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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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Theodore Levitt was born in Germany and emigrated to the United States in 1935 before the Second World War commenced (The Economist, 2009). Levitt served in the US army, and following World War II received a PHD in Economics, whilst studying at Ohio State University (The Economist, 2009).  Following the academic study at Ohio State, Theodore Levitt became an academic at Harvard Business School, where he taught marketing (The Economist, 2009).  

There are two main ideas concepts coined by Levitt: marketing myopia and globalization (The Economist, 2009). A significant idea proposed by Theodore Levitt is marketing myopia (Grant ,1999, p. 397). Levitt insisted that it is crucial to accommodate the needs of the consumers (Grant, 1999, p. 397).  Levitt's definition of marketing came about through disagreement with economist John Kenneth Galbraith (Grant, 1999, p. 398). The economist believed that there is no difference between selling and marketing (Grant, 1999, p. 398). As well as this, he argued that advertising is simply done to promote the selling of a product (Grant, 1999, p. 398).  However, in Levitt's view a seller carries out advertising campaigns not just to promote the product but to also target the needs of the consumers (Grant, 1999, p. 398). Theodore Levitt clearly outlined in his publication “Marketing Myopia” that marketing in fact a key component for all companies as demand is generated through advertising activities (Levitt, 1960, p. 144). In his publication, Levitt discusses real-life examples of successful marketing strategies (Levitt, 1960, p. 144). It is believed that Henry Ford's assembly line concept lead to a significant decrease in costs and therefore the automotive company was able to produce and sell millions of cars for as low as $500 dollars (Levitt, 1960, p. 144).  Nevertheless, in Levitt's opinion the key factor that played a significant role in the firm's success was marketing (Levitt, 1960, p. 144). The concept of Ford was to produce solely black cars and any special requests were turned down because the entrepreneur believed that his idea would be profitable and that it would fulfil the needs of the customers (Levitt, 1960, p. 144).  Furthermore, Levitt signifies the importance of marketing whilst talking about oil companies (Levitt, 1960, p. 147). There are very few examples of firms in the oil and gas sector which are actually willing to spend their revenues on marketing, as Theodore Levitt puts it (Levitt, 1960, p. 147).  In 1959, over 20 articles were published by the American Petroleum Institute Quarterly and only one of them contained information about marketing strategies used (Levitt, 1960, p.147). There is a clear reason because of which marketing is not the primary focus of oil companies; firms believe that there is no competition in the energy market and that the traditional sources of energy have a dominant position (Levitt, 1960, p. 148). However, due to the fact that alternative sources of energy had not been developed and researched to the extent they have today, oil and gas companies did have a leading position in the energy market. Nowadays, however, due to the emergence of renewable energy oil companies which do not spend on marketing suffer greatly, therefore it is crucial to spend on advertising to be able to compete in the energy market. Moreover, if firms are aiming to maximize output, which resembles the rational goal model from Quinn's competing values framework, it is important to create demand for the products, which should be done through advertising (Boddy, 2017, p. 43). The last key point made by Theodore Levitt relating to marketing is that businesspeople need to be aware of the fact that they are not simply producing goods, the main focus has to be set on the customer response (Levitt, 1960, p. 148).  He argues that all industries begin with criteria set up by customers and then businesses satisfy the needs of the public by producing products which they need (Levitt, 1960, p. 148).  

Moreover, the management Guru published an article in 1983 called “The Globalization of Markets”, where he clearly stated that only companies that operate on a global scale can achieve success (Levitt, 1983). Levitt also asserted in the article that there is a significant difference between multinational and global corporations (Levitt, 1983). He outlined that multinational corporations operating in a wide range of countries have to adapt to these markets at high costs, as opposed to global firms, which operate efficiently, and therefore at a lower cost because the same products are sold for the same prices in every country (Levitt, 1983). A prominent example of success in transforming a company into a global corporation is McDonald's (Levitt, 1983). This company succeeded in making the business global, and has chains all around the world, from Paris to Tokyo (Levitt, 1983). Furthermore, another evident example of globalization is Coca-Cola and Pepsi-Cola (Levitt, 1983).  Both companies originated in the United States, and it was only a matter of time until they would become global (Levitt, 1983). The two major soft-drink suppliers sell standardized products around the globe, which in the opinion of Theodore Levitt leads to a significant change in the way businesses operate (Levitt, 1983). Due to the fact that consumers have common preferences, success can be achieved solely through operating efficiently in production, management and ultimately the focus is set on price, which is the most important variable for any business (Levitt, 1983). The whole idea of Theodore Levitt's globalization is connected closely to Quinn's competing values framework, specifically the open systems model, which is based upon expansion and change (Boddy, 2017, p. 43). Companies that follow the open systems approach have to produce goods and services that will fully meet the expectations of the consumers in order to sustain the level of demand not only on a local level but also on a global scale (Boddy, 2017, p. 58). Levitt also suggested that if prices are lowered and the quality of products is improved, then consumers will definitely prefer standardized products (Levitt, 1983). However, global producers, in Levitt's opinion have to be aware of the fact that in order to attain the economies of scale necessary to take part in competition, they have to sell their products in segments, which are alike (Levitt, 1983). Global firms will be willing to standardize products in order to cut down costs and attract consumers with the lower prices (Levitt, 1983). Furthermore, the standardization of products will lead to a change in preference for customers who purchased local brands, as they will certainly be keen to buy a product at a lower price (Levitt, 1983). Nevertheless, a negative impact of globalization which Theodore Levitt outlines is aggressive low pricing (Levitt, 1983). Firms which will expand internationally, will take small local businesses out of the market as their products will not be in demand due to the anti-competitive behavior of the larger global firms (Levitt, 1983). Lastly, Levitt points out in the article “The Globalization of Markets” that firms that do not become global in their activities will be inferior to those that have and eventually, the profits generated will decrease significantly (Levitt, 1983).

In conclusion, Theodore Levitt can be considered a remarkable management guru, as the two main concepts which he discusses in his publications (globalization and marketing) contributed drastically towards the success of many businesses worldwide.

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