levitt - marketing myopia

7/23/2019 Levitt - Marketing Myopia

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The Marketing

Concept and ProcessLecture 1Lecture 1

18 Nov. 200418 Nov. 2004


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The Marketing Concept: What t sand

What t s Not!The "arketing concept has su#ered in t$oThe "arketing concept has su#ered in t$o$a%s:$a%s: &irst' it has (een esta()ished as&irst' it has (een esta()ished as optimaloptimal

management philosophymanagement philosophy$hen it is not$hen it is not

necessari)% so in a)) instances' andnecessari)% so in a)) instances' and

*econd' $e can see "an% e+a"p)es o,*econd' $e can see "an% e+a"p)es o, poorpoor

marketing practicemarketing practicethat have (eenthat have (een adopted inadopted in

the name of the marketing conceptthe name of the marketing concept..

--..It is time that we relearn the marketingIt is time that we relearn the marketing

concept.concept.


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What t s Not

!The marketing conceptThe marketing concept

Custo"er ,ocus' prots' andCusto"er ,ocus' prots' andintegration o, organi/ationa)integration o, organi/ationa)

e#orts.e#orts.


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What t s NotCusto"er orientationCusto"er orientation

Satisfying its customers at a protSatisfying its customers at a prot

Determining the needs and wants ofDetermining the needs and wants oftarget marketstarget markets

Discovering the wants of a targetDiscovering the wants of a target

audience and then creating theaudience and then creating the

goods and services to satisfygoods and services to satisfythemthem


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What t s Not

!ot)ers socia) denition:ot)ers socia) denition:

Marketing is a social andMarketing is a social and

managerial process by whichmanagerial process by whichindividuals and groups obtainindividuals and groups obtainwhat they need and wantwhat they need and wantthrough creating andthrough creating andexchanging products andexchanging products andvalue with others.value with others.


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! oodsoods! *ervices*ervices

! 3+periences3+periences! 3vents3vents

! PersonsPersons

! P)acesP)aces! PropertiesProperties

! rgani/ationsrgani/ations! n,or"ationn,or"ation

! deasdeas

Many Things Can eMany Things Can e

Marketed!Marketed!


What t s Not


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! "eeds# wants#"eeds# wants#and demandsand demands

! MarketingMarketingo$ers% includingo$ers% including

products#products#services andservices andexperiencesexperiences

! &alue and&alue andsatisfactionsatisfaction

! 'xchange#'xchange#

transactionstransactionsandand

relationshipsrelationships

!MarketsMarkets

Core Marketing ConceptsCore Marketing Concepts

What is Marketing5


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What t s Not

!TheThe conditionsconditionsunderunder

$hich the "arketing$hich the "arketingconcept o#ers the properconcept o#ers the properguidance to the "arketer:guidance to the "arketer:


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What t s NotTo the e+tent that the organi/ationTo the e+tent that the organi/ation

re)ies onre)ies on exchangeexchangeas the "eans o,as the "eans o,o(taining co"p)iance $itho(taining co"p)iance $ith

organi/ations needs' $e descri(eorgani/ations needs' $e descri(ethat organi/ation as engaging inthat organi/ation as engaging in6"arketing7.6"arketing7.Strive to understandStrive to understand exchangeexchange

partnerspartnersand tailor oerings for themand tailor oerings for themthrough what is called thethrough what is called the marketingmarketingmixmix(Borden 19!"#(Borden 19!"#


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What t s Not! --it is i"portant to recogni/e thatit is i"portant to recogni/e thatunder some circumstancesunder some circumstances' the' the

production conceptproduction conceptor theor the salessales

conceptconcept$ou)d (e a "ore$ou)d (e a "oreappropriate "anage"entappropriate "anage"ent

phi)osoph% ,or the organi/ation thanphi)osoph% ,or the organi/ation than

thethe marketing conceptmarketing concept.. Can %ou give so"e e+a"p)es5Can %ou give so"e e+a"p)es5


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What t s Not

.customers are not necessarily good

sources of information about

their needs a decade from now

sometimes customers have to learn

about new technologies, beliefs, andways of behaving


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The Marketing M%opia! n 190' Theodore Levitt $roten 190' Theodore Levitt $rote

Marketing M%opia' a $ide)%Marketing M%opia' a $ide)%

;uoted and ,re;uent)% reprinted;uoted and ,re;uent)% reprinted$arvard Business %eview$arvard Business %eviewartic)e.artic)e.

