Understanding the concept: Marketing Myopia

marketing myopia
What is marketing myopia?

In the real world, myopia is a deformity in the eye(s) where an individual is not able to see the far-off things clearly while s(he) can see the near objects. It is also called short-sightedness.

Relating to it, Marketing Myopia is an approach where businesses focus on achieving their goals rather than fulfilling customer needs. Consumer preferences may change over time and it is of utmost importance for the companies to identify those changes and act accordingly. And when companies fail to see those changes, marketing myopia strikes in. Thus, we may define marketing myopia as an approach where a company has a narrow-minded approach

Origin of the term

The term marketing myopia was coined by Theodore Levitt who was the economist, professor at Harvard Business School, and the editor of the journal, Harvard Business Review. Marketing Myopia was also the name of the research paper he published in 1960 in Harvard Business Review (HBR). Marketing Myopia suggests that businesses will do better in the end if they concentrate on meeting customers’ needs rather than on selling products.

According to Levitt, a business may fall if an industry due to short-sightedness and the illusion that it is still a growth industry. As a result, a business may become a victim of marketing myopia.

When does marketing myopia strike in?
Narrow classification of the industry

Sometimes, companies may not identify themselves in the correct industry or may classify their industry narrowly. Such a case can cause marketing myopia to that company. In his paper, Levitt gave numerous examples of this case. One of the examples is railroads. According to Levitt, railroads did not stop growing because the need for passenger and freight transportation declined. That grew. What went wrong was railroads classified themselves as railroad-oriented businesses rather than defined as transport-oriented businesses.

Also, Hollywood just managed to escape the juggernaut of marketing myopia where it classified itself as a film industry, not as an entertainment industry. Hollywood rejected TV where it should have welcomed it. Today, TV is a bigger business than the movie business. But in the case of Hollywood, it was young writers, producers, and directors with experience in television that helped in the resurgence of Hollywood.

Theodore Levitt said, there is nothing like a growth industry. There are only companies that are organized and operated to create and capitalize on opportunities. Industries that assume themselves as growth industries often end up stagnated followed by undetected decay. Four conditions may cause this cycle:

  • A belief that growth is assured by expanding the population.
  • A belief that there’s no substitute for the company’s major product.
  • Faith in mass production and rapidly decreasing cost with an increase in output.
  • The preoccupation that the product lends itself to careful scientific experimentation, improvement, and manufacturing cost reduction.

I will be explaining the aforementioned conditions using the same examples as Levitt i.e. Petroleum, electronics, and automobiles.

Population Myth

It is a belief that profits or growth is assured by expanding the affluent population. If the population is increasing and so are your consumers, then your future is comfortable than if the market is shrinking. If the market is expanding, it keeps the manufacturer from thinking exhaustively. Thus, if thinking is the response to a problem absence of thinking implies the absence of a problem and if the product has automatically expanded the market, manufacturers may not put on their thinking cap.

Levitt explained this using the example of petroleum. According to Levitt, the petroleum industry may not be a growth industry but a declining one and may end up where railroads did. Characteristics of this and industries that believed in the point that expanding the population have beneficial consequences, while companies with a generic product, having no competitive substitute outdo the competitors tends to improve their product over time.

What asked for trouble is the industry’s focus on improving the efficiency of getting and making the product than on improving generic product or their marketing. Also, they define the product in the narrowest way possible like gasoline, not energy or fuel. This assures that major improvement in gasoline quality has come from outside the oil industry. Also, a major improvement in the automobile fuel industry came from small oil companies other than refining or production.

The idea of Indispensability

It is the belief that the major product that the company sells has no competitive substitute. The petroleum industry, for example, has no competitive substitute for its major product-Gasoline or even if it is, it is the derivative of crude oil. The trouble here is that the oiling companies have their huge crude oil reserves that have value if there is a market for those products. Hence there is a belief in the superiority of automobile fuel prepared from crude oil.

