Businesses must recall that they do not exist to sell products, no matter how excellent those products are, but to meet customer needs. Their survival depends upon it.
By Mark D, Harris
Coronado Baptist Church in El Paso, Texas hosted a banquet to raise money for Christian ministries in Africa. A church leader spoke of his experience on that continent (personal experience, 2006).
“Tell me about yourself,” an African pastor said to the American.
“Well, I own a manufacturing plant in Ciudad Juarez, Mexico. We are expanding into India” the church man answered.
“Not about your work, that is unimportant,” the African pastor replied. “Tell me about your family.”
The American businessman defined himself by his work, while the African pastor defined himself as part of a family, a church, and a community. As is common in individualistic societies, the American focused on his individual contribution. As is common in communal societies, the African focused on his part of the group and their contribution. The businessman and the pastor had to understand what each meant when they asked, “Who am I?” Had they not, they never could have met one another’s needs, and the mission trip would have been a failure.
“Who am I” is a fundamental question for every person on earth. It is also a fundamental question for every organization. The African pastor might have reframed the question from “Who am I” to “Whose am I?” The answer shapes the lives of people and organizations.
Theodore Levitt, in his article Marketing Myopia, argues that a businesses’ answer to the “Who am I” question leads companies to success or failure (Levitt, 1960). He contends that businesses too often define themselves incorrectly. In the mid-twentieth century, railroads defined themselves as railroad companies and struggled to cope with air, road, and waterborne transportation rivals. Likewise, movie producers defined themselves as movie companies, and floundered against television and later video competitors (Levitt, 1960). In both cases, leadership defined its company by its product – railroads or movies – rather than by customer needs – transportation and entertainment. To define oneself by product rather than by customer need is to limit ones’ opportunities for growth, and even survival, in the face of new technologies and future challenges.
Four Mistakes Leading to Marketing Myopia
No industries are guaranteed perpetual growth. Levitt identifies four major mistakes that managers make when evaluating their companies. These mistakes entice leaders to think that their products will cause their businesses to grow forever.
First, leaders believe that their company’s growth is assured by expanding and increasingly affluent populations (Levitt, 1960). The decade which ended in 1960 featured the highest American population growth since 1920 (US History, 2000). Gross Domestic Product increased by two-thirds from 1950 to 1960 (Global Security, 2022). Despite these conditions, railroads and movie producers struggled.
Business leaders today have even less reason to trust in economic and population growth as a guarantor of the health of their companies. In 2022, United States population growth is tiny, and economic expansion is minimal compared to 1960. Further, the population is likely to decline in the not-too-distant future, not only in America but in the whole world. Workforces will commensurately shrink, especially due to global aging. To borrow from the aphorism “a rising tide lifts all boats,” a no-longer rising economy and population will not be able to automatically lift organizations in the future.
Second, leaders believe that there is no substitute for their product (Levitt, 1960, 18). Though oil industry executives believed that oil would always be in high demand to produce energy, the industry nearly collapsed due to competitive energy sources. For example, oil as fuel was partly displaced by natural gas, solar, wind, hydroelectric, and nuclear power. Oil maintained its importance when chemists outside the oil industry invented polymer chemistry, leading to plastics and a plethora of useful oil-based products. Oil men did not save oil in America. Instead, changes in technology wrought by others opened new markets which kept oil companies afloat (Levitt, 1960, 28-37).
Third, leaders have too much faith in mass production and the consequent decrease in unit costs. Mass production and cost cutting improve the affordability of existing products, but low costs are only helpful for selling products that are useful. It does no good to make the highest quality, least expensive buggy whip in the world, if no one buys them (Levitt, 1960, 49). Long-term growth requires a focus on the needs of customers, not on the products of companies.
Fourth, preoccupation with a product leads to scientific and economic dead ends. Experimentation on a product will make that product better. However, it will not identify the products that could be produced to better meet customer need (Levitt, 1960, 19). Manufacture of high tech products requires scientists, engineers, and others who are comfortable doing experiments with controllable variables. Such research will help improve existing products but will not help discover customer needs and make new customers (Levitt, 1960, 43). Communication directly with customers – existing and potential – and insights into their needs, will let firms discover the next big thing.
In the 1960s, Swiss watchmakers concentrated on improving their legendary mechanical watches and largely ignored quartz technology used by Japanese manufacturers. Customers didn’t generally care if watches were mechanical or quartz. They needed to know the time with high quality at the lowest possible price, so they flocked to the cheaper Japanese quartz watches. Swiss watchmakers struggled, and finally came back in the 1980s. Customer need, not company product, must be the focus.
