RSM250 week 2 marketing myopia

Why did major industries like the railway road fail?

They were product oriented instead of consumer oriented

-eg. defined themselves as railway business, not transportation business

marketing myopia

the mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products

How can consumer oriented management help to keep an industry growing?

By looking out for new applications of their product to satisfy consumer needs

How does the shadow of obsolescence always linger?

Each new growth industry think there's no substitute for it, but there will be one

What are the 4 conditions of the self deceiving cycle that industries will always be growing/in demand?

1. believing the population myth

2. believing indispensability

3. too much faith in mass production & advantages of rapidly declining unit costs as output rises

4. preoccupation with a product (dangers of R & D)

Population myth

Growth is assured by an expanding and more affluent population

- because companies think the future of the industry rest assured, they focus on outcompeting other companies rather than creating demand for its industry product

Oil Industry

-not being creative ever since kerosene lamps were sent to China to create demand for product

-greatest improvement: tetraethyl lead came from outside the industry

-industry itself focuses on oil exploration, production, and refining

What is the oil industry focused on?

-improving efficiency of producing the product, not on improving the generic product/marketing

Why will oil industry fail

-focusing on oil, not energy

-innovations coming from outside the industry

-only small companies focus on marketing instead of production

indispensability

The idea that there is not competitive substitute for the product

mass production pressures

companies focus on declining unit costs of mass production and neglects marketing

What does Galbraith thinks about production pressure?

output is too much so all efforts concentrate on getting rid of it aka selling, not marketing

Selling vs Marketing

Selling focuses on needs of the seller, marketing focuses on needs of the buyer

Why did Detroit automobiles fail despite doing consumer research?

consumer research didn't research their needs, they just asked about preferences in already existing products

- product oriented not customer oriented

Detroit focused on production, not on retailing and service

- customers were dissatisfied with service but automobile industries don't listen

Mass production thinks profit only comes from low cost full production

What did Ford do?

Invented assembly line to cut costs because he concluded that at $500 he could sell millions of cars:

mass production is the result of marketing foresight to reduce price

Product Provincialism

focusing narrow-mindedly on products, therefore not adapting to market changes

Future of oil company

bleak because other industries are developing fuel cells that eliminate frequent refueling stops, or electric batteries for cars

-satisfy consumer needs because no consumers like stopping at gas stations unless mandatory

Creative destruction

the creation of new products and production methods simultaneously destroys the market power of existing monopolies

Dangers of R & D

-believes that building new innovative products will naturally attract consumers

What are the factors that strengthen the belief that new innovative products will naturally attract consumers?

1) management becomes topheavy with engineers

- create selective bias: research instead of marketing

-focus on production instead of satisfying consumer needs

2) bias of dealing with controllable variables

- scientific products are testable or functional

-but consumers and markets are unpredictable, fickle, stupid, shortsighted, stubborn, and bothersome

Why are electronic companies doing well now?

They are filling market needs not finding new markets -> doesn't have to discover consumer needs and wants

What is the stepchild treatment

Marketing is treated as a stepchild - they exist and are needs to be taken care of but not worth real attention

What should the industry do?

-focus on the DELIVERY of customer satisfaction

-CREATE the things to satisfy customers

-FIND necesssary raw materials

How can companies avoid obsolescence?

-visceral feel of greatness

---entrepreneurial vision & will to succeed

---customer oriented organization

---not producing goods, instead buying customers