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Industry Focus - Marketing Myopia Revisited

Industry Focus - Marketing Myopia Revisited

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Published by ninemileco

Marketing Insights Management Consulting Services

Marketing Insights Management Consulting Services

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Published by: ninemileco on Jan 03, 2013
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02/15/2014

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NINEMILE
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Industry Focus -
Marketing
Myopia Revisited
Copyright © 2012. All Rights Reserved. The Nine Mile Management Consulting Group
Brar, H., Dhir, M., Elliott, G., & Tabak, P.November 2012www.ninemileco.com
 
 
1 |Page 
Nine Mile Management Consulting GroupNovember, 2012
Industry Focus& Marketing Myopia RevisitedMarketing Myopia
“Marketing Myopia” was an article written by the then
Harvard Business School lecturer Theodore Levitt
butthis one article has gone on to establish many of thecornerstones in both the fields of marketing andstrategy 
1
.
The term ‘myopia’ is essentia
lly derived fromthe Greek words
‘to shut’ and ‘eye’ –
 
i.e. to shut one’s
mind to opportunity, to shut the door to strategy, and todevelop a nearsightedness that has caused certainbusinesses to flourish, while others fall to the wayside.The nearsighted business approach has always beenassociated with achieving fast profits, acceleratedgrowth, and the notion of becoming
rich quick
.However, it is the same nearsightedness that caused thefailure of Lehman Brothers, Wachovia, and otherbanking giants during the World Financial Crisis of 2008
2
.But where does such a myopia
or nearsightedness
 develop in the first pla
ce? The answer is simple: “Thefailure is at the top.”
1
Finding New Opportunities
The difference between those firms that suffer frommyopia and those that do not all lie at the top, andspecifically, an error in determining exactly the scope of opportunities that are available. While building adifferentiated, high quality or low cost product may bethe ultimate goal for many firms
it is the same focusand the lack of customer orientation that potentially leads to failure. At the end of the day it's aboutidentifying (1) Which industry your company operates within, and (2) Establishing a customer-orientation.
Figure 1:
Choice of Industry & Customer Orientation
 What industry does your business operate within?’
From the on-set, it sounds like a trivial andinconsequential question that can be readily answeredby most individuals holding top management positionsin any company. For example, a CEO managing a railcompany may answer that he/she operates within therailroad industry 
or Apple is part of the computerindustry.Opportunities for growth can only be established by choosing the right industry. A mismatch of industry focus ultimately means tha
t customer satisfaction can’t
be met. Once a company loses touch with its customer-base through misguided communication efforts the roadto recovery can be daunting, if not impossible.Consumers buy for emotional reasons, and justify theirpurchases rationally. Myopia prevents businesses fromclearly identifying customer needs, which stifles any opportunity to communicate value to market audiences
on an emotional level. It’s essential to develop a
marketidentity 
, but it’s equally 
important to develop an identity that is emotionally driven, and community focused.Figure 2:The Path of Decline When businesses are faced with challenges, the ability of the sales force to deliver value, strategies to increasecash flows, and reduce costs are often central to anorganizations focus.
However, a simple nearsighted attitude towards the industry in which a companyoperates, can ultimately be the determining factor for thechallenges it faces.
Industry ChoiceCustomerOrientationOpportunitiesMyopiaWrong Industry FocusDissatisfied CustomersMarket DeclineMarket Capture byCompetitors
YOU FAILYOUR COMPETITORSSUCCEED
 
 
2 |Page 
Nine Mile Management Consulting GroupNovember, 2012Take for instance, the Hollywood dream machine, and
 what can be termed the ‘Film Industry’. There was the
Golden Age of Hollywood
filled with larger than lifemovie stars; Marlon Brando, Katharine Hepburn,Marilyn Monroe, and the like. However, as externalchallenges presented themselves, namely increasing
popularity of TV in the 1940’s and 50’s –
the filmindustry faced a period of decline
3
. Movie theatreattendance dipped from 80 million per week to 60million in less than 2 years (1946-48). In 1948, MGMStudios which had been one of the richest movie studiosin the US
had negative earnings. What to do in this situation? The introduction of the TV  was clearly eroding their market presence
and even sofar as to erode the relevance of the film industry inpopular culture.The answer was simple. While many studios wentunder, those that survived not only embraced change,they shifted their focus. No longer were they boundedto the confines
of just the ‘Film Industry,’ they 
operated
in the broader context of the ‘Entertainment Industry.’
 What might appear as an issue of semantics actually 
impacts a company’s vision, strategy, and the way they 
conduct business.By the change of industry classification, i.e. from the
‘Film Industry’ to the ‘Entertainment Industry’ –
 Hollywood studios were able to determine how tocapture the TV market, how to blend this transition intotheir marketing strategies, how to adapt movies from thesilver screen to the TV screen, and how to embraceTelevision rather than maintain status quo.The same argument can also be said for Apple
thetechnology giant behind the iMac, the iPod, the iPhone,and the iPad. Before the release of the first Macintoshpersonal computer in 1984
the industry was dominatedby a combination of Microsoft and Intel PCs, hardly inspiring units mostly used in offices for writingdocuments and some rudimentary number crunching
4
.However, the release of the Macintosh put Apple clearly on the map for a number of different reasons. Apple wasnot just another PC manufacturer, they did not justoperate w
ithin the ‘PC Industry’ but the ‘Print & MediaIndustry’ –the early Apple’s being used widely in the
publishing community.
Down the line in the late 1990’sand 2000’s, Apple transformed its industry focus
onceagain by choosing to operate within the
‘Communications Industry’
, helping its customersachieve increased interconnectedness and socialconnections.To say that a certain company lacks opportunities forgrowth is simply not true
 
 what lacks “is not
opportunity but some managerial imagination and
audacity… In truth, there is no such thing as a growthindustry… Industries that assume themselves to be
riding some automatic growth escalator invariably 
descend into staganation.”
1
 
Focus on Customer Satisfaction
Customer satisfaction is key. However, businesses fail torealize that customer satisfaction can only be truly achieved through stepping back and understandingexactly what industry a particular business operates within
only then can all other business operationsfunction at full capacity:
Figure 3:
Thinking Backwards All of this requires a little bit of backwards thinking.
 According to Theodore Levitt: “An industry begins with
the customer and his or her needs, not with patents, raw
materials, or a selling skill. Given the customer’s needs,
the industry develops backwards, first concerning itself  with the physical delivery of customer satisfactions.Then it moves back further to creating the things by 
 which these satisfactions are in part achieved.”
 
 What does this mean for Marketing & Strategy?
Ultimately, it means that once a business has correctly identified its choice of market through the choice of industry 
it can begin to refine marketing activities andgenerate awareness.However, again it can be pointed out that thosecompanies that have achieved great successes asbusinesses, while they have had great (or acceptable
Skills,Products, RawMaterial, PatentSatisfyingCustomerNeedsSatisfyingCustomerNeedsSkills,Products, RawMaterial Patent

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