Ted Levitt “If you are not thinking customer, you are not thinking.”

Ted Levitt

American academic

Born 1925

Breakthrough ideas Marketing

Globalization

Key books Innovation in Marketing

The Marketing Imagination

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The July/August 1960 issue of the Harvard Business Review launched the career

of Ted Levitt (born 1925). It included his article entitled ‘Marketing myopia’

which, totally unexpectedly, brought marketing back onto the corporate agenda.

‘Marketing myopia’ has sold over 500,000 reprints and has entered a select group of

articles that have genuinely changed perceptions.1

The article propelled the German-born Levitt to prominence. It was, he admits, a

lucky break. In 1975 he reflected: ‘Marketing myopia was not intended as analysis

or even prescription; it was intended as manifesto. Nor was it a new idea – Peter F

Drucker, JB McKitterick, Wroe Alderson, John Howard, and Neil Borden had each

done more original and balanced work on the marketing concept. My scheme,

however, tied marketing more closely to the inner orbit of business policy.’2

Drucker had argued that, since the role of business was to create customers, its

only two essential functions were marketing and innovation. In 1954 he wrote:

‘Marketing is not a function, it is the whole business seen from the customer’s point

of view’. As markets have matured and become more competitive, especially during

the 1990s, this 40-year-old concept has become increasingly widely accepted.

In ‘Marketing myopia’ Levitt argued 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.)

At the time of Levitt’s article, the fact that companies were production-led was

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 saluted 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 observed that production-led thinking inevitably led to narrow

perspectives. He argued that companies must broaden their view of the nature

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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’, wrote Levitt. ‘They let others take customers

away from them 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 went 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.

Growth, wrote 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, said

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.

In ‘Marketing myopia’ Levitt also made 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

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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 spent all his career at Harvard Business School and was editor of the

Harvard Business Review for four years. He consistently revealed a reliable

antennae for business trends. He attributed this to his voracious curiosity: ‘I go into

factories, stores and look out the window and ask why? Why are they doing that?

Why are things this way and not that? You ask questions and pretty soon you come

up with answers.’

Levitt’s other major insight was on the emergence of globalization. In the same

way as he had done with ‘Marketing myopia’, Levitt signaled the emergence of a

major movement and then withdrew to watch it ignite. ‘The world is becoming a

common marketplace in which people – no matter where they live – desire the same

products and lifestyles. Global companies must forget the idiosyncratic differences

between countries and cultures and instead concentrate on satisfying universal

drives,’ he said.