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11: Global Marketing Management: PLANNING AND ORGANIZATION
CHAPTER OUTLINE
Global Perspective: GLOBAL GATEWAYS
With their domestic market crowded with competitors, Yahoo!, Lycos, America Online (AOL), and others are rushing to establish their brands in Europe, Asia, and Latin America before local competitors can create dominant franchises of their own.
Recently, Lycos Europe, a joint venture between Lycos Inc. and Germany’s Bertelsmann AG, had its initial public offering on Germany’s Neuer Markt. Many more such offerings are expected, because U.S. Web executives and investors believe that the Internet will continue to grow faster abroad than at home. The U.S. share of Internet users fell from 42 percent in 1997 to 15 percent in 2008.
The battle has been hottest in Europe among the portals that serve as starting points for Web surfers looking for news, shopping, and search services. Yahoo! and Lycos each operates about two dozen foreign portals, most with native-language news, shopping links, and other content custom tailored to the local population. Lycos’s German site features tips on brewing beer at home and a program for calculating auto speeding fines. Yahoo!’s Singapore site offers real-time information on haze and smog in Southeast Asia. AOL has about a dozen international ventures, and Excite, the portal arm of At Home Corporation, has nine international partners.
The top U.S. players face tough homegrown competitors, who often have a better sense of local culture and Internet styles. In many countries, the dominant telephone companies offer portals, giving them a big leg up because customers are automatically sent to their home pages when they log on. Germany’s leading portal, T-Online, is run by Deutsche Telekom. In France, No. 1 Wanadoo is operated by France Telecom.
The U.S. portals risk being viewed as digital colonists trying to flex their muscles around the world, according to industry analysts. Many advise that American companies hoping to set up shop abroad are better served by forming partnerships with local outfits that understand the culture.
Sources: Jon G. Auerbach, Bernard Wysocki Jr., and Neal E. Boudette, “For U.S. Internet Portals, the Next Big Battleground Is Overseas,” The Wall Street Journal, March 23, 2000, p. B1; Daekwan Kim, “The Internationalization of U.S. Portals: Does It Fit the Model of Internationalization?” Marketing Intelligence & Planning 21, no. 1 (2003), pp. 23–36; Euromonitor 2008.
Confronted with increasing global competition for expanding markets, multinational companies are changing their marketing strategies and altering their organizational structures. Their goals are to enhance their competitiveness and to ensure proper positioning to capitalize on opportunities in the global marketplace. Comprehensive decisions must be made regarding key strategic choices, such as standardization versus adaptation, concentration versus dispersion, and integration versus independence.1 Particularly as national .
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1. 1
Levitt, T. (1960). Marketing Myopia. Harvard Business Review
Article Critique by
Osayi Ikponmwosa-Eweka
2. 2
Why do companies fail to evolve and adapt their products and services to meet the constantly
changing customer needs? In the article "Marketing Myopia," Theodore Levitt analyzed several
mistakes senior managers in companies have made and why companies fail to evolve to meet
changing consumer needs. This writer will use marketing frameworks to evaluate if the issues
below, which Levitt raised over 60 years ago, remain relevant in contemporary times.
• Some companies fail to identify and define their industry because they fail to create a
clear purpose and vision. This mistake makes them narrow-minded and product-centric,
believing their products will appeal to a growing population with increasing disposable
income. Levitt termed this "Error Analysis." (Levitt, 1960 p. 3, p. 4 -5).
• Some companies with great products believe there is no substitute for their product or
service, and they forget that having a great product is no guarantee against product
obsolescence (Product Life Cycle). They incrementally iterate cash cow products while
failing to listen to customers nor meet the changing needs. Levitt termed this the "Self-
Deceiving Cycle." (Levitt, 1960 p. 4, p. 7- 9).
• Reducing costs to increase production and efficiency at the expense of marketing leads
to company failure. Levitt termed this "Production Pressure." (Levitt, 1960 p. 4, p. 8 - 11).
Defining a company's mission and vision sets a clear purpose for the company, enabling it to
determine its industry. Marvel Comics, established as a publishing house in 1939 competing
against D.C. Comics, was able to evolve into Marvel Cinematic Universe, an entertainment
company because of the vision "A vision as far as our stories can go." This vision allowed Marvel's
senior managers to quickly realize that they were in the entertainment industry, not the
publishing industry. The power of that vision pulled the company out of bankruptcy in 1996 to
3. 3
become a 26.6 billion USD grossing company, of which 11.13 billion USD was in the U.S.,
generating the most lucrative franchise (click to see Appendix I) in the movie industry to date
(Buchholz, 2022).
Customer-centric companies can quickly identify customer needs and develop relevant products.
In 1997, Netflix was a company that mailed entertainment rental DVDs to customers' homes. By
2013 Netflix was spending more than 500 million USD on postage annually. By 2007, as internet
video streaming became popular, Netflix launched a streaming service as an alternative to
changing customer viewing habits. Today Netflix provides culturally relevant global streaming
services to over 220 million subscribers (click for Appendix II) and annual revenue of 26.7 billion
USD in 2021 (Stoll, 2022). By being a customer-centric home entertainment company, Netflix
saved on costs and scaled globally. The company is now focusing on providing online gaming in
addition to movies in response to the changing global demographics and customer interests.
