Although the famous article titled Marketing Myopia was written by Theodore Levitt in 1975, I think the concept proposed in the article is still very relevant. In fact, I believe that understanding the concept will become increasingly important for survival in the rapidly changing global business environment.

So what is the concept behind the previous article? In the article, Levitt has suggested that most companies fail because they define the business they are in in a famous article titled Marketing Myopia. Simply put, companies define what business they are in narrowly in terms of the product rather than the benefits that the product or service provides to the customer.

You have used the example of the railroad industry in the United States to explain what you mean. The railroads were the backbone of the American economy. However, slowly and steadily, the US rail companies began to go into the red. This happened despite the fact that the American economy was growing rapidly. More and more people were traveling and more and more goods were being transported throughout the United States. To justify their dismal performance, all rail companies pointed to the poor condition of the rail industry as a whole. Levitt suggests that the poor state of the rail industry was due to the railroads defining their business as “railroads” and, as such, only thinking of other rail companies as their competitors. Whereas, Levitt suggests that the rail industry should have defined its business as “transportation of people and goods.” This would have helped the rail companies identify who their real competitors were and who was taking the business away from them. Knowing who their true competitors were would have made the rail companies realize that the airlines, the trucking industry, and the auto industry were taking their customers away. They would also have realized that they now had to compete with them and not just with other rail companies.

As I teach the importance of competition to management students, I always ask them, “Suppose you are the CEO of Maruti Suzuki, a leading automotive company in India. Now tell us what business you are in.” The answers I get are generally the most obvious, i.e. cars, four-wheelers, and automobiles. And when I ask them a follow-up question about who their competitors are, they name all the automakers. According to Levitt, it is this way of strictly defining what business you are in that leads to the downfall of a large number of companies. Taking Levitt’s theory into consideration, Maruti is in the “transporting people” business. The benefit customers get from using cars is that they can be transported to a destination of their choice. As such, Maruti should be considered part of the transportation industry, not just part of the automotive industry.

Now who are your competitors? Well, everyone in the business of transporting people and even some who are not in this industry as well.

Let’s take a closer look at this point. First, it is obvious that all car manufacturers are your competitors. This, of course, needs no further explanation. Then some motorcycle manufacturers are also your competitors. Surprised? Well, don’t be. It is obvious that as the price difference between cars and motorcycles decreases, there is a high probability that some people who were thinking about motorcycles will buy a car and vice versa. In fact, Maruti is trying to attract motorcycle users by keeping the price of the Maruti800 model low. Motorcycle manufacturers should also consider the price of Maruti800 when marketing their products. Another example is the Nano car, which is expected to put competitive pressure on the motorcycle and tricycle industry.

Who else transports people? What about airlines, bus service, and railways? Let’s see if these industries are also competitors of Maruti. There was a time when there were only three viable and convenient options for traveling from Delhi to Chandigarh, that is, by car, bus or plane. Each of these competed with each other and all were viable options for travel. It was the railways that changed the competitive landscape 180 degrees by introducing Shatabdi Express. Now, most people travel by train to Chandigarh, which negatively affects the automobile industry and airlines.

Shocked? Not to be. There are more Maruti competitors but not of the obvious variety. Let me explain what I mean with the help of the example of JC Penny, a chain of more than 100 department stores in the US Every fall and winter season, JC Penny employees travel to these 100 stores to implement the new store . Obviously, your people travel to your 100 stores primarily by car and plane. Even those employees who traveled by air, had to use cars to get to the airport, as well as rented cars when they arrived at their destination. It is obvious that this activity of JC Penny not only generated demand for various industries, such as automobiles, hotel rooms, restaurants, gasoline and airlines. Guess what JC Penny does now every fall and winter season. Link all your stores with video conferencing and change the distribution plan of your store without a single person leaving your office. So what do you think happens to the demand for cars? Come down. Now who is another competitor to automakers like Maruti? Videoconferencing equipment manufacturers.

At the beginning of this article, you had said that the concept proposed by Levitt in 1975 is not only relevant today and will become increasingly relevant in the future. We are all aware that rapidly changing technology is causing discontinuous change, that is, change that has no connection to the past. As such, in the future where the competition will come from, one does not know. Emails made fax machines obsolete. Mobile phones are making landlines obsolete. You can watch movies on demand on your TV or mobile phone. Where technology will take us, we do not know. As such, I believe that it will become increasingly important that you define your business broadly based on the benefit that your products or services provide to the end consumer. Exactly what Levitt suggested in 1975.

So before you sit down to develop any strategy, first establish “What business are you in?” and “Who are your competitors?” Remember, you need to define what business you are in broadly based on the “benefit” you provide to the customer and not based on the type of product.