Many companies are too focused on producing goods or services and don’t spend enough time understanding what customers want or need.
Though Ted Levitt coined the term “marketing myopia” to describe this phenomenon back in 1960, it still applies to many organizations today.
Sustained growth depends on how broadly you define your business.
Levitt asked organizations to carefully consider this very important question: What business are you really in?
Take these examples:
The U.S. railroad industry might have kept growing had it thought of itself as providing transportation, not just creating railroads.
The oil industry could have created greater demand for its product in Levitt’s day by defining its business as providing energy (as many oil companies now do), not just providing oil.
In the 1950s, Hollywood film companies got into trouble because they defined their business as “movies”—a limited product—instead of “entertainment.” Hollywood rejected TV but should have welcomed it as an opportunity to expand the business it was in.
Executives must realize that their companies, and even their industries, will become obsolete if they put too much faith in the superiority of their offerings. Every major industry was once a growth industry—and many of them are now very much in the shadow of decline.
It’s important not to define the company’s product as its business. Levitt refers to that kind of thinking as “suicidal product provincialism.” It’s too narrow to be sustainable.
The way to avoid that problem is to zero in on customers rather than the goods or services you can produce.
We explore each of these key ideas in more detail in this seminar.