How can a company ensure its continued growth? In 1960, a seminal Harvard Business Review journal article, ‘Marketing Myopia’ answered that question in a new and challenging way by urging organizations to define their industries broadly to take advantage of growth opportunities. Mr. Theodore Levitt, the article’s author, showed how they declined inevitably as technology advanced because they defined themselves too narrowly.
He posited that to continue growing, companies must ascertain and act on their customers’ needs and desires, not bank on the presumptive longevity of their products. The success of the article testifies to the validity of its message. Written in 1960, it has been widely quoted and anthologized, and HBR has sold more than 265,000 reprints of it. The author of 14 subsequent articles in HBR, Mr. Levitt passed away a few months back.
As a student of marketing I have always been amazed at the almost visionary zeal with which he proposed theories and concepts and the longevity of many of them. As a mark of respect to the departed soul, here is an extract from Marketing Myopia. If you are impressed, and I can’t see why you shouldn’t, I urge you to go find and run through the entire article and, if possible, Mr. Levitt’s entire collection as well. To get you started, here is the extract.
Every major industry was once a growth industry. But some that are now riding a wave of growth enthusiasm are very much in the shadow of decline. Others, which are thought of as seasoned growth industries, have actually stopped growing. In every case the reason growth is threatened, slowed, or stopped is not because the market is saturated. It is because there has been a failure of management.
The failure is at the top. The executives responsible for it, in the last analysis, are those who deal with broad aims and policies. Thus:
The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because the need was filled by others (cars, trucks, airplanes, even telephones) but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry incorrectly was that they were railway-oriented instead of transportation-oriented; they were product-oriented instead of customer-oriented.
Hollywood barely escaped being totally ravished by television. Actually, all the established film companies went through drastic reorganizations. Some simply disappeared. All of them got into trouble not because of TV’s inroads but because of their own myopia. As with the railroads, Hollywood defined its business incorrectly. It thought it was in the movie business when it was actually in the entertainment business. Movies implied a specific, limited product. This produced a fatuous contentment, which from the beginning led producers to view TV as a threat. Hollywood scorned and rejected TV when it should have welcomed it as an opportunity - an opportunity to expand the entertainment business.
The view that an industry is a customer-satisfying process, not a goods-producing process, is vital for all businesspeople to understand. An industry begins with the customer and his or her needs, not with a patent, a raw material, 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.
How these materials are created is a matter of indifference to the customer, hence the particular form of manufacturing, processing, or what-have-you cannot be considered as a vital aspect of the industry. Finally, the industry moves back still further to finding the raw materials necessary for making its products.
In short, the organization 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.
He posited that to continue growing, companies must ascertain and act on their customers’ needs and desires, not bank on the presumptive longevity of their products. The success of the article testifies to the validity of its message. Written in 1960, it has been widely quoted and anthologized, and HBR has sold more than 265,000 reprints of it. The author of 14 subsequent articles in HBR, Mr. Levitt passed away a few months back.
As a student of marketing I have always been amazed at the almost visionary zeal with which he proposed theories and concepts and the longevity of many of them. As a mark of respect to the departed soul, here is an extract from Marketing Myopia. If you are impressed, and I can’t see why you shouldn’t, I urge you to go find and run through the entire article and, if possible, Mr. Levitt’s entire collection as well. To get you started, here is the extract.
Every major industry was once a growth industry. But some that are now riding a wave of growth enthusiasm are very much in the shadow of decline. Others, which are thought of as seasoned growth industries, have actually stopped growing. In every case the reason growth is threatened, slowed, or stopped is not because the market is saturated. It is because there has been a failure of management.
The failure is at the top. The executives responsible for it, in the last analysis, are those who deal with broad aims and policies. Thus:
The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because the need was filled by others (cars, trucks, airplanes, even telephones) but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry incorrectly was that they were railway-oriented instead of transportation-oriented; they were product-oriented instead of customer-oriented.
Hollywood barely escaped being totally ravished by television. Actually, all the established film companies went through drastic reorganizations. Some simply disappeared. All of them got into trouble not because of TV’s inroads but because of their own myopia. As with the railroads, Hollywood defined its business incorrectly. It thought it was in the movie business when it was actually in the entertainment business. Movies implied a specific, limited product. This produced a fatuous contentment, which from the beginning led producers to view TV as a threat. Hollywood scorned and rejected TV when it should have welcomed it as an opportunity - an opportunity to expand the entertainment business.
The view that an industry is a customer-satisfying process, not a goods-producing process, is vital for all businesspeople to understand. An industry begins with the customer and his or her needs, not with a patent, a raw material, 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.
How these materials are created is a matter of indifference to the customer, hence the particular form of manufacturing, processing, or what-have-you cannot be considered as a vital aspect of the industry. Finally, the industry moves back still further to finding the raw materials necessary for making its products.
In short, the organization 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.
3 comments:
Unfortunately, this seems a lot of nonsense, and it probably has steered companies right into the grave.
The author seems to be suggesting:
a) Companies should cross mediums (theatrical presentations & TV)
and
b) Brands should expand into other markets
Both of these have a history of complete and disasterous failure. When a new medium or market arises (internet shopping for example), then new brands for that market are needed, not expansions of dominators in other markets (who's winning: Amazon.com or BarnesandNoble.com?).
well it must be dat i am comenting on the post a few yeatrs later but since i hv known u recently i m going thr ur blogs now only.... and u shud appreciate on it dat i m gng thru all ur posts inspite of them being older....i ,must say all ur posts r amazing and really gud... thank u 4 making me increase ma knowledge to such an extent thru ur blog... i hope to c such wonderful and amazing posts of urs in the future as well.... thank u.. tc...
well it must be dat i am comenting on the post a few yeatrs later but since i hv known u recently i m going thr ur blogs now only.... and u shud appreciate on it dat i m gng thru all ur posts inspite of them being older....
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