! Chapter eight in Theodore LevittNe$ ?ork: The &ree

Press' [email protected]' 189@.


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The Marketing M%opia! What does the ter" "arketingWhat does the ter" "arketing

"%opia "eans5"%opia "eans5

! What $ere the evidence andWhat $ere the evidence ande+a"p)es used to i))ustrate thee+a"p)es used to i))ustrate thenotion o, "arketing "%opia5notion o, "arketing "%opia5

! Ao$ is theAo$ is the self(deceiving cycleself(deceiving cycle

re)ated to "arketing "%opia5re)ated to "arketing "%opia5! s this notion o, "arketing "%opias this notion o, "arketing "%opia

sti)) va)id toda%' and e+p)ain5sti)) va)id toda%' and e+p)ain5


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The Marketing M%opia

! Marketing myopiaMarketing myopia$as$asinitia))% descri(ed as a r"


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! Levitt cites theLevitt cites the railroadsrailroadsandand*ollywood*ollywood as e+a"p)es o,as e+a"p)es o,

industries that have (een andindustries that have (een andare no$ endangering theirare no$ endangering their,utures (%,utures (% improperly de+ningimproperly de+ningtheir purposestheir purposes. Their pro()e"'. Their pro()e"'

he sa%s' is the% $ere he sa%s' is the% $ere product(product(oriented instead oforiented instead ofcustomer(orientedcustomer(oriented.6.6


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The Marketing M%opia! Warning o, the dangers o, (eingWarning o, the dangers o, (eing

product=oriented rather thanproduct=oriented rather than

custo"er=oriented = creating thecusto"er=oriented = creating the&ord 3dse)' Ne$ Coke or&ord 3dse)' Ne$ Coke or

s"oke)ess cigarettes' as it $ere's"oke)ess cigarettes' as it $ere'

rather than products consu"ersrather than products consu"ers$anted.$anted.


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!ccording to Levitt' ccording to Levitt' thetheorgani,ation must learn toorgani,ation must learn to

think of itself not asthink of itself not asproducing goods or servicesproducing goods or servicesbut as buying customers# asbut as buying customers# as

doing the things that willdoing the things that willmake people want to domake people want to dobusiness with itbusiness with it..


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!*ince its pu()ication'*ince its pu()ication'

corporate )eaders havecorporate )eaders have"oved ,ro" product="oved ,ro" product=

orientation to$ard "arket=orientation to$ard "arket=

orientation.orientation.


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Customer orientationhas also been

considered as a type of marketing myopia.


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&ir"s overe"phasi/e the&ir"s overe"phasi/e the

satis,action o, custo"ersatis,action o, custo"er

$ants and needs and as a$ants and needs and as a

resu)tresu)t ignore competitionignore competition..


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Competitor orientationCompetitor orientationhashas

(een proposed as a(een proposed as a

rep)ace"ent ,or the custo"errep)ace"ent ,or the custo"er

orientationD $ith thisorientationD $ith this

orientation' a r"+en,e)dt and Moore' 1F8@.


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The marketing myopiadescribed by Levitthas also evolved into a planning myopia


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! usinesses need to takeusinesses need to take-evitts idea to its ultimate-evitts idea to its ultimate

endendBB do not Gust se)) a product' se)) thedo not Gust se)) a product' se)) the

so)ution to a pro()e".so)ution to a pro()e".


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The Marketing M%opia i) co"panies have ,o))o$ed that strateg% (%i) co"panies have ,o))o$ed that strateg% (%

deve)oping "ini"arts in service stations.deve)oping "ini"arts in service stations. Higita) 3;uip"ent Corp. earned one=third o, its IFHigita) 3;uip"ent Corp. earned one=third o, its IF

(i))ion in revenue ,ro" co"puter "aintenance(i))ion in revenue ,ro" co"puter "aintenance

services.services. enera) Motors cceptance Corp. nancia)enera) Motors cceptance Corp. nancia)services accounted ,or I1 (i))ion o, theservices accounted ,or I1 (i))ion o, theauto"aker


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The marketing myopia tothe world market


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The Marketing M%opia?ves Ho/' ose *antos and Peter .?ves Ho/' ose *antos and Peter .

