Born in Germany in 1925, Ted Levitt is the leading marketing guru of the last thirty years. He is a Professor at Harvard Business School and former editor of the Harvard Business Review.
Levitt is the author of The Marketing Mode (1969), The Marketing Imagination (1983) and Thinking About Management (1991). His recent work has charted the emergence of global brands.
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ed Levitt’s fame was secured early in his career with
‘Marketing myopia’ (Levitt, 1960), a Harvard Business Review article which enjoyed unprecedented success and attention, selling over 500,000 reprints. It has since been reproduced in virtually every collection of key marketing texts – and by Levitt in his 1962 book Innovation in Marketing.
In ‘Marketing myopia’ Levitt argues that the central preoccupation of corporations should be with satisfying customers rather than simply producing goods. Companies should be marketing-led rather than production-led and the lead must come from the chief executive and senior management –’Management must think of itself not as producing products but as providing customer-creating value satisfactions.’ (In his ability to coin new management jargon, as well as his thinking, Levitt was ahead of his time.)
‘Marketing myopia’ is, as Levitt later admitted, a manifesto rather than a deeply academic article. It embraces ideas which had already been explored by others – Levitt acknowledges, for example, his debt to Peter Drucker’s The Practice of Management.
At the time of Levitt’s article, the fact that companies were production-led is not open to question. Henry Ford’s success in mass production had fueled the belief that low-cost production was the key to business success. Ford persisted in his belief that he knew what customers wanted, long after they had decided otherwise. (Even so, Levitt salutes Ford’s marketing prowess arguing that the mass production techniques he used were a means to a marketing end rather than an end in themselves.)
Levitt observes that production-led thinking inevitably leads to narrow perspectives. He argues that companies must broaden their view of the nature of their business. Otherwise their customers will soon be forgotten. The railroads are in trouble today not because the need was filled by others . . . but because it was not filled by the railroads themselves,’ writes Levitt. ‘They let others take customers away from them
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because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry wrong was because they were railroad- oriented instead of transportation-oriented; they were product- oriented instead of customer-oriented.’ The railroad business was constrained, in Levitt’s view, by a lack of willingness to expand its horizons.
Levitt goes on to level similar criticisms at other industries The film industry failed to respond to the growth of television because it regarded itself as being in the business of making movies rather than providing entertainment. (Interestingly, this can be applied to the resurgence of Disney in recent years – once the company began to regard itself as a provider of family entertainment in a variety of formats, rather than a children’s film maker, it became spectacularly successful.)
Growth, writes Levitt, can never be taken for granted –’In truth, there is no such thing as a growth industry’. Growth is not a matter of being in a particular industry, but in being perceptive enough to spot where future growth may lie.
History, says Levitt, is filled with companies which fall into
‘undetected decay’ usually for a number of reasons. First, they assume that the growth in their particular market will continue so long as the population grows in size and wealth. Second is the belief that a product cannot be surpassed. Third, there is a tendency to place faith in the ability of improved production techniques to deliver lower costs and, therefore, higher profits.
‘Mass production industries are impelled by a great drive to produce all they can. The prospect of steeply declining unit costs as output rises is more than most companies can usually resist. The profit possibilities look spectacular. All effort focuses on production. The result is that marketing gets neglected,’ Levitt writes. Finally, there is concentration on the product as this lends itself to measurement and analysis.
These insights have proved themselves depressingly
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accurate. Indeed, many of today’s leading thinkers, such as Pascale and Peters, continually re-emphasize Levitt’s message that there is no such thing as a growth industry. Success breeds complacency and complacency leads to failure. This is a fact of business life as true in the late 1990s as it was in the early 1960s.
In ‘Marketing myopia’ Levitt also makes a telling distinction between the tasks of selling and marketing. ‘Selling concerns itself with the tricks and techniques of getting people to exchange their cash for your product. It is not concerned with the values that the exchange is all about. And it does not, as marketing invariably does, view the entire business process as consisting of a tightly integrated effort to discover, create, arouse, and satisfy customer needs,’ he writes. This was picked up again in the 1980s when marketing underwent a resurgence and companies began to heed Levitt’s view that they were overly oriented towards production.
Levitt’s article and his subsequent work, pushed marketing to center stage. Indeed, in some cases it led to what Levitt labeled ‘marketing mania’ with companies ‘obsessively responsive to every fleeting whim of the customer’. The main thrust of the article has stood the test of time (‘I’d do it again and in the same way,’ commented Levitt in 1975).
Levitt’s analysis of the problem was clearly accurate – companies were production-led – though his prognosis for potential solutions was less so. If the railroads had decided they were in the transportation business it is unlikely they would have succeeded, but if they had looked at the needs and aspirations of their customers they may well have stemmed the tide.