The Business Book

247

growth. But all growth eventually
tapers off because the market has
already bought enough of the
product or service, or develops
different priorities. The company
with marketing myopia turns
inward to see how it can trim the
costs of manufacturing or make
other internal cost-saving measures.
These tactics may offset a decline
in profits for a while, but eventually
they will not be enough to save the
business from failing. Levitt,
however, reasoned that an industry
can continue to grow long after the
obvious marketing strategies have
been used, if the management is
totally focused on the customer.
Levitt asked the corporate
heads of America in 1960, “What
business are you in?”, demanding
that they shift their focus from
manufacturing to customer
satisfaction. This concept is taken
for granted in the current age
geared to customer analysis and
niche marketing, but given that the
US economy had boomed in the
1950s, enjoying its most prosperous

era for several decades, Levitt’s

idea may not have seemed very

relevant at the time. Still, he cited

convincing examples in US industry

to support his case. In particular, he

accused automobile manufacturers

of marketing myopia.

The automobile industry

On the surface, the US auto

industry appeared unstoppable. By

1960 the “Big Three” in the city of

Detroit (General Motors, Ford, and

Chrysler) dominated the domestic

and global markets. They produced

93 percent of the automobiles sold

in the US, and controlled 48 percent

of world sales. One-sixth of the US

work force was employed directly or

indirectly by the industry.

Nevertheless, cracks were

beginning to show.

In 1955, the Big Three had

enjoyed a record year. However,

demand fell dramatically in 1956

and 1957 because so many

consumers had already bought

cars. This sales slump was partly

responsible for the recession of

1958, during which manufacturing

as a whole declined. This was

the first economic downturn in

the US since the Great Depression.

Meanwhile, car manufacturers in

Germany, the UK, France, and

Japan were threatening the

dominance of the Big Three.

“Detroit never really researched

the customer’s wants,” alleged

Levitt. “It only researched the kinds

of things which it had already

decided to offer.” By the time US

carmakers realized what had

happened, they found it difficult to

adjust. After a series of dud models

and marketing failures, they finally

rebounded in 1965 with the

ubiquitous “muscle” cars such as

the Ford Mustang—but they would

never again have such an iron grip

on the market.

Before Theodore Levitt’s

groundbreaking article in 1960,

marketing was not considered a ❯❯

See also: Finding a profitable niche 22–23 ■ Make your customers love you 264–67 ■ Maximize customer benefits
288–89 ■ Feedback and innovation 312–13

SUCCESSFUL SELLING

Abandoned automobile factories

in Detroit are a reminder of the US

economic downturn in the late 1950s.

Theodore Levitt argued that carmakers

failed to adapt to their customer’s needs.

Selling is not marketing.... the

entire business process [is] a

tightly integrated effort to

discover, create, arouse, and

satisfy customer needs.

Theodore Levitt