CID: 02350535

MARKETING MANAGEMENT ASSIGNMENT

MYOPIA, MYTH and MINDSET
FRESH CHAIN
Word Count – 2,708

Contents Page
Introduction 1
The Fresh Produce Industry 1
About the Company 1
Management’s Myopia 1
Outcomes of the Myopia 2
What Went Wrong? 2
Marketing Myopia
Differentiation Myth 3
Marketing Mindset 4
Recommendations 5
Limitations 5
Conclusions 6
Introduction
The following report looks at how marketing myopia affected the growth of Fresh Chain, a business-to-
business fresh produce distribution company. It also reviews how the differentiation myth led to a focus
on value-additions that was not appreciated by customers. Thereafter, it evaluates how not having a
marketing mindset was the root cause of these problems. It then presents recommendations on how
the company should re-visit its position to devise a new strategy followed by a review of the limitations
of the analysis presented.

Industry in Context
The Fresh Produce Industry in Pakistan is fragmented with multiple middlemen playing a role across the
value chain starting with volume aggregation, transportation to cities, auctioning, sorting and retailing,
and distribution (Khan, 2021). Most of the players involved have rural backgrounds and are operating as
sole proprietors, often running setups that are non-compliant with taxation and labor laws (Khan &
Khan, 1998). The wholesale market is located outside the city. The auction for vegetables starts at
midnight while the auction for fruits starts at sunrise. Distributors spend the night procuring and
packaging produce. In the morning, they dispatch their orders and go to sleep. The product that reaches
end consumers includes non-standard quality with various sizes, colors, and levels of ripening.
Therefore, most fresh produce sections in supermarkets is inconsistent and sub-standard quality (Daily
Times, 2021).

About the Company

Fresh Chain is a startup that began trading in 2021. The aim was to provide high quality fresh produce to
supermarkets, retail stores, Q and E-commerce platforms, hospitals and restaurants. The idea was to
have an urbanized professional organization that was compliant with local laws and regulations and
provided customers with sorted, cleaned and waxed produce of a standardized nature. A tech stack was
developed to provide customers with an easy ordering experience through the website and mobile app.
The last quarter of 2021 saw several customer acquisitions that resulted from referrals and relationships
tapped into by the leadership. Looking at the initial success and mass market potential a Venture Capital
firm made an investment as well. By 2022, the company had a staff strength of 40.

Management’s Myopia
At Fresh Chain, executives believed an urbanized and legally compliant organization would be attractive
for businesses in the city and they would be happy to deal with professionals that they could relate with.
Because they were selling a commodity that was widely available through multiple sellers, they had
hoped that they could differentiate their offering in two ways. First by providing customers with high
quality produce in packaging that would prolong the life of the produce and thereby command a higher
profit margin.
Second, by offering a self-ordering application which would “revolutionize” the way customers would
place their orders. Ease of use would prevent customers from switching to other suppliers and Fresh
Chain would become their supplier of choice. This meant that the bulk of the time was spent by senior
leadership in developing the technology and perfecting operations and quality control processes.

These were made part of the value proposition pitched to potential customers as can be seen below in
the “why us” section from company profile.
(Fresh Chain , 2022)

In the first 6 months of 2022, Growth Targets were missed by 70%, 50% of newly acquired customers
were lost within a few months, and the customer satisfaction score stood at 60% as opposed to the
target of 90%. More concerningly was that the mobile application adoption rate was 0%.

What went wrong?

Marketing Myopia
Theodore Levitt, a Harvard Business School marketing professor, wrote about Marketing Myopia; a
short-sighted and inward-looking approach to marketing that focused on the companies’ products
rather than the customer's needs and wants (Levitt, 2004). Levitt argued that if businesses did not focus
on creating value for their customers, they ran the risk of being replaced by the competition (Gallo,
2016). Under Armor is a good example which has been in the news for slumping sales that are being
attributed to making product decisions based on instinct rather than consumer analysis (Creswell &
Draper, 2020).
Fresh Chain’s sales pipeline revealed that 72% of leads did not materialize because potential customers
found that prices were too high. Some of the leads quantified that the prices were up to 35% higher
than other suppliers. What came as a rude shock was that when potential customers were educated
about the difference in quality, they made it clear that they were not willing to pay a premium for it.
This meant that the company was catering to a niche market of high-end stores and restaurants while
the mass market was price elastic. The leadership was so narrowly focused on providing customers with
a high-quality product that they completely missed out on what most customers really wanted; that is
the best price.
The leadership saw a gap in the market and began to address it without understanding the needs and
wants of customers. This is what Levitt was arguing for, asking leadership to take a step back and
consider why they were doing what they were doing (Gallo, 2016). In Fresh Chain's case, their obsession
with high quality was not essential for the mass market. Instead, it made them less competitive and
slowed down operations thereby, impacting delivery timelines. Customers had strict delivery time
expectations as shops wanted to start selling early and kitchens had to start preparing meals in the
morning. A reflection of this could be seen in the company’s poor customer satisfaction scores, where
80% of the respondents complained about late deliveries.
By understanding what marketing myopia is and then identifying its near-sightedness, Fresh Chain can
start to broaden its horizon and begin developing an outward-looking approach. Any strategy that arises
thereof is likely to be successful.

