Ted Levitt on Marketing
 
Amazon links: Marketing Imagination, New, Expanded Edition
and Ted Levitt on Marketing
- Books by Theodore Levitt
- The Marketing Mode
- Marketing is, most importantly, a comprehensive view of the business process,
- a way of doing business that this view entails
- Business and success
- A business is an organized system of activities
- whose existence and level of success
- are based entirely on
- its ability to attract and hold a necessary number of solvent customers
- in some economically effective way
- Must be economically effective both for itself and its customers
- Customers usually have choices
- Whom to patronize and when
- Whether to buy at all
- If customers stop or reduce their buying, and especially from you, the business slows or stops
- The success of a business
- Is centrally a function of how effectively attentive it is to …
- the needs and wants of the people it tries to attract to its offerings
- the alternatives available to the people it tries to attract
- If enough people … the business is headed for trouble
- don't want to be your customer,
- don't stay being your customer,
- don't like your prices
- even though they may
- like you
- and what you offer
- become dissatisfied with you for any reason
- Getting and keeping customers requires innovation
- You have to try to better yourself
- Because somebody will always try to serve people better in order to merit their custom
- Requires innovating attitudes in all things
- Making products …
- Better
- More suitable
- More versatile
- More easily operable and reparable
- Manufacturing them better & cheaper
- Improving dealings with customers and suppliers
- Improving effectiveness in the …
- office
- sales force
- distribution system
- trade
- All innovation should be thought of as intended to help get and keep customers
- to make the firm more competitive.
- Innovation is unnatural
- Innovation requires abandoning
- What's familiar and has been mastered
- For the unfamiliar and untried
- Innovation is not automatic
- Only inertia is
- Remaining with the accustomed and the comfortable
- Innovation has to be nurtured
- Innovation has to be made to happen
- If it doesn't, the company declines
- Because competitors (existing ones, start-up new ones) will surely find innovative new ways to serve customers better.
- There are usually lots of them, and they have the incentives to try.
- Intensified globalization of competition
- Everybody is everywhere vulnerable to everybody else's commercial intrusions
- There are not any longer any isolated or protected markets
- No matter how small, remote, or specialized
- Instant communication and cheap transport
- Extend competitive reach
- Aggregate small niche markets into scale-efficient global magnitudes
- Nobody is exempt
- Everybody has to …
- manage better
- and seek innovations more systematically.
- Innovation must constantly look for possibilities of product differentiation
- In the pursuit of customers, every seller seeks to be in some appealing way different from all other sellers
- Optimally to be irresistibly different
- So distinctively different as to be a, in effect, a monopolist of the offering—
- to be perceived as being not just the best provider of the particular product
- but as being its only provider.
- Ideally, everybody else should be seen as being in a different and lesser league.
- In this sense a product is
- Not just the simple generic entity that we usually define it to be
- Such as, for example, cement, a disk drive, an evening dress, a particular software, lease financing, ship repair, a rock concert, satellite data services, or whatever
- Not just its defined or descriptive core, but everything that is done with respect to it, including how its
- packaged
- sold
- distributed
- delivered
- promoted
- installed
- repaired
- field-supported
- upgraded
- users are trained in its use
- much more
- Complex cluster of value satisfactions
- If … then it will not sell, or not sell well
- The cluster is not sufficient and right
- Though its generic core (such as the disk or the cement) may be supurb
- It is not "right"
- according to the wants and wishes of customers
- and compared to what is available from others
- Differentiation is one of the most important strategic and tactical activities in which companies must constantly engage
- Everything can be differentiated
- Even so-called "commodities"
- Such as cement, copper, wheat, money, air cargo, marine insurance
- Think only of soap, beer, investment banking, credit cards, steel warehousing, temporary help services, education
- No such thing as a commodity
- Only people who act and think like commodities
- No reason to get stuck in the commodity trap
- Forever confined to competing totally on price alone
- Historically, companies that have taken and stayed resolutely on the commodity path, even when they have driven their costs deeply down, have become extinct
- Although the world is increasingly drive by high technology
- The world continues to be influenced and managed by …
- High spirits
- Emotion
- Energy
- Drive
- Persistence
- Relationships that develop slowly over time between companies and individuals
