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/ noun noun: myopia nearsightedness lack 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 Production Drive to PRODUCE!!! Spectacular profit possibilities Marketing neglected Lag in Detroit Failed to reveal customer’s wants Product-oriented Ford Production genius Marketing genius Product provincialism “Creative Destruction”

Dangers of R&D Top-heavy engineers and scientist management Bias in favor of Research and Product Development Marketing Treated as residual activity Biased towards controllable variables Consumers are: Unpredictable Varied Fickle Stupid Shortsighted Stubborn Bothersome

Step Child Treatment No one interested in basic human needs Questions about customers and Markets not asked More excitement in more product then the customers Articles detailed towards production and none for marketing

The Beginning and End? Customer-Satisfying process viewpoint is vital Violating rules of Scientific Method Define the problem Develop hypothesizes to solve the problem Customer 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 followers Followers are the customers Management must not produce products but provide customer-creating value satisfactions Firm must think of “buying customers” Leader must know where they are going If a leader goes down any road, they might as well stay at home.

A Few Terms Product Provincialism Step-Child Treatment Creative Destruction The Beginning and End

Discussion Questions “There is no such thing as growth industry, what we have is growth opportunities”--- explain. What is “creative destruction?” How does it relate to the Strategy of a company? 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.