Marketing Myopia — Cured or worsening, especially in Industrial Goods Companies (IGCs)
It is in 1960 that Theodore Levitt wrote about ‘ Marketing myopia’ which became a cult classic and was quoted widely across the industry. The article brought home the bitter truth that most of the businesses became production-oriented than customer-focused. Most of them gradually lost an edge and in some cases made an exit. The importance of ‘defining your business’ and focusing on the needs of the customers is relevant today as it was 58 years ago.
A close look at many corporations would tell you more or less the same story where all of them (except a few) chased production-based mad growth, applying the same formula which proved successful in the home market years ago and focusing 80% or more on improving the product, internal processes and systems.
While the article highly appealed to the fast-moving consumer good companies (FMCG as a popular acronym) and consumer durables sector, the companies operating in industrial goods (IGCs), B2B (business to business) looked at it with mild interest and gave a lukewarm response to it.
In other words, if the companies mentioned in the first category were having myopia as per the article, in the second category it had almost reached blindness which viewed marketing as unnecessary and avoidable evil. The industrial goods Companies ( IGCs ) are populated with techies, engineers and scientists which is an infertile ground for customer orientation and marketing. If in FMCG sector, marketing has evolved to some respect and carries weight, in IGCs, it varies from non-existent and neglected to a feeble presence which is the core topic of this article.
There are some examples of failed companies due to myopia in the developed world which are well known. In India too, two prominent car manufacturers having dominant market shares in the past, FIAT and Hindustan Motors (manufacturer of Ambassador cars) are the examples of companies who eventually lost out and while one is a pale shadow of the past, another exited the business. The scooter story is no different as one dominant leader Bajaj exited the business and another one (Kinetic Honda) sold the business to an automotive player. In a country of around 1.3 billion people where most people can not afford cars and when even some essential goods are transported on 2 wheelers, it shows myopia in its full glory.
In global companies, it isn’t any different. They view emerging markets with the same myopia beliefs as guaranteed automatic growth due to the high-growing population entering a market with a second-rate or yesterday’s technology and diluted standards. In the garb of innovating for these markets, stripped versions of products or sometimes ill-fitting, high cost, high spec. products with low respect to customers are launched. This makes the customers, who have unique needs, to look for value anywhere else.
The marketing which could make a huge difference to such markets and industrial products/services continues to remain ineffective and here are some top reasons:
1. Marketing treated as ‘back end’( Structural flaw )
In most IGCs, the organisation is dominated by tech experts and engineers whose forte is production and tech research and this makes them blind to all softer areas like HR, training, soft skills and marketing. The marketing is routinely used to generate some statistics, shallow macro indicators, charts and brochures. Due to this approach of contempt and lack of attention, they start behaving like a typical ‘backend’ function whose job is to support but not question or drive the strategy.
It would not be a surprise in many corporations that enormous time is spent on technical topics, internal improvements of products and processes and very little time on customer needs. Many times, customers are seen through the lens of limitations of production, capacity, technology or costs but rarely with empathy to their needs and an intent to solve their unique problems.
2. Caliber and capability of Marketing staff
Mostly in FMCG companies, marketing is headed by ex-sales staff or people who are from related backgrounds of communication/ PR, etc. Most of the hotter people in marketing have specializations from top B-schools and are picked up by FMCG/consumer durables sector while the people in the middle or lower academic ranks join these IGCs in the areas between least expectations and mediocre output and they do not complain and settle in a comfortable space. With limited budgets, fluctuating importance and treated little better/same as ‘ backend’, they produce routine stuff and myopic strategy camouflaged in short-term spikes.
This helps in perpetuating the self-defeating logic of low value and hence low respect.
Since the capability and requirement are limited in these kinds of corporations, many marketing professionals have traditional, outdated knowledge and skills and approach new topics like ‘ digital marketing’, social media, digitisation of processes with the same mindset which either blocks it totally or makes it painfully slow to take off.
3.Paper Tigers or ‘ Field warriors’
The classic friction is generated in many corporations between sales and marketing where in between win-or-lose slugfest, it is the organisation which loses invariably. The marketing set high on paper degrees, jargon and intellectual pretense and try to convince the sales department of a strategy in which sales oppose vehemently or execute half-heartedly. Most of the time, it is due to inadequate preparation by marketing, poor training on products and inability to communicate as seen fit.
The biggest war happens with the inevitable (as per profit requirement) price increases where both sides fight with their myopic self-interests but never with the interest of its customers in mind.
4. Misalignment with main business strategy
If there is any function which should be closest to the organisation strategy, it is marketing which would create products and services for existing customer needs and for needs which are yet to be demanded by customers. In reality, marketing is seldom aligned with the company strategy and most of their time is taken in routine internal activities. Let’s take the brand building, for example, where most marketing people would understand ‘increasing the loudness’ is the only way to build the brand but not creating continuous pull and employ strategies for differentiating the brand in the minds of consumers.