- The more high-tech the world gets, the more important relationship management becomes for creating and keeping competitive advantage
- This is a much misunderstood and neglected subject
- Especially among those trained in the physical sciences, engineering, and management science
- Nothing sells itself
- Much depends on the quality of the relationship between the seller and his intended customer
- Complex new products
- Relationships can be managed
- To neglect them is to mismanage them
- Marketing imagination
- Also much neglected is cultivation of the marketing imagination
- The ability to make insightful leaps
- into the minds, emotions, and practices of customers
- into the vulnerabilities of competitors
- that help you to get and keep more customers
- Not unique or elusive. Not a talent, but a skill
- Can be developed, cultivated, and enhanced
- The problem is the false presumption that "you either have it or you don't"
- Intangible products offer some of the biggest opportunities for the cultivation and exercise of the marketing imagination, and the practice of product differentiation
- Usually called "services"
- Certain unique properties
- More easily and quickly redesigned and less expensively customized and remanufactured than can processed or manufactured tangible products
- Think only of how much … are customized and modified to suit particular people and situations
- Insurance programs
- Investment or commercial banking
- Industrial cleaning
- Travel
- Entertainment
- Legal services
- Possibilities for relatively easy and quick product customization and modification leave a lot of room for imaginative differentiation to
- Wants and wishes of individuals, segments, and markets
- Possibilities suggested by differences in time of day, day of week, and season
- Such products lend themselves uniquely to the management of demand as when …
- Airlines have special off-season or off-peak rates
- Hotels target particular groups for particular times with a wide mix of flexible offerings
- Preferred prospects get various preference treatments
- Resaurants offer early-bird and retiree discounts
- Time-sensitive and perishable products
- When an airline seat or hotel room is emply, it remains forever unsold
- Lend themselves to enhancing disciplines of industial rationality and technology-based systems
- Organizing rationality and technological content of
- Self-service retailers
- Cafeterias
- Fast-food chains
- Credit cards
- Credit clearing
- Mail and package services
- Warehousing and distribution
- Telephone and computerized brokerage or reservation services
- The scheduled scrupulosity of preventive maintenance for whose continuing and dependable workability most of us take for granted
- machine tools, air plane engines, power stations, telecommunication systems, oil and chemical plants, bottling and canning lines, newspaper printing machines, and other "sensitive" facilities
- How much is regulary done to put technology, industrial routines, and organized rationality to work in intangible-product industries and to provide the reliable and high-quality services that are so regularly bundled along with tangible products
- More is surely possible
- Lend themselves to reassuring possibilities of tangibilization using visual or mnemonic devices to give substance to their promises
- Prudential—Rock of Gibralter
- Other examples on page 137
- Everybody in every organization can
- Develop a better marketing imagination
- Become better at practicing the marketing mode
- The mode that helps companies (and even countries) to get better at getting and keeping customers
- If you don't market, something terrible happens—nothing
- Marketing for Business Growth
- View from the top
- Marketing Chief & CEO
- What's your product and what's your business
- Factories in the field : customers service / service industries
- Innovation and organization
- Creativity not enough
- Thinking big not enough
- New products: allurements and illusions
- Disorganizing for innovation
- Innovation and imitation
- Exploiting what you have: Product Life Cycle
- Exploiting what others have
- Limits of marketing
- Marketing matrix for a balanced business
- Uses and abuses of the marketing concept
- Looking ahead
- Trends without a future
- Morality of marketing
- Advertising
- Rationality is congruence between aspiration and action.
- No such thing as a rational or irrational idea
- Slide rules and laboratory tests do not exhaust the ingredients of
- Advertising performs much the same function as the business lunch.
- Order-takers vs professional salesmen: unexpected consequences.
- Most buying is obligatory not discretionary.
- Advertising's power derives from everybody's want to reduce the risk of being wrong
- Reflects favorably upon him as a person.
- Advertising's role
- You can be sure…if its…
- Susceptibility to influence:
- Marketing Imagination
- Introduction
- What's New?
- By this question people who manage mean,
What unnoticed things "out there" can:
help or hurt my business or my career,
create opportunities or impose perils?
What new techniques, new ways of doing things, can help us better do our jobs?
- The ubiquity of shamans in business dress.
