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Answer & Explanation:Format: Two-page maximum, single space, business block, justified margins, 10-point font APA bibliographic citation of the work as your ‘title’ Your name, course, section number and date at the upper rightContent: Central theme – identify author’s main lesson/argument – what is the author(s) teaching us Critical analysis – evaluate the lesson/argument – strengths/weaknesses – considering pointing to a frame of reference in your own life or your training in the subject Main takeaways – so what and now what? How do we best apply the knowledge from this article/book?Absolutely no plagiarize！！！marketing_myopia_by_theodore_levitt.pdf
marketing_myopia_by_theodore_levitt.pdf

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i960
We always know when an HBR article hits the big time. Journalists write about
it, pundits talk about it, executives routecopiesof it around the organization,
and its vocabulary becomes familiar to managers everywhere -sometimes to
the point where they don’t even associate the words with the original article.
Most important, of course, managers change how they do business because the
ideas in the piece helped them see issues in a new light.
“Marketing Myopia” is the quintessential big hit HBR piece. In it,Theodore
Levitt, who was then a lecturer in business administration at the Harvard Business School, introduced the famous question,”What business are you really in?”
and with ittheclaim that, had railroad executives seen themselves as being in
the transportation business rather than the railroad business, they would have
continued to grow. The article is as much about strategy as it is about marketing, but it also introduced the most influential marketing idea of the past halfcentury: that businesses wilt do better in the end if they concentrate on meeting
customers’needs rather than on selling products. “Marketing Myopia” won the
McKinsey Award in i960.
Marketing Myopia
by Theodore Levitt
E
Sustained growth depends
on how broadly you define
your business-and how
carefully you gauge your
customers’needs.
VERY MAJOR INDUSTRY WaS
a growth industry. But some that
are now riding a wave of growth enthusiasm are very much in the shadow
of decline. Others that are thought of as
seasoned growth industries have actually stopped growing. In every case, the
reason growth is threatened, slowed, or
stopped is not because the market is
saturated. It is because there has been
a failure of management.
Fateful Purposes
The failure is at the top. The executives
responsible for it, in the last analysis,
are those who deal with broad aims and
policies. Thus:
• The railroads did not stop growing
because the need for passenger and
138
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
tbe 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.
• Hollywood barely escaped being totally ravished by television. Actually, all
the established film companies went
through drastic reorganizations. Some
HARVARD BUSINESS REVIEW
simply disappeared. All of them got into
trouble not because of TV’s inroads but
because of their own myopia. As with
the railroads, Hollywood defined its
business incorrectly. It thought it was
in the movie business when It was actually in the entertainment business.
“Movies” implied a specific,
limited product. This produced
a fatuous contentment that
from the beginning led producers to view TV as a threat.
Hollywood scorned and rejected TV when it should have
welcomed it as an opportunity-an opportunity to expand
the entertainment business.
more pridefully product oriented and
product conscious than the erstwhile
New England textile companies that
have been so thoroughly massacred?
The DuPonts and the Comings have
succeeded not primarily because of
their product or research orientation
Today, TV is a bigger business than the old narrowly
defined movie business ever
was. Had Hollywood been customer oriented (providing entertainment) rather than product oriented (making movies),
would it have gone through
the fiscal purgatory that it
did? 1 doubt it. What ultimately saved Hollywood and
accounted for its resurgence
was the wave of new young
writers, producers, and directors whose previous successes
in television had decimated
the old movie companies and
toppled the big movie moguls.
There are other, less obvious
examples of industries that have been
and are now endangering their futures
by improperly defining their purposes.
I shall discuss some of them in detail
later and analyze the kind of policies that
lead to trouble. Right now, it may help
to show what a thoroughly customeroriented management can do to keep
a growth industry growing, even after
the obvious opportunities have been
exhausted, and here there are two examples that have been around for a long
time. They are nylon and glass-specifically, E.I. du Pont de Nemours and Company and Corning Glass Works.