Improving production efficiency for a high-demand product will reduce cost, scale growth, and
increase sales. Increased production typically focuses on selling while product obsolescence
management diminishes. "It usually means that production fails to adapt to the constantly
changing patterns of consumer needs and tastes, to new modified marketing institutions and
practices or to product developments in competing or complementary industries." (Levitt, 1960,
p.8). Marketers use Product Life Cycle planning to plan product obsolescence, drive innovation
and collaborate with research and development teams.
The Sony Walkman's 1979 launch changed consumer behaviour dominating the personal music
consumption market for about three decades (Richter, 2022). Solid sales and growth influenced
4. 4
the inclusion and definition of "Walkman" in the Oxford English Dictionary. As managers at Sony
focused on sales, it seemed they ignored the marginal growth in sales, only occurring
incrementally at the new product iteration launch (market maturity). Apple iPod, which
integrated personalized music preferences with an online music library based on consumer
preferences and online real-time streaming, ultimately ousted the iconic Sony Walkman (click the
link to see Appendix III).
In conclusion, Levitt's issues remain relevant for businesses to succeed today. Today's evolution
of the business landscape partially challenges how Levitt promotes silo thinking and international
cultural context. Iacobucci (2018, p. 4) Has explained that senior managers are responsible for
ensuring that all heads of departments within the organization work collaboratively to attain
success.
• Companies should clearly define their purpose and the industry in which they operate.
• Companies must be customer focused, not product-focused.
• As companies scale, focusing on product availability and sales, they must not do so at the
expense of marketing and marketing research or new product development.
One may agree that the marketing myopia concept can cause businesses today to fail—the article
'Marketing Myopia' remains relevant by focusing on consumer needs. By utilizing new
communication channels to engage customers, companies may adapt to the changing market
landscape funnelling salient marketing feedback into the company's innovation pipeline. As Levitt
(1960) explained, only companies organized and operated to create and capitalize on growth
opportunities may not descend into stagnation.
5. 5
References
Buchholz, K. (October 5, 2022). The Biggest Movie Franchises at the U.S. Box Office [Digital
image]. Retrieved October 13, 2022, from https://www-statista-
com.proxy.hil.unb.ca/chart/10220/us-domestic-box-office-revenue-by-movie-franchise/
Harrison, S., Carlsen, A., & Škerlavaj, M. (2019, July). Marvel's Blockbuster Machine; How the
studio balances continuity and renewal. hbr.org. https://hbr.org/2019/07/marvels-
blockbuster-machine
Iacobucci, D. (2018). Marketing Management (5th ed.). Cengage.
Ipsos. (September 20, 2017). Public preference between Marvel movies and D.C. Comics movies
in the United States as of August 2017 [Graph]. In Statista. Retrieved October 13, 2022,
from https://www-statista-com.proxy.hil.unb.ca/statistics/754142/marvel-dc-movie-
preference/
Laura, O. (2016). Netflix and the Development of the Internet Television Network.
https://surface.syr.edu/cgi/viewcontent.cgi?article=1448&context=etd
Levitt, T. (1960). Marketing myopia. Harvard Business Review, 38(4), 45-56.
McSweeney, T. (2018, March 27). Avengers Assemble!: Critical Perspectives on the Marvel
Cinematic Universe. Wallflower Press.
Moscoso, P., Lago, A., & Boquet, I. S. (2021, February 7). Netflix: From DVD-by-Mail to
Streaming. hbr.org. https://store.hbr.org/product/netflix-from-dvd-by-mail-to-
streaming/IES822
6. 6
Ratazzi, P. (n.d.). An Analysis of Sony's Decade-Long Quest for Success. Research Gate.
https://www.researchgate.net/publication/242507825_An_Analysis_of_Sony’s_Decade-
Long_Quest_for_Success
Richter, F. (2022). The History of Portable Music. Statista.
https://www.statista.com/chart/18555/portable-music-milestones/
Strategy, Context, and the Decline of Sony. (2014, July 23). Harvard Business Review. Retrieved
October 10, 2022, from https://hbr.org/2012/04/strategy-context-and-the-decli
Stoll, J. (2022). Netflix - statistics & facts. Statista.
https://www.statista.com/topics/842/netflix/#topicHeader__wrapper
the-numbers.com. (June 22, 2022). Highest-grossing movie franchises and series worldwide as
of June 2022 (in billion U.S. dollars) [Graph]. In Statista. Retrieved October 13, 2022,
from https://www-statista-com.proxy.hil.unb.ca/statistics/317408/highest-grossing-
film-franchises-series/
7. 7
Appendix I – Highest-grossing movie franchises and series worldwide as of June 2022
Source: The-numbers.com. (2022). Highest-grossing movie franchises
Description
Marvel Cinematic Universe series was the highest-grossing franchise globally with 26.6 billion
USD, with "Avengers: Endgame" (2019) being its highest-grossing movie, at 2.8 billion USD in
global revenue.
8. 8
Appendix II - Countries with Most Content Available on Netflix Worldwide as of April 2022
Source: Stoll, J. (2022). Netflix - statistics & facts. Statista.
Description: This table underscores the relevance of cultural context in business, with Netflix's top 10 consumers being international
countries in Europe, Singapore and the Philippines.
7,436
7,162
6,938 6,932 6,925 6,886
6,710
6,546 6,431 6,427 6,299 6,273 6,156 6,025 5,921 5,917 5,880 5,873 5,838 5,831
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Number
of
movies
and
TV
shows
combined
9. 9
Appendix III – The History of Portable Music
Source: Stoll, J. (2022). Netflix - statistics & facts. Statista.