- The Market Place
- Need to be widely informed and thinking straight
- In a world of full of smart, straight-thinking people requires thinking with a special quality, transcending the ordinary and thus reaching imaginatively beyond the obvious or merely deductive.
The future belongs to those
who see possibilities before they become obvious and
who effectively marshal resources and energies for their attainment or avoidance.
- Also need high spirits
- The purpose of a business
- Customers buy solutions to problems
- Customers are constantly presented with lots of options to help them solve their problems. They don't buy things, they buy solutions to problems.
- The surviving and thriving business is a business that…
- Constantly seeks better ways to help people solve their problems
Functionally better
Valued better
Available better
To create betterness requires knowing what customers think betterness to be.
This precedes all else in business.
The imagination that figures out what that is, imaginatively figures out what should be done, and does it with imagination and high spirits will drive the enterprise forward.
- Marketing and Corporate Purpose
- Profit is a meaningless statement of the corporate purpose.
Without customers in sufficient and steady numbers there is no business and no profit.
No business can function effectively without
a clear view of how to get customers
what its prospective customers want and need
what options competitors give them
explicit strategies and programs focused on
what goes on it the marketplace
rather than on what's
possible in the factory
merely assumed at headquarters
Marketing is everybody's business everybody in the business had better know it.
- Globalization of Markets
- The Industrialization of Service
- Differentiation—of Anything
- Marketing Intangible Products and Product Intangibles
- Relationship Management
- The Marketing Imagination
- Marketing & Corporate purpose es.
- Requisites of competitive success
- Purpose of a business is to create & keep a customer.
- To Do that you have to
- Produce & deliver goods & services that
- People want & value
- at prices &
- under conditions
- that are reasonably attractive relative to competition
- To a proportion of customers large enough to make those prices & conditions possible
- To Continue to do that the enterprise must
- Produce revenues in excess of costs to attract & hold investors in the enterprise
- in sufficient quantity
- with sufficient regularity
- Stay abreast and sometimes ahead of competitive offerings
- This Requires
- Clarity of
- Purposes
- Strategies
- Plans
- In large organizations:
- Written down
- Clearly communicated
- Frequently reviewed by senior members of the enterprise.
- Appropriate system of
- Rewards, audits, and controls,
- To assure that what's intended
- gets done
- & rectified when not.
- Marketing View
- Customers buy hopeful expectations, not actual things
- The ability to satisfy those expectations is more effectively communicated
- by the packaging than by the simple generic description of what's in
- the package.
- Feelings more important that feeling
- Marketing Matrix
- Need to balance condition of:
- External environment with Internal environment
- Limits of the marketing concept page 207 MFBG
- Need to balance between
- Serving the marketing
- Company's need for efficiency
- Need product line policies
- Need policies for competitive posture
- Stages in the evolution of the market that may require
- Policies & strategies falsely
- to be perversely product oriented.
- Globalization of markets
- Industrialization of service
- There is a massive hidden service sector (beyond the obvious "service industries")
- That portion of nominally manufacturing?? industries whose expenses & revenues largely
- represent pre and post purchase servicing in the form of
- planning
- preinstallation support
- software
- repair
- maintenance
- delivery
- collection
- bookkeeping
- and the like
- Service can be industrialized in three ways
- Hard Technology
- Substitutes machinery, tools, and other tangible artifacts
- for people
- in the performance of service work
- Soft Technology
- Substitution of organized preplanned systems for industrial service operatives
- Hybrid Technology
- Combine hard equip with carefully planned industrial systems to bring
- efficiency, order, and speed to the service process.
- Special Case of special opportunities
- Reliable repair service
- Key point is volume
- Magnitudes sufficient to
- achieve efficiency
- employ systems and tech that produce …results
- reliable
- rapid
- low-unit-cost
- Differentiation of anything
- Competitive Distinction THAT PROMISE RESULTS OR VALUES DIFFERENT FROM COMPETITORS
- is visibly sought via 'distinctive product features'
- visually or measurablely identifiable
- cosmetically implied
- rhetorically claimed by reference to real or suggested hidden attributes
- WHAT IS A PRODUCT?
- The generic core seldom has competitive viability by itself. It must be differentiated from competitive offerings, because people understandably respond to differentiation. and they respond differently to different kinds of differention.
