It has been more than two years since I last wrote a marketing strategy post – Nigeria-telecoms-companies-and-marketing. The post generated a lot of reviews and was even a subject of a senior level strategy revamp in a major telecoms company in Nigeria. In this post, I will be making a case for a paradigm shift in the way we approach business/marketing strategy formulation.
First, a bit of background. The concept of marketing myopia was first postulated by Theodore Levitt of Harvard in his landmark 1960 HBR article titled Marketing Myopia. In the article, Levitt asked the now famous question, “What business are you really in?” According to Levitt, failure to answer this question correctly always leads to business failure. And he gave the example of the American railroad:
“The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because that need was filled by others (cars, trucks, airplanes, and even telephones) but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry incorrectly was that they were railroad oriented instead of transportation oriented; they were product oriented instead of customer oriented”
That is the main thrust of Levitt’s argument: businesses will do better in the end if they concentrate on meeting customers’ needs rather than on selling products.
All industries are dynamic. The truth is, every industry was once a growth industry and the ones that are currently riding a wave of growth enthusiasm are likely already in the shadow of growth decline or will soon be.
Let us look at the practical implication of this paradigm shift in selected Nigeria industries:
On the surface, MTN, Etisalat, Airtel, Globacom are all in the telephone business. But in reality, nothing could be more erroneous than this. If these companies are to properly answer the question “what business are we in?”, they will agree that they are in the business of enabling communication between people. The success of any of these companies depends on realizing this. Five years ago, SMS used to cost 15 Naira. Today, the average cost of SMS is 4 Naira. But the real issue is not even in the declining revenue accruing to telecoms companies from SMS, the real issue is that in the next couple of years, SMS revenue will be zero! The reason for this is not farfetched, why should I pay for SMS when I can send the same message (and actually a lot more with multimedia) via Whatsapp, Snapchat, Facebook chat etc.
Even the traditional cash cow for these companies, voice, is not insulated. Skype and Whatsapp calls are free. In fact, I now make more calls on Skype and Whatsapp than on the traditional phone. While it is true that I am not currently a representation of an average Nigerian, it will not be naive to project that as smartphones and data become cheaper, more people will embrace internet calls; with the implication that average spend by the subscriber will keep falling.
A classic example of a company that fails to properly define its business is Nigeria Postal Service, NIPOST. NIPOST apparently thinks it’s in the letter distribution business. Wrong. (Of course, the problems of NIPOST are a legion: package disappearance, undertrained and unmotivated employees, analog operation etc). The single most significant factor responsible for NIPOST’s withering is its failure to correctly define its business.
Were NIPOST management more strategic, they would have understood that they are in the logistics business. This simple paradigm shift would have changed the story of NIPOST. Okay, what do I mean?
While it is true that the advent of email and texting have eroded the volume of the physical letter, the overlooked fact is that the same internet has dramatically increased the number of package deliveries, ala Jumia, Konga, Rytedeals, and co. The extensive postal infrastructure NIPOST has all over Nigeria gives it a huge competitive advantage in package delivery. Thus putting cost and geographic spread into consideration, it would have made a lot more business sense for these e-commerce companies to work with NIPOST (every other thing being equal of course).
***This post was first published a couple of years ago. With the content still very relevant and poignant today in Nigeria, we decided to bring it up again.