Levitt (1975) in his article tries to unearth the reasons as to why the companies which once seemed to be growth companies turn upside down and go broke. The major reason he sites is the short-sightedness among the top management of the company when it comes to the future vision of their company. Every major industry starts as a growth industry but sooner or later their growth becomes stagnant and even decline. What is the reason behind this? Levitt argues that there is no such thing as growth industries; rather there are industries which capitalize on growth opportunities (p. 26). Whenever an industry or a company forgets this basic reasoning and rides on its previous success, it goes through a cycle which ultimately leads to their decline.
According to Levitt (1975), there are four major factors which if present guarantees that the industry will suffer this cycle. The first is the belief that growth depends upon population growth and its affluence level. Second is the mindset that there is no substitute for their products. Third is the faith in mass productions and the last is their product oriented approach to the market (p. 28). A population-driven growth strategy makes the management complacent. The mindset that a product will never become obsolete hinders innovation. High production pressures the companies into selling rather than marketing. The presence of single superior products drives all the innovation towards hat product.
All the above factors turn the company into a product base company. They focus more on the products they are selling than on customers they are selling to. If a company wants to keep on the growth track and not become obsolete in near future it should focus on creating the products which satisfy their customers. They should find the problems its customers are experiencing and innovate and design a product which will solve this problem. They should focus on marketing and not selling. Their main aim should not be selling more of their products rather marketing products which satisfy customers (Levitt, 1975, p. 38).
References
Levitt, T. (1975, September). Marketing myopia. Harvard Business Review, 26-183.
