Marketing myopia: Why India Inc. needs to think big

By Rahul Sathyajit

Prof. Theodore Levitt, an economist, and editor of the Harvard Business Review, coined the term “Marketing Myopia” in 1960, referring to a company’s short-sighted, temporary or narrow-minded approach while marketing their product. His analysis was that for companies to enhance their longevity, they must define their markets more broadly to take advantage of different growth opportunities.

Their focus should be on doing things that will make people want to do business with them rather than simply produce goods and services. While Prof. Levitt used the example of railroads to present an industry that failed to grow, there have been more than a handful of Indian companies that have fallen prey to their myopic vision and hence failed. In hindsight, there are some valuable lessons to be learnt from their failures, which can be applicable to the present business climate.

The fault(s) in the companies’ vision

The first fault that companies make in India is to define their market too narrow. This was especially the case in the 60s’ and 70’s where it was done on the basis of licensing production. The same holds true for some Indian brands who segment their market based on the product they are selling instead of the customer’s viewpoint, which doesn’t allow them to exploit the full opportunity afforded to the brand.

Take the detergent industry for example. Some of the largest companies in the country such as Hindustan Lever and Tata didn’t attempt to make detergent powder, as they thought it wasn’t possible to convert laundry soap users—instead they made detergent bars. Nirma, on the other hand, proved that laundry bar users could be converted to detergent powder users through catchy and intelligent marketing. This demonstrates that manufacturers tend to segment the market while the consumers perceive a bigger market.

Another common fault that companies tend to make is to get complacent and not continuously add value to their products. Take the example of Hindustan Motor’s Ambassador. From 1958 to the 1980s, the car ruled the market alongside Premier Padmini. It was aided in its monopoly by the unfriendly economic policies prevailing at the time, lack of available capital and the license raj which prevented Automobile manufacturers from entering the industry.

While 1983 did see the emergence of Maruti 800, the Ambassador was still the preferred vehicle due to its perceived sturdiness suitable for Indian roads and the significant gap in petrol-diesel prices at that point. This car was also the first choice of bureaucrats and over 16% of the sales came from the government. The subsequent fall of Ambassadors from market leader to a marginal player over the years has been due to them taking their customers for granted.

There was no significant value addition to the car with each new release. Also, their inability to rationalise the product price to suit the market was a major reason customers turned towards more pocket-friendly and better-performing sedans. The final nail in the coffin was perhaps the narrowing price difference between petrol and diesel as no consumer wanted an outdated vehicle that hadn’t kept up with the times.

When technology levels the field

It is difficult to gauge where the competition comes from and sometimes a player in an entirely different market tends to knock off the market leaders from their position. While the examples of typewriters, alarm clocks, and film reels are well known and discussed, the Indian postal services and pay phones were victims of this particular type of short-sightedness.

Pay phones owned by BSNL were the only mode of verbal communication at one point of time, made complacent by the fact that the waiting period to get a landline at home was over one year! Similarly, Indian Post was also the only mode of written communication and parcel delivery as private courier services were few and expensive in number then. All this changed for the better with the advent of Internet and mobile phones.

Electronic mail soon replaced conventional postal mail as the preferred mode of communication as it was practically free of cost. The government-owned postal services, in spite of having a well-established network and immense penetration to even remote areas, suffered from a lack of foresight on their part and an inability to evolve with the technology boom that left them lagging. It is pertinent to mention that India Post has now recognised its strengths and has branched out into banking services, offering millions of customers in remote areas the benefits of financial inclusion.

Curious case of ‘Jio’

The most recent example of myopia on the part of management is that of the entry of Reliance Jio. Jio’s free offers launched in September 2016 had helped notch up more than 100 million subscribers in 170 days, many from rival networks.  They were also able to bring around 60 lakh new subscribers into the fold, starting a fierce competition in the sector that saw the consolidation of Idea and Vodafone as the aftermath. In a short span, they were able to grab 9.29% of market share as on 31^st March 2017.

The story has not been about how Jio changed the Indian telecom landscape, it has been more about the inaction of telecom companies for many years by not providing value-for-money to customers. The older players didn’t acknowledge the global trend of paying either for calls and text or data or for both. The tariff was not revised from time to time and the benefits weren’t passed on to the customer. In short, there was a ‘Jio’ spaced gap in the industry which was duly filled, which has now resulted in a severe correction on the part of telecom giants to retain their customer base.

A holistic and broader vision is needed to make any business successful and sustainable. Organisations should not only keep an eye out for their obvious competitors but also factor in threats which might emerge because of being in that business. Companies should look at all possibilities which serve the purpose of business to their consumers, rather than just trying to sell their product. The boss of an IT company once famously remarked—have breakfast or be breakfast! That sums it up rather neatly.

Featured image source: Pixabay