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B E S T O F H B R 1 9 6 0
Marketing Myopia

by Theodore Levitt

Included with this full-text Harvard Business Review article:

The Idea in Brief—the core idea

The Idea in Practice—putting the idea to work

Article Summary

Marketing Myopia

A list of related materials, with annotations to guide further

exploration of the article’s ideas and applications

15 Further Reading

1

2
Sustained growth depends on

how broadly you define your

business—and how carefully

you gauge your customers’

needs.
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H B R 1 9 6 0

Marketing Myopia

The Idea in Brief The Idea in Practice

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What business are you really in? A seem-
ingly obvious question—but one we

ould all ask before demand for our com-
nies’ products or services dwindles.

e railroads failed to ask this same ques-
n—and stopped growing. Why? Not be-
use people no longer needed transporta-
n. And not because other innovations
rs, airplanes) filled transportation needs.
ther, railroads stopped growing because
lroads didn’t move to fill those needs.
eir executives incorrectly thought that
y were in the railroad business, not the

nsportation business. They viewed them-
ves as providing a product instead of
ving customers. Too many other indus-
s make the same mistake—putting
mselves at risk of obsolescence.

w to ensure continued growth for your
mpany? Concentrate on meeting cus-

ers’ needs rather than selling products.
emical powerhouse DuPont kept a
se eye on its customers’ most pressing

ncerns—and deployed its technical
ow-how to create an ever-expanding
ay of products that appealed to cus-

ers and continuously enlarged its
rket. If DuPont had merely found more

es for its flagship invention, nylon, it
ght not be around today.
This document is authorized for use only by Lian
customerse
We put our businesses at risk of obsolescence
when we accept any of the following myths:

Myth 1: An ever-expanding and more afflu-
ent population will ensure our growth.
When markets are expanding, we often as-
sume we don’t have to think imaginatively
about our businesses. Instead, we seek to
outdo rivals simply by improving on what
we’re already doing. The consequence: We in-
crease the efficiency of making our products,
rather than boosting the value those products
deliver to customers.

Myth 2: There is no competitive substitute
for our industry’s major product. Believing
that our products have no rivals makes our
companies vulnerable to dramatic innova-
tions from outside our industries—often by
smaller, newer companies that are focusing
on customer needs rather than the products
themselves.

Myth 3: We can protect ourselves through
mass production. Few of us can resist the
prospect of the increased profits that come
with steeply declining unit costs. But focusing
on mass production emphasizes our com-
pany’s needs—when we should be emphasiz-
ing our customers’.

Myth 4: Technical research and develop-
ment will ensure our growth. When R&D pro-
duces breakthrough products, we may be
tempted to organize our companies around
the technology rather than the consumer. In-
stead, we should remain focused on satisfying
customer needs.
page 1
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B

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Marketing Myopia

by Theodore Levitt

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harvard business review • july–augus
This document is authorized for use o
Sustained growth depends on how broadly you define your business—

and how carefully you gauge your customers’ needs.
We always know when an HBR article hits the big
time. Journalists write about it, pundits talk
about it, executives route copies of it around the
organization, and its vocabulary becomes famil-
iar to managers everywhere—sometimes to the
point where they don’t even associate the words
with the original article. Most important, of
course, managers change how they do business
because the ideas in the piece helped them see
issues in a new light.

“Marketing Myopia” is the quintessential big
hit HBR piece. In it, Theodore Levitt, who was
then a lecturer in business administration at the
Harvard Business School, introduced the famous
question, “What business are you really in?” and
with it the claim that, had railroad executives
seen themselves as being in the transportation
business rather than the railroad business, they
would have continued to grow. The article is as
much about strategy as it is about marketing, but
it also introduced the most influential marketing
idea of the past half-century: that businesses will
do better in the end if they concentrate on meet-
ing customers’ needs rather than on selling prod-

ucts. “Marketing Myopia” won the McKinsey
Award in 1960.

Every major industry was once a growth in-
dustry. But some that are now riding a wave of
growth enthusiasm are very much in the
shadow of decline. Others that are thought of
as seasoned growth industries have actually
stopped growing. In every case, the reason
growth is threatened, slowed, or stopped is not
because the market is saturated. It is because
there has been a failure of management.

