Marketing Myopia by Theodore Levitt

Group No.8: Alex Elwood Nikolas Foster Blake Overall Shaelee Pittenger Lorelei Wilson

What is Myopia
Nearsightedness--not inherited. It can be prevented. Short sighted and inward looking approach to marketing that focuses on the needs of the firm instead of defining the firm and its products in terms of the customers' needs and wants.
Read more: http://www.businessdictionary.com/definition/marketing-myopia.html#ixzz0yyuoieyC

Theodore Levitt
Started a newspaper with Erma Bombeck in elementary school Served in World War II After the war, Ted was a reporter and sportswriter for the Dayton Journal Herald Received his masters in economics from Ohio State Worked briefly as a consultant in the oil industry Began teaching at Harvard in 1959 Wrote Marketing Myopia in 1960, most reprints of any Harvard Business Review article, 900,000

Levitt cont.
Wrote 25 articles for the Harvard Business Review Authored 8 books on Marketing 1983 wrote Globalization of Markets coined the word globalization In 1985 became the editor of the Harvard Business Review, expanded its readership beyond an academic journal into a mass market management magazine Won many awards What business are you really in? Marketing Myopia Approach was not to get approval in research, but to have important people in important companies (his phrase) to take his ideas and go with them

There is no such thing as a growth industry, what we have is growth opportunities. -Theodore Levitt

Guarantee a Self-Deceiving Cycle

Believe growth is guaranteed by an expanding population Believe there is no competitive substitutes
Have too much faith in mass production Preoccupation with a product: focus on product instead of customer

Assured Growth by Expansion

Belief that increases in population and affluence ensure growth Lack of innovation A common characteristic
Companies focus on efficiency, not innovation

Petroleum industry
A prime example of this fallacy Reinforces Levitts caution of myopically defining ones industry

No Threat of Obsolescence
The fallacy of believing competitive substitutes dont exist Petroleum industry
A history of obsolete products due to competitive substitutes
Kerosene Lamp Kerosene Space Heater

Mass Production
Lower products unit costs as output increases Focus on production, neglect marketing

Selling is not marketing

Focus on companys needs, not customers needs

Henry Ford
Brilliant Marketer Senseless Marketer

Created a product customers needed

Refused to make cars in any other color but black

Created a product customers could afford

Created production system to fit market needs

Preoccupation with Product

Industry declines instead of growing

Example Oil Companies

Survival entails change

Creative Destruction
When something new eliminates something old Must become innovative reinvent business Must change business strategy to survive

Marketing Myopia Today

Airline Industry
- Southwest Airlines vs. American Airlines - Customer satisfaction low in this industry - Airlines vs. Cable T.V : Tie - IRS ranked higher than airlines in customer satisfaction

Marketing Myopia Today

Technology Industry
More focused on the customer today than in 1960 Apple E-commerce and E-Business ranked high in customer satisfaction report

http://www.theacsi.org/images/stories/ACSI_TREE_08_10.pdf

The Pros
Provided for new thought process

Customer Centric
The concept stands the test of time Marketing is not selling

The Cons
Can a company realistically restructure Can go outside the scope of bounded rationality (lose reality) Static not dynamic
Does not factor for globalization Ecommerce

Conclusion
Organizations must learn to think of itself not as producing goods or services but as buying customers, as doing the things that will make people want to do business with it.

Theodore Levitt

Reference
Levitt, T. (1960). Marketing myopia. Harvard Business Review, 38(4), 45-56. Lavelle Louise (2006). Theodore Levitt Dead at 81. Business Week. Retrieved September 10, 2010 from www.businessweek.com. McDermott, Anne (2010). Customer Satisfaction-Airlines Worse than IRS, Better than Facebook. FareCompare.com. Retrieved September 8, 2010 from http://www.farecompare.com/articles/airline-industrynews/customer-satisfaction-airlines-irs-facebook/ Dictionary, (2010). Creative destruction. http://dictionary.reference.com/browse/creative+destruction Wikipedia, (2010). Creative destruction. http://en.wikipedia.org/wiki/Creative_destruction