Differentiation Myth
There is a common myth that customers only buy a product because it offers something distinctive
(Barwise, 2009). Fresh Chain’s management had bought into the idea that without a unique selling point
they did not have a business. Instead of focusing on the most critical factors, they spent a considerable
amount of time investing in technology to stand out. It was, therefore, worrying that what they were
expecting to be a key differentiator was not adopted by even a single customer because they felt it was
just easier to place the order by sharing their purchase order or in some cases placing the order through
an audio note on WhatsApp.
The VC investor believed that if the product could not be differentiated through the mobile application
and quality then they had made a bad investment in a saturated market with stiff price competition and
low margins. They made it clear that they would not be open to providing any further funding for the
business (Gadit, 2022).
The Leadership of Fresh Chain began to review whether they could compete in the market given that
their differentiation strategy had failed. They believed the market was highly price-sensitive and they
would not be able to compete because customers would switch to whoever offered the lowest price.

Levitt criticized the view that in the face of raging price wars, customers switch to the lowest price
without consideration for other factors. These other factors were often the intangibles attached to a
product. The product itself is a bare minimum requirement to be in business. Levitt called this the
“expected product” (Levitt, 1980). For Fresh Chain’s customers, delivery timing was one such
requirement. Furthermore, customer satisfaction surveys revealed that 56% of respondents expressed
dissatisfaction with incomplete order fulfillment. Because the company had high-quality standards in
certain seasons the quality of produce from the source was not up to the mark and was rejected by the
QC team. In such an event the produce was not delivered to customers. Moreover, 62% expressed
dissatisfaction with poor after-sales service. Operations ran throughout the night and dispatch and
delivery were completed by noon after which the wholesale market would largely run out of stock.
However, customers that needed urgent deliveries were excused and those that had received incorrect
deliveries were provided with a replacement the following day. Because these basic expectations were
not being met customer retention was low.

What they did not realize was that customers are looking for better, not different (Barwise, 2009).
Therefore, Levitt argued that all goods can be differentiated. He stated that in the case of an
undifferentiated product businesses could differentiate their offering in the way they executed their sale
(Levitt, 1980). Take McKinsey for example. Their generic services are not different from those of other
consultancy firms, but it is the way they present themselves and the aura they build of having the best
resources that influences customer decisions (Vermeulen, 2013).
For Fresh Chain, this could include service excellence when it came to delivery timing, same-day
redeliveries and replacements, and ensuring order fulfillment.
Having an appreciation that customers are not always looking for different will allow Fresh Chain to
avoid incurring further sunk costs in pursuit of differentiation as they did with the tech stack.
Furthermore, knowing that even generic products can be differentiated will allow Fresh Chain to avoid
falling into the trap of believing that they must either enter an aggressive price war or develop a
negative outlook towards the business and consider an exit. This will allow them to conduct further
analysis into what areas of differentiation are available.

Marketing Mindset
Marketing should be embedded in the culture of an organization. It is a mindset that must be embraced
by everyone at all levels, and it should guide the strategic direction of the firm in order to create value
(Merlo, 2020). At Fresh Chain, the most critical mistake was not to start with marketing to determine
whether there was a problem that needed to be solved, or a gap that needed to be filled. Furthermore,
a situational assessment of customers and competitors was not carried out. The resultant strategy was
therefore deficient.

When the Sales head was asked why targets were not being met, he blamed Marketing for not putting
together a value proposition that would attract customers. Marketing insisted that they were only
responsible for executing the strategy given to them by leadership at inception and that in any case their
proposals were not taken seriously by other departments. One such proposal was around reviewing
pricing, for which the commercial team was tasked to provide more competitive rates. The commercial
team blamed the procurement team not sourcing in a cost-effective manner. They also made it clear
that they had to provide a price which ensured that margin expectations of management were being
met. The procurement team blamed operations for rejecting and returning produce on quality grounds
which led them to procure more expensive produce and finally the operations team blamed the quality
control team for setting strict standards that were not practical and led to considerable wastage. The
customer support team blamed their performance on the operations team for not being able to fulfil
customer demands.

Levitt had warned that if an organization did not have a united pursuit of maximizing customer
satisfaction, they would end up operating as silos (Harvard Business Review, 2006). In Fresh Chain, while
the differentiation strategy was a failure, it was not embedded within the organization's DNA. This was
evidenced by how every department blamed the other for its failure without realizing that the company
was trying to differentiate through quality and technology.

