Critical Analysis of Marketing Myopia - Essay Example

? A Critical Analysis of Marketing Myopia Table of Contents Executive Summary 3 Introduction 4 The Marketing Issues Raised by Theodore Levitt in Marketing Myopia 5 A Critical Analysis of Marketing Myopia 7 Recommendation 10 Conclusion 11 References 12 Executive Summary This marketing case analysis focuses on the concept “marketing myopia” as presented by Theodore Levitt. This case analysis mainly delves at critically analyzing the case of “marketing myopia”. Specifically, this paper aims at reviewing what principally causes the failure of business as suggested by Levitt (1975). From such marketing issues raised by Levitt, the marketing concepts, theories and frameworks are applied in this analytical review. In this regard, a deeper understanding of what the relevance is of “marketing myopia” is can be gauged. In the analysis of this case study, Levitt (1975) suggested that the reason behind the downfall of the so-called “growing industry” is generally because of their myopic thinking culture. With this short – sighted vision of what the future of business may possibly offer, firms do collapse. It is indeed necessary to think outside the box and have a bigger picture of what is likely to happen in the industry. Also, he proposed that in order for business to thrive continuously, businesses must be customer – oriented instead of being too much occupied in developing, improving and producing goods and services. Likewise, he also suggested that marketing is needed and not just basically selling since marketing includes communicating the values that the products and services can possibly offer. This recommends that in order to avoid business failure in the future, a proper implementation and execution of the strategies should come next to ensure the sustained business after such careful and balanced analysis and planning of the business context today and in the future. Introduction Starting a business involves risks since its success is never a guarantee. In reality, there are only slim chances of success in every business because only a few out of the total numbers of founded businesses do succeed. The U.S. Small Business Administration suggested that an estimation of over a half of the small businesses do fail within the first 5 years of their operation (Vetbiz Resource Center, 2009). There are many available print and online materials which try to explain why businesses fail. In the book entitled “Small Business Management,” Michael Ames (1983) suggested that the collapse of small businesses can be accounted by the following reasons: the entrepreneur’s lack of experience in handling business, poor inventory management, weak credit arrangement, excessive investment in fixed assets, insufficient capital to sustain the business needs, personal use of business funds, surprising growth in business as well as the poor and inconvenient location of business. On the one hand, there are two more reasons accounting to the collapse of business. According to Gustav Berle (1989) in the “Do It Yourself Business Book”, the increased competition in the market and the low sales are also reasons behind business failure. However, it is the case that businesses may have achieved a certain growth at one point in time which is followed by its collapse after. This failure of businesses, according to Theodore Levitt (1975), is not caused by the saturation in the market but mainly due to the short – sighted thinking culture of firms through having the illusion that such industries are growing. For Levitt (1975), the belief in the so – called “growth industry” should be rejected since for him, such conviction is followed by complacency. With the belief in the “growth industry”, the businesses focus more on developing products and producing goods which they sell to the consumers. Nonetheless, these firms lose sight of what the real needs and wants are which can truly satisfy the customers. Given this, the focus of this paper mainly delves at critically analyzing the case of “marketing myopia”. Specifically, this paper aims at reviewing what principally causes the failure of business as suggested by Levitt (1975). From such marketing issues raised by Levitt, the marketing concepts, theories and frameworks are applied in this analytical review. In this regard, a deeper understanding of what the relevance is of “marketing myopia” is can be gauged. The Marketing Issues Raised by Theodore Levitt in Marketing Myopia In “Marketing Myopia”, Levitt (1975) suggested that what has paved way for a business to collapse is basically caused by their myopic points of view. While most organizations are too occupied developing, producing, improving and selling their products, they have become too confined having a limited understanding of what sort of business they are in. He challenged this narrowed thinking in businesses by asserting that firms must have to think beyond the business activities they are currently in. Instead of being product – oriented, Levitt (1975) reasoned that in order for businesses to succeed, they should be customer – oriented. Myopia, an eye condition which means near – sightedness or short – sightedness, is what Levitt (1975) used to define how the future of business suddenly becomes blurred. Having a short – sighted vision of what may probably happen in a particular business in the future can lead to its downfall. Through having a myopic vision of the business limits them to see the bigger picture of the market. At some points, when firms are thought of to be growing, most of them stop growing or even collapse due to failure in management. When businesses already have thrived to be at the top of their game, some of the firms even think that there is no competitive alternative for their superior product. Nonetheless, this belief is indeed irrational since this market is indeed an open space for competition. If one has not envisioned the substitute products that can compete against the market share in the next future, the product which one sell can be obsolete and thus, definitely, the business will be doomed. At this point, research and development should always be considered by