Both companies have great technical
competence. Their product orientation
is unquestioned. But this alone does not
explain their success. After all, who was
TOP-LINE GROWTH |ULY-AUGUST 2OO4
but because they have been thoroughly
customer oriented also. It is constant
watchfulness for opportunities to apply
their technical know-how to the creation of customer-satisfying uses that
accounts for their prodigious output of
successful new products. Without a very
sophisticated eye on the customer, most
of their new products might have been
wrong, their sales methods useless.
Aluminum has also continued to be
a growth industry, thanks to the efforts
of two wartime-created companies that
deliberately set about inventing new
customer-satisfying uses. Without Kaiser Aluminum & Chemical Corporation
and Reynolds Metals Company.the total
demand for aluminum today would be
vastly less.
Error of Analysis. Some may argue
that it is foolish to set the railroads off
against aluminum or the movies off
against glass. Are not aluminum and
glass naturally so versatile that the industries are bound to have more growth
opportunities than the railroads and
the movies? This view commits
precisely the error I have been
talking about. It defines an industry or a product or a cluster
of know-how so narrowly as to
guarantee its premature senescence. When we mention “railroads,” we should make sure
we mean “transportation.” As
transporters, the railroads still
have a good chance for very
considerable growth. They are
not limited to the railroad business as such (though in my
opinion, rail transportation is
potentially a much stronger
transportation medium than
is generally believed).
What the railroads lack is
not opportunity but some of
the managerial imaginativeness and audacity that made
them great. Even an amateur
like Jacques Barzun can see
what is lacking when he says,
“I grieve to see the most advanced physical and social organization of the last century
go down in shabby disgrace for
lack ofthe same comprehensive imagination that built it up. [What is lacking
is] the will of the companies to survive
and to satisfy the public by 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 apparently unchallenged superiority of its
product There appeared to be no effective substitute for it. It was itself a runaway substitute for the product it so
triumphantly replaced. Yet one after
another of these celebrated industries
has come under a shadow. Let us look
139
BEST OF HBR • Marketing Myopia
briefly at a few more of them, this time nopolies now, but tomorrow they may
taking examples that have so far received be natural deaths. To avoid this prosa little less attention.
pect, they too will have to develop fuel
Dry Cleaning. This was once a growth cells, solar energy, and other power
industry with lavish prospects. In an age sources.Tosurvive,they themselves will
of wool garments, imagine being finally have to plot the obsolescence of what
able to get them clean safely and eas- now produces their livelihood.
ily. The boom was on. Yet here we are 30
Grocery Stores. Many people find it
years after the boom started, and the hard to realize that there ever was a
industry is in trouble. Where has the thriving establishment known as the
competition come from? From a better “corner store.” The supermarket took
way of cleaning? No. It has come from over with a powerful effectiveness. Yet
synthetic fibers and chemical additives the big food chains of the ig3os narthat have cut the need for dry cleaning. rowly escaped being completely wiped
But this is only the beginning. Lurking out by the aggressive expansion of inin the wings and ready to make chemi- dependent supermarkets. The first gencal dry cleaning totally obsolete is that uine supermarket was opened in 1930,
powerful magician, ultrasonics.
in Jamaica, Long Island. By 1933, supermarkets
were thriving in California,
Electric Utilities. This is another one
of those supposedly “no substitute” Ohio, Pennsylvania, and elsewhere. Yet
products that has been enthroned on the established chains pompously iga pedestal of invincible growth. When nored them. When they chose to notice
the incandescent lamp came along, ker- them, it was with such derisive descriposene lights were finished. Later, the tions as “cheapy,” “horse-and-buggy,”
waterwheel and the steam engine were “cracker-barrel storekeeping” and “uncut to ribbons by the flexibility, reliabil- ethical opportunists.”
established distribution and merchandising methods. The companies with
“the courage of their convictions” resolutely stuck to the corner store philosophy. They kept their pride but lost their
shirts.
