Marketing Myopia - Theodore Levitt

By Javier Sastre Martin, Sastre & Asociados. Business administration Consultants

DOES THE CERAMIC TILE MANUFACTURING INDUSTRY SUFFER FROM MARKETING MYOPIA?

MARKETING MYOPIA?

a review of the ideas of Theodore Levitt

a review of the ideas of Theodore Levitt The following paper was delivered at the Qualicer World Congress held in Spain, March 2004.

ABSTRACT One of the most famous articles of all time on business management is the article entitled “Marketing Myopia”, which could translate into Spanish as “Miopia en marketing”. Theodore Levitt wrote this in the 1960s and the paper’s fame is due to the stir that it caused in the business and academic world at that time. This article, which deals with the lack of vision by executives and the mistaken assumptions and beliefs that take hold widely in industry, has had such an influence that it is still quite commonly found in today’s textbooks on marketing or business administration. In fact, it is still studied at the most prestigious business schools. Theodore Levitt is currently professor emeritus of the Harvard Business School (Massachusetts, U.S.A.) and is one of the most respected authorities on business administration and marketing. In this communication we shall review the basic ideas that Levitt set out in his paper, with a view to ascertaining whether today, in the Spanish ceramic tile industry, managers could be guilty to some extent of those erroneous assumptions or nearsightedness. Based on this, we shall then attempt to draw some constructive conclusions in these times of change for the sector.

1. GROWTH INDUSTRIES In his classic article, Levitt observes that all the major industries (automobile, railroad, oil, etc.) were at some time considered growth industries. Unfortunately, many of these found themselves almost suddenly in a situation of stagnation, if not decline. What do we mean by a growth industry? To put it simply, we can say that an industry is a growth industry when it has continuous double digit annual growth rates. That is to say, rates of 10 per cent or higher. The Spanish ceramic tile manufacturing industry is, of course, an important industry because of its dynamism, its export vocation, its relative global importance, etc. Can the Spanish tile manufacturing industry be considered a growth industry? It obviously was in the 1990s, when according to data from ASCER, average tile production grew by over 16 per cent annually between 1990 and 2001. However, perhaps it would be advisable instead to focus on the most recent data, set out in the following table, to establish whether this is still the case.

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Spain

1997

1998

1999

2000

2001

2002

Annual production growth

14.4%

16.3%

6.7%

3.2%

2.7%

2.0%

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In view of the parameter established at the outset (double digit annual growth), the Spanish ceramic industry is clearly no longer an industry with a growing production. And note that this is despite the fact that the Spanish tile industry “has caught up with” the Italian tile manufacturing industry, the Spanish industry’s reference point par excellence. However, the Italian industry has also for quite some time ceased to be a growth industry (see table below). Italy

1997

1998

1999

2000

2001

2002

Annual production growth

3.2%

2.9%

2.9%

4.2%

1.0%

-5.2%

This has happened in a context in which, on a global scale, world tile production growth has remained approximately stable (see table below). The table shows that the Spanish ceramic tile industry’s share in world tile production has fallen since 2000, as Spanish tile production has grown less than that of world tile production. In addition, the average growth of some of the more important emerging tile producing countries has been much higher, as the following table shows (average annual growth between 1996 and 2002). World

1997

1998

1999

2000

2001

2002

Annual production growth

4.0%

6.7%

4.6%

4.1%

5.4%

6.1%

These figures should logically be accompanied by production value, but although these values are unavailable, they may certainly be considered significant. Could the Spanish tile industry be entering a situation of sudden downturn, as Levitt indicates occurred in other important industries? How could we determine this?

Countries

Production growth (annual average)

Production 2002 (thousands of m2)

Vietnam

63.1%

97.184

Poland

20.4%

53.608

Egypt

19.5%

73.159

Czech Republic

15.6%

47.697

Iran

13.6%

107.507

India

12.4%

137.262

Mexico

11.4%

150.520

China

7.7%

2.240.000

Spain

7.3%

651.000

Italy

1.1%

605.500

2. THE FAILURE OF THE MANAGERS In the first place, Levitt tells us that in fact, in a broad sense, growth industries do not exist. What you have are individual companies organized and directed to create and take advantage of growth opportunities that appear in their markets. And what happens is that sometimes such opportunities are “more visible” and almost all the companies in a sector take advantage of them, whereas on other occasions, opportunities are much less obvious, and only the best-equipped companies are able to take advantage of these. Consequently, if sectors or industries no longer grow or stop growing together, why is a company affected by a general decline? Levitt indicates that the main reason for individual company growth to stagnate or be constrained is not market saturation, an explanation that obviously lies at hand, but something much more essential: the failure of industry management. Failure, inasmuch as executives are the persons responsible for establishing the corporate objectives and strategies that decide the future of their companies, and which will make their companies flourish or fail.

