In 1960, Theodore Levitt wrote a seminal article for Harvard Business Review titled Marketing Myopia. In his article, Levitt suggested that many once rapidly-growing companies and industries eventually reach a point where they stop growing or their business starts receding. Many of the examples cited in his article focused on a core product that fueled their initial growth and when product growth plateaued, so did their overall business. One of Levitt's examples was the railroad industry whose growth peaked before the introduction of the automobile.
Levitt posited that these industries and firms ultimately had their tremendous growth end since they were not ultimately focused on their customers' needs. They had a product orientation and focused heavily on selling the one core product that brought them initial success, such as railroad transportation.
Instead, a customer orientation would have served them better since they would have focused on their customers' needs instead of marketing their core product in a changing industry. The railroad industry's customers needed transportation. While the automobile began providing a more flexible solution to transportation, the railroad industry was still focused on marketing their core product: railroad transportation. As customers began flocking to the automobile, the railroad industry saw their tremendous growth come to a halt.
The extension of customer orientation is market orientation, where a company focuses not only on their customers' needs, but they also factor in things like competitive conditions, industry changes and economic conditions. Apple is a great example of a company who has had great success as a result of their strong market orientation. For example, in the early 2000’s the music industry was undergoing significant upheaval. CD sales were starting to decline and digital platforms like Napster that facilitated the sharing MP3 audio files of songs, largely illegally, were taking root. It was evident that consumers wanted the choice to consume individual songs instead of entire albums. Several portable MP3 music players entered the market, offering a way to listen to this new music format on-the-go. None of them reached mainstream success because they were often difficult to use and did not offered a refined experience.
Apple was not the first company to enter the market with a portable digital music player. However, they leveraged their industrial design experience to develop an attractive and easy-to-use product called the iPod. It was positioned as “1000 songs in your pocket.” Meanwhile, Apple also acquired the program Soundjam MP from Casady & Greene and relaunched it under the name iTunes. It allowed users to ‘rip’ CDs they already owned into MP3 files and load them onto the iPod. Apple was the first to market with an end-to-end, easy-to-use, and legal solution to portable digital music where users could pick just the songs they wanted to bring with them to listen to. Apple extended iTunes further and in 2003 provided a store where users could purchase and download individual song files.
Apple did not rush to enter a new market. They were careful to understand what customers expressed as a want and what competitors were, in turn, providing. Music listeners wanted to be very selective in the individual songs they consumed while the established music industry was only providing a package of multiple songs on a CD. Apple provided consumers with a complete solution to consume the songs they wanted while on-the-go. Having a market orientation, by understanding their customers, their competitors and the industry as a whole, allowed them to bring a product to market that would achieve great success.
Method Products is another example of a company that utilized market orientation to achieve success. As consumers, Method’s founders Eric Ryan and Adam Lowry were not motivated to clean their apartment using traditional, smelly, and harmful chemical cleaners. Recognizing their own need for an alternative, they developed a product designed to meet the needs of consumers like themselves. The result was a product that used non-toxic, biodegradable and nice-smelling ingredients.
However, cleaning products as a category are commodities where it is difficult to differentiate a product - other than on price. Not only must the core product differentiate itself and appeal to consumers, but the packaging and marketing of the product also had to differentiate itself. While most of the competition had similar packaging and pricing, Method hired a noted designer to create a package that stood out on the store shelves. Their differentiated product and marketing was aligned with what certain customers wanted and they were able turn their cleaning supply startup into a very successful business.
Depending on a firm’s industry, the product development cycle may take time and firms are forced to market ‘what they have’ if consumers’ needs change or market conditions are dramatically shifted. Nonetheless, even in these scenarios, companies should mix a product orientation with a market orientation so they can clear current inventory while also positioning themselves to meet customers’ needs going forward.
As seen with both Apple and Method, a firm that takes a market-oriented approach to all aspects of its business not only develops products that customers really need, but its marketing is in alignment to present the product to customers in a way that's meaningful to them. While the classic phrase “the customer is always right” may be overly simplistic in today’s marketplace, taking a customer and market orientation is a critical step toward delivering products and marketing messages that resonate with customers.