Wi))ia"son dra$ on so"e e+a"p)es o,Wi))ia"son dra$ on so"e e+a"p)es o,co"panies that are "aGor successesco"panies that are "aGor successes(ecause the% sought kno$)edge in(ecause the% sought kno$)edge in

other countries' such asother countries' such asShiseido& the 'apanese cosmetic companyShiseido& the 'apanese cosmetic company

that looked to rance to )ecome once againthat looked to rance to )ecome once againa leading player#a leading player#

*ittle Scandinavian +okia overtook ,otorola*ittle Scandinavian +okia overtook ,otorola

in the early days of the mo)ile wars simplyin the early days of the mo)ile wars simply)y monitoring the radar for emerging)y monitoring the radar for emergingphenomena in markets around the world#phenomena in markets around the world#


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! nnovating using )oca) kno$)edge'nnovating using )oca) kno$)edge'

per,ecting %our product andper,ecting %our product and

service to "eet the needs o,service to "eet the needs o,custo"ers in %our ho"e "arket'custo"ers in %our ho"e "arket'

and (ench"arking %ourse),and (ench"arking %ourse),

against do"estic co"petitors=against do"estic co"petitors=each o, these has (eco"e a higheach o, these has (eco"e a high

risk strateg%.risk strateg%.


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! ,ter a))' ce))u)ar te)ephon% had (een invented,ter a))' ce))u)ar te)ephon% had (een inventedin "erica=at Ke)) La(oratories' and Motoro)ain "erica=at Ke)) La(oratories' and Motoro)a$as a"ong the rst to "assproduce "o(i)e$as a"ong the rst to "assproduce "o(i)e

te)ephones.te)ephones.! *o then' ho$ did Nokia' a )itt)e=kno$n upstart*o then' ho$ did Nokia' a )itt)e=kno$n upstart

,ro" the edge o, the rctic Circ)e )eave,ro" the edge o, the rctic Circ)e )eaveMotoro)a (ehind and "anage to (eco"e theMotoro)a (ehind and "anage to (eco"e theg)o(a) )eader in "o(i)e te)ephon%5g)o(a) )eader in "o(i)e te)ephon%5

! "okia was the +rst to see the potential of"okia was the +rst to see the potential ofa cellphone as a fashion accessory froma cellphone as a fashion accessory fromobservations of its customers in /siaobservations of its customers in /sia..


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The Marketing M%opia! "okia has the ability to plug into knowledge"okia has the ability to plug into knowledge

about new technologies and emergingabout new technologies and emergingcustomer needs from every corner of the worldcustomer needs from every corner of the world ..

! t understood the need ,or custo"ised handsets ,ro"t understood the need ,or custo"ised handsets ,ro"

its e+perience in 3urope' $here it rst (eca"eits e+perience in 3urope' $here it rst (eca"eapparent that there $ere di#erent seg"ents o, users.apparent that there $ere di#erent seg"ents o, users.

! (serving pi)ot users across *candinavia' it $as(serving pi)ot users across *candinavia' it $asa"ong the rst to recognise that digita) techno)og%a"ong the rst to recognise that digita) techno)og%cou)d dra"atica))% i"prove the ,unctiona)it% o,cou)d dra"atica))% i"prove the ,unctiona)it% o,"o(i)e phones."o(i)e phones.

! nd in China' ndia and ,rica' it sa$ that "o(i)end in China' ndia and ,rica' it sa$ that "o(i)ephones cou)d potentia))% (eco"e su(stitute ,or $ire=phones cou)d potentia))% (eco"e su(stitute ,or $ire=)ine phones.)ine phones.


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! Whi)eWhi)e "okia prospected the world"okia prospected the world,or insight a(out pro"ising,or insight a(out pro"isingtechno)ogies' diverse custo"ertechno)ogies' diverse custo"er(ehavior and ne$ $a%s to use "o(i)e(ehavior and ne$ $a%s to use "o(i)ephones'phones' Motorola continued toMotorola continued todevelop its products based on itsdevelop its products based on itsknowledge of the customers andknowledge of the customers and

technologies in its 0.1. backyardtechnologies in its 0.1. backyard..


