How marketing myopia can spell trouble for business

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SummaryOn Wednesday, December 9, 2009, Bajaj Auto announced that it was discontinuing the production of scooters. As quoted in a newspaper, the managing director reportedly said, “one day, God willing, we will be the largest motorcycle...

On Wednesday, December 9, 2009, Bajaj Auto announced that it was discontinuing the production of scooters. As quoted in a newspaper, the managing director reportedly said, “one day, God willing, we will be the largest motorcycle company in the world. If we have to be a motorcycle specialist, we have to make a sacrifice in the scooter segment—where we are not selling according to expectations.”

Consider the facts. According to Siam, Bajaj’s cumulative domestic scooter sales during April to November 2009 was 3,356 units, a decline from a similar period the previous year. The Indian scooter market, currently at 1.2 million, is growing at 15%. From 12% of two wheelers in 2008, scooters are expected to contribute 20% to two-wheeler sales in 2010. The scooter market has grown at double digits in the last fiscal compared to the motorcycle market, which grew only at 2.6%. Honda Motorcycle and Scooter India has just started a third assembly line at its plant to meet growing demand for scooters.

It would appear that the venerable Bajaj brand is falling into a classic trap of marketing myopia. Almost 50 years ago, the late Ted Levitt coined the term ‘marketing myopia’ for a firm or manager’s approach and thinking that is product-focused. He suggested that the reason railroad companies in the US declined in the early- and mid-20th century was that they thought they were in the railroad business—not the transportation business; they thought that customers were buying ‘railroad’ services from them—not the benefit of being transported from point A to point B in a convenient, inexpensive way. The railroads got into trouble not because the need for passenger and freight transportation declined. That grew. However, that need was filled by others (cars, trucks, airplanes, even telephones); it was not filled by the railroads themselves.

In a similar fashion, Hollywood barely escaped being totally ravished by television. Actually, all the established film companies went through drastic reorganisations. Some simply disappeared. All of them got into trouble not because TV’s inroads hurt but because of their own myopia. As with the railroads, Hollywood defined its business incorrectly. Studios thought they were in the movie business when they were actually in the entertainment business. ‘Movies’ implied a specific, limited product. This produced a fatuous contentment which from the beginning led producers to view TV as a threat. Hollywood scorned and rejected TV when it should have welcomed it as an

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