If the company strategy is to build value and command a premium, you may find marketing executing it with the tactics of discounts and matching prices with lower performance offerings.
5.Misleading MIS ( Management Information Systems )
Most companies use stats to camouflage their weak points and show the better picture than it actually is. For example, they show ‘sales growth’ and not market share, high growth of low base products and unverified market potentials. The market share in emerging markets is a difficult exercise as it does not have enough published data, professional agencies and companies which are privately held and thus have no legislative need to publish the revenue growth, profitability, etc.
This leads to self-generated comfortable data without any customer perspective (myopia again) and actions which usually fall flat having no connection with market reality.
6. Marketing subservient to Sales
Most of the corporations transmit short-term sales pressures to marketing which is detrimental to a long-term strategy and for building brand strength. Marketing is forced to devise schemes and promotions which is nothing but offering ‘discounts’ creatively. By operating regularly under such pressures, marketing gets reduced to a mint of churning schemes one after the other and loses sight of market and customers in the process.
7. Clarity and Purpose within Marketing
It would be as basic as’ knowing the purpose of the enterprise‘ and as Peter Drucker said, the purpose of the enterprise is to serve existing customers and create new customers. The marketing is the function whose main purpose is the same and they should forever be striving to create value for customers and looking for needs which are met and unmet. In the comfort zone of routine tasks and other reasons mentioned above, marketing loses its focus on the main purpose and becomes a pale shadow of sales doing some back-end jobs, launching odd products and providing collateral for visibility.
There are possibilities where myopia does not worsen and gets cured to a large extent. Here are a few suggestions from my experience:
1.Structure and staffing
Let the department of marketing have marketing competent people and not people who would rather fit into sales or other areas. The ideal team could have marketing strategists, content/function experts and a few to run routine but necessary activities if it can’t be outsourced. In reality, most of the team is populated with a routine activity of people and slightly better-qualified staff at a leadership level. If the marketing gets professionalized and has clear mandate to lead the strategy, the gain would be enormous and the business would be winning in short as well as in long run.
The structure should be redesigned to bring marketing as ‘ frontend’ in IGCs which may seem a revolutionary thought to many but with market changing so rapidly, it would be a mandatory and life-critical thing to do.
2. Seeing Big picture yet ‘ ears close to the ground’
Marketing can not afford to believe in only ‘theory’, operate as an ivory tower and strategize with speculations. Most of the customer orientation in marketing in IGCs is derived from the channel, sales force, touristic market visits and periodic customer surveys by external agencies. While it serves some purposes and gives few insights, it is usually very limited, highly filtered and worse — either too diluted or extremely exaggerated. It would be dangerous to use it to devise a strategy and take actions on the battlefield called market.
3. Upgradation of Marketing Skills
It is painful to see the marketing staff unable to work out few basic things like segmentation (product segmentation is sometimes mistaken as customer segmentation), brand building and providing direction to channel and sales in IGCs. It would be another day when they have superior skills to apply marketing expertise to the customers in the digital age. Most of the staff struggle with digital marketing, new media and the demands of millennials, although many Gurus have mushroomed. It is therefore essential to upgrade their skills continuously so that the enterprise is able to build and share with its future customers.
4. Acting as a ‘ Glue’ for the main strategy
Marketing cannot run a separate strategy than its business and make tactical activities which are at cross purposes. In fact, it is the main role of marketing to align all functions within the organisation to point and help reach the goal. For example, if sales are not able to deliver due to poor knowledge of products, customer segments, competitor offerings, marketing can take a lead and get them a training aligned with these needs and help them win more customers and grow the business sustainably.
5. Opaque to transparent MIS
The system and measurements should reflect clear criteria of winning and not redoubtable market shares and unverified market potential figures.
It would be a great move to have ‘unfiltered voice of customers’ as substructure installed in marketing function and I would suggest that marketing should have direct access to channels (not through sales), influencers and consumers. A dedicated cell can do both qualitative as well as quantitative job and accelerate the strategy execution.
To sum up, it would make lot of sense to focus on customers and marketing rather than on products, internal processes and to cite a positive example in India, let me share of movie industry(Bollywood) which got disrupted with new distribution model, opening of multiplexes and as a result, many of them lost money in a short term. Very quickly they reorganized and reinvented their enterprise, professionalized and made movies with better content and above all attached great importance to marketing.
It made a lot of sense back then in the 60s and continues to make even more sense now and in future too to work towards ever-evolving customer needs, cure marketing myopia in all types of businesses, IGCs included.
Disclaimer: The views expressed in this article are personal to the author and does not reflect on the publication or the organisations the author was associated in the past.
