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Theodore (Ted) Levitt, The Marketing Imagination (1983)

Theodore (Ted) Levitt


American Harvard Business School professor (pictured right), world authority on marketing and creator of the term globalization.


See also...

Theodore (Ted) Levitt in the Management Gurus section. 


Book summary


A collection of Levitt’s best articles...

They are largely from the Harvard Business Review.

They contain key insights into how to achieve business success through:

  • customer satisfaction.
  • innovation.

 Theodore (Ted) Levitt, The Marketing Imagination (1983)

Marketing and the Corporate Purpose

Levitt says:

“The purpose of a business is to create and keep a customer”. 

To do this and make a profit you must sell products that people want.

Profit shouldn’t be the business purpose because it:

  • isn’t the real cause of business success (customers are).
  • is “morally shallow” and so uninspiring for employees – people will get much more excited about customers.


“If no greater purpose can be discerned, business cannot morally justify its existence”, Levitt comments about profit.Theodore (Ted) Levitt, The Marketing Imagination (1983)

Corporate strategy must always be:

  • customer driven.
  • clear and concise (so that employees can understand it).


The Globalization of Markets

Technology has created “global markets for globally standardized products” leading to:

  • the global corporation (like McDonald’s and Coca-Cola) which “sells the same things in the same way everywhere”.Theodore (Ted) Levitt, The Marketing Imagination (1983)
  • global competition (over price and quality).
  • huge cost savings (and lower prices) from global economies of scale in production, distribution, marketing and management.

But globalization doesn’t mean disregarding local or national differences.


Theodore (Ted) Levitt, The Marketing Imagination (1983)Differentiation - of everything

Any product can be differentiated by providing customers certain benefits:

  • tangible (e.g. the actual product).
  • intangible (e.g. service, brand image and customer relationships – see below).

So products must be seen as “providing customer creating value satisfactions” which have four different parts (making up the “total product concept”,pictured right below):


1. Generic product

(the basic product e.g. steel for a steel producer).

 Theodore (Ted) Levitt, The Marketing Imagination (1983)

2. Expected product

The customer’s “minimal expectations”, including the generic product.


3. Augmented product 

Giving a customer

“what he thinks he needs or has become accustomed to expect”.


4. Potential product

Possible ways of attracting and keeping customers.


Relationship management

Customer relationships are like a marriage and require:

  • mutually beneficial exchange.Theodore (Ted) Levitt, The Marketing Imagination (1983)
  • empathy and great customer service.
  • awareness and assessment of problems.
  • accountability (regular reporting on customer relationships and checking against performance standards).
  • actions (decisions focused on improving customer relationships).

“A company’s most precious asset is its relationships with its customers”, says Levitt.


The marketing imagination

This is the foundation of organizational purpose and successful marketing, because imaginative marketing is required to find out:Theodore (Ted) Levitt, The Marketing Imagination (1983)

  • customers’ problems.
  • new and better solutions for them.

Don’t confuse:

  • imitation and...
  • innovation.


Marketing myopia

Don’t define your business too narrowly because this restricts your:Theodore (Ted) Levitt, The Marketing Imagination (1983)

  • market opportunities.
  • awareness of key competitors (e.g. an airline has competition from other transport providers)  

Examples of a broad business definition

  • oil companies - business is energy not oil
  • railroads - business is transport not rail, so facing competition from other forms of transport like cars and planes.
  • Hollywood - business is entertainment not films, so making TV a competitor.

A company must think of itself as:

  • “buying customers” so that...
  • “people want to do business with it”. Theodore (Ted) Levitt, The Marketing Imagination (1983)

Success is never guaranteed and all products are threatened by the “shadow of obsolescence”.


Key quote on customers and products

People don’t buy things but buy solutions to problems.


Key quote on business success

The organization must learn to think of itself not as producing goods or services but as buying customers as doing the things that make people want to do business with it.


Key quote on selling and customers

The sale merely consummates the courtship. Then the marriage begins. How good the marriage is depends on how well the relationship is managed by the seller.


Key quotes on objectives and vision

Good work in pursuit of wrong purposes is more damaging than bad work in pursuit of right purposes.

The purpose of a business is to create and keep a customer.


Key quote on finance and accounting

A company’s most precious asset is its relationships with its customers.


Key quote on buyer behaviour

Expectations are what people buy, not things.


Key quote on change

Nothing drives progress like the imagination.

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