• What Business Are You In?: Classic Advice from Theodore Levitt

    For all the talk about management as a science, experienced executives know that strategic decisions and tactics depend heavily on context. No one understood this better than Theodore Levitt (1925-2006). A Harvard Business School professor renowned as a founder of modern marketing, he sought above all to use his knowledge to serve the needs of businesspeople. In a series of powerfully insightful--and delightfully written--essays in Harvard Business Review, he provoked readers to reexamine their settled thinking about vital issues so that they could better meet the needs of customers. Levitt had the gifts of provocation and generalization, offering ideas that startled readers but compelled them to think creatively and intelligently about their companies. Writing in a period when business was held in far less esteem than it is today, he rejected the easy contempt that many intellectuals had for managers and consumers. Levitt carried that practical approach to his tenure at Harvard Business Review from 1985 to 1989. As one of HBR's most intellectual and most populist chief editors, he understood that the magazine's main purpose was to serve as a kind of sophisticated translation, clarifying authors' raw--and sometimes rough -- ideas for impatient, time-pressed readers. This tribute, a look into one of business's great minds, offers excerpts from six of Levitt's most influential HBR articles: "Marketing Myopia" (July-August 1960), "After the Sale Is Over..." (September-October 1983), "Marketing Success Through Differentiation--of Anything" (January-February 1980), "Production-Line Approach to Service" (September-October 1972), "The Globalization of Markets" (May-June 1983), and "Creativity Is Not Enough" (May-June 1963).
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  • Marketing Myopia

    At some point in its development, every industry can be considered a growth industry, based on the apparent superiority of its product. But in case after case, industries have fallen under the shadow of mismanagement. What usually gets emphasized is selling, not marketing. This is a mistake, since selling focuses on the needs of the seller, while marketing concentrates on the needs of the buyer. In this widely quoted and anthologized article, first published in 1980, Theodore Levitt argues that "the history of every dead and dying 'growth' industry shows a self-deceiving cycle of bountiful expansion and undetected decay." But, as he illustrates, memories are short. The railroads serve as an example of an industry whose failure to grow is due to a limited market view. Those behind the railroads are in trouble not because the need for passenger transportation has declined or even because that need has been filled by cars, airplanes, and other modes of transport. Rather, the industry is failing because those behind it assumed they were in the railroad business rather than the transportation business. They were railroad oriented instead of transportation oriented, product oriented instead of customer oriented. For companies to ensure continued evolution, they must define their industries broadly to take advantage of growth opportunities. They must ascertain and act on their customers' needs and desires, not bank on the presumed longevity of their products. In short, the best way for a firm to be lucky is to make its own luck. An organization must learn to think of itself not as producing goods or services but as doing the things that will make people want to do business with it. And in every case, the chief executive is responsible for creating an environment that reflects this mission.
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  • Creativity Is Not Enough (HBR Classic)

    Creativity is often touted as a miraculous road to organizational growth and affluence. But creative new ideas can hinder rather than help a company if they are put forward irresponsibly. Too often, the creative types who generate a proliferation of ideas confuse creativity with practical innovation. Without understanding the operating executive's day-to-day problems or the complexity of business organizations, they usually pepper their managers with intriguing but short memoranda that lack details about what's at stake or how the new ideas should be implemented. They pass off onto others the responsibility for getting down to brass tacks. In this classic HBR article from 1963, the author, a professor emeritus at Harvard Business School and a former HBR editor, offers suggestions for the person with a great new idea. First, work with the situation as it is--recognize that the executive is already bombarded with problems. Second, act responsibly by including in your proposal at least a minimal indication of the costs, risks, manpower, and time your idea may involve. Extolling corporate creativity at the expense of conformity may, in fact, reduce the creative animation of business. Conformity and rigidity are necessary for corporations to function.
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  • Advertising: "The Poetry of Becoming"

