MARKETING MYOPIA

An Article Review by

By

Sidath Pananwila
MBF/06/66

Kugathasan Pushpakaran
MBF/06/67

Adisha Srithunga
MBF/06/69

Prasanna Lokugamage
MBF/06/65

Vijitha Warakaulle
MBF/06/73

Course: MBF 506 Marketing of Financial Services

Course Instructor: Mr. Dr. Uditha Liyanage

Semester I, 2008

POSTGRADUATE INSTITUTE OF MANAGEMENT

University of Sri Jayewardenepura
 Abstract
At the of World War Two rapid developments in Industrialization enabled mass
production and fast growth in many industries, based on the apparent superiority of
products and higher demand than supply. But most major industries failed to
continue the growth into the next decade. The Major companies in industries such as
Railroad, Movies and Automobiles failed and are no longer enjoy their dominance. In
this article, first published in 1960, Theodore Levitt argues that they failed due to
mismanagement. He introduces the concept of marketing myopia, the failure to focus
on the most critical factor to any industry or any organization – Customer. The
article describes the myths leading to Production and Product concept to
organizational planning. As illustrated through the railroads industry the author
concludes that for companies to ensure continued evolution, they must define their
industries broadly through customer benefit rather than product that satisfy the need
and constantly evolve themselves along with the changing needs of the market. And in
every case, the chief executive is responsible for creating an environment that reflects
this mission.

1. DESCRIPTION

“Marketing Myopia is management’s failure to recognise the scope of its business”

(Theodore Levitt, 1960). It is the lack of foresight in marketing. This event occurs
when marketers fail to consider every aspect in marketing, which results to failure in
achieving marketing goals and objectives. A case example is when Coca Cola tried to
replace their drink's flavour. Because of the intensifying competition posed by Pepsi,
Coca Cola believed that the market will find it enticing to taste a new Coca Cola. In
doing so, mass complaints flooded Coca Cola. Because of the failure of Coca Cola to
consider that their target market includes people who wanted change in flavour and
people who still prefer the original Coca Cola flavour, and by trying to replace the
original flavour Coca Cola, they've lost the other portion of their market... which is
the people who would still prefer the old flavour. The portion of the market Coca Cola
has lost is substantial, such that the company was forced to return back the original
Coca Cola flavour to be distributed in the market.

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The aforesaid example is a case of marketing myopia. Because, Coca Cola failed to
foresee the repercussions of their marketing strategy

The article criticised that selling focus on the product fails to appreciate the marketing
focus on the consumer. Accordingly, the key question that all managers must be able
to answer, “what business are you in?” The railroads, for example, (“Let others take
customers away from them because they assumed themselves to be in the railroad
business instead of the transportation business” - T. Levitt), in this case, people no
longer needed rail transportation. Because, other innovations (such as cars, airplanes)
filled their transportation needs. At the same time, railroads did not move to fill those
needs. Because, their CEOs incorrectly thought that they were in the railroad
business, not the transportation business. They viewed themselves as providing a
product instead of serving customers. Hence, it is remarkable that too many other
industries make the same mistake-putting themselves at risk of obsolescence.

The article argued that "Marketing is a stepchild" in most corporations because of an

overemphasis on creating and selling products. "But selling is not marketing”
(“Selling is not concerned with the values that the exchange is all about. And it does
not, as marketing invariably does, view the entire business process as consisting of a
tightly integrated effort to discover, create, arouse, and satisfy customer needs." T.
Levitt). Therefore, it is crucial to concentrate on meeting customers’ needs rather than
selling products in order to ensure continued growth for the company. For example,
chemical powerhouse DuPont kept a close eye on its customers’ most pressing
concerns-and deployed its technical know-how to create an ever-expanding array of
products that appealed to customers and continuously enlarged its market. If DuPont
merely found more uses for its most important invention, nylon, it might not be
around today.

Furthermore, based on the concept of emerging global markets for standardised

consumer products at lower prices, the article insisted that the future belongs not to
the multinational corporation, but to the “global corporation.” Commenting on its
Globalization of Markets, it said "A global company should always go about its
business in a way that's responsive to the major differences from one country to

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another," in terms of, for example, how retailing or distribution or payment systems
work. But the core product or service should remain unchanged, it added, since that is
what is "globalized." In addition to "The Globalization of Markets," regarding "The
Marketing Imagination," the article asserts that “The marketing Imagination is the
starting point of success in marketing. It is distinguished from other forms of
imagination by the unique insights it brings to understanding customers, their
problems, and the means to capture their attention and their custom." And also, with
regard to differentiation, it points out that "Differentiation is the essence of
everything; everything can be and is differentiable, even such 'commodities' as steel,
cement, money, chemicals, and grain."

Marketing Myopia disputed the idea that slow growth in some industries was a result
of market saturation. Instead, it was suggested that businesses endangered their
futures by defining themselves too narrowly, for so, the argument was that the vision
of most organizations was constricted in terms of what they, too narrowly, saw as the
business they were in. It exhorted CEOs to re-examine their corporate vision; and
redefine their markets in terms of wider perspectives. For example, the oil companies
redefined their business as energy rather than just petroleum; although Shell, which
embarked upon an investment programme in nuclear power, subsequently regretted
this course of action. --even good ideas can sometimes lead to unforeseen, and costly,
problems. Even now, too much of marketing is constricted by the narrow vision of
marketers using just the few tools they have bothered to learn. The world is a large
place; and cannot be limited by a few crude rules-of-thumb --no matter how expert, or
charismatic, their inventors!