A Self-Deceiving Cycle. But memories are short. For example, it is hard for
people who today confidently hail the
twin messiahs of electronics and chemicals to see how things could possibly
go wrong with these galloping industries. They probably also cannot see how
a reasonably sensible businessperson
could have been as myopic as the famous Boston millionaire who early in
the twentieth century unintentionally
sentenced his heirs to poverty by stipulating that his entire estate be forever
invested exclusively in electric streetcar
securities. His posthumous declaration,
“There will always be a big demand for
efficient urban transportation,” is no
consolation to his heirs, who sustain life
by pumping gasoline at automobile filling stations.
ity, simplicity, and just plain easy availability of electric motors. The prosperity
of electric utilities continues to wax extravagant as the home is converted into
a museum of electric gadgetry. How
can anybody miss by investing in utilities, with no competition, nothing but
growth ahead?
Yet, in a casual survey I took among
a group of intelligent business executives, nearly half agreed that it would
be hard to hurt their heirs by tying
their estates forever to the electronics
industry. When I then confronted them
with the Boston streetcar example, they
chorused unanimously, “That’s different!” But is it? Is not the basic situation
identical?
In truth, there is no such thing as a
growth industry, I believe.There are only
companies organized and operated to
create and capitalize on growth opportunities. Industries that assume themselves to be riding some automatic
growth escalator invariably descend
into stagnation. The history of every
dead and dying”growth”industry shows
a self-deceiving cycle of bountiful expansion and undetected decay. There
are four conditions that usually guarantee this cycle:
1. The belief that growth is assured
by an expanding and more affluent
population;
2. The belief that there is no competitive substitute forthe industry’s major
product;
But a second look is not quite so comforting. A score of nonutility companies are well advanced toward developing a powerful chemical fuel cell, which
could sit in some hidden closet of every
home silently ticking off electric power.
The electric lines that vulgarize so many
neighborhoods would be eliminated. So
would the endless demolition of streets
and service interruptions during storms.
Also on the horizon is solar energy, again
pioneered by nonutility companies.
Who says that the utilities have no
competition? They may be natural mo-
The executive of one big chain announced at the time that he found it
“hard to believe that people will drive
for miles to shop for foods and sacrifice
the personal service chains have perfected and to which [the consumer] is
accustomed.”‘ As late as 1936, the National Wholesale Grocers convention
and the New Jersey Retail Grocers Association said there was nothing to fear.
They said that the supers’ narrow appeal to the price buyer limited the size
of their market. They had to draw from
miles around. When imitators came,
there would be wholesale liquidations
as volume fell. The high sales of the
supers were said to be partly due to
their novelty. People wanted convenient
neighborhood grocers. If the neighborhood stores would “cooperate with their
suppliers, pay attention to their costs,
and improve their service,” they would
be able to weather the competition until
it blew over.’
Theodore Levitt, a longtime professor of
marketing at Harvard Business School In
It never blew over. The chains discovBoston, is now professor emeritus. His most ered that survival required going into
recent books are Thinking About Man- the supermarket business. This meant
agement (1(^90) and The Marketing Imag- the wholesale destruction of their huge
ination (1983), both from Free Press.
investments in corner store sites and in
140
HARVARD BUSINESS REVIEW
Marketing Myopia • BEST OF HBR
3. Too much faith in mass production
and in the advantages of rapidly declining unit costs as output rises;
4. Preoccupation with a product that
lends itself to carefully controlled scientific experimentation, improvement,
and manufacturing cost reduction.
I should like now to examine each of
these conditions in some detail. To build
my case as boldly as possible, I shall
illustrate the points with reference to
three industries: petroleum, automobiles, and electronics. I’ll focus on petroleum in particular, because it spans
more years and more vicissitudes. Not
only do these three industries have
excellent reputations with the general
public and also enjoy the confidence of
sophisticated investors, but their managements have become known for progressive thinking in areas like financial
control, product research, and management training. If obsolescence can cripple even these industries, it can happen
anywhere.
Population Myth
The belief that profits are assured by an
expanding and more affluent population is dear to the heart of every industry. It takes the edge off the apprehensions everybody understandably feels
about the future. If consumers are multiplying and also buying more of your
product or service, you can face the future with considerably more comfort
than if the market were shrinking. 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. If your product has an
automatically expanding market, then
you will not give much thought to how
to expand it.
