Analysis of Harvard Business Review Article “Marketing Myopia”

1. By Theodore Levitt MKTG 5320 Marketing Management, Texas A&M University Corpus Christi Presented By Group 8; Robert Rodela : Introduction Loan Vo: Population Myth Manuel Arcos : Production Pressures John Lowe : Dangers of R&D Bill Blevins: Conclusion Analysis of Harvard Business Review Article “Marketing Myopia”

2. Theodore Levitt (1925-2006) • Harvard Business School Professor • Editor of Harvard Business Review • Marketing Scholar • Authored “Marketing Myopia” (1960) • Popularized term Globalization

3. Marketing Myopia Definition- A short-sighted and inward looking approach to marketing that focuses on the needs of the company instead of defining the company and its products in terms of the customers' needs and wants. It results in the failure to see and adjust to the rapid changes in their markets.

4. Define Industry • What Industry are we in? • Railroad or Transportation • Movie Business or Entertainment Business • Oil Industry or Energy Industry • BP Oil/Energy Company

5. Growth Industries • No such thing as a growth industry only growth opportunities. • Focus on Consumers not Products

6. Reasons Industries Fail • Population Growth Myth • Production Pressures • Research and development Dangers

7. Loan Vo Population Myth

8. Population Myth • On the surface: sounds reasonable. . Once the population is growing, there will be more demand.  limit the manufacturer’s creativity and imagination. . There is no substitute for the product. The manufacturer becomes more complacent and stubborn wanting to stick with status quo.

9. In the deeper layer: a myth . Population both growing and changing . Demand changing each day . The future market is uncertain come. The manufacturer should be customer-oriented, not product-oriented

10. Example: Petroleum industry • Instead of positioning itself as an energy industry, it defines itself too narrowly. • They concentrate all resources to oil exploration, production and refining • No understanding of the consumers’ true demand: not oil, but a means, a stimulant that makes their car run, makes their fireplace burn…

11. History of the petroleum industry Kerosene lamp Incandescent lamp invented by Edison was totally nondependent on oil  2 rescues . The internal combustion engine, helping to boost the demand for oil . central oil heater (in1920s)  wartime, demand for oil for aviation  expansion of transportation helped to keep the oil industry in gear.

12. From the example: • If defined as an energy industry instead of oil industry, would not depend on good luck or had to resign profits to outsiders • Today, emerged new kinds of energy such as fuel cell, solar energy, atomic energy  Still lucky or not??

13. Manuel Arcos: Production Pressures

14. ProductionPressures • Alleffortfocusedonproduction • Marketing getsneglected • Massproductiongeneratepressuretomovetheproduct. • “Output is so prodigiousthatalleffortconcentratesontryingtogetrid of it”.

15. Differentpoint of view

16. Lag in Detroit • Detroit ismainlyproduct-oriented, notcustomeroriented. • Theydidnotresearchcustomers´wants. • Inevitable lost of millions of customers. • Occasionalattentiontofinancing and someproductchanges.

17. What Ford putfirst • Business Plans and strategymustfollowhardthinkingaboutthecustomer. • Cuttingsellingprice. • Assembly line and massproductionallignedtoreach a $500 car. • “Ourpolicyisto reduce theprice, extendtheoperations and improvethearticle”

18. ProductProvincialism • Narrowpreocupation in lowunitproductioncostsinstead of growing. • Productfailstoadapttochangingpatterns of consumersneeds. (BuggyWhipIndustries) • ClassicExample: • OilIndustry

19. OilIndustries • Developmentsconcentrated in fuel Systemsdesignedtopower Automobiles (Hydro-carbonfuels) • Non petroleumcompanies are workingon: • Advancedmodels of energysystemswhichwilleliminatethedemandforgasoline. • Fuel cellsthatcreateelectricalenergyfromchemicalprocesses (hydrogen and oxygen) • Electric Storage Batteries • Solar Energy

20. CreativeDestruction • Motoristdisliketheexperience of buyinggasolinetocontinuedrivingtheir cars. • The gas stations are perceived as a taxcollector. • Once oilcompaniesrecognizethecustomer-satisfyinglogictheywillworkonefficient and longlasting fuel. • A creativedestructionisthecatalysttoimprove and survive. • ChevronOil/EnergyCompany

21. John Lowe: Dangers of R&D

22. Dangers of R & D According to Levitt, R&D presents a danger to a firm’s ability to sustain growth, when managers are preoccupied by the profits generated from technical research.

