Sunday, June 28, 2009

Marketing Myopia

Written by Theodore Levitt in 1960, Marketing Myopia is probably the most influential article on marketing. Many argue that it signaled the birth of modern marketing thought.

Marketing myopia occurs when the marketers start concentrating on the product they are selling and forget about the customer needs they are serving. According to Levitt, sustained business growth depends on how broadly you define your business and how carefully you gauge your customer’s needs.

For example, all sellers of magnetic tapes were in trouble when music CDs came about and were able to serve the customer’s need for listening to music in the privacy of their homes in a better manner (Earlier, magnetic tapes had similarly displaced vinyl records). The firms which were better able to meet the challenge posed by CDs were those that made the transition early. Similarly, the new challenge for the same industry is from MP3 players and new digital music storage devices.

So, the prescription is that the company should define its business and their competition according to the customer needs it serves and not according to the product they currently sell. For example, Mercedes sells cars but the needs they cater to are varied, like mobility, comfort while travelling, convenience and status. So, the competition for Mercedes is not only from other carmakers but also from sellers of luxury goods like Rolex and Louis Vuitton.

Another important learning from this concept is that if you are unsuccessful in marketing your product then it means that in the perception of your customer, you are not able to serve her needs well. So, to ensure marketing success you have to tighten your product to ensure that you are able to better serve your customers’ needs than your competition. For, example when Lucky Goldstar’s first came to the Indian market, their consumer durables were unable to gain any significant market share. After revamping product features, introducing new models and upgrading its distribution system, LG (formerly Lucky Goldstar) became a market leader in several product categories.

Sometimes, companies have to take very drastic action. When Bajaj made the transition from scooters to motorcycles, it was still the number one seller of scooters in India but it recognized the changing customer preferences. The scooter manufacturers who failed to see the writing on the wall are still suffering.

Finally, it must be stressed that the concept of Marketing Myopia does not encourage diversification. It talks of shifting one’s focus from product to customer needs. That may or may not result in diversification.

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