Marketing Myopia: Theodore Levitt

In Theodore Levitt’s article, “Marketing Myopia” (1975), the concept of marketing was widened by examining the history of failed industries doomed to fail eventually. Industries failed to continue their growth not because of a saturated market but failure of proper management. They did not realize the need of expanding into areas in which they were already familiar. Levitt used the railroads as an example because railroads were not focusing on other modes of transportation such as cars and planes, and ships. The railroads only wanted to think of rail transport. Levitt also used other examples such as Hollywood not defining itself correctly, thinking they were a movie business instead of an entertainment business. When TV came out, it almost destroyed Hollywood because of their myopic marketing.

The major problem with these industries was the issue of product orientation rather than customer-oriented. To survive, their products and services had to be marketed differently according to the customers’ needs. According to Levitt’s research, companies go out of business because they take the customer and market for granted. Businesses must not remain stagnate but must constantly change as the market and its needs change if they want to stay in business.

Levitt argues his first point-of-view on the shadow of obsolescence and that “there is no such thing as a growth industry,” but growth opportunities. Levitt termed the stagnation of growth industry as a self-deceiving cycle. Within this cycle, there are warning signs that tell if an industry will fail. The first sign is the population myth; the belief that a rise in population “growth is assured by an expanding and more affluent population” does not necessarily mean a rise in the demand of what a particular industry is offering. If the population increases and more people are buying products or services does not mean the business will sustain growth. For example because of unknown reasons, a product may take over in demand such as provided by the petroleum industry. To save themselves, they expanded their sales only from gasoline to complete crude oil products. Another sign of a self-deceiving cycle is the idea of indispensability, believing “there is no competitive substitute for the industry’s major product.”

Because we live in an ever-changing world; using the petroleum industry example, Levitt believes because of inventions from other industries, the petroleum industry had to shift focus several times. From the kerosene in lamps, which was replaced by electric light bulbs to replacing space heaters with the coal industry for central-heating systems. A third sign of a self-deceiving cycle is production pressures; putting too much into mass production, to produce all they can as “declining unit costs as output rises” is more than they can resist. Putting “too much faith in mass production and in the advantages of rapidly declining unit costs as output rises” results in marketing being neglected. Production pressures speaks of the concern with marketing not sales; because “selling focuses on the needs of the seller” and “marketing on the needs of the buyer.”s a result of production pressures, product marketing is usually ignored because producing more units will lower production costs. Marketing the product should parallel producing it.

“All effort focuses on production. The result is that marketing gets neglected.” Levitt argues his third point on the “Dangers of R&D” as another big danger to a firm’s continued growth, the “preoccupation with a product that lends itself to controlled scientific experimentation, improvement, and manufacturing cost reduction.” It happens when top management is paying too much attention to research and development at the expense of product marketing, the idea is that the product will be so good that it will sell itself. It is often difficult to top management that some focus needs to be on marketing, not just producing them.

Just as difficult for management is to address issues of change in the market, which favors other industries because of newer technology. This way of thinking can be damaging to a business. When too much attention is spent on the research and development of the product, a myopic view is formed, narrowing the corporate vision until it is blinded to the opportunities of growth and marketing. Entering myopia, causing the rest of the business to suffer or fail. A business should follow its mission statement to help to avoid marketing myopia.

Theodore Levitt’s solution for marketing myopia and avoid the fate of those who previously failed is a simple one, go back to the beginning. Start building an effective customer-oriented company with human organization and leadership. For an organization to become great, it needs to have a vigorous leader who strives to succeed and has the vision that customers want to follow. To do this, management needs to think of themselves not as merely product producers but as providers of customer-creating value satisfactions. They must embed this philosophy in their corporate culture to stimulate all who work within it, creating a sense and purpose.

Levitt states that the first requirement for good leadership is “unless a leader knows where he is going, any road will take him there.” From a broad perspective, top management should be able to integrate the production of products with customer needs because the consumers are the lifeline of the company. Without them, there would be no reason to produce any products or services. Levitt uses examples opposite to this perspective to illustrate the type of behavior that creeds itself toward production over marketing, and selling over building consumer relationships. Organizations must consider the reasons consumers would want to purchase their products or services, then find innovative ways to create and deliver these reasons at the time and place the customer wants them.

References

Levitt, T. (1975). Marketing myopia. Harvard Business Review, Sep/Oct75, 53(5), 26-183. Retrieved on September 28, 2010 from Business Source Complete database.