23. Dangers of R & D • Marketing is shortchanged • When firms pay too much attention to R & D • Customers come forward with specific new product demands (firms fill markets instead of finding markets) • Examples • Electronics Industry • Oil Industry

24. Dangers of R & D – Electronics Industry • Early industry shaped by military orders that preceded existence of facilities / firms • Expansion of the industry has been devoid of any marketing effort • Products are sophisticated, so companies employ large numbers of engineers & scientists • Leads to a bias favoring product R & D & production • View marketing as something that must be done once the product is created

25. Dangers of R & D – Electronics Industry • Companies favor business activities that involve experimentation and control • Belief that consumers are unpredictable, stubborn, bothersome, fickle • So firms concentrate on what they can control (product, R & D, production processes) • Military & others push new frontiers • Don’t have to discover customer wants & needs.

26. Dangers of R & D – Oil Industry • Marketing gets the “stepchild treatment” • Exists but not with much dedication • Focus is on improving what they already do Telling sign - Articles on “The Revolutionary Potential of Electronics” • In the Search for Oil • In Production Operations • In Refinery Processes • In Pipeline Operations All major functions discussed EXCEPT marketing

27. Dangers of R & D – Oil Industry • Beginning to End • “The (Oil) Industry is implicitly defined as beginning with the search for oil and ending with its distribution from the refinery” (Levitt) • Ironic that industries heavily affiliated with research and development seem to violate the Scientific Method

28. Dangers of R & D – Oil Industry Rules of Scientific Method: • Define Problem • Hypothesis • Prediction • Experiment • Conclusion

29. Dangers of R & D – Oil Industry • More appropriate “Beginning to End” process: • Customer needs • Create product / service to satisfy customer need • Delivery of customer satisfaction • Find raw materials required

30. Dangers of R & D • Selling is NOT marketing Selling focuses on the needs of the seller Marketing focuses on the needs of the buyer

31. Bill Blevins: Conclusion

32. Conclusion • Self Confidence without direction (railroad Tycoons) After the advent of new technologies railroad barons still remained unshaken and focused on the Institution which was the Railroad industries past success…They ignored change.

33. Train wrecks are irreversible Most railroad investors from 1880 to 1920 were over confident in the belief that there was only one type of reliable freight and passenger transportation that being by railroad. After the turn of the century they were wrong to ignore new industry inventions in aviation, trucks and the automobile.

34. How does one avoid the Train wreck of Marketing Myopia. • Managerial ineffectiveness – being ineffective at their post and without imagination. • Obsolescence – lacking progressive thinking in the areas of finance, product R&D and managerial training rendering yourself obsolete. Current examples; Gasoline Vs. electric, hybrid and ?? Cars. • Ideas of Indispensability – Ideas that there is no competitive substitute. Edison’s invention of the light bulb vs. Kerosene lamps. • Customers needs – Follow the customer. Henry Ford and his $500 model T. • Research and Development – there can be too much R&D and not enough marketing – design to fit customer needs.

35. Entrepreneurial Greatness • See the big picture • Adapt to requirements of the marketplace • Take action • Create value • Have purpose and direction • Have the will to succeed

36. C.E.O. Example Jerry Jones, Owner and CEO of the Dallas Cowboys and Cowboy Stadium may not be everyone’s favorite person but exhibits every trait of a customer oriented, decisive and visionary entrepreneur.

37. Cowboy Stadium, Arlington, TX By building the new Cowboy stadium, Jones built a mega complex, appealing to anyone who has the desire for a larger than life experience. And of course for all football sports fans.

38. Jones, Marketing Entertainment, • Jones took a financial risk on his vision, but is hosting regular games of Colleges, and all playoff games of TX high schools in 2011, A to AAAAA. He developed a very good plan to succeed. • Imbedded value creating a place where there is a since of grandiose and where one hundred merchants sell food and wares and contribute to the experience. • Jones is not selling football tickets he is selling entertainment on a level that exceeds the football game experience.

39. Questions, comments