An important part of the Marketing mindset is an internal focus which is a focus on the internal
customer that is employees. Top management must play a role here and create excitement and
awareness about marketing to get everyone on board as a team. Human Resources should please
employees by linking their targets and rewards to creating customer value (Merlo, 2020).

At Fresh Chain this was not the case. Marketing was not motivated to use their skills to generate and
review the overall strategy. Other departments dealing with customers were aware of where the issues
lay but had no incentive to raise them nor was there a system in place to report these findings back to
management so that the ongoing strategy could be reviewed. Instead, they discussed these issues
among themselves and left it at that.

Had leadership adopted a marketing mindset, to begin with, they would have not fallen into the trap of
marketing myopia, nor would they have believed in the differentiation myth. Furthermore, they would
have set up the organization in a way that interactions with customers and their feedback would have
looped back into an intelligence-gathering mechanism that would have directed future strategy.
Moreover, employees would have been part of generating solutions rather than playing the blame game
among themselves.

Recommendations
Leadership should put aside their initial assessment and go back to the drawing board, starting with
overcoming marketing myopia and asking the core question: what value can be created for the
customer? rather than assuming what they want. This is after all the aim of marketing in the words of
Peter Drucker; “to understand the customer so well that the product or service fits him and sells itself”
(Drucker, 2008). The marketing department should conduct a situational analysis to understand the
external environment using tools such as the 5C’s model, Porters 5 forces and SWOT. These will provide
them with a greater depth of understanding regarding the customer’s needs and wants, who is fulfilling
these currently and any gaps which provide opportunities for differentiation. Building on these, they can
present proposals on market segmentation, positioning and the marketing mix.

What will be most important is that this exercise becomes an ongoing assessment based on generating
and disseminating intelligence. The entire organization should be involved in the process and their input
should be sought for the future strategy. Furthermore, the leadership should task human resources to
align employee incentives across the organization with customer value creation. Once a strategy is
executed, engagement should be created to align everyone toward it. This can be done by holding a
town hall for the employees, putting up printed material around the workplace highlighting key
features, sending an official email to everyone, and having periodic interdepartmental meetings to
discuss and review the strategy. These steps will help embed a marketing mindset within the
organization.

Limitations
While marketing myopia is important to keep in mind the risks of not paying attention to customer
needs it has been criticized for placing too much belief in customers who can be hard to predict and
short-sighted (Smith, et al., 2010). This is especially the case for technological adoptions. While
customers are not currently adopting the mobile app they may if they were incentivized and may
eventually become accustomed to it. In other words, sometimes people don’t know what they want and
pushing against the tide can work.

Furthermore, Levitt argues that everything can be differentiated and there is no such thing as a
saturated market and customers do not make decisions solely based on pricing (Levitt, 1980). While
these points may be true, they disregard the fact that in a saturated industry, despite differentiating
with better execution, the pricing must be competitive. Hence, a business will not be able to command a
margin and would have to operate on lower margins which may not be attractive for investors. This is
another issue with marketing myopia that it is narrowly focused on customers and not considering other
stakeholders (Smith, et al., 2010).

Moreover, it is not the same to differentiate by being better and having a unique selling point.
Differentiation by being better can be copied by competitors easily and this tends to happen when
customers start pointing out to their suppliers that another supplier is performing better.
Conclusion
This report has seen how marketing myopia affected Fresh Chain by focusing on quality over pricing. It
followed by reviewing how the differentiation myth led to a focus on value additions such as a self-
ordering mobile application which was not adopted by customers. Then, it looks at the criticality of
having a marketing mindset. Furthermore, it provides recommendations on what steps the company
should take next to re-evaluate their strategy, such as conducting a situational analysis, and embed a
marketing mindset in the organization. Finally, it evaluates some of the limitations of the key concepts
discussed.

References
Barwise, P., 2009. Differentiation that matters. Market Leader, 1 March.pp. 19-21.

Creswell, J. & Draper, K., 2020. How Under Armour Lost Its Edge. [Online]
Available at: https://www.nytimes.com/2020/01/26/business/under-armour-struggles.html
[Accessed 3 December 2022].

Daily Times, 2021. Pakistan needs a systematic approach to combat poor food quality, experts. [Online]
Available at: https://dailytimes.com.pk/779607/pakistan-needs-a-systematic-approach-to-combat-poor-
food-quality-experts/
[Accessed 30 November 2022].

Drucker, P. F., 2008. The Essential Ducker: The Best of Sixty Years of Peter Drucker's Essential Writings on
Management. 1st ed. s.l.:HarperCollins Publishers, Inc..

