[PPT]Marketing Myopia - Texas A&M University–Corpus...

Marketing Myopia

LEVITT, THEODORE (1975), “MARKETING MYOPIA,” HARVARD BUSINESS REVIEW, SEPTEMBER-

OCTOBER, 26-44,173-183.

ORIGINALLY THIS ARTICLE WAS WRITTEN IN 1960, HBR REPRINTED IT IN 1975 WITH UPDATED COMMENTS OF LEVITT,

USED THE UPDATED ARTICLE.

Theodore Levitt (1925-2006)

• PROFESSOR AT HARVARD BUSINESS SCHOOL AND EDITOR OF THE “HARVARD BUSINESS REVIEW”

• DEAN OF MARKETING, KNOWN FOR HIS CONTRIBUTION IN MARKETING. THE JOURNEY MAY HAVE STARTED WITH “MARKETING MYOPIA” IN HARVARD BUSINESS REVIEW IN 1960 WHEN HE WAS A LECTURER AT HARVARD

• POPULARIZED THE TERM OF GLOBALIZATION WITH HIS ARTICLE “GLOBALIZATION OF MARKETS” IN 1968

• AWARDS INCLUDE MCKINSEY AWARDS FOR BEST ANNUAL ARTICLE AND CHARLES COOLIDGE PARLIN AWARD AS MARKETING MAN OF THE YEAR IN 1970.

• ONE OF THE MOST IMPORTANT FIGURES IN MARKETING AND ECONOMICS

Essence of the Article

Written in 1960, the article revolutionized the thought processes of business managers who were narrowly focused on the products they sold—they were short-sighted or myopic, as Levitt calls it.

It is important to define an industry by asking a simple question—“what business are we in?

To ensure growth, companies must define their business properly based on customer needs and desires. Businesses are actually customer satisfying institutions/entities.

Myopia

my·o·pi·a /mīˈōpēə/nounnoun: myopianearsightednesslack of imagination, foresight, or intellectual insight

Fateful Purposes

Companies went into decline because they did not define their industries properly

Examples of some successful and unsuccessful companies that were product-oriented and not customer-oriented are: Railroad (goods moving vs. transportation) Hollywood (movies vs. entertainment) Petroleum (oil vs. energy business)

Shadow of Obsolescence

Threats to products within industries and remaining unprepared to the improvements cripple the presence of companies Dry cleaning: synthetic fibers and chemical were appearing, we no

longer need dry cleaning. Electric utilities: solar energy, fuel cells, and other power source are

threat to electric utilities. Grocery store: supermarket are doing a better job of understanding

customers need than grocery stores.

Self-Deceiving Cycle

Self-Deceiving Cycle

Self-deceiving cycle occurs when companies lack the vision. Inappropriate self-assessment system leads to failure in the long run.

Four conditions that guarantee the self-deceiving cycle: Belief that growth is assured by an expanding and more affluent

population Belief that there is no competitive substitute for the industry’s major

product. Too much faith in mass production and in the advantages of rapidly

declining unit costs as output rises Preoccupation with a product that lends itself to carefully controlled

scientific experimentation, improvement and manufacturing cost reduction

Population Myth

Assured profits based on expanding population Increasing purchases? Market growth based on this assumption Limits imagination

absence of problem absence of thinking

Production Pressure

Mass ProductionDrive to PRODUCE!!!Spectacular profit possibilitiesMarketing neglected

Lag in DetroitFailed to reveal customer’s wantsProduct-oriented

FordProduction genius Marketing genius

Product provincialism “Creative Destruction”

Dangers of R&D

Top-heavy engineers and scientist managementBias in favor of Research and Product DevelopmentMarketing Treated as residual activity

Biased towards controllable variablesConsumers are:

UnpredictableVariedFickleStupidShortsightedStubbornBothersome

Step Child Treatment

No one interested in basic human needsQuestions about customers and Markets not

askedMore excitement in more product then the

customersArticles detailed towards production and

none for marketing

The Beginning and End?

Customer-Satisfying process viewpoint is vitalViolating rules of Scientific Method

Define the problemDevelop hypothesizes to solve the problemCustomer satisfaction not being considered as the problem

Selling and Marketing are different

Visceral Feel of Greatness

Leaders need to have vision that can produce eager followersFollowers are the customers

Management must not produce products but provide customer-creating value satisfactionsFirm must think of “buying customers”

Leader must know where they are goingIf a leader goes down any road, they

might as well stay at home.

A Few Terms

Product ProvincialismStep-Child TreatmentCreative DestructionThe Beginning and End

Discussion Questions

1. “There is no such thing as growth industry, what we have is growth opportunities”--- explain.

2. What is “creative destruction?” How does it relate to the Strategy of a company?

3. Ford created a car with no custom options that was only available in black, but sold for $500. Levitt calls him as “both the most brilliant and the most senseless marketer” in American History. Why? Explain.