People buy products in order to solve problems.
A product is a complex cluster of value satisfactions.
The generic 'thing' or 'essence' is not itself the product. It is the table stake.
Customers attach value to products in proportion to the perceived ability of those products to help solve their problems.
All else is derivative.
Only the buyer or ultimate user can assign value, because value can reside only in the benefits he wants or perceives.
————
The dimensions on which the customer grades the supplier. Scale of 1 to 10 . Supplier with highest score has a better product. He delivers more product.
- What a product is 'in its customer-getting and satisfying entirety can be
- the how it can be managed can be graphically represented by the: Total Product Concept
- DIFFERENTIATION
- TOTAL PRODUCT CONCEPT
- What a product is 'in its customer-getting and satisfying entirety can be managed and the how it can be managed can be graphically represented by the: The Total Product Concept.
- The Generic Product
- Is the rudimentary substantiative 'thing' without which there is no chance to play
the customers expects more than the generic product
and unless his other expectations are minimally fulfilled,
there is no sale.
- The Expected Product
- When the customer expects more than the generic product the generic product can be sold only if those expectations are met.
The expected product = Generic + customer's minimal expectations.
priced right
delivered right
quantity
schedule
specific locations
right payment terms
customer may actually expect and want less.
for him more is not better
not even at a competitive price
The different means by which competing sellers seek to fulfill
these expectations distinguish their offerings from one another
In this way, differentiations follow expectations.
- The Augmented Product
- Differentiation is not exhausted by expectations.
What the customer expects may be augmented by offering more than what
he thinks he needs or
has become accustomed to expect
The augmented product consists of
The voluntary or unprompted "augmentations" plus
The Expected Product
The Process of Providing these augmentations can in time educate the customer about what to expect from the seller. Expectations rise to what has been shown to customers to be possible.
- Not for everybody
- Not all customers for all products and under all circumstances can be attracted by an ever widening bundle of these differentiating "value satisfactions." Some customers may prefer lower prices to more augmentations. Some cannot use certain offered augmentations.
- Systems Selling-Three different kinds of augmented Products
- The Product system
- The Contracting System
- does not sell systems, but uses systems to sell.
- The Service System
- achieves the ultimate of total integration. It sells a system, while the system sells both itself and a service.
- The decreasing dependence of the buyer.
- The rule can be laid down that the more successfully a seller expands the market by teaching and helping customers to use his product, the more vulnerable the seller becomes to the loss of those customers.
When a prospect no longer needs the help that converted him into a customer, he becomes free to shop around for things he values more than that help. Often this is price, but it can be other things as well.
It is precisely when the buyer has become less dependent on the technical help or brand support of the originating supplier that greater attention may be beneficially focused on a systematic program of finding customer-benefitiating and therefore customer-keeping product augmentations. It is also a time when when increasing effort should be focused on possible cost and price reduction. Thus arises the irony of product maturity.
- Irony of product maturity
- When price competition gets most severe and cost reduction becomes more important is when one is also likely to benefit by incurring the additional costs of special new product augmentations.
- Testing the customer's assumptions
- The augmented product is uniquely a condition of relatively mature markets or of relatively experienced or sophisticated customers. Not that more experienced or sophisticated customers cannot benefit or will not respond to augmented offerings; but when a customer know or thinks he knows everything and can do anything, it is up to the seller to test those assumptions lest he be condemned to the purgatory of price competition alone.
The way to test the customer assumptions
that he no longer
needs or wants
all or any part of the augmented product is to
is to consider what's potentially possible to offer.
- The Potential Product
- every thing potentially feasible to attract and hold customers.
what remains to be done
what is possible
depends heavily on changing conditions
what's new?
describes what has changed
and this helps define the
potential product with which it compete more effectively
under changed conditions.
- Differentiation via market managemento so.
- Market Selection & Pricing leads to another form of differentiation
- marketing management : how the marketing process is managed
- brand management
- product management
- market managementues largley.
- putting somebody
- in charge of a product that's bought and used
- essentially in the same way by a large segment of the total market better product. He delivers more product.
- or in charge of a specific market
- for a product that's bought and used in essentially
- different ways in different industries.
- clearly focus attention, responsibility, and effort that ?? clear
- competitive advantage generally goes to firms so organized.