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! The resultThe result:: Motorola missed the shiftMotorola missed the shifttotodigita) "o(i)e te)ephon% and the gro$ingdigita) "o(i)e te)ephon% and the gro$ingstrength o, the 3uropean *M standard. t didn


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The types of marketing myopiacan be

classified along two dimensions:

1. the management's definition of the firm, and

2. the firm's business environment perspective.


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!The second di"ension concerns theThe second di"ension concerns ther"


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! n addition' the% are considered to have in(redn addition' the% are considered to have in(red"anage"ent. *o"e "anagers have spent the"anage"ent. *o"e "anagers have spent thegreater part o, their pro,essiona) careers in onegreater part o, their pro,essiona) careers in one

industr%.industr%.! n(red "anage"ent is not necessari)%n(red "anage"ent is not necessari)%undesira()e' (ut it is potentia))% detri"enta)undesira()e' (ut it is potentia))% detri"enta)$hen it ,osters the contention that it can )earn$hen it ,osters the contention that it can )earnnothing ,ro" r"s in other industries' and itnothing ,ro" r"s in other industries' and itkeeps its r" perceptua))% insu)ated ,ro" suchkeeps its r" perceptua))% insu)ated ,ro" such

other r"s.other r"s.! &or e+a"p)e' "anagers o, the co)d (reak,ast&or e+a"p)e' "anagers o, the co)d (reak,ast

cerea) r" "a% (e concerned on)% $ith thecerea) r" "a% (e concerned on)% $ith theactions and reactions o, other co)d cerea) r"s.actions and reactions o, other co)d cerea) r"s.


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! &ir"s $ith a "u)ti=industr%&ir"s $ith a "u)ti=industr%perspective' on the other hand'perspective' on the other hand'

have a (roader vie$ o, the "arket.have a (roader vie$ o, the "arket.! Whi)e the% are concerned $ithWhi)e the% are concerned $ithi""ediate co"petitors' the% a)soi""ediate co"petitors' the% a)sorea)i/e that r"s in other industriesrea)i/e that r"s in other industries

can serve as sources o, innovativecan serve as sources o, innovativestrategies as $e)) as (eingstrategies as $e)) as (eingpotentia) co"petitors.potentia) co"petitors.


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! *uch "anage"ent is said to (e cross=*uch "anage"ent is said to (e cross=(red' in that "anagers "a% have(red' in that "anagers "a% havee+perience in a (road range o,e+perience in a (road range o,industries or the% are $i))ing to )earnindustries or the% are $i))ing to )earn,ro" r"s ,acing si"i)ar situations in,ro" r"s ,acing si"i)ar situations inother industries.other industries.

! &ir"s $ith a "u)ti=industr% perspective&ir"s $ith a "u)ti=industr% perspective

are out$ard)% oriented and notare out$ard)% oriented and notperceptua))% insu)ted ,ro" otherperceptua))% insu)ted ,ro" otherindustries.industries.


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!The co"(ination o, theThe co"(ination o, thet$o di"ensions produces at$o di"ensions produces a

"atri+ $ith ,our t%pes o,"atri+ $ith ,our t%pes o,r"s:r"s:


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1.1.classic myopiaclassic myopia' $ith a product=' $ith a product=denitionsing)e=industr% perspective'denitionsing)e=industr% perspective'

2.2. competitive myopiacompetitive myopia' $ith a' $ith acusto"er=denitionsing)e=industr%custo"er=denitionsing)e=industr%perspective'perspective'

.. e2ciency myopiae2ciency myopia' $ith a product=' $ith a product=denition"u)ti=industr% perspective'denition"u)ti=industr% perspective'

4.4. innovative myopiainnovative myopia' $ith a' $ith acusto"er=denition"u)ti=industr%custo"er=denition"u)ti=industr%perspective.perspective.


