Abstract
Marketing Myopia is a theory developed by the late, great, Theodore Levitt, an influential economist and marketing innovator born to a Jewish family in Vollmerz, Schlüchtern, Germany. The family emigrated to the United States in 1935 when Theodore (Ted) was ten years old. He would eventually become a highly respected professor at the Harvard Business School. He commenced his tenure there in 1959, where he is credited with many marketing innovations. This included bringing the term 'globalization' into everyday use. Levitt, who died on June 28, 2006 is widely regarded as one of the giants of the marketing profession. His thinking lives on through his books and articles. His concepts remain highly relevant to marketers, and to those concerned, with winning and keeping customers. His theory of marketing myopia underpins this applied research and business project.
After reading extensively through Levitt’s wide-ranging contributions to marketing contributions to marketing, I would sum up his connected messages by suggesting he may have said, "The world is disruptive so keep your eyes and minds open. Ensure your enterprises have excellent leadership, and make sure you know what business you are in. Be very careful how you define that choice, and above all things, remember, you exist to serve customers. Do not forget those customers have choices. Fail in any of these areas and be prepared to meet the headwinds of irrelevance first-hand."
Levitt believed that when short-sighted mindsets were allowed to proliferate and become embedded in organizational cultures, the impact could, and often would, position an organization for failure. These impacts were more likely to be acutely felt in enterprises leveraging business models focused on selling the bulk of their production into so-called 'endless' growth industries or markets. For example, enterprises selling undifferentiated commodity products like timber logs, dairy powder, and beef and lamb into recently explosive growth markets like China. History has not played well for enterprises that over-invested in these types of 'mirage' markets, which are driven by commodity exchanges and low-level relationships. I would assert that achieving premium pricing in any industry requires a premium relationship. This enables an enterprise to create the environment and opportunity for high quality and meaningful engagement with the consumer. Transactional relationships are less likely to achieve this state.
Levitt's (1960) examples of reliance on endless growth industries, include the railroad, movie, and oil and gas industries. He observed complacent incumbent enterprises, steered by poor leadership, often missed significant opportunities because they lacked innovation and consumer awareness. Levitt (1960) believed that such enterprises were so over-invested in generating returns from the present, they did not see the future. Levitt argued that strong growth for whatever reason was likely to generate complacency. This meant that a myopic (complacent) organizational strategy and its subsequent execution tended to be geared to short-termism, which often ignored the shifting needs and wants of the consumer. Levitt referred to these needs and desires as ‘customer satisfactions’. It is these ‘satisfactions’ Levitt argued, that represent the sustainability of an enterprise’s future.
Responding to these shifts in consumer requirements is where today's enterprises are most likely to find tomorrow's profits. Failure to respond to shifting consumer behaviour, increased competition, and disruptive forces can, and often does, create an extinction pathway. Think Blockbuster (1985-2010), Polaroid (1937-2001), Toys R Us (1948- 2017), Pan Am (1927-1991), and there are many more examples. These extinct businesses all failed to see the future or were very narrow in what they saw, and as established by Levitt's (1960) theory of marketing myopia, it does not end well for enterprises so afflicted.
This applied business research project examines the New Zealand red meat industry for signs it is suffering from marketing myopia. The methodology used to support the thesis and investigation combines qualitative interviews with a broad cross-section of influential industry players, a marketing system called ‘transvection’ used to assess the flow of profits and culminates in the real world commercialization of Triple Nine Farms Limited.
At the beginning of this project Triple Nine Farms was merely a concept in my mind. Today, nearly four years later, Triple Nine Farms is a tested, validated, business concept ready for further investment, which will allow it to reach its goal of becoming an innovative, consumer-driven, natural, regenerative, red meat protein business. The enterprise had the vision to create and build customer satisfactions capable of delivering differentiated premium red meat offerings to customers, and well above average returns to investors and shareholders. In doing so, it aimed to offer the wider New Zealand red meat community fresh thinking on how to develop potentially disruptive business models.
It is one that could provide an alternative approach to the value-poor commodity models used by New Zealand producers and processors today. The Triple Nine Farms vision has been formulated by viewing the world with non-myopic eyes. It has looked far into the future with fresh eyes and open minds. The new venture has listened carefully to the voice of the consumer. New consumer behaviours are emerging and many of them offer real opportunities to New Zealand red meat producers.
The results of this applied business research project have been pressure tested in both theory and practice and strongly demonstrate two key outcomes. Firstly, the New Zealand red meat industry appears to have suffered from the impact of marketing myopia. There is evidence (persistently poor financial results) to suggest Levitt’s classic failure scenarios (preconditions) may exist in the New Zealand red meat industry in 2020. Historical examination of other industries, (Railroads, Oil & Gas, Movies, Nokia, Blockbuster, and GMH Australia) where effective responses to marketing myopia were not applied resulted in suboptimal outcomes.
Secondly, the commercialization of Triple Nine Farms demonstrates there is an alternative pathway, but it requires a paradigmatic shift in thinking, fresh engagement with a new mindset, significant, and patient capital, and the unequivocal support of producers, processors, and industry leaders. Achieving this alignment in a conservative New Zealand agricultural sector has been a major challenge in its own right. At Triple Nine Farms, alignment is still a work in progress, capital is still constrained, and the future is far from certain, particularly given the Covid 19 world we all currently inhabit.
Right now in 2020, alignment, collaboration, and cooperation can be difficult to find. A highly competitive environment appears to exist and it can be hostile to collaboration, particularly where disruptive start-up companies like Triple Nine Farms are concerned. Big would appear to have many advantages over small as the infrastructure required to enable small red meat enterprises is compromised right across the New Zealand red meat industry.
Sadly, like many other industries, real innovation usually does not stem from big, slow- moving, inflexible, incumbents. It often comes from smaller, more agile, more consumer connected enterprises. Innovation is an industry challenge and New Zealand policymakers, farmers, industry leaders, and the wider red meat community may need to grapple with how to facilitate disruptive innovation in the future.
The current leadership of New Zealand's red meat enterprises, or at least the leadership that counts, appears not to view marketing myopia as an issue. Whilst the boards, leadership teams, and industry’s wider management regularly espouse the virtues of value-added strategies, there is a lack of evidence to support their adoption or their success, particularly in return-on-investment terms. This oversight could become costly for the New Zealand red meat industry, its farmers, and all of those employed in the sector.