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Why do managers fail? Because they lack vision. Because they do not define the aims of their companies properly, but only do so in a limited and short-sighted way. Hence the title of Levitt’s paper. This lack of vision materializes in two forms:

• The client is supposed to choose out of a wide range of finished products, instead of the company inquiring into the user’s needs when the products were to be designed and developed. • Growing numbers of items are made in an attempt, with any luck, to find something that is successful among the clients, even though every year witnesses talk of narrowing product ranges. • The markets are not sufficiently differentiated; the entire product range is offered to all markets, instead of being adapted to the peculiarities of each market, leaving aside the rest of the products. So, is the market defined in a narrow way in the Spanish tile manufacturing industry? Judge for yourself: It certainly is narrowly defined by those that think that their business is the “production” of ceramic floor and wall tiles and that, therefore, their market is “only” represented by those

Companies in the Spanish tile manufacturing industry cannot be considered market oriented...”

First, managers do not focus on what is truly important for any type of industry, independently of the existing economic circumstances: satisfying the real needs of consumers, their actual clients. That is to say, they happen not to be market oriented. This, despite their appearing to act as such, in view of the superficial, highly fashionable cliches that are bandied around merely as slogans in most companies, of the type: “the client is pivotal”, “the customer is king”, etc. To be market oriented means to be completely focused on satisfying the actual needs (not the hypothetical ones) of clients. It should be noted that when we refer to clients we are referring in particular to the consumer, although one ought not to forget the direct clients (whether these be stockists, distributors, builders, etc.). The second reality is that managers establish a narrow definition of their own market. To establish a non-narrow market definition again involves returning to the value chain, towards consumers, and determining what essential needs the company can satisfy with available technology, both in markets of persons and in those of industry. In this way, the company market is appropriately established. Are companies in the Spanish tile manufacturing industry market oriented, or instead, are they more production oriented, in the sense of being basically concerned with manufacturing and selling their production as profitably as possible? Companies in the Spanish tile manufacturing industry can not be considered market oriented, in view of the scarce development, in general, of that corporate function that deals with ascertaining and trying to satisfy customer needs. That function is known as marketing. Indeed, in the tile manufacturing sector there continues to be a pronounced production or product orientation (in this latter case the preoccupation centres on making quality products). Examples of this are readily found:

players in the market that buy their production directly from them. Although behind these buyers there logically stands an end-user or consumer. In this case those that buy the production, except for noteworthy exceptions that have their own distribution, are generally stockists, distributors and builders. None of these is an end-user or consumer. For this type of mentality, competitors are all those manufacturers that try to sell to these same builders, distributors and stockists. In contrast however, the market is not narrowly defined by those that consider the business of the industry to be that of satisfying tiling needs in the different habitats used by human beings, whether in the workplace, living quarters or leisure domains, interiors or exteriors. Now the market, i.e., the clients, will be all who have tiling needs in their habitats. And this is a much larger group, made up of all the end-users, whether individuals, families, companies or public bodies. In this case, competitors are all those that can offer tiling solutions for the different needs of the end-user, regardless of the user’s aesthetic and technical preferences. That is to say, substitute products are now also taken into account. In other words, these involve other ceramic floor and wall tile manufacturers but also producers of natural stone, bricks, composite materials (gypsum mortar), organic materials (wood, cork, wallpaper, textiles), polymer materials (vinyl, linoleum, rubber, gum), metallic materials, etc.

3. CHARACTERISTIC BELIEFS IN THE DOWNWARD CYCLE Levitt identifies a series of widely held mistaken beliefs or assumptions amongst managers, together with an inadequate market orientation and narrow market definition in industries that entered processes of unexpected decline from a previous situation of continuous, prolonged growth. These downward processes are characterized by having a large number of companies in the particular industry involved start to operate with a feeling of negative inertia, in which growth rates steadily decrease and margins progressively tighten. We do not by any continued on page 24 tiletoday.com.au ISSUE 44

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MARKETING MYOPIA?

a review of the ideas of Theodore Levitt

means wish to suggest that the Spanish tile manufacturing industry is in a stage of decline. However, we do wish to establish whether these beliefs occur to any degree within the sector, in order to put it on its guard to avoid that risk. The four erroneous beliefs or assumptions of top managers, which Levitt identified in industries that entered a process of unexpected decline, are: • 1st belief: The myth of population • 2nd belief: The non-existence of competitive substitutes • 3rd belief: The unbeatability of mass production • 4th belief: The obsession for R&D We shall now review what each of these beliefs involves, and establish whether they are to be found in the Spanish ceramic tile manufacturing industry at this moment.

