Theodore Levitt

Theodore
Levitt
1925
2006

German-born American Economist and Professor at Harvard Business School, Editor of the Harvard Business Review, popularized the term globalization

Author Quotes

The oil industry is a stunning example of how science, technology, and mass production can divert an entire group of companies from their main task. ... No oil company gets as excited about the customers in its own backyard as about the oil in the Sahara Desert. ... But the truth is, it seems to me, that the industry begins with the needs of the customer for its products. From that primal position its definition moves steadily back stream to areas of progressively lesser importance until it finally comes to rest at the search for oil.

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 a company going.

The true purpose of a business is to create and keep a customer, not to make you money.

There is no such thing as growth industries, only companies that take advantage of growth opportunities.

To be successful a strategy must also be simple, clear, and expressible in only a few written lines. If it is elaborate and complex, and takes a lot of space or time to communicate, few people will understand it or march to its tune. Complexity tends usually to mask a vague or unsubstantial sense of the realities that face the enterprise. The most dramatic and visible realities that so obviously destroy companies are usually fiscal: insufficient cash flow to finance debt and interest payments, to pay vendors, and the like. These usually make the headlines, because they lead so often and so obviously to bankruptcy. Often they are due to wrong decisions about purely financial affairs. Most commonly such wrong decisions are based on miscalculations or plain dumb assumptions about the market place ? that sales would be sufficiently good, prices sufficiently high, accounts receivable sufficiently low and short-term. Hence, fiscal failure originates in the market place.

To survive, they themselves will have to plot the obsolescence of what now produces their livelihood.

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 times, executed with means right for their situations. Nor is selecting growth sectors on which to concentrate company efforts 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 the other competitors? The trick is to combine price competitiveness with competitiveness in all other respects. In short, the trick is to provide the most competitive value? Business success is a matter of the disproportionate and enduring attraction of certain proportions of customers at certain enduring levels of relative price. Most significantly, it is a story that defines the purpose of business in terms of marketing ? once again, getting and keeping customers. This therefore installs marketing at the center of what's done in corporate strategic planning.

If a company?s own research does not make its product obsolete, another?s will.

Strategic planning involves defining what's to be done. It is inescapably rooted in marketing matters, in the need to respond to realities, the actualities of the market's unyielding requisites. To get done what strategic planning has decided to do requires realistic plans for implementation at the center of the competitive vortex. If the plans are not realistic, and if those who must convert the plans into action are not persuaded regarding their feasibility, the results will be disastrous. Subordinates will, perhaps grudgingly, carry out plans and programs they think are silly or wrong. But they will not seriously attempt to implement plans and programs they think are not realistic, that is, not implementable?

If an organization does not know or care where it is going, it does not need to advertise that fact with a ceremonial figurehead. Everybody will notice it soon enough.

The difference between data and information is that while data are crudely aggregated collections of raw facts, information represents the selective organization and imaginative interpretation of those facts.

If you?re not thinking segments, you are not thinking marketing.

The discovery of the simple essence of things is the essence of the marketing imagination? Theodore Levitt, The Marketing Imagination (Excerpt) 2 of 8 Imagination means to construct mental pictures of what is or is not actually present, what has never been actually experienced. To exercise the imagination is to be creative. It requires intellectual or artistic inventiveness. Anybody can do it, and most people often do ? unfortunately, however, only in daydreams and fantasies, when they are not constrained by convention or conviction. To do it in business requires shedding these constraints but also discipline, especially the discipline of dissociation from what exists and what has been. It usually requires combining disparate facts or ideas into new amalgamations of meanings.

If you're not thinking segments, you're not thinking. To think segments means you have to think about what drives customers, customer groups, and the choices that are or might be available to them. To think segments means to think beyond what's obviously out there to see. If everybody sees segments as obviously consisting of certain demographics, industries, user groups, buying practices, certain influencing groups, and the like, then the thinking that gives real power is thinking that transcends the ordinary?

The earth is flat ? What is striking today are the underlying similarities of what is happening now ? (they) form an overwhelming, predominant commonality everywhere.

In marketing? the object is to get and keep a customer, and also to get existing buyers to prefer to do business with you rather than your competitors. In marketing, therefore, the imagination must constantly focus on that objective? The essence of competition?is differentiation: providing something different and providing it better than your competitor. Sometimes even an obvious functional difference doesn't sell unless it is also presented or positioned differently? Let us repeat: 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 a company going. To be the low-cost producer? 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 you from extinction. To do well what should not be done is to do badly.

The global corporation operates with resolute constancy ? at low relative cost ? as if the entire world (or major regions of it) were a single entity; it sells the same things in the same way everywhere. ? (It) contrasts powerfully with the aging multinational corporation. ? (it) accepts for better or for worse that technology drives consumers relentlessly toward the same common goals ? alleviation of life?s burdens and the expansion of discretionary time and spending power.

Innovation is not the product of logical thought, although the result is tied to logical structure.

The marketing imagination is the starting point of success in marketing. It is distinguished from other forms of imagination by the unique insights it brings to understanding customers, their problems, and the means to capture their attention and their custom. By asserting that people don't buy things but buy solutions to problems, the marketing imagination makes an inspired leap from the obvious to the meaningful. "Meaning" resides in its implied suggestion as to what to do ? in this case find out what problems people are trying to solve. It is represented by Charles Revson's famous distinction regarding the business of Revlon: 'In the factory we make cosmetics. In the store we sell hope.' It is characterized by Leo McGinneva's famous clarification about why people buy quarter-inch drill bit: 'They don't want quarter-inch bits. They want quarter-inch holes.' It leads to Professor Raymond A. Bauer's famous point that when buyers select a known vendor or known brand over another it is more meaningful to think of the choice as an act of risk reduction rather than as the expression of a brand preference.

Innovation is the ability to see change as an opportunity - not a threat.

Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth.

Japanese companies have discovered the one great thing that all markets have in common ? an overwhelming desire for dependable, world-standard modernity in all things, at aggressively low prices.

Kodak sells film, but they don't advertise film. They advertise memories.

Learning and innovation go hand in hand. The arrogance of success is to think that what you did yesterday will be sufficient for tomorrow.

Marketing is inescapable in the determination of corporate results. The reason is that marketing deals with the sources and levels of the revenues that help determine the corporate fate. Since marketing means getting and keeping customers in some acceptable proportion relative to competitors, it is to the marketing imagination one must look to gain differential advantage over competitors. Assuming that the costs of what it sells are reasonably competitive, it remains the burden of the marketing imagination to find ways to attract and hold customers. It usually takes a lot of long and sweaty effort to get things done, and that itself may take a lot of imagination. But unless the decision as to what to do is appropriate, which is to say, unless it is imaginatively right, nothing can save the enterprise from disaster. Good work in pursuit of wrong purposes is more damaging than bad work in pursuit of right purposes. In business, the marketing imagination is the central tool for deciding on what the purposes are to be.

Author Picture
First Name
Theodore
Last Name
Levitt
Birth Date
1925
Death Date
2006
Bio

German-born American Economist and Professor at Harvard Business School, Editor of the Harvard Business Review, popularized the term globalization