"Marketing Myopia" is an article written by Theodore Levitt published in the Harvard Business Review in 1960. Since its publication, Levitt's article has redefined and revolutionised the marketing landscape.
What was the result of the railroad industry not defining itself correctly?
Railroad companies narrowly defined their business as belonging to the ‘railroad industry’ as opposed to the ‘transportation industry’. This allowed other modes of transportation, such as aeroplanes and automobiles, to fill the need for passenger and freight transportation. Therefore, it was the railroad industry’s own “lack of managerial imaginativeness and audacity” to satiate consumers’ needs that resulted in this loss of potential business. This example pertinently illustrates the dangers of being short-sighted as the railroad industry ultimately marginalised their business by being product-focussed rather than addressing customer needs.
In Levitt's article, what did the oil industry continue to do and what was its consequence?
Generally, this myopic mindset would transpire into the obsolescence of oil. However, the oil industry was "miraculously saved by innovations and developments not of its own making." For example, once Thomas Edison invented the electrical light bulb, the need for kerosene lamps was eliminated. However, kerosene found a new purpose in space heaters. Shortly after, coal-burning heaters replaced the space heater. This would have signalled the end for oil but the industry was once again rescued by the invention of the internal combustion engine. Therefore, despite the product-oriented mindset of oil companies, new uses were discovered by those outside of the industry.
The oil industry continued to be product-oriented. They held the belief that the growth and expansion of their business will result from more customers purchasing more products. As a result, oil companies focussed on improving oil by making changes to their location and refining methods. As Levitt describes, “the industry was blinded by its narrow preoccupation with a specific product and the value of its reserves. It paid little or no attention to its customers’ basic needs and preferences.”
Generally, this myopic mindset would transpire into the obsolescence of oil. However, the oil industry was "miraculously saved by innovations and developments not of its own making." For example, once Thomas Edison invented the electrical light bulb, the need for kerosene lamps was eliminated. However, kerosene found a new purpose in space heaters. Shortly after, coal-burning heaters replaced the space heater. This would have signalled the end for oil but the industry was once again rescued by the invention of the internal combustion engine. Therefore, despite the product-oriented mindset of oil companies, new uses were discovered by those outside of the industry.
In theory, oil companies should have also pioneered the Gas Revolution. This is so, as they possessed an innate knowledge of heating issues, pipeline technology and transmission. Yet viewing natural gas as the competition proved to be one of the most significant consequences of the oil industry's narrow-mindedness. They could not capitalise on this growth opportunity themselves which allowed others to take advantage of the developments in gas technology.
List the reasons Levitt gives for the demise of myopic industries over time.
Levitt makes it clear that the notion of a ‘growth industry’ does not exist. Only companies that actively create and capitalise on growth opportunities will avoid obsolescence. To further illustrate his point, Levitt breaks down the demise of myopic industries into four conditions.
Firstly, myopic industries experience their demise by believing that “growth is assured by an expanding and more affluent population”. This mindset prohibits imaginative thinking as businesses become complacent in the expanding market. Secondly, the belief that “there is no competitive substitute for the industry’s major product” contributes to the obsolescence of industries. This is so, as companies generally focus on the strength of their product or service, rather than addressing customers’ needs. Thirdly, when industries place “too much faith in mass production and in the advantages of rapidly declining unit costs as output rises”, they move closer towards their expiration. By placing this importance on production, strategic marketing is often overlooked by companies. Yet when marketing is considered, it is then commonly viewed as a mere consequence of the product, rather than the driving force behind it. Lastly, the “preoccupation with a product that lends itself to carefully controlled scientific experimentation, improvement and manufacturing cost reduction” also contributes to the demise of myopic industries. Marketing is once again considered as an afterthought as the emphasis remains on product development and innovation.
Levitt makes it clear that the notion of a ‘growth industry’ does not exist. Only companies that actively create and capitalise on growth opportunities will avoid obsolescence. To further illustrate his point, Levitt breaks down the demise of myopic industries into four conditions.
Firstly, myopic industries experience their demise by believing that “growth is assured by an expanding and more affluent population”. This mindset prohibits imaginative thinking as businesses become complacent in the expanding market. Secondly, the belief that “there is no competitive substitute for the industry’s major product” contributes to the obsolescence of industries. This is so, as companies generally focus on the strength of their product or service, rather than addressing customers’ needs. Thirdly, when industries place “too much faith in mass production and in the advantages of rapidly declining unit costs as output rises”, they move closer towards their expiration. By placing this importance on production, strategic marketing is often overlooked by companies. Yet when marketing is considered, it is then commonly viewed as a mere consequence of the product, rather than the driving force behind it. Lastly, the “preoccupation with a product that lends itself to carefully controlled scientific experimentation, improvement and manufacturing cost reduction” also contributes to the demise of myopic industries. Marketing is once again considered as an afterthought as the emphasis remains on product development and innovation.