1st belief: THE MYTH OF POPULATION Levitt tells us that many managers exhibit an unjustified confidence in indefinite market growth, based on population growth and a rising standard of living of the population.

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In the field of housing construction, a distinction can be drawn between the housing market of second family dwellings, whose possibilities of development could be greater in Spain, owing to being a centre of tourist attraction. These possibilities are tied to the net growth of the individual wealth of citizens (Spanish and from surrounding countries), which also depends on the economic situation. Abroad, it will depend on the location of geographic centres of leisure, tourism or business, or on the surroundings of the large cities, and also on economic circumstances.

The danger...is that a market in permanent expansion saves the manufacturer from needing to think too much...”

The danger that lies in wait behind this belief is that a market in permanent expansion saves the manufacturer from needing to think too much and imaginatively, as company growth is expected to occur easily thanks to the “organic growth” of its market. Let us see whether the factors relating to this belief have led to its spread in the tile manufacturing industry. Organic or natural growth of the tile manufacturing market can be produced by: •Increased housing construction. •Increased construction of public buildings. •Greater and faster renewal of tiles in dwellings and other facilities of public and private use. Without going into further detail, which the length of this communication does not allow, increased housing construction depends on three variables: population growth, the investmentspeculation component and the rise in level of wealth of the population. Since the 1980s, population growth has been a factor that depends on economic circumstances, and is not a law that is inevitably obeyed. Nowadays, few managers will expect market growth in Spain to be achieved as a result of continuous population growth, as Spain has one of the lowest birth rates in the world. Despite immigration. Moreover, this situation seems generalized in most of the developed Western countries.

Possibilities of population growth can be observed, although always of a circumstantial character, in developing countries. Therefore, if the Spanish ceramic industry wishes to base its growth on population growth, it will consequently not be in the domestic market but in foreign markets, preferentially in the ones mentioned above, where this can be done based on economic circumstances. On the other hand, recent years have witnessed an enormous boom in new housing construction in Spain, driven by a strong

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investment-speculation component, according to which investors have sought a safer and more traditional alternative to investments in financial markets. In addition to being very profitable, given the continuous rise in prices. It does not seem reasonable that such growth, based on economic circumstances, will be sustainable in the middle or long term in the domestic market. In foreign markets, this will depend on the particular circumstances of each market, although it will be difficult to find similar situations.

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On the other hand, the increase in public construction, of a public or private nature (hotels, shopping centres, etc.) depends directly on the economic situation. In the former case, this is limited by the pursuit of a zero State deficit. In the latter, by the possibilities of achieving a return on investment, which the high cost of the land in Spain make difficult in the middle term. Finally, there is the possibility that the improvement in the standard of living, materializing in the form of greater income, could lead to renewal of floor and wall tiling that is old-fashioned or in bad repair, by more modern and better tiling. This replacement market can occur, for private consumers, in the purchase of the second or third family dwelling in the course the consumer’s life, in the pursuit of improvement of original qualities or renovation of the regular dwelling. And in decisions of image enhancement and upgrading of facilities, for private companies and public bodies. This is a possibility that could of course display sustained growth, although it depends on a positive evolution of the levels of income of the population and on an economic situation that generates no negative expectations. Such renovation can also be partly driven by industry, by means of appropriate communication of the advantages of a greater rate of turnover in replacing tiling installations in housing or public buildings, somehow modifying users’ scales of priorities. However, it is certainly true that the industry has encountered other means of promoting growth, independently of the organic growth of its customary markets: • Expansion into new geographic markets abroad. • Broadening of the range of tile uses in the markets. On the one hand we find that expansion into new geographic markets can not be unbounded, as these markets are finite. Moreover, this resource has been extensively exploited by the sector for years, so that considering the industry in general, there are few new markets left to discover. The industry is

already present in the main economic areas of the globe.

MARKETING MYOPIA?

a review of the ideas of Theodore Levitt

Furthermore, there could be an increase in national competitors in foreign markets, together with the danger of price-based competition. And this has been going on until now, with a view to capturing market share from the reference Italian industry. Similar intentions of other competitors from China, Brazil, Turkey, etc., make such price-based growth very difficult. Finally, the most advanced competitors are trying to promote growth in their markets by seeking new tile applications and novel domains for tile installation, striving to position ceramic tile products in all fields of construction: architecture, town planning, interior design and housing. However, the implementation of new applications and domains involves substituting other products and requires long-term work in order to alter habits and customs. This is akin to fostering a greater turnover in tile replacement. Review of the factors that produce growth in the markets clearly shows that organic factors do not grow indefinitely, because they depend on economic situations that will not always be propitious. And regarding the factors that we could call promoters, one factor, expansion into new geographic markets, is displaying symptoms of exhaustion in the industry as a whole, while another, the introduction of new tile applications and domains requires both time and work, certainly on an institutional and international level. In view of the above, this belief should not be very deeply rooted in the Spanish tile manufacturing industry, in spite of the extremely favourable economic circumstances that have lately been in place, and which analysed from a short-term perspective could lead to unjustified optimism.

