“What business are you really in? A seemingly obvious question – but one we should all ask before demand for our companies’ products or services dwindles.”-Theodore Levitt
The idea that a business owner wouldn’t know what “business” they are in might sound absurd to some people. Shouldn’t it be obvious? However, while all business owners know what products they offer, not all of them understand the value or service that they are providing their customers. This lack of foresight is sometimes referred to as marketing myopia, and it can lead even a successful business down the road to disaster.
What is Marketing Myopia?
The term “marketing myopia” was first coined by economist Theodore Levitt in his award-winning 1960 article of the same name. Marketing myopia can be best described as a short-sighted and inward-looking approach to business and marketing that sacrifices long-term strategic planning in favor of short-term profits. This most often happens when the people running the business have a narrow sense of what their goals are, focusing more on products and services then the actual customers.
The primary example that Levitt used to describe marketing myopia was the railroad industry. Around the time that “Marketing Myopia” was published, train manufacturing had gone from being a growth industry in the early 20th century, to facing a steady decline by the mid-20th century. Levitt argued that this came down to business owners having a narrow understanding of their purpose. To quote, he claimed that the reason the railroad industry had stopped growing was…
Not because people no longer needed transportation. And not because other innovations (cars, airplanes) filled transportation needs. Rather, railroads stopped growing because railroads didn’t move to fill those needs. Their executives incorrectly thought that they were in the railroad business, not the transportation business. They viewed themselves as providing a product instead of serving customers.
This contrast between product centric and customer centric business can very easily lead businesses to overspecialize and limit themselves in ways that might have immediate benefits, but runs the risk of positioning themselves for obsolescence. In the case of the railroad industry, manufacturers continued to make better and faster trains, even as the travel by train became less and less desirable. Ultimately, it doesn’t matter how high quality your products or services are if they aren’t meeting customer’s needs.
What Are Some Examples?
There have been several high-profile examples of businesses who have allowed marketing myopia to lead them astray. One of the greatest examples is Blockbuster Video: once the king of movie rental businesses, they went from having over 9,000 stores worldwide to a single location in Bend, Oregon. This can largely be chocked up to an unwillingness to evolve past the video rental model, which has largely fallen out of favor due to the popularity of streaming video. By the time they realized that their method was no longer sustainable, it was already too late to change.
For a good example of a company that has avoided this fate, look at Nintendo. Most people recognize Nintendo for their video games, from the Nintendo Entertainment System from the mid-1980’s to the recent Nintendo Switch. What some people might not realize is that the company itself dates back to 1889, having originally made playing cards and toys. Yet the higher ups at Nintendo recognized that they weren’t just in the toy business, they were in the business of providing family entertainment. So when video games started to emerge as a major trend in the 70’s, they were able to easily adapt, becoming a company that’s now worth more than $85 billion.
How Do You Define Your Business?
When Theodore Levitt wrote “Marketing Myopia,” it was a challenge to companies to broaden their understanding of customer’s needs. This didn’t just apply to marketing departments either, but to businesses as a whole. It is easy to focus on the product when you’re in a growth industry (or at least THINK that you’re in one), but as Levitt said: “The reality of the matter is that there is no such thing as a growth industry. There are only companies organized and operated to create and capitalize on growth opportunities.”
Marketing myopia might not cost you in the short term, but it will inevitably cost you in the long term. To avoid this, you need a clear vision of what your business is about – not just the products that they sell, but the problem that their customer base has and how they can solve them. When you only think of your business in terms of what you are selling, you limit what it’s capable of. But when you shift focus on customers and their needs, you open yourself up to new possibilities and new opportunities for success.