negative campaign • Why do we see more in political campaign than in commercial markets?* • Two candidates • It is hard to run a negative campaign against 6 competitors • Thus, we should expect to find more negative campaign in commercial markets when the number of players is small. Is it really the case? • The winner takes it all • Recall that negative often also hurts the sender • Consider the following example. In the starting point, firm A has 100 costumers and B 80 • B starts a negative campaign • The results, A has 50 costumers and B 55 • In commercial markets, the result is devastating for B. In the political arena, it is a great victory

35. PMS: specific aspects – monitoring Monitoring • The bottom line – the market share • The market share among segments of the population • The weights • The perceptions • What if we find that the plan does not work? • Change gears only if the trouble is major • Frequent changes throughout the campaign send a very bad signal to voters. Why?