Fresh Chain , 2022. Company Profile. Karachi: s.n.

Gadit, R., 2022. [Interview] (2 July 2022).

Gallo, A., 2016. A Refresher on Marketing Myopia. [Online]

Available at: https://hbr.org/2016/08/a-refresher-on-marketing-myopia
[Accessed 30 November 2022].

Harvard Business Review, 2006. What Business Are You In?: Classic Advice from Theodore Levitt. [Online]
Available at: https://hbr.org/2006/10/what-business-are-you-in-classic-advice-from-theodore-levitt
[Accessed 30 November 2022].

Khan, M., 2021. Pakistani startup Tazah raises $2m in pre-seed funding. [Online]
Available at: https://www.dawn.com/news/1650462
[Accessed 29 November 2022].

Khan, M. H. & Khan, M. S., 1998. Taxing Agriculture in Pakistan. [Online]

Available at: https://www.imf.org/external/pubs/ft/ppaa/ppaa9803.pdf
[Accessed 30 November 2022].

Levitt, T., 1980. Marketing Success Through Differentiation—of Anything. Harvard Business Review,
January-February.
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Merlo, O., 2020. Strategic Marketing. London: Amazon.

Moti, N. Z., 2017. A look inside Karachi’s wholesale vegetable market. [Online]
Available at: https://herald.dawn.com/news/1153919/a-look-inside-karachis-wholesale-vegetable-
market
[Accessed 30 November 2022].

Smith, C. N., Drumwright, E. M. & Gentile, C. M., 2010. The New Marketing Myopia. Journal of Public
Policy & Marketing, 29(1), pp. 4-11.

Steenburgh, T. & Avery, J., 2010. Marketing Analysis Toolkit: Situation Analysis. Harvard Business
Review, 4 February.

Vermeulen, F., 2013. You Can Win Without Differentiation. [Online]

Available at: https://hbr.org/2013/10/you-can-win-without-differentiation
[Accessed 3 December 2022].

Bibliography
Barwise, P., 2009. Differentiation that matters. Market Leader, 1 March.pp. 19-21.

Creswell, J. & Draper, K., 2020. How Under Armour Lost Its Edge. [Online]
Available at: https://www.nytimes.com/2020/01/26/business/under-armour-struggles.html
[Accessed 3 December 2022].

Daily Times, 2021. Pakistan needs a systematic approach to combat poor food quality, experts. [Online]
Available at: https://dailytimes.com.pk/779607/pakistan-needs-a-systematic-approach-to-combat-poor-
food-quality-experts/
[Accessed 30 November 2022].

Drucker, P. F., 2008. The Essential Ducker: The Best of Sixty Years of Peter Drucker's Essential Writings on
Management. 1st ed. s.l.:HarperCollins Publishers, Inc..

Fresh Chain , 2022. Company Profile. Karachi: s.n.

Gadit, R., 2022. [Interview] (2 July 2022).

Gallo, A., 2016. A Refresher on Marketing Myopia. [Online]

Available at: https://hbr.org/2016/08/a-refresher-on-marketing-myopia
[Accessed 30 November 2022].

Harvard Business Review, 2006. What Business Are You In?: Classic Advice from Theodore Levitt. [Online]
Available at: https://hbr.org/2006/10/what-business-are-you-in-classic-advice-from-theodore-levitt
[Accessed 30 November 2022].
Khan, M., 2021. Pakistani startup Tazah raises $2m in pre-seed funding. [Online]
Available at: https://www.dawn.com/news/1650462
[Accessed 29 November 2022].

Khan, M. H. & Khan, M. S., 1998. Taxing Agriculture in Pakistan. [Online]

Available at: https://www.imf.org/external/pubs/ft/ppaa/ppaa9803.pdf
[Accessed 30 November 2022].

Levitt, T., 1980. Marketing Success Through Differentiation—of Anything. Harvard Business Review,
January-February.

Levitt, T., 2004. Marketing Myopia. Harvard Business Review, July-August.

Merlo, O., 2020. Strategic Marketing. London: Amazon.

Moti, N. Z., 2017. A look inside Karachi’s wholesale vegetable market. [Online]
Available at: https://herald.dawn.com/news/1153919/a-look-inside-karachis-wholesale-vegetable-
market
[Accessed 30 November 2022].

Smith, C. N., Drumwright, E. M. & Gentile, C. M., 2010. The New Marketing Myopia. Journal of Public
Policy & Marketing, 29(1), pp. 4-11.

Steenburgh, T. & Avery, J., 2010. Marketing Analysis Toolkit: Situation Analysis. Harvard Business
Review, 4 February.

Vermeulen, F., 2013. You Can Win Without Differentiation. [Online]

Available at: https://hbr.org/2013/10/you-can-win-without-differentiation
[Accessed 3 December 2022].