Marketing Myopia

This 50-year-old book explains marketing better than most modern gurus ever could.

Every major industry was once a growth industry.

Fateful Purposes

The reason growth becomes threatened, slowed or stopped is not because the market is saturated. It is because of a failure of management.

Railroads didn’t stop growing because the need for passenger and freight transportation declined. Instead, they let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business.

Railroad-orientated instead of transportation-oriented; they were product-orientated instead of customer-oriented.

Hollywood barely escaped being annihilated because it defined its business incorrectly. Hollywood thought it was in the movie business when it was actually in the entertainment business.

Error of Analysis

What the railroads lacked was not opportunity, but some managerial imaginativeness and audacity to make them great. What was lacking was the will to satisfy the public using inventiveness and skill.

Shadow of Obsolescence

It is impossible to mention a single major industry that did not at one time qualify for the magic appellation of “growth industry” In each case the industry’s assumed strength lay in the unchallenged superiority of its product.?

Dry Cleaning, Electric Utilities and Grocery Stores are all examples of past growth industries.

To survive, every business will have to plot the obsolescence of what now produces their livelihoods.?

A Self-Deceiving Cycle

In truth, there is no such thing as a growth industry, there are only companies organised and operated to create and capitalise on growth.?

The history of every dead and dying “growth” industry shows a self-deceiving cycle of bountiful expansion and undetected decay.?

The 4 conditions that usually guarantee this cycle.

1. The belief is that growth is assured by an expanding and more affluent population.
2. The belief is that there is no competitive substitute for the industry’s major product.
3. Too much faith in mass production
4. Preoccupation with a product that lends itself to carefully controlled scientific experimentation, improvement and manufacturing cost reduction.

Population Myth

An expanding market keeps the manufacturer from having to think very hard or imaginatively. If thinking is an intellectual response to a problem, then the absence of a problem leads to the absence of thinking.?

The petroleum industry’s efforts are focused on improving the efficiency of getting and making its product, narrowly defining its product - namely, gasoline, not energy, fuel or transportation.

The development of superior alternative fuels comes from outside the oil industry.

Production Pressures

The best way for a company to be lucky is to make its own luck. That requires knowing what makes a business successful. One of the greatest enemies of knowledge is mass production.?

Mass production generates pressure to “move” a product. So what usually gets emphasised is selling, not marketing. Marketing, a more sophisticated and complex process, gets ignored.?

The difference between marketing and selling is more than semantic. Selling focuses on the needs of the seller, marketing focuses on the needs of the buyer.?

In some industries, the enticement of full mass production is so powerful that there is a shift in power to the consumer.?

A truly marketing-minded firm tries to create value-satisfying goods and services that consumers will want to buy.

What is offered for sale includes not only the generic product or service but also how it is made available to the customer, in what form, when, under what conditions, and what terms of trade. Most importantly, what it offers for sale is determined not by the seller but by the buyer. The seller takes cues from the buyer in such a way that the product becomes a consequence of the marketing effort, not vice versa.

The Detroit automobile industry never really researched customers' wants. It only ever researched their preferences between the kinds of things it had already decided to offer them.?

Creative Destruction

If the oil industry changed its thinking to take care of customer needs, not finding, refining or even selling oil through the lens of taking care of people’s transportation needs, nothing would stop it from creating its own extravagantly profitable growth.

People don’t actually buy gasoline. What they buy is the right to continue driving their cars. The gas station is like a tax collector to whom people are compelled to pay a periodic toll as the price of using their cars. This makes the gas station an unpopular institution.?

It is all too easy for companies and industries to let their sense of purpose become dominated by the economies of full production and to develop a dangerously lopsided product orientation.

The historic fate of one growth industry after another has been its suicidal product provincialism.

It is not surprising that having created a successful company by making a superior product, management continues to be orientated towards the product rather than the people who consume it.

The company views itself as making things rather than as satisfying customer needs. Thus marketing gets treated as a residual activity, “something else” that must be done once the vital job of product creation and production is completed.

Stepchild Treatment

Most large companies focus on getting the information that is designed to help the company improve what they are now doing.

Nobody seems interested in probing deeply into the basic human needs that the industry might be trying to satisfy.?

Basic questions about customers and markets seldom get asked. The latter occupy a stepchild status. They are recognised as existing, as having to be taken care of, but not worth very much real thought or dedicated attention.

The Beginning and End

The view that an industry is a customer-satisfying process,? not a goods-producing process, is vital for all business people to understand. An industry begins with the customer - his or her needs, not with a patent, a raw material, or a selling skill.

Given the customers’ needs, industries should develop backwards, first concerning themselves with the delivery of customer satisfaction, then creating the things by which these satisfactions are achieved.

Organisations must learn to think of themselves not as producing goods or services, but as doing the things that make people want to do business with it.

Summary:?

This classic book is a great reminder that as a business our focus should be on addressing a customer's need, not on the product or services that we are intent on selling. To get better at learning what the customer wants, and to deliver more of that, even if this means changing or discontinuing a product or service.?

1 Key Takeaway/Insight:

If thinking is an intellectual response to a problem, then the absence of a problem leads to the absence of thinking.?

Rating: 9 out of 10

Author:?Theodore Levitt

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