The First Principles of Marketing: A Guide to Lasting Success

We Live in a Copycat World

We live in a world where it seems like everything has already been done. From product frameworks to growth playbooks, it often feels like we’re just copying what has already been done. This phenomenon is known as the “copycat world” and it’s a reality that many of us face.

The copycat world is a result of the ever-increasing speed of technology and the internet. It’s easier than ever to access information and ideas, which means that it’s also easier to copy them. This has led to a culture of imitation, where people are more likely to copy than to create something original.

The copycat world has garnered immense popularity, not only among the youth, but also amongst renowned celebrities, influential figures, and intellectuals. Austin Kleon, a New York Times best-selling author, has embraced the copycat phenomenon so much that he wrote a book titled “Steal Like An Artist” which outlines the do’s and don’ts of what is considered acceptable and unacceptable imitation. By doing so, he encourages readers to learn and take inspiration from the successes of others and to build on them.

Reasoning by Analogy

“Only dead fish go with the flow.” — Unknown

Having been around for centuries, the copycat world is related to the principle of reasoning by analogy in that it involves taking an existing idea or concept and adapting it to a new context. Analogical reasoning proceeds from the observation that things which are similar in some respects are probably similar in other respects too. Through this type of critical thinking, several everyday items made their way into production thanks to technology developed by NASA. Companies took the technology developed for space exploration and found ways to transform it, creating real-world products widely used today. Items such as memory foam, baby formula, thermometers, invisible braces, and even the Super Soaker exist today due to analogical problem solving.

Reasoning by First Principles

“I don’t know what’s the matter with people: they don’t learn by understanding; they learn by some other way — by rote or something. Their knowledge is so fragile!” — Richard Feynman

Analogies can’t replace understanding. While it’s easier on our brain to reason by analogy, we are more likely to come up with better answers when we reason by first principles. Reasoning by first principles is a powerful problem-solving technique that involves breaking down a problem into its most basic components and then building up a solution from there. It is a form of critical thinking that requires a deep understanding of the underlying principles and concepts that govern a particular problem. By breaking down a problem into its most basic elements, it allows us to identify the root cause of the problem and develop a solution that is based on sound logic and reasoning. This approach can be used to solve a wide variety of problems, from complex engineering problems to everyday life decisions.

The distinction between reasoning by analogy and reasoning by first principles is similar to the difference between being a chef and being a cook. While these terms are often used interchangeably, there is an important nuance. The cook, who reasons by analogy, relies on a recipe. He creates something, perhaps with slight variations, that’s already been created. And if the cook lost the recipe, he’d be in trouble. The chef, however, is a trailblazer. He understands the flavor profiles and combinations at such a fundamental level that he doesn’t even need a recipe. Rather, he is the person who invents recipes. He has real knowledge, not just know-how.

This is what makes reasoning by first principles one of the best sources of creative thinking. Thinking in first principles allows us to adapt to a changing environment, deal with reality, and seize opportunities that others can’t see. The pioneering ideas of first principles thinking have been embraced by many renowned figures, such as Johannes Gutenberg, John Boyd, and Aristotle. However, no one has mastered this philosophy more effectively than the renowned entrepreneur, Elon Musk. What’s most interesting about Musk is not what he thinks but how he thinks:

I think people’s thinking process is too bound by convention or analogy to prior experiences. It’s rare that people try to think of something on a first principles basis. They’ll say, “We’ll do that because it’s always been done that way.” Or they’ll not do it because “Well, nobody’s ever done that, so it must not be good. But that’s just a ridiculous way to think. You have to build up the reasoning from the ground up — “from the first principles” is the phrase that’s used in physics. You look at the fundamentals and construct your reasoning from that, and then you see if you have a conclusion that works or doesn’t work, and it may or may not be different from what people have done in the past.

Rockets are exorbitantly expensive, posing a major obstacle to Musk’s goal of sending people to Mars. To make this dream a reality, he had to ask himself: “What is a rocket made of? Aerospace-grade aluminum alloys, plus some titanium, copper, and carbon fiber. And … what is the value of those materials on the commodity market? It turned out that the materials cost of a rocket was around two percent of the typical price.”

