Marketing and not the industry of entertainment. An

Marketing Myopia occurs when company leaders define their mission
too narrowly. Its is a form of business short-sightedness.

In this article Theodore Levitt expresses his views on how
industries failed to continue their growth due to lack of realizing the need of
expanding into sectors adjacent to which they are already working. Levitt
believes that the major mistakes by the industries was being product or service
oriented, when they should be customer oriented.

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Fateful purposes

Companies went into decline because they did not define their
industries adequately. In the article Levitt considers examples of some
successful and unsuccessful companies that were product oriented and not
customer oriented; Railroad Industry (moving goods vs. transportation
industry), Hollywood (movies vs. entertainment) and Petroleum (oil vs. energy
business).

Error of analysis

Levitt proceeds to discuss the Error of Analysis whereby a
company’s scope is defined inaccurately and is unable to grow due to
restricting itself. He follows this up with an example of the railroads which
have declined because they ”were railroad oriented instead of transportation
oriented; 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 similar
example, the Hollywood industry had declined because they focused on films and
not the industry of entertainment. An industry is therefore better positioned
for growth if they focus on meeting the customer’s wants and need rather than
mass production and selling techniques of their products.

Shadow of obsolesce

This is where Levitt expands on why companies stop growing once
their products lose their life due to being outdated or easily substituted by
competition over time. He gives the example of the dry-cleaning industry which
faces some shadow of obsolescence due to new innovations and alternatives that
meet customers needs. It was once a thriving market which provided an effective
way to clean wool garments, but over time the introduction of synthetic fibres
which are easier to clean do not require dry cleaning services and innovations
such as washing machines make the industry obsolete. Other examples that he
goes into are, the Electric Utilities: electric motors replace steam engines
and incandescent lamps replace kerosene lights and lastly the grocery stores
being replaced by large supermarket chains.

Self-deceiving cycle

Companies that suffer from myopia are also subjected to a
self-deceiving cycle because they think there is nothing wrong with their
approach even though there is. Its recurring in nature because most companies
make the mistake of focusing on production and sales and not enough attention
to customer needs.

Self-deceiving cycle has four conditions;

1.     
Belief that growth
is assured by expanding and more wealthy population.

2.     
Believing there
is no competitive substitute for the industry’s major product.

3.     
Too much faith
in mass production and advantage of rapidly declining unit cost as output rises.

4.     
Preoccupation
with product that leads itself to carefully controlled scientific experiment,
improvement, and manufacturing cost reduction.

Population myth

Levitt discusses the mistake of the Population myth whereby
companies 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 to
the absence of thinking.”

Asking for trouble

Using the petroleum industry as an example, they mostly focused on
improving the efficiency of sourcing and making the product and no improving
the generic product or its marketing. Levitt argues that in that industry, the
product is defined in the narrowest terms namely gasoline not energy or
transportation. This has enabled innovations to originate outside the oil
industry such as new companies expanding multi-pump gas stations with the
emphasis on large layouts, rapid and efficient driveway service and quality of
gasoline at affordable prices.

Idea of indispensability

The idea of indispensability is whereby companies think they are
safe from competition due to their product being irreplaceable. Levitt used the
petroleum industry as an example due to its success throughout its history
bearing in mind it had to shift focus several times due to inventions arising
from outside the industry. The petroleum industry has become content in its
strategy and assumes that if the world’s population keeps growing, then its
customer base will always increase. This leads to the industry being myopic to
the fact that now people are becoming aware and conscious of the environment
and are interested in other alternative forms of energy that reduce greenhouse
gas emissions.

Uncertain future

“If a company’s own research does not make a product obsolete, another’s
will.” Levitt explains that a company cannot just rely on a complacent strategy
and process, they must expand into to new markets and produce customer oriented
products or services otherwise their competitors will.

Production pressure

Mass production industries focus on producing all they can and are
occupied 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. Levitt
demonstrates how industries have too much faith in mass production and take
advantages of rapidly declining unit costs as output rises.

Lag in Detroit

Levitt uses Detroit as an example of how it followed the trend of
mass production in automobile industry. Detroit’s researchers failed to
recognize its customers wants. Detroit believed customers wouldn’t want
anything different from what they were already getting until it lost millions
of its customers to other small car manufacturers. Detroit only researched the
customer’s preferences between the products it had already decided to offer
them. Detroit did not concentrate on the customer’s choice.

What Ford put first

Levitt criticizes the notion of Ford as a manufacturing genius.
Ford invented the assembly line to perfect and ship thousands of cars. He
correctly predicted that he could sell millions of cars for a modest price to
consumers. It’s how he sold and not what customers bought. Levitt refers the
assembly as a marketing exercise.

Creative destruction

Regarding the petroleum industry through the eyes of customers,
customers do not buy gasoline for its taste, colour or smell at the gas
station, they buy the right to drive their cars. Answering the consumers needs
would be giving them the right to drive their cars definitively, therefore the
future 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 that
satisfies a customer’s needs. Companies must react by listening to customer
preferences, understanding the mind of their customers, why they bought, what
they bought, and why they will buy again. Companies that succeed are not afraid
to scrap one product to deliver the next, or destroy what they built to best
serve the customer. It is the necessary “creative destruction” process due to
the historical fate of any growth industry; “product provincialism.”

Dangers of R&D

Paying to much attention to research and development is the danger
of electronic companies. They grow with the illusion that a superior product
will sell itself because they have created a successful product. Possible
reasons for this belief: bias toward the complex products over its marketing;
scientists tend to not care for customers needs. Even when companies are
focused on marketing, they are more concerned about ads and promotions of the
products rather than finding out the needs of the customers.

Step child treatment

This occurs in some industries such as the petroleum industry where
all activities are more concerned with the sourcing/searching and operations
and less concerned with marketing. Questions about customers and markets are
not asked. The customers’ needs are not considered – “Marketing is a stepchild.”

Beginning and end

Customer satisfying process is vital in an industry, but scientific
methods violate this rule by defining the problem, developing a hypothesis to
solve the problem and not considering the customers satisfaction as the
problem. Industries need to be aware that selling and marketing are very
different. The main functions of an industry should be;

1.     
Marketing
(satisfying the customer’s needs)

2.     
Delivering

3.     
Selling

4.     
Production

5.     
Research and
development

Visceral Feel of Greatness

Leaders need to have vision that can produce eager followers, the
followers are the customers. Management must not produce products but provide
customer creating value satisfactions; consider the buying customer’s needs.
The leader must also have a vision and know where they are going ahead. “A
vigorous leader who is driven onward by a pulsating will to succeed.”

This article suggests an organization to be;

ü  consumer focused

ü  constantly innovative

ü  in a position of control

ü  able to understand customer preferences/desires

ü  able to adapt to innovative marketing strategies depending on the
consumers feedback.

 For a company to be able to
cater to the needs of a market, it not only needs to be technically sound but
also customer oriented. It should regularly conduct research to find out
various ways of improving its products to retain the customers interests for as
long as possible. The company should always keep adapting itself to the
ever-changing market conditions and demands, in order to survive the increasing
competition.