Levitt spoke of marketing myopia as failing to identify and meet the customers’ needs. Other authors, such as Delapedra and Silva (2021) contend that focusing on the needs of the customers, especially short-term needs, is not enough. Every organization has stakeholders whose needs are not likely to be perfectly aligned with customers. Further, customers themselves have short term and long-term needs. These will often differ (Delapedra & Silva, 2021). As an example, they note that the fast-food industry met customers’ short-term desire for tasty food but did not meet their long-term desire for good health, weight control, and environmental sustainability (Delapedra & Silva, 2021). These authors conclude that organizations must consider the needs of customers, and other stakeholders, to avoid market myopia.
Oehmen et al. (2020) has a related take on myopia as it relates to companies. Managers must focus on customer and stakeholder needs but must always remember to make allowances for dramatic changes in the overall environment, such as natural disasters, man-made disasters, and pandemics (Oehmen et al., 2020). Such events disrupt the normal interchange between firms and customers. They also occasion new needs in all stakeholders that companies can capitalize on to build their brand and promote their products. The authors recommend that leaders risk planning should include not only low impact, high frequency events, but also high impact, low frequency events, such as the COVID pandemic (Oehmen et al., 2020).
Since Adam complained to the Lord that he was naked (Genesis 3:10, Holy Bible, English Standard Bible, 2001), humans have been nothing if not selfish. Self-obsession comes as naturally as breathing. Individuals focus on their wealth, power, or wisdom (Jeremiah 9:23-24, Holy Bible, English Standard Bible, 2001) while companies focus on their position and their products. Organizational marketing myopia derives directly from the selfish nature of man. Firms do not exist for themselves, but for others, just as people do not exist for themselves, but for God (Acts 17:28, Holy Bible, English Standard Bible, 2001). Insofar as companies strive to know and meet the needs of others, they will succeed.
Levitt concludes by saying, “the view that an industry is a customer-satisfying process, not a goods-producing process is vital for all businesspeople to understand” (Levitt, 1960, 71). Though his examples of future technologies were off – fuel cells do not power ordinary houses, and the internal combustion engine has not become obsolete – his themes remain sound.
If anything, Levitt’s conclusions should be expanded. “Who am I?” even when answered by discovering and meeting genuine customer need, is not enough. Like the African pastor, organizations must answer the question “Whose am I?” Along these lines, Delapedra and Silva (2021) insist that while customer needs are first, the needs of other stakeholders must be considered. Such a statement is accurate, as no firm can neglect the needs of its shareholders, employees, community, or government. However, no company can assign equal priority to every stakeholder. The archer who aims at ten targets hits none of them. Likewise, organizations must first meet customer needs, then shareholder needs, then employee needs, and finally the needs of other groups. A clear strategy and a proper balance, facilitated with such tools as the Balanced Score Card, can minimize myopia.
Oehmen et al. (2020) was right in telling managers that marketing myopia extends from stakeholders to the overall environment. This is especially true in the setting of a major pandemic, widespread political unrest throughout the world, climate change, and global power competition of a sort not seen since before World War I. Russia’s recent invasion of Ukraine, as well as Chinese threats against Taiwan, and growing military action across the globe, highlight dangers that every leader must face.
Delapedra, A. T. F., & Silva, J. D. da. (2021). Business strategies under the new marketing myopia perspective. Revista Pensamento Contemporâneo Em Administração, 15(1), 107–121. https://doi.org/10.12712/rpca.v15i1.48604
Global Security. (2022). USA History – The Post-War Economy: 1945-1960. http://Www.globalsecurity.org. https://www.globalsecurity.org/military/world/usa/history/12-01.htm#:~:text=Gross%20national%20product%20%28GNP%29%2C%20a%20measure%20of%20all
English Standard Bible. (2001). ESV Online. https://esv.literalword.com/
Levitt, T. (1960). Marketing myopia. Harvard Business School Press.
Oehmen, J., Locatelli, G., Wied, M., & Willumsen, P. (2020). Risk, uncertainty, ignorance, and myopia: Their managerial implications for B2B firms. Industrial Marketing Management, 88, 330–338. https://doi.org/10.1016/j.indmarman.2020.05.018
US History. (2000). U.S. Population, 1790-2000: Always Growing. U-S-History.com. https://www.u-s-history.com/pages/h980.html