every industry to keep struggling in the face of the competition. True enough, internally, businesses concentrate in producing goods which they aim to sell. However, in the real world, not all produced goods are purchased by the customers. Thus, the real need for the firms is to think outside the box. Businesses should consider how their products can satisfy the demands, needs and wants of the market. In this regard, to keep the industry’s growth, it is the customers’ demands, needs and wants which should be satisfied by the products or services that businesses do offer. This is for the reason the superiority of the industry through a certain product can vanish in the future because it has fallen under the trace of failed management. Hence, the loyal consumers, without a doubt, will keep one’s business flourishing if it keeps on supporting the offered products and services. Likewise, Levitt (1975) proposed the difference between selling and marketing. Indeed, businesses are up to selling the most number of products and services that they can offer the consumers. By means of selling, what is often emphasized is the need of the industry, their need for profit gains in exchange of the products or services they sell in particular. Nonetheless, it is of importance to note that the life and continued survival of one’s business lie in the consumers who will continue to patronize the goods and services being offered. For them to continuously patronize one’s business, what is needed is marketing these goods and services. The distinction between the two terms is that marketing focuses much more on what the value of the product or service is while selling does not. Hence, marketing in return, the products and services being marketed can deliver and satisfy the needs and wants of the target market. In a nutshell, if businesses can rise above their myopic thinking culture and rather focus on different utilizing different marketing strategies and applying different predictive techniques to calculate future situations as best as possible, chances of success in business can be much more ensured. Hence, most specially, valuing more on satisfying the customers through their products rather than their satisfying their own needs through products they sell can entail the existence of a thriving business. A Critical Analysis of Marketing Myopia At one point in time, business can have a lavish potential which seems its growth is non – stop. However, Levitt is convincing enough when he did assert the most often taken for granted reasons of why businesses do collapse. Industries fail simply because of its short – sighted vision of its situation which makes these industries be satisfied in the position it owns at present. However, in my evaluation of this marketing myopia case, I can say that Levitt offered a general picture behind the discontinued growth in business or even its failure. In this regard, it is really of significance to have a vision of the future issues and competitions yet to come. Nonetheless, there is also a danger in rising above this myopic premise of being too much into envisioning the future or the reverse of the term which is marketing hyperopia as coined by Kotler and Singh in 1981. This prevents firms to understanding the kind of business they are in today. The future success of business is based on its present situation. What is done today will definitely have an impact on the future. Positioning of the business in the future cannot be possible if the business has already collapsed today. As argued by Kivetz and Keinan (2006), what the over control and too much view of the future of the business can also be directed to a regretful disappointment because decisions necessary to be made at present may be possibly overlooked. As such, this can yield a stronger feeling of regret in the long run. Indeed, it is the case that there are hungry innovators and entrepreneurs out there. Anytime, they may surprise the world with their new products that can really entice customers. Nonetheless, I greatly consider that businesses should just have a 20/20 marketing vision instead which is a balanced vision of what is currently happening at the moment and balanced vision of what is yet to come in the future. There is always a danger of having too less or too much in everything. This is also true in the realm of business. Having a balanced vision of the business situation can be achieved through applying different marketing strategies. For example, SWOT analysis or an examination of the strengths, weaknesses, opportunities and threats that a project or business venture faces is really one effective strategic tool for a marketing plan that can find a competitive advantage for any organization (Hagos and Pal, 2010). Through SWOT analysis, it does not just focus too much on the present situation but also looks after the future. From having a balanced analysis, it does not put forward a company to a danger zone of thinking too much of the wider scope of business that may or may be not necessary in analyzing an industry and the market. It is indeed the case that Levitt (1975) happens to be offer too much wider view. Marketing myopia as a concept is so wide – ranging and so broad. It lacks the very specific details and strategic tools that can be utilized by business to ensure its competitive advantage over the others. There are indeed a lot more to consider in order to keep the business alive. There are a lot of elements such as quality of products and services, price, imagery and so forth which are of value among the customers. In terms of price, according to Gay (2010), it is always the case that the customers always prefer for the products or services that cost the lowest. This competition in the name of price is a usual scenario in various businesses because this pricing is a strategy employed by businesses in order to gain customers. As Porter (1980) suggested, offering the lowest cost or being the cost leader functions as a competitive advantage because it can attract the price – sensitive or the cost – conscious customers via having the low – priced service for a given level of quality. To escape the danger of having myopic vision