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The Physics of Marketing – Chaos Theory

Chaos TheoryChaos Theory states that little things can mean a lot.  For example, the wind created from a butterfly flapping its wings in the jungle could result in a tornado forming in Southwestern Ohio.

Chaos Theory is why the weather can only be predicted for a few days out.  There are so many variables that come into play, that long term predictions become virtually impossible.  Over time variance in inputs result in patterns which can change in unexpected and unpredictable ways.

Chaos Theory was developed by Edward Lorenz, who was an American mathematician and meteorologist.  He devised the theory as a result of rounding errors as he was trying to compute weather patterns.  He found that these small changes in rounding of numbers could result in dramatically different outcomes.    Thus he concluded that minuscule changes in inputs can have enormous consequences on the ultimate outcome.

So how does this pertain to marketing?

I think that the analogy to marketing is rooted in my belief that everything a firm does is in fact marketing.  If this is true, than seemingly little things like how clean you keep your lobby, how you show appreciation to your customers, or how you handle complaints can have a huge impact on your success.  While it is not possible to predict exactly how each interaction will play itself out, it is certain that in this age of interconnection and transparency patterns will emerge.

Thus, just as Chaos Theory states that little changes can have a big impact, the same holds true in marketing.  Thinking of outsourcing your customer complaint line?  Yes it might be cheaper, but it will make a difference in the ultimate outcome.  That minor change could have a major impact.  Ask Dell about that.

We live in a time where consumers have unlimited choices.  Thus as marketing professionals, we must take great pain to make sure the the inputs that can be controlled are controlled.  We must proactively seek to improve the customer experience.  We must seek to add value relative to the price that is being paid.  We must make sure to notice the little things that most would not notice.

Some might argue that Starbucks was a victim of Chaos Theory.  Is their recent trouble due to the fact that they opened too many stores too quickly?  Was the brand just a fad?  Do $4.00 gas prices and rising unemployment come into play?  Are they hurting because they focused on things like music and credit cards instead of coffee and customers?  Did the change from the manual to automated espresso machines dilute the brand?  I have no idea which of these things actually caused their current problems.  It might be all of them, it might be a butterfly in the jungles of South America.  I would argue however that these things led to a pattern with a predictable outcome.   Taken on their own they are small, but combined they create a difficult situation that would have been difficult to envision just a short time ago.

So for marketers, control that which you can control.  Focus on delivering quality to the consumer.  Pay attention to changes in outcome.  And, pray that butterflies help you more than they harm you.

How would you apply Chaos Theory to Marketing?  The world is waiting to find out.  Share your thougths, and change the world with your comments.  You never know what outcome they might produce…