Fateful Purposes
The failure is at the top. The executives re-
sponsible for it, in the last analysis, are those
who deal with broad aims and policies. Thus:

• The railroads did not stop growing because
the need for passenger and freight transporta-
tion declined. That grew. The railroads are in
trouble today not because that need was filled
by others (cars, trucks, airplanes, and even tele-
phones) but because it was not filled by the rail-
roads themselves. They let others take custom-
t 2004 page 2
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Marketing Myopia

B

EST

OF

HBR 1960

harvard business review • july–augus

Theodore Levitt

, a longtime professor
of marketing at Harvard Business
School in Boston, is now professor
emeritus. His most recent books are

Thinking About Management

(1990)
and

The Marketing Imagination

(1983), both from Free Press.

This document is authorized for use o
ers 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 incorrectly was that
they were railroad oriented instead of transpor-
tation oriented; they were product oriented in-
stead of customer oriented.

• Hollywood barely escaped being totally
ravished by television. Actually, all the estab-
lished film companies went through drastic re-
organizations. Some simply disappeared. All of
them got into trouble not because of TV’s in-
roads but because of their own myopia. As with
the railroads, Hollywood defined its business
incorrectly. It thought it was in the movie busi-
ness when it was actually in the entertainment
business. “Movies” implied a specific, limited
product. This produced a fatuous contentment
that from the beginning led producers to view
TV as a threat. Hollywood scorned and rejected
TV when it should have welcomed it as an op-
portunity—an opportunity to expand the en-
tertainment business.

Today, TV is a bigger business than the old
narrowly defined movie business ever was.
Had Hollywood been customer oriented (pro-
viding entertainment) rather than product ori-
ented (making movies), would it have gone
through the fiscal purgatory that it did? I
doubt it. What ultimately saved Hollywood
and accounted for its resurgence was the wave
of new young writers, producers, and directors
whose previous successes in television had dec-
imated the old movie companies and toppled
the big movie moguls.

There are other, less obvious examples of in-
dustries that have been and are now endanger-
ing their futures by improperly defining their
purposes. I shall discuss some of them in detail
later and analyze the kind of policies that lead
to trouble. Right now, it may help to show
what a thoroughly customer-oriented manage-
ment can do to keep a growth industry grow-
ing, even after the obvious opportunities have
been exhausted, and here there are two exam-
ples that have been around for a long time.
They are nylon and glass—specifically, E.I. du
Pont de Nemours and Company and Corning
Glass Works.

Both companies have great technical compe-
tence. Their product orientation is unques-
tioned. But this alone does not explain their suc-
cess. After all, who was more pridefully product
oriented and product conscious than the erst-

while New England textile companies that have
been so thoroughly massacred? The DuPonts
and the Cornings have succeeded not primarily
because of their product or research orientation
but because they have been thoroughly cus-
tomer oriented also. It is constant watchfulness
for opportunities to apply their technical know-
how to the creation of customer-satisfying uses
that accounts for their prodigious output of suc-
cessful new products. Without a very sophisti-
cated eye on the customer, most of their new
products might have been wrong, their sales
methods useless.

Aluminum has also continued to be a
growth industry, thanks to the efforts of two
wartime-created companies that deliberately
set about inventing new customer-satisfying
uses. Without Kaiser Aluminum & Chemical
Corporation and Reynolds Metals Company,
the total demand for aluminum today would
be vastly less.

Error of Analysis. Some may argue that it is
foolish to set the railroads off against alumi-
num or the movies off against glass. Are not
aluminum and glass naturally so versatile that
the industries are bound to have more growth
opportunities than the railroads and the mov-
ies? This view commits precisely the error I
have been talking about. It defines an industry
or a product or a cluster of know-how so nar-
rowly as to guarantee its premature senes-
cence. When we mention “railroads,” we
should make sure we mean “transportation.”
As transporters, the railroads still have a good
chance for very considerable growth. They are
not limited to the railroad business as such
(though in my opinion, rail transportation is
potentially a much stronger transportation
medium than is generally believed).

What the railroads lack is not opportunity
but some of the managerial imaginativeness
and audacity that made them great. Even an
amateur like Jacques Barzun can see what is
lacking when he says, “I grieve to see the most
advanced physical and social organization of
the last century go down in shabby disgrace for
lack of the same comprehensive imagination
that built it up. [What is lacking is] the will of
the companies to survive and to satisfy the
public by inventiveness and skill.”1

Shadow of Obsolescence
It is impossible to mention a single major in-
dustry that did not at one time qualify for the
t 2004 page 3
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Marketing Myopia

B

EST

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HBR 1960

harvard business review • july–augus

This document is authorized for use o
magic appellation of “growth industry.” In
each case, the industry’s assumed strength lay
in the apparently unchallenged superiority of
its product. There appeared to be no effective
substitute for it. It was itself a runaway substi-
tute for the product it so triumphantly re-
placed. Yet one after another of these cele-
brated industries has come under a shadow.
Let us look briefly at a few more of them, this
time taking examples that have so far received
a little less attention.

