Marketing Myopia occurs when company leaders define their missiontoo narrowly. Its is a form of business short-sightedness.In this article Theodore Levitt expresses his views on howindustries failed to continue their growth due to lack of realizing the need ofexpanding into sectors adjacent to which they are already working. Levittbelieves that the major mistakes by the industries was being product or serviceoriented, when they should be customer oriented.
Fateful purposesCompanies went into decline because they did not define theirindustries adequately. In the article Levitt considers examples of somesuccessful and unsuccessful companies that were product oriented and notcustomer oriented; Railroad Industry (moving goods vs. transportationindustry), Hollywood (movies vs. entertainment) and Petroleum (oil vs. energybusiness).Error of analysisLevitt proceeds to discuss the Error of Analysis whereby acompany’s scope is defined inaccurately and is unable to grow due torestricting itself. He follows this up with an example of the railroads whichhave declined because they ”were railroad oriented instead of transportationoriented; they were product oriented instead of customer oriented.” They decline not because of cars, truck,airplanes and telephones, but because of their own myopia.
In a similarexample, the Hollywood industry had declined because they focused on films andnot the industry of entertainment. An industry is therefore better positionedfor growth if they focus on meeting the customer’s wants and need rather thanmass production and selling techniques of their products.Shadow of obsolesceThis is where Levitt expands on why companies stop growing oncetheir products lose their life due to being outdated or easily substituted bycompetition over time. He gives the example of the dry-cleaning industry whichfaces some shadow of obsolescence due to new innovations and alternatives thatmeet customers needs. It was once a thriving market which provided an effectiveway to clean wool garments, but over time the introduction of synthetic fibreswhich are easier to clean do not require dry cleaning services and innovationssuch as washing machines make the industry obsolete. Other examples that hegoes into are, the Electric Utilities: electric motors replace steam enginesand incandescent lamps replace kerosene lights and lastly the grocery storesbeing replaced by large supermarket chains.Self-deceiving cycleCompanies that suffer from myopia are also subjected to aself-deceiving cycle because they think there is nothing wrong with theirapproach even though there is. Its recurring in nature because most companiesmake the mistake of focusing on production and sales and not enough attentionto customer needs.
Self-deceiving cycle has four conditions;1. Belief that growthis assured by expanding and more wealthy population.2. Believing thereis no competitive substitute for the industry’s major product.
3. Too much faithin mass production and advantage of rapidly declining unit cost as output rises.4.
Preoccupationwith product that leads itself to carefully controlled scientific experiment,improvement, and manufacturing cost reduction.Population mythLevitt discusses the mistake of the Population myth wherebycompanies assume that a growing population is equal to a growing market demand.Companies believe that they are assured profits based on expanding population.This myth limits a company’s imagination. “…the absence of a problem leads tothe absence of thinking.”Asking for troubleUsing the petroleum industry as an example, they mostly focused onimproving the efficiency of sourcing and making the product and no improvingthe generic product or its marketing.
Levitt argues that in that industry, theproduct is defined in the narrowest terms namely gasoline not energy ortransportation. This has enabled innovations to originate outside the oilindustry such as new companies expanding multi-pump gas stations with theemphasis on large layouts, rapid and efficient driveway service and quality ofgasoline at affordable prices.Idea of indispensabilityThe idea of indispensability is whereby companies think they aresafe from competition due to their product being irreplaceable. Levitt used thepetroleum industry as an example due to its success throughout its historybearing in mind it had to shift focus several times due to inventions arisingfrom outside the industry. The petroleum industry has become content in itsstrategy and assumes that if the world’s population keeps growing, then itscustomer base will always increase. This leads to the industry being myopic tothe fact that now people are becoming aware and conscious of the environmentand are interested in other alternative forms of energy that reduce greenhousegas emissions.
Uncertain future”If a company’s own research does not make a product obsolete, another’swill.” Levitt explains that a company cannot just rely on a complacent strategyand process, they must expand into to new markets and produce customer orientedproducts or services otherwise their competitors will. Production pressureMass production industries focus on producing all they can and areoccupied with meeting production goals and neglect marketing of those products.John Kenneth Galbraith argues the opposite, all efforts are on trying to ‘move’the product. Therefore, selling is emphasized, not marketing. Levittdemonstrates how industries have too much faith in mass production and takeadvantages of rapidly declining unit costs as output rises.Lag in DetroitLevitt uses Detroit as an example of how it followed the trend ofmass production in automobile industry.
Detroit’s researchers failed torecognize its customers wants. Detroit believed customers wouldn’t wantanything different from what they were already getting until it lost millionsof its customers to other small car manufacturers. Detroit only researched thecustomer’s preferences between the products it had already decided to offerthem. Detroit did not concentrate on the customer’s choice.
What Ford put firstLevitt criticizes the notion of Ford as a manufacturing genius.Ford invented the assembly line to perfect and ship thousands of cars. Hecorrectly predicted that he could sell millions of cars for a modest price toconsumers. It’s how he sold and not what customers bought. Levitt refers theassembly as a marketing exercise.Creative destructionRegarding the petroleum industry through the eyes of customers,customers do not buy gasoline for its taste, colour or smell at the gasstation, they buy the right to drive their cars.
Answering the consumers needswould be giving them the right to drive their cars definitively, therefore thefuture of petroleum is a fuel that prevents the need of frequent refuelling.The future of any product is not a more technological one but a product thatsatisfies a customer’s needs. Companies must react by listening to customerpreferences, understanding the mind of their customers, why they bought, whatthey bought, and why they will buy again. Companies that succeed are not afraidto scrap one product to deliver the next, or destroy what they built to bestserve the customer.
It is the necessary “creative destruction” process due tothe historical fate of any growth industry; “product provincialism.”Dangers of R&DPaying to much attention to research and development is the dangerof electronic companies. They grow with the illusion that a superior productwill sell itself because they have created a successful product. Possiblereasons for this belief: bias toward the complex products over its marketing;scientists tend to not care for customers needs.
Even when companies arefocused on marketing, they are more concerned about ads and promotions of theproducts rather than finding out the needs of the customers.Step child treatmentThis occurs in some industries such as the petroleum industry whereall activities are more concerned with the sourcing/searching and operationsand less concerned with marketing. Questions about customers and markets arenot asked. The customers’ needs are not considered – “Marketing is a stepchild.”Beginning and endCustomer satisfying process is vital in an industry, but scientificmethods violate this rule by defining the problem, developing a hypothesis tosolve the problem and not considering the customers satisfaction as theproblem. Industries need to be aware that selling and marketing are verydifferent.
The main functions of an industry should be;1. Marketing(satisfying the customer’s needs)2. Delivering3. Selling4. Production5. Research anddevelopmentVisceral Feel of GreatnessLeaders need to have vision that can produce eager followers, thefollowers are the customers.
Management must not produce products but providecustomer creating value satisfactions; consider the buying customer’s needs.The leader must also have a vision and know where they are going ahead. “Avigorous leader who is driven onward by a pulsating will to succeed.”This article suggests an organization to be;ü consumer focusedü constantly innovativeü in a position of controlü able to understand customer preferences/desiresü able to adapt to innovative marketing strategies depending on theconsumers feedback.
For a company to be able tocater to the needs of a market, it not only needs to be technically sound butalso customer oriented. It should regularly conduct research to find outvarious ways of improving its products to retain the customers interests for aslong as possible. The company should always keep adapting itself to theever-changing market conditions and demands, in order to survive the increasingcompetition.