The Physics of Marketing - Second Law of Thermodynamics
June 13, 2008 by davidebowman
The Second Law of Thermodynamics states that in a closed system entropy always increases. That means that when you put Coca-Cola in a refrigerator, the Coke will get cooler - but the refrigerator will put out heat into the world in order to make that happen. Yes the inside of the refrigerator is cool, but put your hand on the back, and you will get the idea. To make the inside of the fridge cool, the heat energy must be dispersed out of the system. Cold objects have low entropy, or disorder, and hot items higher entropy (think of those hot molecules wildly bouncing). Heat does not flow from a cold object to a hot one, but rather from hot to cold until an even temperature is reached. The Coke does not absorb the heat from the air in the refrigerator making the can warmer, but rather, as would be expected, the can gets cold.
I must admit that relating this concept to marketing has been a challenge, so I am really hoping to get some good feedback from the scientists out there. Still, I will take a stab at it, and hopefully learn in the process.
The thought that comes to mind for me revolves around product launches. A hot new product is introduced, like the iPhone. With a good marketing campaign, this product creates tremendous disruption in the marketplace.and as people begin to use it. Over time it becomes adopted, prices come down, and the heat generated by the product dissipates. The product introduced disorder, which ultimately created change dispersed throughout our universe. The iPhone will yield cheaper copy cat products, and the technology will eventually become integrated into the population. (Now this example assumes that the product is successful)
Know that because of this law, the heat of success will cool. You had better be able to introduce further innovation if you want to remain viable. Why has Apple had such a good run? They have continued to introduce entropy into the marketplace with hot new exciting products. iPod, Shuffle, Nano, MacBook, MacAir, iPhone, etc…
Another example that came to mind was the idea of maximizing your strengths as opposed to trying to focus on areas of weakness. By focusing on strengths, you are more likely to produce change - resulting in entropy. Focusing on doing what you do well, finding ways to do it better, and developing ways to add new and innovative value is similar to creating something hot and sending out that energy. Weakness on the other hand, represents low entropy to me. If you struggle in an area, chances are your improvements will be marginal at best. Thus you are only going to go from cold to slightly less cold. You are unable to impact change with the weakness approach. Ultimately if you can generate enough heat with your areas of strength, you can make weakness irrelevant - because the final level of entropy will be elevated to a greater extent. Be the best in the world at what you do best, and hire that best in the world where you are weak.
I would love to hear from you. How would you relate the Second Law of Thermodynamics to Marketing? Please share your thoughts on this by leaving a comment. Educate me and the rest of the world with your brilliance.
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Dig the Business Physics metaphors. They are driven in creative similarities. Look forward to more, such as Newton’s Laws, Murphy’s Laws (maybe not, ha) perhaps some physiology, biology, military strategy, and other comparisons that provide interesting direction! Keep expanding our understanding of the market as a living, breathing, and ‘alive’ entity. Business truly is a science as well as an art.
Okay, it has taken me awhile for me to come up with this one, but here goes.
The Laws of Thermodynamics are fundamental rules which govern all processes in nature. To the casual observer, they can be confusing and misunderstood or entirely forgotten about. However, to anyone with a basic understanding of the Laws, they are a reminder that nothing is free in nature. For the former, please call me and don’t read anymore of this post. I have a perpetual motion machine and an energy pump that I’d like to sell you. For the latter, read on.
The First and Second Laws of Thermodynamics remind us simply that (1) energy is limited and (2) there is a maximum efficiency to which energy can be used (i.e. energy always comes at a cost). Think about that the next time you’re driving your fancy hybrid vehicle down the road. The batteries in your car came at a cost. The Nickel in them had to be mined, rifined, and processed at a huge cost to the environment. This is the Second Law in action. The entropy of the universe must increase (you can’t get something for nothing). Where the hybrid does excel is in its ability to take advantage of limiting its future losses to nature. Having a low profile, narrow tires, and ‘recouping’ some of the losses when braking by charging its batteries. That is the best we can do: limit our losses. The lowest entropy, and therefore most efficient cars, are those that utilize the most efficient processes when being designed, built, and operated (for example the new Smart Car).
Since the Laws of Thermodynamics are Laws and apply to all processes, then they must be applicable to marketing right? How efficiently can a product be marketed to a target audience? A company may put little effort at advertising its product or it may pour huge amounts of money into a campaign. The efficiency of its campaign could be measured by looking at the effort (dollars) to market the campaign compared to the market response (profit). I’m sure there are more ways and more accurate tools to measure this in the marketing world (not my field of expertise). In a heat cycle, this can often be measured by comparing the energy expended in the real cycle (Rankine Cycle) with that of an ideal cycle (like the Rankine Cycle of a Carnot Engine). The difference is the efficiency.
In the end, a company must seek the balance between spending and earnings to maximize profits (efficiency) since the Second Law tells us that this is the best that any of us can do.