What other examples can you suggest of industries or corporations failing to adapt new ways to meet old needs?
Two other industries which have failed to adapt new ways of meeting old needs are the music industry and the print media industry. Both industries have fallen victim to the rise of the technological age, specifically due to the creation and prolific use of the Internet.
In the print media industry, circulation figures and advertising revenue are on the decline. Advertisers are instead turning their attention to the online audience rather than print publication readers. This may be as a result of the print media industry narrowly defining their business. In turn, their ability to exercise their entrepreneurial spirit has been compromised. Traditional print media should view their business as delivering information to the public rather than providing physical copies of newspapers or magazines.
Once print media companies adapt to delivering information through digital means (as some companies are successfully doing), they will be in the best position to profit once the digital world continues to become monetised.
For a long time, the music industry continued to narrowly view songs as a physical, packaged good. Once again, this product-driven mindset did not cater for the change in customer needs and online habits. Music companies were too slow to embrace new digital business models as a consequence. Instead, they initiated legal proceedings against online file sharers in an attempt to combat music piracy. Essentially, the music industry must redefine their industry as being entertainment media delivery. In doing so, they can focus on fulfilling customers’ needs by delivering content that is convenient and accessible by making it available in a digital format. iTunes successfully uses this business model and with time, other methods of online music content delivery will undoubtedly emerge.
What lessons does the article give about sport in general and sport marketing?
This article cautions the sport industry to avoid possessing a product-oriented mentality. They must not rely on merely selling goods and services to their customers. Instead, sport must turn their attention to fan engagement to retain existing fans and create new fans. Importantly, they need to continuously identify what customers’ needs are and deliver these needs in entrepreneurial ways.
Two other industries which have failed to adapt new ways of meeting old needs are the music industry and the print media industry. Both industries have fallen victim to the rise of the technological age, specifically due to the creation and prolific use of the Internet.
In the print media industry, circulation figures and advertising revenue are on the decline. Advertisers are instead turning their attention to the online audience rather than print publication readers. This may be as a result of the print media industry narrowly defining their business. In turn, their ability to exercise their entrepreneurial spirit has been compromised. Traditional print media should view their business as delivering information to the public rather than providing physical copies of newspapers or magazines.Once print media companies adapt to delivering information through digital means (as some companies are successfully doing), they will be in the best position to profit once the digital world continues to become monetised.
For a long time, the music industry continued to narrowly view songs as a physical, packaged good. Once again, this product-driven mindset did not cater for the change in customer needs and online habits. Music companies were too slow to embrace new digital business models as a consequence. Instead, they initiated legal proceedings against online file sharers in an attempt to combat music piracy. Essentially, the music industry must redefine their industry as being entertainment media delivery. In doing so, they can focus on fulfilling customers’ needs by delivering content that is convenient and accessible by making it available in a digital format. iTunes successfully uses this business model and with time, other methods of online music content delivery will undoubtedly emerge.
What lessons does the article give about sport in general and sport marketing?
This article cautions the sport industry to avoid possessing a product-oriented mentality. They must not rely on merely selling goods and services to their customers. Instead, sport must turn their attention to fan engagement to retain existing fans and create new fans. Importantly, they need to continuously identify what customers’ needs are and deliver these needs in entrepreneurial ways.
Furthermore, Levitt’s article raises the important distinction between promotions and marketing. In sport, promotions and marketing must not be treated as the same concept. For example, promotions through advertising or tactics used during halftime shows may assist in engaging fans. However, they only form a small part of the overall marketing strategy once the customers’ needs are first determined.
Lastly, the sport industry, like the railroad industry or oil industry, must broaden their definition. Sport is unique as its consumers enjoy sport for a multitude of reasons. Whether fan enjoyment is derived from the social interaction, health and fitness perspective, entertainment value or sense of competition, sport cannot afford to become myopic. They must ultimately adapt to consumer behaviour and desires to remain current, relevant and avoid obsolescence.
What did you get out of reading this article?
Three key messages can be taken away from Levitt's article, "Marketing Myopia":
1. Be prepared to define your business broadly to avoid marginalisation;
2. Focus on customers' needs, rather than your product; and
3. Be prepared to use an entrepreneurial spirit to capitalise on growth opportunities as a 'growth industry' does not exist.
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