Why is it so costly to launch a rocket into space? Elon Musk, a self-taught geniuswith degrees in economics and physics, realized that the only reason for the exorbitant cost was a lack of innovative thinking. He decided to take matters into his own hands and create SpaceX, to see if he could build rockets from scratch. By breaking down the problem into its first principles, he was able to identify the root cause of the problem and develop a creative solution that was much cheaper than the traditional approach. Using cost per kilogram to Low-Earth Orbit (LEO) — a standard industry metric to compare costs across space systems — SpaceX’s rockets have dramatically reduced costs to orbit. SpaceX Falcon Heavy’s cost of US$1,400 per kg is 700 times cheaper than Vanguard — the first family of NASA’s rockets — 44 times cheaper than the retired Space Shuttle program and 4 times cheaper than Saturn V — the rocket that took humans to the Moon in 1969 on the Apollo 11 mission.

The BuzzFeed Story

Jonah Peretti had a vision when he founded BuzzFeed in 2006 — to understand the psychology of virality and use it to create a wildly successful website. His strategy was simple — instead of publishing content people should read, BuzzFeed focused on content people wanted to read. This meant aiming to get maximum social shares, and putting distribution in the hands of readers.

Peretti’s approach to journalism was revolutionary, and he even disregarded SEO, saying, “Instead of making content robots like, it was more satisfying to make content humans want to share.” And share people did — from cat videos to articles, BuzzFeed’s content was widely distributed.

The key to BuzzFeed’s success was its distribution-based approach, which was based on obsessive measurement, A/B testing, and analytics. Thanks to Peretti’s vision and strategy, BuzzFeed quickly grew to be one of the most popular websites on the internet, with hundreds of employees and substantial revenue.

Jon Steinberg, president of BuzzFeed, explains the first principles of virality:

Keep it short. Ensure that the story has a human aspect. Give people the chance to engage. And let them react. People mustn’t feel awkward sharing it. It must feel authentic. Images and lists work. The headline must be persuasive and direct.

First Principles in Marketing

“Good marketing makes the company look smart. Great marketing makes the customer feel smart.” — Joe Chernov

Marketing is the key to success for any business. It is the process of creating, communicating, and delivering value to customers and managing customer relationships in ways that benefit the organization and its stakeholders. To craft a successful marketing strategy, brands need to have a deep understanding of the first principles of marketing. These principles include understanding customer needs, creating a unique value proposition, developing a strong brand, and utilizing effective marketing strategies. These fundamentals can be summed up in what is known as the four P’s of marketing — Product, Price, Place, and Promotion. These four elements — also known as the marketing mix — are the foundation of any successful marketing strategy, and understanding them from a first principles perspective is essential for any business looking to maximize their marketing efforts.

At the core of the four P’s is a deep understanding of our target audience. Most marketers make the cardinal mistake of defining their target audience based on assumptions or shared beliefs. When you think it through, anything that is not a law of nature is just a shared belief — a concept based on assumptions. We live in a world based on beliefs and assumptions. For example, we believe that the dollar, the pound, the euro or indeed any currency has value. But these pieces of metal and paper have no intrinsic value. The value is solely in the shared belief that these things have value.

To illustrate this further, a widely held shared belief about Millennials is that they are lazy and entitled whereas Gen-X and those born during the baby boom are loyal and hardworking. This is wrong. In fact, a 2015 study from the U.S. Bureau of Labor Statistics shows that the average American born between 1957 and 1964, the latter years of the baby boom, held nearly a dozen jobs between the ages of 18 and 48. Thus, Gen-X and Baby Boomers were job-hopping long before Millennials made it the popular thing to do. Also, since employers no longer offer hefty pensions and other golden opportunities, job hopping is simply inevitable.

A more serious shortcoming of assumptions — the potential to cause offense. For example, the stereotype of Irish people’s fondness for alcohol is well known — but that doesn’t mean that every Irish person even drinks alcohol, let alone frequently gets drunk. Put something clumsy and distasteful like this in your marketing messaging, and you’re almost certain to receive bad feedback.

Defining Your Target Audience

Marketers must begin by defining their target audience — it’s the first and most important step to creating a winning marketing strategy. The conventional approach will demand that marketers start by using what they already know — rather assume — about the brand’s ideal customers. However, when approached from a first principles perspective, all assumptions, opinions, and beliefs are questioned until we are left with the fundamental truths or components — otherwise known as first principles. Be leveraging a first principles approach, marketers can identify their ideal customer’s core set of needs by asking the following questions: “What is their problem? Why do they need to solve this problem? What are the solutions available to them in the market? What solutions have they considered? What solutions are most appealing and why? What solutions would they like but aren’t available in the market yet? What are their thoughts and steps that go into their decision making process?” Marketers should study their audience and keep asking probing questions in the form of a cooperative argumentative dialogue until everything knowable is known and they have broken down the problem down to its fundamental truths. This method of questioning — known as the Socratic Method — will help them gain the most accurate and comprehensive insights possible about their audience, their needs, and how best to reach them. They will know their audience like the back of their hands and unleash possibilities they never imagined.