One of the most interesting examples of this is provided by the petroleum
industry. Probably our oldest growth industry, it has an enviable record. While
there are some current concerns about
its growth rate, the industry itself tends
to be optimistic.
But 1 believe it can be demonstrated
that it is undergoing a fundamental yet
TOP-LINE GROWTH J ULY-AUGUST 2OO4
typical change. It is not only ceasing to
be a growth industry but may actually
be a declining one, relative to other businesses. Although there is widespread unawareness of this fact, it is conceivable
that in time, the oil industry may find
itself in much the same position of retrospective glory that the railroads are
now in. Despite its pioneering work in
developing and applying the presentvalue method of investment evaluation,
in employee relations, and in working
with developing countries, the petroleum business is a distressing example
of how complacency and wrongheadedness can stubbornly convert opportunity into near disaster.
One of the characteristics of this and
other industries that have believed very
strongly in the beneficial consequences
of an expanding population, while at the
same time having a generic product for
which there has appeared to be no competitive substitute, is that the individual
companies have sought to outdo their
competitors by improving on what they
are already doing. This makes sense, of
course, if one assumes that sales are tied
to the country’s population strings, because the customer can compare products only on a feature-by-feature basis.
I believe it is significant, for example,
that not since John D. Rockefeller sent
free kerosene lamps to China has the
oil industry done anything really outstanding to create a demand for its product. Not even in product improvement
has it showered itself with eminence.
The greatest single improvement-the
development of tetraethyl lead-came
from outside the industry, specifically
from General Motors and DuPont. The
big contributions made by the industry
itself are confined to the technology of
141
BEST OF HBR • Marketing Myopia
oil exploration, oil production, and oil
refining.
Asking for Trouble. In other words,
the petroleum industry’s efforts have focused on improving the efficiency of getting and making its product, not really
on improving the generic product or its
marketing. Moreover, its chief product
bas continually been defined in the narrowest possible terms – namely, gasoline, not energy, fuel, or transportation.
This attitude has helped assure that:
• Major improvements in gasoline
quality tend not to originate in the oil industry. The development of superior alternative fuels also comes from outside
the oil industry, as will be shown later.
• Major innovations in automobile
fuel marketing come from small, new
oil companies that are not primarily preoccupied with production or refining.
These are the companies that have been
responsible for the rapidly expanding
muttipump gasoline stations, with their
successful emphasis on large and clean
layouts, rapid and efficient driveway service, and quality gasoline at low prices.
Thus, the oil industry is asking for
trouble from outsiders. Sooner or later,
in this land of hungry investors and entrepreneurs, a threat is sure to come.
The possibility of this will become more
These have value only if there is a market for products into which oil can be
converted. Hence the tenacious belief
in the continuing competitive superiority of automobile fuels made from
crude oil.
This idea persists despite all historic
evidence against it. The evidence not
only shows that oil has never been a superior product for any purpose for very
long but also that the oil industry has
never really been a growth industry.
Rather, it has been a succession of different businesses that have gone through
the usual historic cycles of growth, maturity, and decay. The industry’s overall
survival is owed to a series of miraculous
escapes from total obsolescence, of lastminute and unexpected reprieves from
total disaster reminiscent of the perils of
Pauline.
The Perils of Petroleum. To illustrate, I shall sketch in only the main
episodes. First, crude oil was largely a
patent medicine. But even before that
fad ran out, demand was greatly expanded by the use of oil in kerosene
lamps. The prospect of lighting the
world’s lamps gave rise to an extravagant promise of growth. The prospects
were similar to those the industry now
holds for gasoline in other parts of the
Then disaster and reprieve struck
again. TVvo great innovations occurred,
neither originating in the oil industry.
First, the successful development of coalburning domestic central-heating systems made the space heater obsolete.
While the industry reeled, along came
its most magnificent boost yet: the intemal combustion engine, also invented
by outsiders. Then, when the prodigious
expansion for gasoli …
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