    People don't take vacations to "get away from it all," states marketing guru Ted Levitt, but to escape from modern commercialism. And the chief culprit is advertising: omnipresent, relentless, loud, sometimes tasteless. Even if you like a product or love an ad, the ubiquitousness, the repetition of advertising can drive you crazy. But advertising helps a lot too, Levitt asserts. Facilitating the free flow of commerce, advertising creates opportunities and employment and spurs innovation. Informing, entertaining, and exciting, it presents a change of pace amidst the usual news, drama, sports, or MTV. Ads open doors to the products people create to reshape their environments and enhance their lives, the tools they use to get results. And in an era where there is so much to mistrust, advertising is straightforward in its purpose. Acting in behalf of whoever is paying, it hides no agenda but blatantly seeks your money.
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  • After the Sale Is Over

    Buyers no longer purchase products and services but sets of expectations. Thus, the relationship between buyer and seller often intensifies when the sale is made. How selling companies manage buyer-seller relationships increasingly affects their reputations and repeat sales. The seller can maintain a healthy relationship with the buyer after the purchase by regularly considering whether the relationship has been improving or deteriorating. To effectively manage relationships, managers must understand both the problems and the opportunities.
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  • Globalization of Markets

    The new commercial reality is the emergence of global markets for standardized consumer products on a previously unimagined scale of magnitude. Technology, by proletarianizing communication, transport, and travel drives the world toward a converging commonality. Well-managed companies have moved from emphasis on customizing items to offering globally standardized products that are advanced, functional, reliable, and low priced. They benefit from enormous economies of scale in production, distribution, marketing, and management.
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  • Marketing Intangible Products and Product Intangibles

    Rather than distinguishing between the marketing of services or goods, it is more useful to identify companies according to whether they sell intangibles such as travel or tangibles such as automobiles. Companies that sell tangibles emphasize intangible benefits, including status and comfort, to enhance their products. Tangibilizing intangible products presents more difficulties because of their people-intensive production and delivery which increase the chances for personal discretion and error.
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  • Marketing Success Through Differentiation - Of Anything

    Marketers can differentiate any product or service, even commodities which seem to differ only in price from competitors' offerings. Products almost always combine a tangible entity with an intangible promise of user satisfaction. The expected product, which includes the generic product, represents the customer's minimal purchase conditions. These purchase conditions include variables such as delivery, terms, support efforts and new ideas. The sale of the generic product depends on how well the customer's wider expectations are met.
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  • Industrialization of Service

    The introduction of hard, soft, or hybrid technologies into service areas is the beginning of the industrialization of service. The key point is to increase the volume of service to a magnitude sufficient to achieve efficiency and to employ systems and technologies which produce reliable, rapid, and low-cost service results. Various cases illustrate problems of paperwork, service repairs, selling, and specialization, when implementing this management rationality. Service industrialization requires a set of processes and management that is much different from that used in the functional production of goods.
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  • Note on Marketing Arithmetic and Related Marketing Terms

    A basic note to be used at the beginning of the introductory marketing course to familiarize students with the arithmetic techniques, concepts, and terms that are typically employed in the analysis of a first year marketing case.
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  • Production-Line Approach to Service

    All industries are, effectively, service industries. Some industries merely have greater service components than others. Many so-called service industries such as fast food, mutual funds, and credit cards have applied manufacturing solutions to people-intensive service problems. To gain benefits, managers should consider the problems and desired output; how to redesign the process and install new tools that automate the job; and how to control people's behavior and channel their choices. The primary objective is to serve the customer's needs efficiently and effectively, and to make customer service an integral part of what the customer buys. McKinsey Award Winner.
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  • Exploit the Product Life Cycle

    The product life cycle measures the likelihood, character, and timing of competitive and market events. A product strategy that includes some sort of plan for a timed sequence of conditional moves provides an offensive rather than a reactive move. Most successful products pass through certain recognizable stages. Awareness of these stages affects decisions on marketing factors such as pricing, product identity, and sales and distribution networks. New uses and new customers extend the product life cycle. Planning in the early stages for product life extension helps to guide the direction of ongoing technical research in support of the product.
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