- hidden analysis
- control
- field work
- see market analysis, price sensitivity (NEEDS MORE WORK)
- Intangible products and product intangibles
- when prospective customers can't taste, test, feel, smell, or watch the product in operation in advance, what they are asked to buy are, simply, Promises of Satisfaction. Even tangible, testable, feelable, smellable, products are before they're bought, largely promises.
Satisfaction later in consumption or use can seldom be quite the same as earlier in trial or promise. p96
Metaphor makes the sale.
Promises, being intangible, have to be tangiblized in their presentation.
Metaphor, symbols and similes become "surrogates" for the tangibility that cannot be provided or experienced in advance.
Prospective buyers will translate appearance into confidence about performance.
The way the product is packaged (how the primise is depicted in brochure, letter, design appearance) and how it it presented and by whom all become parts of the product itself, because they are elements of "what it is" that the customer finally decides to buy or reject.
Certain conditions must be satisfied before the prospect buys. What makes intangible products unique is that they are entirely nonexistent before being bought, entirely incapable of prior inspection or review. For that reason, the customer is forced to make judgements far more on the basis of what's asserted or implied about them than with tangible products.
Assertions and implications must therefore be more carefully managed than with tangible products.
What therefore becomes crucial for sales success is how competitors differentiate themselves from each other.
Competing firms offering tangible products differentiate each other by:
design
operating features
special purpose applications
Competing intangible products do so more commonly by surrogates.
Keeping customers for intangibles
Intangible are people intensive in their production and delivery.
The more people intensive the more prone to personal discretion, idiosyncrasy, error, and delay. Easily unsold as a consequence of his expectations having been underfulfilled.
Hence the search for alternatives to dependence on people. See the industrialization of service.
Manager's rational routines.
Unique to intangible products is that the customer is seldom aware when he's being served well. This is especially so in the case of intangible products that for the durations of the contract, are consumed almost constantly. Only when things don't go well or a competitor suggests they could go better. Small visible failure that imply hidden ones and vendor neglect.
To keep customers for regularly delivered and consumed intangible products, They have to be regularly reminded of what they're getting. The promises that were made in order to land the customer must be regularly reinstated when the promises are fulfilled. Even the source of the delivered product has to be regularly reinstated in the customer's consciousness.
Getting customers for an intangible product requires the product to be tangiblized. Keeping customers requires the product to be reinstated, to be constantly resold while things go well lest the customer get lost when things go badly. Doing both well requires that the tasks be industrialized. The relationship with the customer has to be managed much more carefully and continuously in the case of intangible that tangible products. See p109 for importance.
- Relationship mgt
- The relationship intensifies after the sale
- Growing product complexity & interdependencies
- Continuous services and enhancements in order to keep the product longer in
- effective state of the art use
- Requires a conscious and constant fight against the forces of entrophy.
- The idea is to build bonds that last, no matter who come and goes.
- Mkt imagination
- To attract a customer
- You are asking him to do something different from what he would have done in the absence of the programs you direct at him. He has to change his mind and his actions. The customer must shift his behavior in the direction advocated by the seller. Hence the seller must distinguish himself and his offering from those of others so that people will want or at least prefer, to do business with him.
- Differentiation
- Segments
- Imagination means
- The essence of competition
- Is differentiation: providing something different and providing it better than your competitor.
- Best way to do consumer & market research
- Letting oneself live, as it were, in their customer's shoes, talking their language, thinking their thoughts, feeling their emotions, responding to their cues.
- Purpose of a business
- The purpose of a business is to get and keep a customer. Without customers, no amount of engineering wizardry, clever financing, or operations expertise can keep the company going. To be the low cost producer of vucuum tubes, to have the best salesmen of what's not wanted or wanted only by the few whose ability to pay won't even pay for the overhead—these can't save us from extinction. To do well what should not be done is to do badly.
What should be done can be defined only by reference to what customers do, can do, or might do in the market place. No amount of imagination can bail out companies intent on inappropriate purposes. The history of all succeeding and successful companies is a history of right purposes at the right time, executed with means right for their situations. Nor is selecting growth sectors on which to concentrate company effort a solution to the problem of stagnation. A lot of other companies are likely to have hit on the same target opportunities. The trick is to know how to convert opportunity into disproportionately opportune results. This means getting an edge over competitors.
