Despite its initial popularity and loyal following, Marketing Myopia by Theodore Levitt is no longer useful or relevant. The author’s assumptions do not hold up in modern management experience, making it of little value for 21st-century marketing students. The rapid pace of change in industry structures, competition platforms, and the success and failure of companies and industries goes against traditional logic.
In Marketing Myopia, Theodore Levitt argues that industries should have broad definitions for themselves. This approach enables them to maintain flexibility and always focus on fulfilling the fundamental customer need with their product. Consequently, they can adapt and improve their products to better meet customer requirements. Levitt illustrates this concept with the example of the buggy whip industry. If they had defined themselves broadly as part of the transportation industry or as providers of a “stimulant or catalyst to an energy source,” they would have survived by evolving their product.
The author focuses on long-term changes and notes that companies often fail to navigate market transitions because they have a narrow view of their business scope. Using the example of the railroad industry, the author explains that companies often incorrectly define their industry based on their specific product or service rather than on the broader needs of their customers. The article highlights the importance of starting with overall objectives rather than focusing solely on operational goals. For instance, K Mart attempted to position itself as a comprehensive retail chain meeting all customer needs, but it ultimately failed due to fierce competition from Walmart, a stronger discount chain. In contrast, niche retail companies like Home Depot and Toys r Us have thrived because they have a clear focus and offer specialized services tailored to specific customer needs.
Every product goes through a product life-cycle, which consists of stages defined in our marketing textbook: introduction, growth, maturity, and decline. When a product reaches the decline stage, another product is prepared to replace it, fulfilling the same customer need but more efficiently. Levitt advises management to stay vigilant and keep an eye on the bottom-line, focusing on how to better fulfill the customer’s needs and develop a replacement for their product. However, category killers often emerge unexpectedly and redefine the industry, making it challenging for incumbents to do so. For instance, IBM writes more patents in the computer industry than its competitors combined, yet breakthrough technologies often originate from other companies like Treo’s PDA cum phone or Toshiba’s tablet PC.
Drucker (1999) argues that the concept of a growth industry is not valid. He explains that such an industry refers to one where the demand for its products or services grows at a faster rate than national income and/or population. In contrast, a “mature” industry experiences growth in demand at the same pace as national income and/or population. On the other hand, a “declining” industry is characterized by slower growth in demand relative to national income and/or population, despite an increase in sales volume.
Levitt states that every major industry was once a growth industry that emerged independently.
The text emphasizes the significance of seizing growth opportunities to prevent a decline in a company and questions the concept of market saturation. It presents evidence against this belief by citing the example of railroads losing their near-monopoly to competitors like airplanes entering the market. While the passenger-automobile industry in the western world has been declining for years, global sales are still experiencing slow growth due to market saturation in most countries. However, there is potential for a transportation boom in emerging and Third World countries that could replicate the economic expansion witnessed in the mid-19th century. Despite strong demand from China, the steel industry has been struggling with over-capacity for more than ten years and continues to face these challenges. The closure of facilities in developed nations has resulted in higher prices, despite overall demand only growing at 1%. Therefore, it can be concluded that this industry is completely saturated.
The article’s first criticism is levied against the idea of relying on population growth and affluence to ensure future economic growth. According to Levitt, this approach is flawed because it cannot be controlled. Instead, he suggests seeking out opportunities on one’s own. He uses John D. Rockefeller’s marketing effort of sending free kerosene lamps to China as an example of a successful strategy to increase sales in the oil industry. However, Levitt contradicts himself by warning against relying on population growth and a growing target market, which is exactly what Rockefeller tapped into. Many multinational companies are currently drawn to China due to the appeal of its growing middle class and their increasing affluence. This is evident in the 6-8% growth experienced by various industries in China, compared to the world average of 2-4%. Additionally, the attractive demographic factors have led to over $40 billion of Foreign Direct Investment flowing into China each year.
Discounting changes in demographics while not relying on population changes for industry success has significant implications. Demographics encompass various characteristics of a human population, such as size, growth rate, gender, marital status, education, and age. A prominent demographic shift has been the substantial increase in the aging population, particularly the baby boomers – those born between 1946 and 1964. This generation has propelled the financial services industry to become the world’s fastest-growing and most prosperous sector during the final three decades of the 20th century.
The demand for retail services targeting affluent and aging individuals in developed nations has experienced significant growth as it aims to provide retirement income. Mutual funds, pension fund managers, and new brokerage houses have achieved tremendous success beginning with the United States market and expanding to the UK, Continental Europe, and Japanese markets (Drucker, P. (1999) Management Challenges for the 21st Century. Harper-Collins.)
This example clearly demonstrates how demographic changes greatly influence the types of goods and services desired by a population.
Nevertheless, Levitt’s article receives my utmost criticism due to its outdated nature. Classifying one’s business solely based on industry can be constraining in today’s world, where products and services are becoming more integrated and the lines between them are increasingly blurred.
Nowadays, fulfilling the customer’s needs is crucial. Research in Motion (RIM), a Canadian company that created the Blueberry, took a unique approach in developing their product. They did not categorize themselves as part of the communication industry, which could have limited their vision. Instead, RIM adopted a holistic perspective when they created the Blackberry, not defining themselves narrowly as wireless hand-held device manufacturers. This broader mindset allowed them to innovate beyond boundaries and better meet customer demands.
The Blackberry has taken over the role of the Wall Street Journal in delivering financial news and stock quotes. It has replaced dull moments with mindless games and automatically downloaded top-ten lists similar to those seen on Letterman. Additionally, it has served as a substitute for personal computers that allow users to check their emails. Furthermore, it has replaced other telephones. The creators of the Blackberry recognized various consumer needs and worked towards fulfilling them, regardless of the industry they were entering. They were not confined or restricted to a single industry.
In the modern era, it is disadvantageous to solely identify oneself with a particular industry as it can be restricting. Instead, it is crucial to define oneself according to the changing demands of customers in order to attain business success. Furthermore, numerous products nowadays encompass various industries. While Levitt’s suggestions were groundbreaking during the 1960s, they are no longer applicable for marketing students and executives in today’s context.