2. Risk of Obsolescence
According to the article, the business is put at risk of obsolescence while accepting
any of the following myths.

Myth 1: An ever-expanding and more affluent population will ensure growth:-

When markets are expanding, it is often assumed that the major organizations serving
such markets need not think imaginatively about their business. Instead, they could
maintain their positions by defeating the existing competitors by producing the

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existing products more efficiently. Consequently, they increase the efficiency of
operations of producing their products, rather than improving the value those products
deliver to customers.

Myth 2: There is no competitive substitute for industry’s major product:-

Management belief that their products have no rivals makes their companies weak to
dramatic innovations from outside their industries-often by smaller, newer companies
that are focusing on customer needs rather than products themselves. The case could
be illustrated by the failure of IBM mainframes and marketing success of personal
computers.

Myth 3: They can protect themselves from mass production:-

Few managers can resist the view of the increased profits that come with sharply
declining unit costs. But focusing on mass production highlights their company needs-
when they should be highlighting their customers’ needs.

Myth 4: Technical research and development will ensure growth:-

When R&D produces breakthrough products, they may be convinced to organise their
companies around the technology rather than the customer. Instead, they should
remain focused on satisfying customer needs.

One reason that short sightedness is so common is that people feel that they can not
accurately predict the future, which means that many business people make their
decisions, based on current circumstances. They do not think about what will likely
happen in their industry in the future? Obviously we know the world is inherently
unpredictable, all businesses are subject to myopia to a certain extent according to
Theodore Levitt (1960). Because of this, organizations should be careful not to define
themselves too narrowly. For example, a company that delivers coal should think of
itself as being in the energy business. This broad market definition will provide a
greater scope of opportunities as the industry changes. When we do this we are asking

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our managers to look beyond our current business activities and “think outside the
box”. This would be looking at long term and short term objectives, with focus on
market strategy and the customer over the lifetime. Despite the simplicity of this
process company after company are consumed with marketing myopia. Again, if a
customer oriented company is led by marketing strategy and the process of how to
derive is understood, then you are giving yourself a distinct compelling value to
continue into the future.

3. Relevance to the Present Market

Modern marketers face a drastically different and very dynamic environment

comprising of the following major factors

3.1 Very demanding, affluent and knowledgeable consumers protected by

government and industrial standards and consumerist group activities.

3.2 Increased competition from local and foreign firms due to technological
advancement and globalization.

3.3 Higher threat of new entrants through new scientific discoveries.

The relevance of the myths presented by Levitt could be analyzed on this context as
follows

Myth 1: An ever-expanding and more affluent population will ensure growth:-

Although the world population is rapidly growing and wealth of customers of most
markets increase, the globalization of sales as well as communications have ensured
that no company or industry how large or dominant is safe to assume continued
growth unless it follows the market closely. IBM, Ford and GM are examples of
giants failing due to reluctance to identify and adapt to market changes. To reap the
best fruits of population growth Marketers must reinvent themselves and their
industry like software giant Microsoft.

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Myth 2: There is no competitive substitute for industry’s major product:-

The rapid growth in most fields of science and technology ahs ensured that no
product, company or industry is safe from new entrant that would dominate or
transform the market. IBM mainframes, VHS cassettes and Analogue cameras are a
few such examples. So creative destruction is the order of the day exhibited by Sony.

Myth 3: They can protect themselves from mass production:-

Efficient operations are essential for short term success but customer effectiveness by
way of enhancing benefit to the target market will only ensure long term success.
Therefore, mass customization is more successful in modern market place as practices
by Dell.

Myth 4: Technical research and development will ensure growth:-

Most of everyday products such as mobile phones, DVD players, and hand held PCs,
virtual and smart payment methods were never imagined ten years ago. But all these
new products succeed because they address a hidden but real customer need. The
large but mostly unknown failed inventions would prove that technology alone won’t
drive a new product towards market success. Sony and 3M are examples of few rare
companies who could predict unknown potential consumer needs to launch future
winners.

There are five alternative concepts under which organizations plan and implement
their marketing strategies. Levitt distinguishes between production, product and
marketing concepts. In addition, modern authors such as Philip Kotler add two more
concepts – selling and societal marketing. Further more, for industries such as energy
which encounter demand for products exceeds supply the production concept is still
useful. Selling is still the focus of companies such as insurers whose products are
generally not sought out by customers.

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But for a majority of managers worldwide the effort to understand and anticipate the
needs, wants and aspirations of their customers and trying to develop product
offerings to satisfy them is the critical activity for survival of their organizations

There are some cases of some visionary marketers such as Sony’s Akio Morita who
lead customers by introducing products that would satisfy customer’s unknown needs.
Most of everyday products from digital camera - cell phones to wearable PCs were
introduced to the market by developers of technology who anticipated what customers
would want in future.

And the recent concern for long term welfare of consumers and the environment has
resulted in the emergence of societal marketing concept. The emphasis has shifted
towards developing and promoting long term beneficial customer- marketer- society
relationships to ensure survival of all the partners.

List of References

• Theodore Tedd Levitt, Marketing Myopia, Harvard Business Review, 1975.

• Kasper Hans et al, Service Marketing Management, John Wiley & Sons,
England, 2005, pp. 143-217.
• www.google.com

• Philip Kotler and Gary Armstrong, Principles of Marketing, Prentice-Hall

Inc., New Jersey, 2006, pp. 8-17.