Marketing Myopia - The Converging World

It spoke about how firms lost hold of markets because they were product-focused rather than customer-focused. The paper can be found at the Harvard Business Online site if readers want to download the original article. To quote:

"The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not so much because that need was filled by others (cars, trucks, airplanes, and even telephones), but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry incorrectly was that they were railroad oriented instead of transportation oriented; they were product oriented instead of customer oriented."

Levitt's paper and the same principles still hold great relevance for present day businesses. From a client and market research consultancy perspective these are still amongst the key questions we are asking today. In market research if we define the competitive framework too narrowly our clients miss the big picture. Consumers are led by how their needs can be satisfied - it is immaterial to them what marketers call their products - end benefits determine which products/brands satisfy their needs. To take perhaps an extreme example, should hospitals today focus only on diagnosis, medicine, surgery and some post-treatment recuperation - or should they be looking at getting into preventive / natural treatments like spas, ayurvedic, etc ? This would imply that hospitals should attempt to cannibalize their existing business proactively, instead of sitting back and allowing other players to enter their extended field of "treatment" as such.

Technology changes have also played a major role in blurring the lines between competing products. To name a few:
• Payment mechanisms: from the traditional method of cash/cheque to debit/charge/credit card to e-wallet / mobile wallet - who would have thought that cards would one day face a potential threat from mobile phones through mobile wallet applications? The market is payment mechanisms and not payment cards.
• Photography: The move to digital photography has changed the photography landscape immensely. And one player that suffered from "marketing myopia" was perhaps Kodak that got into the digital photography market later than it should have if they had seen themselves in the "image capture" market. Changes in the photography world have happened at many levels - digital cameras from traditional camera makers, but also new players in the digital camera market, as well as photos from mobile phones and camcorders. This has also spawned other associated products and services - online services for printing and storing, photo printers etc. The brands and competing players are very different now - brands like Sony have exploited their strength in digital (cybershot) cameras and launched mobile phones that use the same technology as their cameras. Suddenly major mobile phone manufacturers have got into this field of "image capture".

So how does one measure the photography market now - surely we can no longer limit it to the traditional number of snaps taken and developed. We must also take into consideration images captured in any form and stored/developed in any media (SLR camera, digital cameras, camcorders with cameras, mobile phone cameras etc.). This would certainly mean that there are a lot more photographs taken now: even if not all will be printed, given that they can be stored or deleted. Share of photography and videography solutions is key given that the market itself is much more complex - digital photo printing, online storing and printing services, memory requirements for storage, PC's, memory cards, developing etc. It is quite clear that this market is one which has been redefined by technology.

• Technology developments are also resulting in more and more customers asking for converged or "all-in-one" solutions. Information on this field and more is available as part of the TNS Global Technology Insights study - the second instalment in TNS Technology's GTI series, an annual syndicated survey focusing on the latest trends and issues in technology. The latest GTI covered 16 to 49 year old mobile users in 29 countries.
• TNS tested three concepts (see the graph below) - a Universal Communicator, an Ultra Pocket PC and an ICE system. Results showed clearly a need for converged solutions. Gone are the days when consumers are happy to use different devices for different needs - now they would prefer one device that does it all, well almost. The traditional difference therefore between different sectors - Information, Communication and Entertainment has blurred. The study showed some interesting pointers :

- Given a choice, consumers would prefer that these solutions were provided by two or three brands working in collaboration with one another. In all cases, consumers tended to match brands to categories, clearly driven by the desire to gain "the best of both worlds". A powerful case for co-branding solutions.

- For mobile and portable solutions - the Universal Communicator and Ultra Pocket PC, our consumers' choices of provider brands most commonly included Other Technology Device brands, Software / Platform / Applications brands, Local Media / Local Portal brands and Mobile Service Provider brands. The inclusion of Local Media / Local Portal brands and International Media / Broadcast / Content brands had the effect of making the solution even more appealing.

All this shows that in today's new world marketers have even more cause to heed the advice of Prof Levitt and always be reconsidering their competitive frame of reference ; perhaps even start looking at collaborating with companies that traditionally have been considered as sworn arch enemies !

"Universal Communicator"

The Universal Communicator is the first mobile device to work across any connection including WiFi, WiMax, 3G, CDMA and GSM. It is sleek and smaller than your palm, but encompasses all the power and capabilities of latest PDAs, MP3 players, Gameboys, camcorders and video phones. The Universal Communicator takes the Smartphone concept to a whole new level.

"Ultra Pocket PC"

The Ultra Pocket PC combines all the power and functionality of a laptop, games console, high definition TV, hi-fi, camcorder and smartphone into one sleek, 15 cm wide touch screen device that is easy to carry with you. 2 days of active battery life, 80GB of memory and broadband Internet means you have the freedom to go anywhere and do everything.

"ICE System"

The Information, Communications and Entertainment, or ICE system comprises thin screens adorning your home within which lie best-in-class TV, video, audio, Internet, telephony, gaming and PC technology. Screens throughout your home are wireless connected to each other and to all your personal devices such as laptops and mobile phones, giving you full functionality anywhere in the house.