Research Insights 4.1 Marketing Myopia

The Marketing Environment

Source: Levitt, T. (2004), ‘Marketing myopia’, Harvard Business Review, July–August (originally published in 1960).

Abstract: At some point in its development, every industry can be considered a growth industry, based on the apparent superiority of its product. But in case after case, industries have fallen under the shadow of mismanagement. What usually gets emphasized is selling, not marketing. This is a mistake, since selling focuses on the needs of the seller, while marketing concentrates on the needs of the buyer. In this widely quoted and anthologized article, first published in 1960, Theodore Levitt argues that "the history of every dead and dying 'growth' industry shows a self-deceiving cycle of bountiful expansion and undetected decay." But, as he illustrates, memories are short. The railroads serve as an example of an industry whose failure to grow is due to a limited market view. Those behind the railroads are in trouble not because the need for passenger transportation has declined or even because that need has been filled by cars, airplanes, and other modes of transport. Rather, the industry is failing because those behind it assumed they were in the railroad business rather than the transportation business. They were railroad oriented instead of transportation oriented, product oriented instead of customer oriented. For companies to ensure continued evolution, they must define their industries broadly to take advantage of growth opportunities. They must ascertain and act on their customers' needs and desires, not bank on the presumed longevity of their products. In short, the best way for a firm to be lucky is to make its own luck. An organization must learn to think of itself not as producing goods or services but as doing the things that will make people want to do business with it. And in every case, the chief executive is responsible for creating an environment that reflects this mission.

Insight: This is perhaps the most famous and celebrated article ever written on marketing. It won the author the McKinsey Award. It has twice been reprinted in the Harvard Business Review. The central thesis of the article—as true today as it was in 1960—is that companies must monitor change in the external environment and keep abreast of their customers’ needs or else risk decline. Levitt asks fundamental questions about the strategic orientation of a business and stresses the importance of always understanding what business a company is really in (see also Market Insight 4.4, later in the chapter, for an example of a firm’s failure to appreciate this insight). For example, many oil companies today consider themselves to be energy companies—yet they still invest most of their resources on oil. This is very risky because it opens them to new competitors focusing specifically on alternative energies. Companies always need to monitor the environment to understand what market they are competing in.