Dry Cleaning. This was once a growth in-
dustry with lavish prospects. In an age of wool
garments, imagine being finally able to get
them clean safely and easily. The boom was
on. Yet here we are 30 years after the boom
started, and the industry is in trouble. Where
has the competition come from? From a better
way of cleaning? No. It has come from syn-
thetic fibers and chemical additives that have
cut the need for dry cleaning. But this is only
the beginning. Lurking in the wings and ready
to make chemical dry cleaning totally obsolete
is that powerful magician, ultrasonics.

Electric Utilities. This is another one of
those supposedly “no substitute” products that
has been enthroned on a pedestal of invincible
growth. When the incandescent lamp came
along, kerosene lights were finished. Later, the
waterwheel and the steam engine were cut to
ribbons by the flexibility, reliability, simplicity,
and just plain easy availability of electric mo-
tors. The prosperity of electric utilities contin-
ues to wax extravagant as the home is con-
verted into a museum of electric gadgetry.
How can anybody miss by investing in utili-
ties, with no competition, nothing but growth
ahead?

But a second look is not quite so comforting.
A score of nonutility companies are well ad-
vanced toward developing a powerful chemi-
cal fuel cell, which could sit in some hidden
closet of every home silently ticking off electric
power. The electric lines that vulgarize so
many neighborhoods would be eliminated. So
would the endless demolition of streets and
service interruptions during storms. Also on
the horizon is solar energy, again pioneered by
nonutility companies.

Who says that the utilities have no competi-
tion? They may be natural monopolies now,
but tomorrow they may be natural deaths. To
avoid this prospect, they too will have to de-
velop fuel cells, solar energy, and other power

sources. To survive, they themselves will have
to plot the obsolescence of what now produces
their livelihood.

Grocery Stores. Many people find it hard to
realize that there ever was a thriving establish-
ment known as the “corner store.” The super-
market took over with a powerful effective-
ness. Yet the big food chains of the 1930s
narrowly escaped being completely wiped out
by the aggressive expansion of independent
supermarkets. The first genuine supermarket
was opened in 1930, in Jamaica, Long Island.
By 1933, supermarkets were thriving in Cali-
fornia, Ohio, Pennsylvania, and elsewhere. Yet
the established chains pompously ignored
them. When they chose to notice them, it was
with such derisive descriptions as “cheapy,”
“horse-and-buggy,” “cracker-barrel storekeep-
ing,” and “unethical opportunists.”

The executive of one big chain announced at
the time that he found it “hard to believe that
people will drive for miles to shop for foods
and sacrifice the personal service chains have
perfected and to which [the consumer] is ac-
customed.”2 As late as 1936, the National
Wholesale Grocers convention and the New
Jersey Retail Grocers Association said there
was nothing to fear. They said that the supers’
narrow appeal to the price buyer limited the
size of their market. They had to draw from
miles around. When imitators came, there
would be wholesale liquidations as volume
fell. The high sales of the supers were said to
be partly due to their novelty. People wanted
convenient neighborhood grocers. If the
neighborhood stores would “cooperate with
their suppliers, pay attention to their costs, and
improve their service,” they would be able to
weather the competition until it blew over.3

It never blew over. The chains discovered
that survival required going into the supermar-
ket business. This meant the wholesale de-
struction of their huge investments in corner
store sites and in established distribution and
merchandising methods. The companies with
“the courage of their convictions” resolutely
stuck to the corner store philosophy. They kept
their pride but lost their shirts.

A Self-Deceiving Cycle. But memories are
short. For example, it is hard for people who
today confidently hail the twin messiahs of
electronics and chemicals to see how things
could possibly go wrong with these galloping
industries. They probably also cannot see how
t 2004 page 4
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Marketing Myopia

B

EST

OF

HBR 1960

harvard business review • july–augus

It is hard for people who

hail the twin messiahs of

electronics and chemicals

to see how things could

possibly go wrong with

these galloping

industries.