The Four P’s of Marketing

Once the target audience is identified, the next step is to develop a marketing strategy that utilizes the four P’s of marketing: Product, Price, Place, and Promotion. Product refers to the goods or services being offered, price is the cost of the product or service, place is the location where the product or service is sold, and promotion is the way the product or service is advertised. These four P’s of marketing, also known as the marketing mix, are essential for marketers to create effective marketing strategies that will help them reach their goals.

“Don’t find customers for your product. Find products for your customers.” — Seth Godin

The product is the most important element of the four P’s. It is the foundation of the entire marketing strategy and should be carefully considered. The product should be designed to meet the needs of the target market, and should be of high quality. It should also be unique and stand out from the competition. The product should also be supported with good customer service and after-sales support.

Pricing is all about perceived value for the products or services offered. So, it’s important that marketers understand their customer’s motivating factors as well as the positioning of the product in their target audience. It’s also important to consider the cost of customer acquisition and retention. Pricing should be dynamic and flexible, allowing for changes in the market and customer preferences.

Place refers to the distribution of the product or service. It is important to consider the target market and the competition when deciding on the distribution channels. It should be chosen carefully to ensure that the product is accessible to the target audience and easy to find.

Promotion is the process of communicating the features and benefits of the product or service to the target market. It is important to consider the target market, the competition, and the budget when creating a promotional strategy. Promotions could include advertising, public relations, social media campaigns, influencer marketing, and so on.

By carefully considering each element, businesses can ensure that their product is attractive to the target market, is priced competitively, is easy to find, and is promoted effectively. By leveraging the four P’s of marketing, businesses can create a successful brand that will stand out from the competition. Let’s now analyze how we would use these principles for a fictitious technology company named Orange that sells computers and related products.

If the company were to conduct a survey to study its target audience and their needs, they would first survey their audience with questions such as: “Why do you need a computer? What problem does it solve? Why is that a problem?” When drilled down with further questions, they would arrive at different fundamental truths for different types of audience. For example, scientists need them for facilitating research, students for aiding their studies, mothers for communicating with loved ones, and so on. The next question would be: “What else could solve each of these issues? What are the alternatives?” Smartphones are now able to solve a lot of needs that were the exclusive domain of desktop and portable computers. Also, we now have AR Smart Glasses – integrated multi-sensory experiences – that is expected to replace screens, smartphones, and laptops with further advancements in technology. We could keep asking questions until we reach at the fundamental truths — otherwise known as first principles. Such methods of questioning will enable marketers to come up with ingenious possibilities such as a wearable, non-invasive brain-computer interface that would allow people to experience information employing all their six senses – touch, hearing, sight, smell, taste, and proprioception – without using any of their sensory organs. For those unaware, proprioception (or kinesthesia) is the sense that lets us perceive the location, movement, and action of parts of our body. It encompasses a complex of sensations, including perception of joint position and movement, muscle force, and effort.

Such a device — let’s call it Orange X — would serve the needs of a wider audience. For example, people with sensory disabilities could now use these devices to touch, hear, see, smell, and taste. Scientists, doctors, engineers, pilots, teachers, students, writers, politicians, etc would all find Orange X to be invaluable in both their personal and professional lives. Orange X would usher a new era of communication, education, healthcare, scientific discoveries, and technological advancements. It would propel humanity to ever wider horizons of achievement and civilizational maturity.

Such an ingenious product would call for an entirely new type of positioning, methods of distributions, partnerships, and promotions not traditionally envisaged in the marketing mix. And you can see where we are going with this! And if Orange were to again use the first principles of reasoning for each of the elements of the marketing mix, they would — dare I say — create a more innovative and enterprising marketing strategy that would be a marvel of a phenomenon.

When most people envision the future, they project the current form forward rather than projecting the function forward and abandoning the form. Orange X was the result of optimizing the function, and ignoring the form. Using first-principles reasoning to cut through the dogma and remove the blinders, marketers were able to develop a cutting-edge product, Orange X. Even if you aren’t trying to develop innovative ideas, understanding the first principles of marketing is important to ensure that you are making decisions based on sound reasoning and not just following trends.