Introduction
The competitive market is an unstable and ever-evolving medium. Products change, companies rise and fall, and new trends and demands fluctuate from one point to another. In this environment, a business cannot allow itself to remain static unless it wants to be swept away by its competitors. Large companies have, arguably, an easier time facing the winds of business fortune. The big players tend to have resources, brand names, and teams of analysts and planners to prevent and predict every possible fluctuation of the market (Hill, 115). Yet many large and successful companies have fallen victim to a trap known as market myopia. In this paper, we will identify how to market myopia works, examine famous historical examples related to the approach, and summarize ways of avoiding it.
What Is Market Myopia?
The concept of Market Myopia was first introduced in 1960 by Theodore C. Levitt, a professor of marketing at Harvard Business School. In his article, “Market Myopia,” published by Harvard Business Review, he described the mechanism of this faulty approach to marketing (Del Rio 185). Marketing Myopia is a short-sighted marketing practice that focuses on short-term perspectives for the company, deals with its inner problems and needs, and either forego long-term strategy or commits to one that does not have the customer’s needs and wants in mind. As a result of this practice, the company loses its ability to react to the ever-changing business environments in time, becomes stagnant, and eventually loses its market share due to being outclassed by its competitors. This does not occur overnight; it is a string of poor managerial decisions, which pile up. By the time the company realizes that something needs to be changed, it is already too late. Companies that fall prey to Market Myopia often omit or forget to ask themselves a very important question, which lies at the core of every business: “What are we doing?” (Del Rio 190).
Examples of Market Myopia
In this section, we will analyze two staple examples of Market Myopia demonstrated by two major companies that were once leaders in their own segment of the market but fell off due to overconfidence and the inability to perceive and adapt to the changing realities of the market. These companies are Smith Corona and Nokia.
Smith Corona used to be the world’s leading typewriter company. Before the age of computerization, it held the world’s biggest market share in the typewriter industry. Its products were efficient, robust, and reliable with many functions, such as the spellchecker, document preview, built-in calculator, etc. (Danneels, 15). The latest models of Smith Corona typewriters were, arguably, more efficient than early PC models. At the beginning of the 1980s, Smith Corona was capable of either ousting or buying off any franchise that had the capability to challenge its dominance in the market (Danneels 20). However, the company was so certain in the future of typewriters that they failed to recognize the potential danger posed by computers. As a result, their market share dropped dramatically over the next decade, and the company went broke in 1995 (Danneels 29).
Another company that suffered greatly due to Marketing Myopia is Nokia. Throughout the late 1990s and early 2000s, Nokia was one of the leading companies in the mobile cellphone industry (Aspara, 623). It had great experience and technology that left many of its competitors years behind. Throughout the early 2000s, the company maintained its technological edge and presented numerous products that became massive hits around the world. In 2005 Nokia’s 1100i model set the record for the best-selling cellphone, with over 250 million devices sold (Aspara, 630). The company had a bright future ahead of itself as it had the technological base and resources to spearhead any potential breakthrough long before its competitors. However, Nokia became overconfident in its success. Its brand name was absolute. The company’s top managers never bothered investing in prospective alternative technologies and never expected the competitors to come up with anything that could topple them. In so doing, they missed the rise of the smartphone. Pioneered by Apple, the smartphone heralded a new age of communication. While Nokia managed to produce its own line of smartphones, which saw moderate success, the moment was lost (Aspara, 650). Other companies, such as Samsung, Apple, and Huawei, claimed much of the market share formerly held by Nokia. In 2014 the company discontinued its line of smartphones and sold all assets to Microsoft.
How to Avoid Market Myopia
From the two examples above, it becomes obvious that Market Myopia is not a mistake in strategy but rather a mindset mistake. Myopia comes from hubris and overconfidence that nothing could go wrong and that things will remain unchanged forever. That is a fallacy that brought many industrial giants to their knees. Instead of looking inward and focusing on the company’s internal matters alone, the manager must always look outward for better ways to serve customer needs and look for innovative ways to expand and improve products (Hill, 243). Avoiding hubris and overconfidence is essential, as both Smith Corona and Nokia had the possibility to predict the emergence of new products but never believed in their own fallibility, which leads to their inevitable fall.
Conclusions
Market Myopia is a faulty managerial practice that involves focusing on the company’s needs instead of those of the customers. This problem afflicts stable and successful companies, leading to stagnancy and loss of market share. Awareness of what Market Myopia is can reduce the potential of falling for it and open-mindedness and humility among managers will ensure that the company will always prioritize the needs of the customers when planning its development strategy.
Works Cited
Aspara, Jaakko. “Strategic Management of Business Model Transformation: Lessons from Nokia.” Management Decision, vol. 47, no. 4, 2011, pp. 622-647.
Danneels, Edwyn. “Trying to Become a Different Sort of Company: Dynamic Capability at Smith Corona.” Strategic Management Journal, vol. 32, no.1, 2011, pp. 1-31.
Del Rio, Christina. “Stock Characteristics, Investor Type, and Market Myopia.” Journal of Behavioral Finance, vol. 17, no. 2, 2016, pp. 183-199.
Hill, Charles. Strategic Management Theory. Cengage Learning, 2014.