This document is authorized for use o
a reasonably sensible businessperson could
have been as myopic as the famous Boston
millionaire who early in the twentieth century
unintentionally sentenced his heirs to poverty
by stipulating that his entire estate be forever
invested exclusively in electric streetcar securi-
ties. His posthumous declaration, “There will
always be a big demand for efficient urban
transportation,” is no consolation to his heirs,
who sustain life by pumping gasoline at auto-
mobile filling stations.

Yet, in a casual survey I took among a group
of intelligent business executives, nearly half
agreed that it would be hard to hurt their heirs
by tying their estates forever to the electronics
industry. When I then confronted them with
the Boston streetcar example, they chorused
unanimously, “That’s different!” But is it? Is
not the basic situation identical?

In truth, there is no such thing as a growth in-
dustry, I believe. There are only companies or-
ganized and operated to create and capitalize
on growth opportunities. Industries that as-
sume themselves to be riding some automatic
growth escalator invariably descend into stag-
nation. The history of every dead and dying
“growth” industry shows a self-deceiving cycle
of bountiful expansion and undetected decay.
There are four conditions that usually guaran-
tee this cycle:

1. The belief that growth is assured by an ex-
panding and more affluent population;

2. The belief that there is no competitive
substitute for the industry’s major product;

3. Too much faith in mass production and in
the advantages of rapidly declining unit costs
as output rises;

4. Preoccupation with a product that lends
itself to carefully controlled scientific experi-
mentation, improvement, and manufacturing
cost reduction.

I should like now to examine each of these
conditions in some detail. To build my case as
boldly as possible, I shall illustrate the points
with reference to three industries: petroleum,
automobiles, and electronics. I’ll focus on pe-
troleum in particular, because it spans more
years and more vicissitudes. Not only do these
three industries have excellent reputations
with the general public and also enjoy the con-
fidence of sophisticated investors, but their
managements have become known for pro-
gressive thinking in areas like financial control,
product research, and management training. If

obsolescence can cripple even these industries,
it can happen anywhere.

Population Myth
The belief that profits are assured by an ex-
panding and more affluent population is dear
to the heart of every industry. It takes the edge
off the apprehensions everybody understand-
ably feels about the future. If consumers are
multiplying and also buying more of your
product or service, you can face the future
with considerably more comfort than if the
market were shrinking. An expanding market
keeps the manufacturer from having to think
very hard or imaginatively. If thinking is an in-
tellectual response to a problem, then the ab-
sence of a problem leads to the absence of
thinking. If your product has an automatically
expanding market, then you will not give
much thought to how to expand it.

One of the most interesting examples of this
is provided by the petroleum industry. Proba-
bly our oldest growth industry, it has an envi-
able record. While there are some current con-
cerns about its growth rate, the industry itself
tends to be optimistic.

But I believe it can be demonstrated that it
is undergoing a fundamental yet typical
change. It is not only ceasing to be a growth
industry but may actually be a declining one,
relative to other businesses. Although there
is widespread unawareness of this fact, it is
conceivable that in time, the oil industry
may find itself in much the same position of
retrospective glory that the railroads are
now in. Despite its pioneering work in devel-
oping and applying the present-value
method of investment evaluation, in em-
ployee relations, and in working with devel-
oping countries, the petroleum business is a
distressing example of how complacency and
wrongheadedness can stubbornly convert
opportunity into near disaster.

One of the characteristics of this and other
industries that have believed very strongly in
the beneficial consequences of an expanding
population, while at the same time having a
generic product for which there has appeared
to be no competitive substitute, is that the in-
dividual companies have sought to outdo their
competitors by improving on what they are al-
ready doing. This makes sense, of course, if one
assumes that sales are tied to the country’s
population strings, because the customer can
t 2004 page 5
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Marketing Myopia

B

EST

OF

HBR 1960

harvard business review • july–augus

The history of every dead

and dying “growth”

industry shows a self-

deceiving cycle of

bountiful expansion and

undetected decay.

This document is authorized for use o
compare products only on a feature-by-feature
basis. I believe it is significant, for example,
that not since John D. Rockefeller sent free ker-
osene lamps to China has the oil industry done
anything really outstanding to create a de-
mand for its product. Not even in product im-
provement has it showered itself with emi-
nence. The greatest single improvement—the
development of tetraethyl lead—came from
outside the industry, specifically from General
Motors and DuPont. The big contributions
made by the industry itself are confined to the
technology of oil exploration, oil production,
and oil refining.