However, historic evidence may not support this. The evidence says that the oil industry never had a superior product for so long. But had a succession of different businesses gone through the cycle of growth, maturity, and decline (Product Life Cycle).

For Example, Levitt said that crude oil was largely a patent medicine. As when the fad ran out the kerosene lamp took in the place. In its earlier day, the company’s competed with each other and against gaslighting by trying to improve the illumination of kerosene. What happened next was impossible to imagine. Edison invented the light bulb. And it was independent of crude oil. This pushed the oil industry towards obsolescence, but it was the growing use of kerosene in the space heater.

What followed next was the invention of coal-powered central heaters that paved the way for the obsolesce of space heaters. Along with it came the Internal Combustion Engine, which saved the oil industry from falling. And during World War 1 demand for aviation fuel saved the oil industry. Post world war 2 oil industry was promising. Up to 1975, companies promised growth of 6%. However, booming demand sent oil men searching for more and the number of reserves increased. This caused the weakening of oil prices throughout the world.

Mass Production

Mass production forces companies to produce all they can. Declining cost per unit and as the output rises is highly irresistible for the companies. The profits are spectacular, but what’s ignored is marketing. The output may be so huge that the company may want to just get rid of it. Thus it focuses more on selling, not marketing.

The automobile industry, for example, is the place where mass production is most famous. For example, the automobile industry spends millions of dollars on consumer research but Detroit didn’t do the same. It didn’t identify consumer’s wants but wanted them to choose from the features they’ve to offer and thus lost its customer to the small car manufacturers.

What Ford put first?

Henry Ford is believed to be the most senseless and brilliant marketer in American history. He’s senseless. He forced everyone to buy the same black car while brilliant because he designed a production system to fit market needs. We believed that Ford was able to sell the car at $500 because he invented the assembly line. He actually invented the assembly line because he already decided to sell a million cars at $500 per car. Thus, Mass production wasn’t a result of his low prices.

Product Provincialism

This refers to the fourth case of the self-deceiving cycle. Low-cost production creates possibilities for profits but it may be the most serious self-deceiving attitude that can affect the “growth” company, where the expanding demand neglects the concerns of marketing and the customer. And instead of growing the company declines and the product fails to adapt to consumers’ changing tastes and preferences, new marketing practices and institutions, and product development in competing or complementary industries.

For example, had it defined itself as a transportation business, the buggy whip industry may not have seen the failure it did. It may have survived even if it would have defined itself as a catalyst to energy sources, by manufacturing fans or belts.

The oil industry can be another case, where they got competition, outside their industry. Or take the classic case of kerosene lamps VS electric bulbs.

Stepchild Treatment

Among the market and the customer, the customer is often given stepchild treatment. It may look like they’re taken care of but aren’t given real thought. Instead, companies tend to spend resources on developing products. The oil industry is a typical example of how science, technology, and mass production can divert companies from their goal. The extent to which customer is studied is with the focus of getting information to improve what they are doing now. They focus on developing convincing advertisement themes, or effective promotional offers, rather than what consumers dislike or like about the service station or dealers.

More examples of Marketing Myopia
  • Kodak losing its share to Sony, when the demand for digital cameras exploded.
  • Nokia lost its market share to Android and iOS and ended up in misery when Microsoft took over its smartphone business.
  • When Bill Gates was the CEO of Microsoft he had 2 choices to choose from. Gaming console industry (Valued at approx.. $25bn) and search engine industry ( valued at around $1bn) and they opted for the gaming console industry. Initially, they didn’t get much success in the gaming console industry. Also, With time, the search engine industry developed and is dominated by Google today. The gaming console industry is dominated by Sony PlayStation.

Thus, I’ll conclude that every industry has been in a false belief that it is a growth industry. There are numerous cases (other than the aforementioned ones) that suggest that growth did not stop, declined, or threatened because of market saturation but because of management failure, or to say because of “Shortsighted Management”.

Read another marketing related post “Digital Marketing: A World of Possibilities

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Satyam Sapra

Satyam Sapra

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