Marketing Myopia

The article “Marketing Myopia” written by Theodore Levitt in 1960 is still as relevant today as when it was first written.  Levitt argues that the railroads didn’t take advantage of passenger rail service because they viewed themselves as railroad companies rather than transportation companies.  Likewise, he points out the many movie studios that ceased to exist because they erroneously thought they were in the business of making pictures rather than in the entertainment business. 

Since the article was first published there have been other companies with marketing myopia, branding themselves too narrowly and ultimately going out of business.  Kodak and Polaroid are two that come to mind.  Both of these companies failed to innovate when digital photography came along, choosing to stick with their tried and true forms of film. 

Reader’s Digest and Border’s Books are two more companies that failed because of how they defined themselves.  Reader’s Digest did in print (taking interesting stories, informative articles, and humorous pieces from other sources and aggregating them in one place) what companies like Yahoo do today on the web.  They defined themselves as a publishing company, yet they failed to publish on the internet until it was too late.  Sure, Reader’s Digest has a website now, but they’re irrelevant and not likely to last.  Border’s was done in by Amazon because their definition of a book was one made of paper.  Barnes and Noble may be struggling, but their Nook shows they know there’s more than one way to read a book.

The companies named so far failed because, much like the railroads and movie companies mentioned in Levitt’s article, they limited their scope by not realizing what business they were in.  The opposite can also be true.  The Radio Corporation of America, or RCA, is a great example.  A spinoff of GE, they were one of the original tech companies in the 1930’s.  However, by the mid 1970’s they were a conglomerate with no focus.  Some of their businesses included rental cars, frozen food, carpeting, and greeting cards.  This is the prime example of not knowing what business you’re in.

On the flip side there are many great companies that, knowingly or not, succeeded by following Mr. Levitt’s advice.  Disney started as a cartoon about a mouse.   The mouse is still prominent, but they are a major entertainment company with interests in movies, television, sports (ESPN), theme parks, and branded merchandise.  Nike started as a shoe company for runners, but is now the most dominant sports apparel company on the globe.

Coke and Pepsi aren’t in the soft drink business.  Coca Cola is the world’s largest beverage company with brands such as Minute Maid and Dasani.  Pepsi, along with owning Tropicana and Gatorade, is one of the world’s largest snack food companies with Frito-Lay and Quaker Oats.  Had these two giants of industry labeled themselves as merely soft drink companies they would certainly still be in business in one form or another, but it’s doubtful they would be the globally successful companies they are today.