Asking for Trouble. In other words, the pe-
troleum industry’s efforts have focused on im-
proving the efficiency of getting and making its
product, not really on improving the generic
product or its marketing. Moreover, its chief
product has continually been defined in the
narrowest possible terms—namely, gasoline,
not energy, fuel, or transportation. This atti-
tude has helped assure that:

• Major improvements in gasoline quality
tend not to originate in the oil industry. The de-
velopment of superior alternative fuels also
comes from outside the oil industry, as will be
shown later.

• Major innovations in automobile fuel mar-
keting come from small, new oil companies
that are not primarily preoccupied with pro-
duction or refining. These are the companies
that have been responsible for the rapidly ex-
panding multipump gasoline stations, with
their successful emphasis on large and clean
layouts, rapid and efficient driveway service,
and quality gasoline at low prices.

Thus, the oil industry is asking for trouble
from outsiders. Sooner or later, in this land of
hungry investors and entrepreneurs, a threat is
sure to come. The possibility of this will be-
come more apparent when we turn to the next
dangerous belief of many managements. For
the sake of continuity, because this second be-
lief is tied closely to the first, I shall continue
with the same example.

The Idea of Indispensability. The petro-
leum industry is pretty much convinced that
there is no competitive substitute for its major
product, gasoline—or, if there is, that it will
continue to be a derivative of crude oil, such as
diesel fuel or kerosene jet fuel.

There is a lot of automatic wishful thinking
in this assumption. The trouble is that most re-

fining companies own huge amounts of crude
oil reserves. These have value only if there is a
market for products into which oil can be con-
verted. Hence the tenacious belief in the con-
tinuing competitive superiority of automobile
fuels made from crude oil.

This idea persists despite all historic evi-
dence against it. The evidence not only shows
that oil has never been a superior product for
any purpose for very long but also that the oil
industry has never really been a growth indus-
try. Rather, it has been a succession of different
businesses that have gone through the usual
historic cycles of growth, maturity, and decay.
The industry’s overall survival is owed to a se-
ries of miraculous escapes from total obsoles-
cence, of last-minute and unexpected re-
prieves from total disaster reminiscent of the
perils of Pauline.

The Perils of Petroleum. To illustrate, I
shall sketch in only the main episodes. First,
crude oil was largely a patent medicine. But
even before that fad ran out, demand was
greatly expanded by the use of oil in kerosene
lamps. The prospect of lighting the world’s
lamps gave rise to an extravagant promise of
growth. The prospects were similar to those
the industry now holds for gasoline in other
parts of the world. It can hardly wait for the
underdeveloped nations to get a car in every
garage.

In the days of the kerosene lamp, the oil
companies competed with each other and
against gaslight by trying to improve the illu-
minating characteristics of kerosene. Then sud-
denly the impossible happened. Edison in-
vented a light that was totally nondependent
on crude oil. Had it not been for the growing
use of kerosene in space heaters, the incandes-
cent lamp would have completely finished oil
as a growth industry at that time. Oil would
have been good for little else than axle grease.

Then disaster and reprieve struck again. Two
great innovations occurred, neither originating
in the oil industry. First, the successful develop-
ment of coal-burning domestic central-heating
systems made the space heater obsolete. While
the industry reeled, along came its most mag-
nificent boost yet: the internal combustion en-
gine, also invented by outsiders. Then, when
the prodigious expansion for gasoline finally
began to level off in the 1920s, along came the
miraculous escape of the central oil heater.
Once again, the escape was provided by an out-
t 2004 page 6
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Marketing Myopia

B

EST

OF

HBR 1960

harvard business review • july–augus

If thinking is an

intellectual response to a

problem, then the

absence of a problem

leads to the absence of

thinking.

This document is authorized for use o
sider’s invention and development. And when
that market weakened, wartime demand for
aviation fuel came to the rescue. After the war,
the expansion of civilian aviation, the die-
selization of railroads, and the explosive de-
mand for cars and trucks kept the industry’s
growth in high gear.

Meanwhile, centralized oil heating—whose
boom potential had only recently been pro-
claimed—ran into severe competition from
natural gas. While the oil companies them-
selves owned the gas that now competed with
their oil, the industry did not originate the nat-
ural gas revolution, nor has it to this day
greatly profited from its gas ownership. The
gas revolution was made by newly formed
transmission companies that marketed the
product with an aggressive ardor. They started
a magnificent new industry, first against the
advice and then against the resistance of the
oil companies.

By all the logic of the situation, the oil com-
panies themselves should have made the gas
revolution. They not only owned the …

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