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! Marketing "anagers $ho $ish toMarketing "anagers $ho $ish toachieve theachieve the innovative +rminnovative +rm

orientationorientationshou)d:shou)d:1.1.take a generic vie$ o, their r" or industr%'take a generic vie$ o, their r" or industr%'2.2."onitor other industries'"onitor other industries'

..engage in (ench"arking to deter"ine theengage in (ench"arking to deter"ine theo(Gectives ,or re)evant areas o, "arketing'o(Gectives ,or re)evant areas o, "arketing'

4.4.recruit "arketing peop)e' andrecruit "arketing peop)e' andJ.J.(e Ee+i()e enough to app)% uni;ue(e Ee+i()e enough to app)% uni;ue

so)utions to pro()e"s.so)utions to pro()e"s.


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! 1trong sales# no1trong sales# no

pro+tspro+ts! Customer(drivenCustomer(driven

to its coreto its core

! 'ach customer3s'ach customer3sexperience isexperience is

uni4ueuni4ue

! 5rovides great5rovides great

selection#selection#good value#good value#

discovery anddiscovery and

convenienceconvenience! / true online/ true online

communitycommunity

/ma,on.com/ma,on.com

Discussion:Discussion:

Will Amazon.com SurWill Amazon.com Sur

Case *tud%


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What is Marketing5! Marketing is "anaging prota()eMarketing is "anaging prota()e

custo"er re)ationshipscusto"er re)ationships

/ttracting new customers/ttracting new customers 6etaining and growing current6etaining and growing current

customerscustomers

! 66Marketing7 is NT s%non%"ousMarketing7 is NT s%non%"ous$ith 6sa)es7 or 6advertising7$ith 6sa)es7 or 6advertising7


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Marketing

Manage"ent! Marketing managementMarketing managementisis

6the art and science o,6the art and science o,

choosing target "arkets andchoosing target "arkets and

(ui)ding prota()e(ui)ding prota()e

re)ationships $ith the".7re)ationships $ith the".7

Creating# delivering andCreating# delivering and

communicating superiorcommunicating superior

customer value is key.customer value is key.


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Marketing

Manage"ent! Custo"er Manage"ent:Custo"er Manage"ent:

Marketers select customersMarketers select customers

that can be served well andthat can be served well and

pro+tably.pro+tably.

! He"and Manage"ent:He"and Manage"ent:

Marketers must deal withMarketers must deal with

di$erent demand statesdi$erent demand states

ranging from no demand toranging from no demand to

too much demand.too much demand.

Marketing


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Marketing

Manage"ent

! 5roduction5roduction

conceptconcept

! 5roduct5roductconceptconcept

! 1elling1elling

conceptconcept

! MarketingMarketingconceptconcept!1ocietal marketing concept1ocietal marketing concept

Management 7rientationsManagement 7rientations

MarketingManage"ent


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COM!CRMCRMBB CustomerCustomer

relationshiprelationship

managementmanagement# # ## # #6is the overa)) process o, (ui)ding6is the overa)) process o, (ui)dingand "aintaining prota()eand "aintaining prota()e

custo"er re)ationships (%custo"er re)ationships (%

de)ivering superior custo"erde)ivering superior custo"er

va)ue and satis,action.7va)ue and satis,action.7


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COM

!t costs J to 10 ti"es MO3t costs J to 10 ti"es MO3

to attract a ne$ custo"erto attract a ne$ custo"er

than it does to keep athan it does to keep acurrent custo"er satised.current custo"er satised.

!Marketers "ust (eMarketers "ust (econcerned $ith the )i,eti"econcerned $ith the )i,eti"e

va)ue o, the custo"er.va)ue o, the custo"er.


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COM

!-ttracting&-ttracting&retaining andretaining and

growing customersgrowing customers

! Building customerBuilding customer

relationships andrelationships and

customer e.uitycustomer e.uity

! Custo"er va)uesatis,actionCusto"er va)uesatis,action Perceptions are ke%Perceptions are ke%

Meetinge+ceedingMeetinge+ceedinge+pectations createse+pectations createssatis,actionsatis,action

! Lo%a)t% and retentionLo%a)t% and retention Kenets o, )o%a)t%Kenets o, )o%a)t%

Lo%a)t% increases asLo%a)t% increases assatis,action )eve)s increasesatis,action )eve)s increase

He)ighting consu"ersHe)ighting consu"ersshou)d (e the goa)shou)d (e the goa)

! ro$ing share o, custo"erro$ing share o, custo"er Cross=se))ingCross=se))ing

8ey Concepts8ey Concepts


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COM! Custo"er e;uit%Custo"er e;uit% The tota) co"(inedThe tota) co"(ined

custo"er )i,eti"ecusto"er )i,eti"e

va)ues o, a))va)ues o, a))custo"ers.custo"ers.

