By Cyril Chen、Chelsea Jia
26 March 2018

Theodore Levitt (1925-2006) of the Harvard Business School wrote an article in 1960 entitled ‘Marketing Myopia,’ where he argued that is short-sighted for a business to focus on selling. Selling is concerned with ‘techniques of getting people to exchange their cash for your product.’ A business needs to focus on the whole market, in a broad perspective where the needs of the buyer are prominent. Marketing stresses ‘satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering and finally consuming it.’

Half a century later. Professor John Deighton of the Harvard Business School commented on Levitt’s article:

The genius of the original article is that it is so easy to be myopic when it comes to marketing… Unfortunately, the clock never stops long enough to answer the question, ‘Why are you doing what you are doing?’…it’s far too easy to lose sight of the big picture.¹

‘Marketing Myopia’ has been republished several times and 850,000 reprints have been sold. It has been the Harvard Business Review’s best-selling articles ever. Its consumer-centred argument is undiminished.

Does marketing myopia hold any cues for Australian companies in doing business with China? Cyril Chen and Chelsea Jia in their blog of 26 March 2018 take up Levitt’s question that any manager must be able to answer: ‘What business are you in?’ Levitt wrote, “The railroads let others take customers away from them because they assumed themselves to be in the railroad business instead of the transportation business.’ He argued that management must think of itself not as producing products but as discovering and satisfying consumer needs. Cyril Chen and Chelsea Jia point to companies in China which have met market needs, but have kept transforming and innovating: Baidu, Alibaba and Tencent and have succeeded because they have followed customer-oriented marketing policies.

A joint study by scholars in the United States and China² compares Chinese users’ views of Google and Baidu search engines, to see how country, industry and firm contexts relate to brand performance. The article finds that the source country affects the way a particular industry is viewed, and then users tend to focus on the particular firm in terms of satisfaction, loyalty and perceived success, assessing a firm’s resources and its ability to back a product. Google is a global brand, the sophisticated with quality services, and it performs well in China. Yet Baidu has the most comprehensive Chinese search engine and has a special capacity to understand the demands of Chinese users; it is proactive in following Government regulations and creating a positive environment for its business success.

In the early 2000s, Chinese consumers preferred to pay in cash and negotiate face-to-face. Reputation is still extremely important in China. What Alibaba has done is to create models of trust in the buyer-seller relationship and the buyer-platform relationship, with two-way instant communication available on the platform. Alibaba’s Taobao online shopping site with its Alipay system ‘dramatically changed the business paradigm from a seller-dominant to a buyer-oriented model’ where buyer satisfaction is guaranteed, or money is refunded. In 2014 Alibaba launched Tmall Global for overseas purchases.³

WeChat (Weixin in Chinese), launched in 2011 by Tencent, offers multiple services to individuals and organizations, including communication services via text messages and voices as well as social networking services (SNS). By the first quarter of 2017, the number of monthly active WeChat users had reached 938 million. A survey of 297 young WeChat users in China showed that media appeal has the greatest effect on the intention to continue to use WeChat, followed by perceived enjoyment, then information sharing.4

Baidu, Alibaba and Tencent are not the whole Chinese market, but their success tends to justify Levitt’s argument that understanding consumer needs and wants is critical to market success. These three innovative entrepreneurial giants in the digital economy have prospered in China in recent years. They hold out promise for Australian business people who want to market their services in China.

1Professor John Deighton in an interview with Paul Garbett in the Harvard Business Review, 22 August 2016.

2Deli Yang, Mahmut (Maho) Sonmez, Qinghai Li & Yibing Duan (2015) The power of triple contexts on customer-based brand performance: A comparative study of Baidu and Google from Chinese netizens’ perspective. International Business Review 24, pages 11–22.

3Jonyoung Kwak, Yue Zhang & Jiang Yu (2018) Legitimacy building and e-commerce development in China: The experience of Alibaba. Technical Forecasting & Social Change (article in press).

4Chunmei Gan & Hongxiu Li (2018) Understanding the effects of gratifications on the continuance intention to use WeChat in China: A perspective on uses and gratifications. Computers in Human Behaviour 78 (2018), pages 306-315.