Marketing Myopia - HBR assignment Zorana Svedic PDF

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HBR assignment Zorana Svedic...

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Marketing Myopia By Theodore Levitt Marketing Myopia occurs when company leaders define their mission too narrowly - It is a form of business nearsightedness or shortsightedness Fateful Purpose - Executives responsible for failure - Railroads business failed because they defined their industry wrong, they were railroadoriented instead of transportation oriented, product oriented instead of customer oriented - Industries endanger their future by improperly defining their purpose Error of Analysis - What is lacking is the will of companies to survive and satisfy the public by inventiveness and skill Shadow of Obsolescence - Some products appear to have “no effective substitute” - Some products are runaway substitutes for the product it triumphantly replaced Examples: - Dry cleaning was popular with wool clothing, but it declined when synthetic fibers and chemical additives cut the need for drying - Electric utilities: electric motors replaced steam engines, incandescent lamp replace kerosene lights - Grocery stores: replaced by large supermarkets, they believed supermarkets strived because of novelty Self-Deceiving Cycle - Boston millionaire sentenced his heir to poverty when he invested all his money in electric streetcars - No such thing as a growth industry, only companies organized to create and capitalize on growth opportunities - 4 conditions of self-deceiving cycle: 1. Belief that growth is assured by expanding and more wealthy population 2. Belief that 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 lends itself to carefully controlled scientific experimentation, improvement, and manufacturing cost reduction (R&D will ensure growth) Population Myth - Belief that market is always expanding due to increase population growth - Petroleum may be a declining industry

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Focus on improving efficiency of getting and making its product does not improve the generic product or its marketing Oil industry in danger of replacement because they only innovate their fuel quality but dont look for new types of fuel

Idea of Indispensability - Petroleum industry persuaded that they have no competitive substitute for gasoline - Oil has never been a superior product for very long, it is a succession of different businesses that gone through the usual historic cycles of growth and decay Perils of Petroleum - Invention of light that's not dependent on crude oil finished oil as a growth industry - Outsider inventions such as central oil heating system “saved” the oil industry - Abundance of oil weakened crude and product prices all over the world Uncertain future - Emerging of petrochemicals - Oil has never been a growth industry, always miraculously saved by innovation - Consider other non petroleum sources of raw material such as coal - No guarantee against product obsolescence Production Pressures - Prospect of steeply declining unit cost as output rises - Selling focus on needs of seller, marketing focus on needs of buyer - Seller trying to convert product into cash, marketing wants to satisfy needs of customer - What is offered for sale is determined by the buyer not the seller A lag in Detroit - Mass production has greatest impact on entire society here - Detroit was not convinced that people wanted anything different from what they had been getting until it lost millions of customers to other small-car manufacturers - Automobile companies do not listen to their motorist What Ford Put First: - Mass production must follow hard thinking about the customer - Mass product was the result, not the cause of low prices Product Provincialism - Teasing of profit possibility of low unit production cost is self-deceiving attitude on a growth company - Industry has eyes so firmly on specific product that it does not see how it is being made obsolete, such as buggy whip industry - The marketing effort is still viewed as a necessary consequence of the product, not vice versa

Creative destruction - People dont buy gasoline, they are actually buying right to continue driving their car - Creative destruction is destroying their own highly profitable assets to create new and better ones Dangers of R&D Marketing Shortchanged: - Paying too much attention to R&D - They become totally devoid of marketing effort - Managers orient toward product rather than people who consume it Factors that lead to this belief: 1. Belief that electronic products are highly complex and sophisticated, creates bias in favour of research and production in expense of marketing. Marketing treated as residual activity 2. Management tend to favor business activities that lend themselves to careful study, experimentation and control - Realities of the market is short changed Stepchild Treatment: - Questions about customer and markets seldom get asked - Market seldom occupy a stepchild status, they do not have real thought or dedication - Every industry’s major functional areas is listed except marketing, editors forgot to discuss marketing The Beginning and End - Be a customer-satisfying process not a good-producing process - Physical delivery of customer satisfactions - Creating the things by which these satisfactions achieved - Finding the raw materials necessary for making its product - They do not consider customer as the problem The Visceral Feel of Greatness - Survival is a so-so aspiration - Not experience success but to have visceral feel of entrepreneurial greatness - Leader has to have will to succeed - requires a vision, followers are the customers - Customer-creating and customer-satisfying - Create customer values, buy the customers - Unless leader knows where he is going, any road will take him there. If organization does not know where it’s going, it will fail. Key ideas: - Major improvements come from outside the industry

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No guarantee against product obsolescence. If a company’s own research does not make a product obsolete, another’s will. Selling focuses on needs of the seller, marketing on need of the buyer An industry is a customer-satisfying process, not a goods-producing process

Examples industry

Myopic purpose

Broader purpose

railroad

Train travel

transportation

hollywood

movies

entertainment

Oil companies

Petroleum

energy

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Blockbuster should be in entertainment business, not just physical movie rental business...