Professional Documents
Culture Documents
by Theodore Levitt
Team #8: Aaron Indridson Ahmet B. Koksal Elkin Majidov Eric Salazar Errol Johnson Mark A. Robinson
Theodore Levitt
Born in Germany 1925 and escaped the Nazi forces by fleeing to America. Worked his way up starting as a fifth grade editor to become a highly awarded author of seven published marketing books. Marketing Myopia by Levitt was reprinted over 850,000 times and won him the McKinsey Award in 1960. Was a highly esteemed lecturer and professor of marketing at the Harvard Business School.
Production Myths
Eric Salazar
Population Myth
The belief that profits are assured by an expanding and more affluent population is dear to the heart of every industry. Example: Petroleum Industry
Major innovations in automobile fuel marketing come from small, new oil companies.
Marketing Myopia
The belief that there is no competitive substitute for the industrys major product
Idea of Indispensability
There is no substitute for the major product. The example is petroleum industry - Gasoline, diesel and kerosene are just the derivatives of oil. - Oil has never been a superior product for any purpose - Oil industry has never been a growth industry
Uncertain Future
The total U.S. production of petrochemicals is about 2% of the demand for all petroleum products. - A 50,000 barrel-per day oil refinery is now considered the absolute minimum size for efficiency. - A 5,000 barrel-per day chemical plant is a giant operation. Oil has never been a continuously strong growth industry.
PRODUCTION PRESSURES
Good: Lean manufacturing & mass production results in lower costs. Bad: Production costs become so charming that marketing gets neglected. Result of mass production: a need to move the product. Usually, selling gets emphasized. Difference between marketing and selling?
Goal of marketing: Satisfying customers Goal of selling: Getting rid of the product
A Detroit Example
Detroit car producers spend millions of dollars on consumer research. Yet, consumers chose small-cars producers. Why? Marketing vs. selling again
A Detroit Example
Detroit car manufacturers: product oriented What they surveyed was never what consumers wanted, it was always a choice between what they had already decided to offer.
A Mistake
The marketing effort is still viewed as a necessary consequence of the product not vice versa, as it should be (Levitt).
Henry Ford
A marketing genius or a production genius? $500 a car, result of the assembly line. Ford set the price to $500. Price forced the costs down. Result: assembly line.
Marketing Myopia
Marketing myopia: Buggy whips Transportation business vs. buggy whip business Another example: Oil industry Nonpetroleum companies: Energy systems to replace internal combustion engine Electric storage batteries Solar energy conversion systems
Marketing Myopia
Nobody likes buying gas Once these alternatives are perfected, they will replace gas, since consumers will prefer them over gas stations. Creative destruction: For their own good, the oil firms will have to destroy their own highly profitable assets in order to survive in the changing business environment (Levitt).
Focus on what can be controlled versus the market in which they provide for
Conclusion
Aaron Indridson
Focus on marketing and not selling a product. View the product as a consequence of the marketing effort.
Creative Destruction
Process in which a once dominant new industry sees their dominance vanish as rivals launch new designs or cut manufacturing costs. Acts on customer needs and desires.
Conclusion: Q&A
Q: Their is no such thing as growth industry, what we have is growth opportunities Explain. A: If a company focuses on its industry as opposed to the opportunities presented by the market, it will in the end fall to stagnation. Q: What is creative destruction? How does this relate to the strategy of a company? A: Internal creative destruction occurs when a company plans for the obsolescence of its own product by creating the product that will replace it.
Conclusion
Q: Why was Ford considered the most senseless and the most brilliant marketer? A: The most senseless because of his failure to provide the customer with more than one color option (black.) The most brilliant because he realized that the market could produce millions of sales for a $500 dollar car, hence the creation of the assembly line to meet market demand.
Questions?