Theodore Levitt: marketing.
Life and career
Born in Volmerz in Germany, Levitt moved with his parents to the United States in 1935, where he later studied economics. In the late 1950s he worked as a consultant in Chicago, before being approached by Harvard Business School. In his very first year there he began to teach marketing, although at the time he had reportedly never read a book on the subject.
Levitt's first article was published in 1956. His tenure at Harvard as an academic has lasted for more than thirty years. This period included a spell as a somewhat controversial editor of the Harvard Business Review, a post from which he resigned in 1990 following a row over an article on women in management.
Levitt emphasises the need for a company to achieve a balanced orientation by including marketing in its strategy; he focuses on the need for a marketing outlook to pervade an organisation and provide a necessary counterbalance to a preoccupation with production. His landmark article expounding this theory, Marketing myopia, appeared in Harvard Business Review in 1960 and is one of the most requested reprints from that journal, having sold over 500,000 copies. Subsequently, Levitt has reiterated and expanded his theory in several articles and books. These partly focus on the methodology of implementing the marketing mode, including the proposition of a `marketing matrix' for assessing the degree of marketing orientation existing in a company. They also explore the theory behind the marketing concept and delineate some of its limitations and problems. Other works concentrate on such topics as the `industrialisation of service' (examining the potential benefits of applying the production line and quality control methods of industry to service provision), the nature of the product, advertising and globalisation.
Marketing myopia explored
Levitt himself has described his article Marketing myopia as a manifesto. It challenged the conventional thinking of the time by putting forward a persuasive case for the importance of the marketing approach and the shortsightedness of failing to incorporate it into business strategy.
In an era in which post-war shortages contributed to a concentration on production, most companies had developed a product orientation which Levitt believed was too narrow a philosophy to allow continued business success. A drive to increase the efficiency and volume of production took place at the expense of monitoring whether the company was actually producing what the customer wanted. Marketing myopia stressed that customer wants and desires should be a central consideration of any business.
"The organisation must learn to think of itself not as producing goods or services but as buying customers, as doing the things that will make people want to do business with it." (Marketing myopia)
In order to achieve this,
"... the entire corporation must be viewed as a customer-creating and customer satisfying organism. Management must think of itself not as providing products but as providing customer-creating value satisfactions. It must push this idea (and everything it means and requires) into every nook and cranny of the organisation." (ibid.)
Levitt highlighted the need for companies to define what business they are in, as this concentrates attention on customer needs. He uses the now famous example of the railroads, which rather than being in the business of running trains, should instead have defined themselves as providing transportation. This definition would have helped the railway companies to be aware of the changing customer demand and they might not have suffered so greatly from the rise of road and air transport. Focus on satisfaction of customer needs, Levitt argues, is a better path to continued business success than concentration on the actual product on offer.
Also presented in Marketing myopia, as a warning against complacency, is Levitt's belief that "In truth there is no such thing as a growth industry." (ibid.). There are growth opportunities, which can be created or capitalised on, but those companies which believe they are "...riding some automatic growth escalator invariably descend into stagnation." (ibid.). The belief that a company is in a growth industry and is therefore secure must never be allowed to overshadow or replace awareness of the need to practise marketing and assert a customer orientation. This is the only route through which a company can hope to achieve sustained expansion.
Of a more practical nature is the `marketing matrix', a device presented by Levitt in Marketing for business growth to aid the measurement of a company's marketing orientation. A horizontal scale of 1-9 records the degree of customer orientation, and a vertical scale of 1-9 records the degree of company orientation. A score of 9 on both scales is the ideal. Using this method, organisations can assess their incorporation of marketing thinking and can determine where steps are needed to improve their strategy and to become more marketing oriented.
Ways to do this include the `industrialisation of service', which involves the measuring and standardising of customer service to a predetermined quality level, applying industrial-style controls on production to the service process. For example, a production line can be set up for service delivery, and each service encounter can be standardised and monitored to be of a similar quality. This has been accomplished with great success by the MacDonald's fast food chain (The industrialisation of service). To recognise this concept is, writes Levitt, "...to introduce a potentially emancipating new cognitive mode and operating style into modern enterprise." (Marketing imagination). Another factor which is important in enhancing a marketing orientation is relationship marketing (After the sale is over). This revolves around the need not only to acquire customers but to keep them and form mutually beneficial long-term relationships.
In a 1983 article (The globalisation of markets) Levitt once more produced a forward-looking `manifesto' with a view of the changing nature of the marketplace and the trend, fuelled by technological advances, towards globalisation. His thesis is, that in order to survive and prosper, companies must offer standardised products around the world, products which incorporate the best in design, reliability and price. The efficiency of such an approach will outweigh, in his opinion, the benefits of taking into account varying cultural preferences and tailoring products to different national markets. The reason for this is the overlying trend towards world homogenisation.
"Two vectors shape the world--technology and globalisation. The first helps determine human preferences; the second, economic realities. Regardless of how much preferences evolve and diverge, they also gradually converge and form markets where economies of scale lead to reduction of costs and prices." (The globalisation of markets)
Thinking about management, Levitt's latest book, contains a distillation of his thinking on effective management, presented in nuggets in the three categories of Thinking, Changing and Operating. Many of his theories are here reiterated, and the work forms a useful guide to his collected thought.
A major influence on Levitt's work was the writing of Peter Drucker, who was among the first to see marketing as all pervasive:
"Marketing is not a function, it is the whole business seen from the customer's point of view." (The practice of management)
However, although influenced by academic thought, Levitt seems to have drawn his greatest inspiration from the real world, examining the companies around him and distilling the examples of good and bad practice which illustrate much of his writing.
Levitt's influence contributed to the rise of the marketing concept in the 1960s and its increasing incorporation into management thinking, initially in the United States of America but later also in Europe. His subsequent works may not have achieved the fame of Marketing myopia, but they are nevertheless an important part of the evolving pattern of marketing writing which has gathered impetus through recent decades. By pointing out the myopic vision of many managers, Levitt set in motion a vigorous new way of thinking which was taken up by other management writers and practitioners and culminated in the rebirth of marketing in the 1980s. Other marketing gurus such as Philip Kotler acknowledge the influence of Levitt's work, and he is regularly quoted.
In retrospect, Levitt has been proven to have had remarkable foresight in his anticipation of the importance of marketing to organisations, his initial work predating the marketing boom by two decades. He also successfully predicted the value of relationship marketing, a topic which only became an identifiable discipline in the early 1990s, and the concept of the global village, which is now commonplace.
Levitt's assertion that there is no such thing as a growth industry is another tenet which has proved influential, and writers such as Tom Peters and Richard Pascale have taken up this idea in the 1990s.
The editions cited here are those held in, and available for loan to members from, the Chartered Management Institute's Management Information Centre. These may not always be the first edition.
Key works by Levitt
Innovation in marketing: new perspectives for profit and growth New York: McGraw Hill, 1962 Marketing for business growth New York: McGraw Hill, 1974 (first published in 1969 as The marketing mode: pathways to corporate growth) The marketing imagination New York: Free Press, 1983 Thinking about management New York: Free Press, 1991
Marketing myopia Harvard Business Review, vol 38 no 4, Jul/Aug 1960, pp45-56 The industrialisation of service Harvard Business Review, vol 54 no 5, Sep/Oct 1976 pp63-74 After the sale is over Harvard Business Review, vol 61 no 5, Sep/Oct 1983 pp87-93 The globalisation of markets Harvard Business Review, vol 61 no 3, May/June 1983 pp92-102
The practice of management, Peter Drucker London: Heinemann, 1955
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|Date:||Dec 1, 1999|
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