I remember studying one article 'Marketing Myopia' by Theodore Levitt while I was in college. It explained how parochialism on part of the companies or the industries could eventually lead to their destruction. It also talked about industries which defined their business scope narrowly and didn't give a thought to what future could have in store for them. Article gives examples of some industries which went out of business and some others which almost suffered the same fate due to their narrow outlook: take railroad industry which believed it was in railroad business instead of transportation, Hollywood thought it was in movie making business instead of entertainment business and how incandescent lamp replaced kerosene light. Levitt emphasized that companies should be customer oriented rather than product oriented.
Recently I came across one such example though on a much smaller scale i.e. manufacturing of LPG cylinders. There was an article in one newspaper which mentioned as to how the bulky LPG cylinders that we are using now could get replaced by cylinders made of fiberglass and polymer. These cylinders will be non-corrosive and more stylish though there will be no subsidy and they will be more expensive than the regular ones (Regular Cylinders cost The Oil Marketing companies (OMCs) around Rs.1050 but the new ones will cost around Rs.3200). They are planning to import around one lakh cylinders on a trial basis for metros. Secondly, at many places these cylinders have already been replaced by gas pipelines so some business is lost there too. I don't know whether the companies which have been making the conventional cylinders have the technology or the manpower to switch to making this new type of cylinders (I have no idea whether the new cylinders will do well or not) but this development certainly provides a reason to give it a serious thought. One more aspect to this could be the Steel companies which supply steel to these manufacturers. Agreed Steel companies cater to a number of sectors but LPG business is relatively more consistent compared to other sectors accounting for reasonably good sales for them.
However it is too early to jump to any conclusion at this stage but if things go well for the new cylinders then the B-School students could have one more case study to discuss when they study ‘Marketing Myopia’!
Recently I came across one such example though on a much smaller scale i.e. manufacturing of LPG cylinders. There was an article in one newspaper which mentioned as to how the bulky LPG cylinders that we are using now could get replaced by cylinders made of fiberglass and polymer. These cylinders will be non-corrosive and more stylish though there will be no subsidy and they will be more expensive than the regular ones (Regular Cylinders cost The Oil Marketing companies (OMCs) around Rs.1050 but the new ones will cost around Rs.3200). They are planning to import around one lakh cylinders on a trial basis for metros. Secondly, at many places these cylinders have already been replaced by gas pipelines so some business is lost there too. I don't know whether the companies which have been making the conventional cylinders have the technology or the manpower to switch to making this new type of cylinders (I have no idea whether the new cylinders will do well or not) but this development certainly provides a reason to give it a serious thought. One more aspect to this could be the Steel companies which supply steel to these manufacturers. Agreed Steel companies cater to a number of sectors but LPG business is relatively more consistent compared to other sectors accounting for reasonably good sales for them.
However it is too early to jump to any conclusion at this stage but if things go well for the new cylinders then the B-School students could have one more case study to discuss when they study ‘Marketing Myopia’!
Interesting example of LPG, I guess i have heard it somewhere ;-)
ReplyDeleteThe thing with manufacturing industry, especially Steel industry, is that even if they can gather technical knowledge of the new technology or a substitute, it'll be difficult for them to arrange for the machines... And having a separate machine only for LPG segment wont be beneficial...
But ya, something to think abt, for the manufacturing industry... :-) I am sure u will make a difference, if you stay in this industry... :-)