According to the Merriam Webster Dictionary myopia is a term used to describe the eye condition of shortsightedness, it’s also used to describe a lack of foresight or a lack of insight. Theodore Levitt – a Harvard Business School professor – coined the term “Marketing Myopia”. It refers to marketing practices that are short-sighted and focused internally, rather than outwardly focused on customer needs and wants.
The professor warns executives of becoming too narrowly focused and losing touch with changing customer preferences. It’s this extensive focus on products, as opposed to customer needs that creates a lack of strategic foresight. Levitt argues that enterprises perform better when they focus on meeting customer needs, rather than on selling products.
Marketing myopia happens when a business focuses more on the products and services they sell other than on understanding customers changing needs and wants. Business exists to serve customers and therefore they should modify their products and services accordingly. Success requires a strong sense of customer focus. Common sense, but surprisingly not such common practice.
“The view that an industry is a customer-satisfying process, not a goods-producing process, is vital for all businesspeople to understand. An industry begins with the customer and his or her needs, not with a patent, a raw material, or a selling skill. Given the customer’s needs, the industry develops backwards, first concerning itself with the physical delivery of customer satisfactions. Then it moves back further to creating the things by which these satisfactions are in part achieved. How these materials are created is a matter of indifference to the customer, hence the particular form of manufacturing, processing, or what have you cannot be considered as a vital aspect of the industry. Finally, the industry moves back still further to finding the raw materials necessary for making its products.” – Theodore Levitt, Marketing Myopia, Harvard Business Review
Theodore Levitt observes that “industry is a customer-satisfying process” as such, long term success of any business rests on its ability to meet customer needs rather than on selling products.
Ultimately it’s the customer who defines business success. The customer is the expert on the market. It’s the customer’s perspective and experience defines the market, not your product or service. It’s the customers decisions that drive success and the customer buys when your products and services deliver value.
Marketing Myopia in the Railroad Business
The classic example of marketing myopia described by Theodore Levitt is the railroad business. The railroad business declined because railroad executives saw themselves as being in the railroad business – running trains – rather than in the business of providing transportation. This perspective limited their ability to respond to changing customer needs and constrained their growth.
“The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because that need was filled by others (cars, trucks, airplanes, and even telephones) but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry incorrectly was that they were railroad oriented instead of transportation oriented; they were product oriented instead of customer oriented.” – Theodore Levitt, Marketing Myopia, Harvard Business Review
The future prospects of any product are not based on the product’s technology and features, instead it’s based on the ability of the product to satisfy a customer need. The railway executives were too busy focusing on the train’s dashboard, rather than paying attention to the world outside the windscreen.
What Business Are You Really In?
Theodore Levitt suggests that businesses can avoid marketing myopia by answering the question “what business are we really in?“. Answering this question helps clarity the intent and purpose of a business.
This question helps leaders gain insight into why customers actually buy their goods and services. Unless you understand why customer buys your product you cannot effectively market and sell your products and services.
“In the factory we make cosmetics. In the department stores we sell hope.” – Charles Revson, former owner of Revlon International Corp.
Answering this question helps leaders to shift their focus away from products and allows a focus on how they can benefit customers. This shift allows enterprises to innovate around satisfying customer needs and wants. So understanding what business you’re in is the starting point for innovation.
- What business are you really in?
- What do your customers really value
- What do your customers actually buy?
- What experiences do you provide?
- In what other ways can this value be delivered?