The low-cost producer who gets disproportionate market share by passing part of his advantage along in the form of customer-getting lower prices has a clear and powerful advantage. But it must also be linked to doing everything else that's needed to satisfy the insatiably expanding wishes and demands of the market. In time, lower prices get taken for granted. What's usually wanted next are increasingly expanding cluster of other benefits and also often increasingly varied lines of product and sevice options for the customer. The strategy of price competitiveness makes sense only in the context of the larger or different cluster of things customers want and value. The trick is to combine price competitiveness with competitiveness in all other respects. In short the trick is to provide the most competitive value.
Feature Chart Goes here.
- Marketing and its Discontents
- The apparent insatiability of human appetites: Regardless of how much better off they keep getting. Each generation everywhere seems to ask for what is predecessors asked only of God. See page 152. The problem is that every solution creates new problems
- ADDENDUM: Management and the postindustrial society
- This cover the crucial role of real management in creating a post industrial society (services) . Based esentially on the MacDonald's Model
- Introduction
- Dum & Gloomers: We are entering a world of economic entrophy
- The more economically advanced that nations become the less their living standards will rise until, finally those standards begin to fall.
- Advanced goods-producing nations become goods satiated and service hungry
- Marginal utility of more of a product declines.
- Demand for services accelerates both absolutely and relatively
- Travel
- Education
- Entertainment
- Eating Out
- Health Care
- More of the nation's work shifts from production worker to
- Whose activities have only limited access to the kinds of industrial and science-based technologies that so profoundly increased productivity in manufacturing and farming in the last 100 years.
- lower level service worker
- upper-levle "knowledge worker"
- Hence costs and prices rise more rapidly
- A structural malignancy increasingly creeps into the economy
- A we want relatively more of the things that cost relatively more to produce
- The less well off we shall become.
- The solution.
- The only feasible solution to our economic problem is to raise productivity and the only way to accomplish this is by raising the productivity of knowledge work.
- Service Productivity
- Some moderating propositions
- Not all good production has had the same productivity gains
- Productivity gains in service sector underrated
- Government employment at its peek
- Proportionately
- Absolutely
- What accounts for the greater productivity of the goods-producing industries
- Role of Management
- Management consist of
- Administrators
- Variation in Productivity
- Value added per employee the measure of labor productivity
- Capital per employed worker is an industry is an accepted measure of the level of industrialization
- Observation
- The goods producing sector of the American is not uniformly capital intensive nor uniformly productive. Neither within categories nor within time periods
- Utilizing Technology (service sectors that have increasedproductivtu)
- Assessing Mass Transit
- The Productivity Problem
- The New Service Fecundity
- Fast Food Technology
- The McDonalds "Machine"
- Managerial Rationality
- Production vs. Performance
- Ritualistic behavior vs rational behavior
- Search for improvement
- Thinking Technocratically
- Redesigning the tasks themselves
- Entertaining revised purposes
- Creating new
- Plans
- Tools
- Processes
- Systems
- Organizations
- Controls
- Eliminating the conditions that created the problems in the first place.
- Production Prototypes
- The Limits of Industrialization
- The Special Case of Government
- The Demographic Distemper
- Possibilities For Progress
- The Practice of Management
- —————————
- What is a product
- All of the attributes that produce solvent customers
- Something capable of producing revenue.
- Brings in new customers
- In consumer goods mfg have recognized that the generic product is the
- least important part of the products
- Not dresses but fashion
- In retailing
- entertainment
- atmosphere
- selection
- speed of service
- delivery matters more than quality of the product
- Not cigarettes but sex
- Cosmetics - hope
- Fertilizer - free consulting
- Computers - service
- Not just what the engineers say but also what is implied by its
- design
- packing
- channel of distribution
- price
- quality and activities of its salemen
- Transaction
- Synthesis of what the seller intends and the buyer perceives.
- What the buyer perceives can be controlled by what the seller
- design
- packing
- channel of distribution
- price
- quality and activities of its salemen
- What people buy
- Not products
- Expectation of benefit
- Value satisfactions they believe are bestowed by what they are buying
- Prefers
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