Literally, the word “myopia” means shortsightedness or nearsightedness which is the inability to see things far away.
Marketing Myopia is the inability of a company to perceive the needs of the consumer (who is at a distance from the company) due to their focus on their immediate company needs. The consequence of this is the inability to see ‘beyond the now’ and make amendments in order adapt to the quick changes in the market. In other words, it can be said to be the lack of vision in the business, to see where things are going.
Marketing Myopia leads to the decline of firms as their shortsighted product based approach makes them fall behind in satisfying the evolving needs of the consumers and they often are substituted by innovative new inventions.
It was first coined by Professor Theodore Levitt in his article for Harvard Business Review, and it will be best illustrated in the terms of examples and situations cited below.
Companies must define themselves based on customer needs
Professor Levitt, in his article, mentions the example of the railroad industry.
There was a time when railroad tycoons were the richest people in America. The railroad was deemed to be one of the greatest developments in human history. People who were invested into this industry were certain that their money would never go down.
But then slowly, over the decades, the railroads were replaced by automobiles and other forms of road transport. Theodore Levitt says that this happened because these railroad companies defined themselves based on their product: Railways.
Instead, if they had called themselves a transport company, which catered to the mobility needs of the commuters, they would have had a better direction to work towards and would have probably had better chances of survival against the onslaught of the automobile industry.
This illustrates a common fallacy by management leaders in organizations. Many a times companies are closer to their products than to the needs of their customers that they are supposed to fulfill. This leads to shortsightedness and definite downfall.
Levitt repeats the example for the Hollywood stalwarts who almost lost the race to Television back in the early days. Hollywood had initially dismissed the television as a non-competitor as they defined themselves to be in the movie business. But Levitt states that Hollywood was lucky as they correctly redefined themselves as ones who were in the entertainment business and brought TV into their purview.
Marketing Myopia is due to Managerial shortcomings
Levitt is very clear that industries go into decline due to poor leadership. He says that many managers lack imagination and vision due to which the road ahead starts getting unclear for the business.
The reasons below are why Marketing Myopia could set in:
The Population Myth
Some managers might fall into the argument of growing population and growing incomes affected by the economy. While growing population and incomes indeed presents an opportunity, it is by no means an assurance of growth of the industry.
In fact, smart managers keep an eye out for the growth of the industry vis-à-vis the population growth. If the population growth outmatches the industry growth, you can infer clearly that your industry is shrinking.
Idea of Indispensability
Extremely strong and essential products give overconfidence to managers at times that their industry would never sink since their products are indispensable to the consumer.
That kind of attitude sets back product developments and innovations and the threat of substitutes becomes very real, as while the organization is working in its cocoon of false security, there are others who are working on better substitutes.
Take railroads as the example in this case. The railroad tycoons thought they were unbeatable.
Mass production pressures
There are times when companies look to scaling up and set up mass production facilities. It is not wrong to seek economies of scale. But mass production pressures make companies neglect marketing, by shifting focus on the selling and instead of marketing.
Once the production facility is huge, the overheads are huge. There are goods produced at a larger scale and inventory is created. This inventory ties up working capital, and thus, the company starts focusing more on converting goods back to money through sales. This is where managers start believing marketing is not important and you lose sight of the long term vision.
Selling and marketing differ more than just semantics. Selling focuses on seller’s needs while marketing focuses on the buyer’s needs. When managers lose sight of the buyers’ needs, that is where Marketing Myopia sets in.
Lopsided view towards Market Insights
Very often, managers pay more heed to the special expertise they have, instead of what the market needs. Levitt cites the example of technology companies.
In tech firms, there is too much emphasis on technical research without heed to consumer needs. The R&D investments tend to weigh in on decisions which are less beneficial for the company. Marketing gets shortchanged as engineer-managers and researchers draw more importance.
In all these aspects above, marketing gets insufficient importance. Managers pay less heed to essential market research or to market insights. That is why it is aptly named as Marketing Myopia.
Organizations must think of itself as not producing goods or services, but as buying customers, as doing things that will make people want to do business with them. This is why you need to have a long term vision with the customers in mind and need to keep understanding customers and evolving accordingly.