of the business as well as looking at the bigger picture and future of the market, Porter’s five forces framework is a strategy that can be used for analyzing industries which basically derive the five forces which are considered to be the elements of competition in the market (Porter, 1980). This framework of pure competition can be applied to further understand the industry context of its particular industry (Chapman, 2010). The application of this strategic tool offers the determining factor for profitability (Porter, 1980). Moreover, his five forces model is made up of three external sources and two internal threats. These forces which determine the industry’s profitability include the following: rivalry, threat of substitutes, bargaining power of the suppliers, bargaining power of buyers, and threats of new entrants. According to Grundy (2006), this proposed model by Porter is valuable because of a number of reasons. First, it provides an illustration of how competitive rivalry takes place. Second, it aids in the prediction of the rates of return in the long run. Third, it assists in merging together the input – output analysis of a particular industry through the said forces. Fourth, it highlights the significance of looking for imperfect markets. Fifth, it offers not just a simplistic focus on relative market growth rate in establishing market profitability. Sixth, it enables to take the external environments into consideration which is far better than SWOT analysis. Seventh, it is an efficient tool for applied systems of thinking. Last, it presents a simplified micro – economic theory via the five main forces. On the one hand, I definitely agree when Levitt (1975) argued that instead of being product – oriented, industries must be customer – oriented. This is because the life of the business lies beneath the consumers who continuously patronize its product or service. Once the customer becomes happy and satisfied on a certain product or service, he or she will become loyal and will continue to purchase or avail such. This ensures a continued survival of the business. Indeed, there is a need to define who the target market is so the firm can identify the needs and wants of this market (Kurtz, 2010). Thus, firms also strategize on how to meet these needs and wants are. Recommendation What Levitt (1975) suggested is convincing. However, the concept is too broad that it needs a framework to ensure that the wider scope of vision a firm has is still focused on the industry itself and not concentrating too much on other things. Thus, there is a danger of being too much limited on understanding what a context of business is. Likewise, there is also a risk of being too much concentrating on what the future beholds. The broadness of the concept marketing myopia is dangerous that it can cause unbalanced view between the present and future situations. Thus, having a 20/20 marketing vision is what this paper recommends to avoid the danger zone of directing into business failure. Through having a balanced vision of the business itself, what we can use are other marketing strategies like applying SWOT analysis, Porter’s five forces model and others. This is suggested because this is focused on the situation of the business today but at the same time, offers opportunity to grab in the future to ensure a competitive advantage over the other. In order for business to thrive, indeed, it is necessary to define its particular target market so its needs and wants can be identified. Levitt (1975) is definitely right when he said industries should be a producing a customer – satisfying goods or services instead. By means of satisfaction, a certain market share can be owned in which the business must keep and expand. Businesses must not sell but indeed market their products and services through communicating what values they can offer through such. However, this paper recommends greatly that it is not just about carefully and strategically assessing how the market forces are operating in a certain industry today so businesses can be equipped in the future. It is not just about marketing the values of the product and services among the consumers. After planning, a proper implementation and execution of the strategies should come next to ensure the sustained business. Conclusion Levitt (1975) proposed an important concept in marketing through marketing myopia. He is indeed correct when he proposed that the future must also be considered in assessing the state of business today. Levitt’s term was introduced in a broad manner that it can however pose a danger on focusing too much on the future. Likewise, given its general characteristic, businesses can rise above their myopic thinking culture and rather focus on different utilizing different marketing strategies and applying different predictive techniques to calculate future situations as best as possible as well as being able to satisfy the needs of the customers, chances of success in business can be much more guaranteed in the face of the competition. References: Ames, M.D. (1983). Small business management. West Group. Berle, G. (1989). Do-it-yourself business book. Wiley. Chapman, A. (2010). Porter's five forces model. Retrieved from: Gay, M. (2010). Australia pressures fashion industry to bulk up models. AOL News. Retrieved http://www.aolnews.com/2010/06/29/australia-pressures-fashion-industry-to-bulk-up-models/ Grundy, T. (2006). Rethinking and reinventing Michael Porter’s fiver forces model. Strategic Change 15: 213 – 229. Hagos, T.M. and Pal, G. (2010). The means of analysis and evaluation of corporate performances. Annales Universitatis Apulensis Series Oeconomica 12(1): 438 – 449. Kivetz, R. & Keinan, A. (2006). Repenting hyperopia: An analysis of self-control regrets. Journal of Consumer Research, 33 (September), 273–82. Kotler, P. & Singh, R. (1981). Marketing warfare in the 1980s. Journal of Business Strategy. 1(3) : 30–41. Levitt, T. (1975). Marketing myopia. Harvard Business Review (September – October): 1-14. Porter, M.E., 1990. The competitive advantage of nations. New York: Free Press. Vetbiz Resource Center (2009). Why small businesses fail. Retrieved at: Read More