Thursday, June 23, 2011

Marketing Myopia on Ice

1960, Theodore Levitt’s “Marketing Myopia” was published in the Harvard Business Review.  It became an instant classic by reminding leaders to focus on the customer instead of the product.  

This challenged CEOs to properly define their business: Railroads should have discovered they were in the transportation, not railroad, business.  When TV appeared, Hollywood should have found itself in the entertainment, not movie, business.  And oil companies should have defined themselves as being in the energy, not oil, business.  (Except for those that went into the nuclear energy business, and then they should have stayed in the gold old oil business.  Every concept has its limits.)

Anyway, that was in 1960, a long time ago.

The other day I stumbled upon a November 1928 (even longer time ago) letter from George B. Bright of George B. Bright Co., Refrigerating Engineers and Architects, of Detroit.  Bright found himself uncomfortably straddling two sides of a great divide, with his old ice manufacturers on one precipice, and the new mechanical refrigeration guys on the other.

In 1928, ice was clearly on the backside of its lifecyle.  An important growth industry for a generation, there had been 35 commercial ice plants in America in 1879 and 2,000 by 1909, while ice consumption tripled to almost 15 million tons annually.  Clever men like Frederic Tudor made a career of sawing pond ice and delivering it mostly intact to faraway places.  The ice wagon became a familiar sight on city streets, the “Ice Today” sign in windows.  Every home had a wooden icebox, and a water pan that had to be emptied daily.

Then, out of the slaughterhouses and breweries came a singularly disruptive consumer technology, mechanical refrigeration.  Ice wagons became a thing of the past and the Ice Man didn’t cometh.  In the 1920s, the household refrigerator became an essential piece of kitchen furniture: In 1921, 5,000 mechanical refrigerators were manufactured in the US; in 1931, over one million, and six years later, six million.

That’s the impossible situation where George B. Bright, refrigeration engineer,  found himself in 1928.  And, in the interest of preserving the peace and cultivating all of his clients, he wrote them a letter:
Things have been and are moving fast in the entire refrigerating field.  Three years ago we saw the ice industry ‘run down at the heels’ while its new competitor the mechanical refrigerator was in the first flush of exultant prosperity.  The old established order of things seemed doomed and the extremes of optimism and pessimism were on every hand. . . 
Today much of the chaff of competition has blown away and tho there is a never-ending group of newly hopefuls entering the mechanically cooled refrigerator field---those most firmly entrenched have settled down to a steadier gait, both as to production, advertising, and ethics.  Much good has already come out of it all.  The mechanical group has learned a healthier respect and a certain tolerance for the older order of things while he in the ice industry on the other hand is learning to become a business man—a merchant if you will—finding curiously enough that there is room enough for everybody and that the other fellows advertising is doing more good than harm. . . .

Now comes the line that Ted Levitt might have referenced, but 32 years later: “On every hand is a growing appreciation of the fact that what we all have to sell is ‘Refrigeration’ and not Ice as a commodity nor even a machine as such.”

Cool, eh?  George Bright, refrigeration engineer from Detroit--when Ted Levitt was just three years old--already had it right.  Nah, he didn’t say it like some high-falutin academic.   But he understood a central truth of Marketing in a crazy time of rapid change: His old clients weren’t in the ice business.  And his new ones certainly weren’t in the mechanical refrigerator business.  

What they were selling to consumers was refrigeration.

Bright seems to have been successful in his chosen field, and with that kind of calming wisdom, you might understand why.  He could well have closed his letter with the Eskimo proverb which says, “You never really know your friends from your enemies until the ice breaks.”

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