Measures a r"sMeasures a r"s

per,or"ance' (utper,or"ance' (ut

in a "anner thatin a "anner that)ooks to the ,uture.)ooks to the ,uture.





relationships andrelationships and

customer e.uitycustomer e.uity


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COM! Custo"er re)ationshipCusto"er re)ationship

)eve)s and too)s)eve)s and too)s Target "arket t%pica))%Target "arket t%pica))%

dictates t%pe o,dictates t%pe o,re)ationshipre)ationship Basic relationshipsBasic relationships ull relationshipsull relationships

Custo"er )o%a)t% andCusto"er )o%a)t% andretention progra"sretention progra"s-dding nancial )enets-dding nancial )enets-dding social )enets-dding social )enets-dding structural ties-dding structural ties




relationships andrelationships andcustomer e.uitycustomer e.uity



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Marketing Cha))enges

!Techno)ogica) advances' rapidTechno)ogica) advances' rapidg)o(a)i/ation' and continuingg)o(a)i/ation' and continuing

socia) and econo"ic shi,ts aresocia) and econo"ic shi,ts arecausing "arketp)ace changes.causing "arketp)ace changes.

! MaGor "arketing deve)op"entsMaGor "arketing deve)op"ents

can (e grouped under thecan (e grouped under thethe"e o,the"e o, ConnectingConnecting##


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! /ia technology/ia technology! 0ith customers0ith customers

! 0ith marketing0ith marketing

partnerspartners

! 0ith the world0ith the world

! dvances in co"puters'dvances in co"puters'te)eco""unications'te)eco""unications'video=con,erencing' etc.video=con,erencing' etc.

are "aGor ,orces.are "aGor ,orces. Hata(ases a))o$ ,orHata(ases a))o$ ,or

custo"i/ation o,custo"i/ation o,products' "essagesproducts' "essagesand ana)%sis o, needs.and ana)%sis o, needs.

! The nternetThe nternet &aci)itates an%ti"e'&aci)itates an%ti"e'an%$here connectionsan%$here connections

&aci)itates COM&aci)itates COM Creates "arketspacesCreates "arketspaces

ConnectingConnecting


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! *e)ective re)ationship*e)ective re)ationship"anage"ent is ke%."anage"ent is ke%. Custo"er prota(i)it%Custo"er prota(i)it%

ana)%sis separatesana)%sis separates$inners ,ro" )osers.$inners ,ro" )osers.

! ro$ing 6share o,ro$ing 6share o,custo"er7custo"er7

Cross=se))ing and up=Cross=se))ing and up=se))ing are he)p,u).se))ing are he)p,u).

! Hirect sa)es toHirect sa)es to(u%ers are gro$ing.(u%ers are gro$ing.




partnerspartners



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! Partner re)ationshipPartner re)ationship

"anage"ent"anage"ent

invo)ves:invo)ves:

Connecting insideConnecting inside

the co"pan%the co"pan%

Connecting $ithConnecting $ith

outside partnersoutside partnersSupply chainSupply chain

managementmanagement

Strategic alliancesStrategic alliances




partnerspartners



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Marketing Cha))enges! )o(a)i/ation)o(a)i/ation

Co"petitionCo"petition

Ne$ opportunitiesNe$ opportunities

! reater concern ,orreater concern ,orenviron"enta) andenviron"enta) andsocia) responsi(i)it%socia) responsi(i)it%

! ncreased "arketingncreased "arketing

(% nonprot and(% nonprot andpu()ic=sector entitiespu()ic=sector entities *ocia) "arketing*ocia) "arketing

ca"paignsca"paigns




partnerspartners


levitt - marketing myopia

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