2ND belief: THE NON-EXISTENCE OF COMPETITIVE SUBSTITUTES According to Levitt, the apparent solidity of growth industries was due to the supposedly unquestionable superiority of their product, which would therefore produce unbroken demand. There was no effective substitute. In actual fact, the product itself had surely been a formidable substitute of the predecessor it replaced. The danger that this belief generates is that companies, aware of the superiority of their products, come to be faced with the obsolescence of their products, without having researched or developed other new ones that satisfy the changing needs of consumers. Or they realize this very late. Our perception today as regards this belief in the tile manufacturing industry is that, apparently (although reliable data on a world-wide level are unavailable), tile seems to have an advantageous position in respect of other competing materials, because of its technical properties and aesthetic possibilities. In this sense, to the excellent technical qualities of ceramic tile are being added the aesthetic possibilities of other materials, imitating their colours, forms and textures, etc. Right now, these are competing in consumers’ minds with other alternatives that had until recently been completely independent. However, one matter is the perception of people tied to the sector, with their logical knowledge and attachment to the product, and another quite different matter is consumers’ perception. What we can say concerning this belief is not that ceramic tile lacks substitutes, since it has many, but that tile surpasses these at the moment, at least in the view of people “in the know”. This is good news for the industry, because it means suitably

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communicating this advantage to consumers, although it needs to be borne in mind that a product or concrete model is never free of obsolescence. In this sense, Levitt indicates that there are no products free of obsolescence, because if (technical and market) research of the companies themselves do not cause its obsolescence, other companies will. As an example, Intel, the world’s largest manufacturer of microprocessors, believes that if it fails to rapidly outstrip its own products, other companies will. Intel, as all we know, has been market leader for many years. To be sure, ceramic tile has substitutes. It may have certain advantages with regard to some of these, although the advances achieved in other industries are probably not known, and this would require studies on an institutional level to detect possible threats. These advantages have certainly not been communicated either sufficiently or efficiently to consumers. And to get consumers to heed the excellent performance features of tile requires ceaselessly disseminating the qualities of ceramic materials amongst the various specifiers. No products are free of obsolescence, and to avoid this requires ongoing development of more advanced products, with new performance features. Levitt indicates that the companies with the best outlook are those that construct their own luck and do not limit themselves to copying and following others. This continues to be so today, though to construct the future with criterion requires understanding the grounds for success in the business. And these grounds are now referred to, in more or less general terms, as the key factors for success. In order to innovate with success, it is necessary to know the key factors for success. These factors to success refer to those essential ones which, though they may alter with time, guide consumers and buyers in our markets when they are acquiring the product. We would therefore be aware of what consumers want, because we have asked them directly. How many manufacturers truly know this? Those that understand the key factors to success, not just today of course, but also tomorrow and the day after, will construct their own luck. The others will be led, and be forced to imitate. If, in addition, these same companies head the development of future substitutes, they will be laying the groundwork for a new stage in which they could be the leading players. In the same or in a different industry.

3RD belief: THE UNBEATABILITY OF MASS PRODUCTION Mass production industries have an almost irresistible temptation to raise production continuously. This is motivated, according to Levitt, by the prospect of reducing unit costs by increasing production, which by counting on the sale of production will generate higher profits. The danger of striving for continuously lower unit costs of production is that it usually puts a spiral of pressure on sales and prices, if we are not in a market with over demand. This is because cutting production costs is only interesting as long as production is sold. Should this not occur, factories would be faced with undesired excess stocks. Excess stocks involve higher store maintenance costs, repercussion of floor cost, labour costs, financial costs, etc., which make it difficult, if not impossible to reduce unit costs (although this reduction is strictly in the production process). To avoid reaching this critical situation of excess stocks, companies usually tend to apply excessive pressure on sales. Which in passing increases sales costs. This leads to completely

prioritizing sales activities over other activities, particularly over marketing activity, which could become side-lined. The sales department, faced with the insufficiency or absence of other product differentiating arguments (owing to the absence of marketing), makes a last-ditch attempt to achieve sales by competing on price. And this usually means just one thing: smaller profits. Despite production unit costs being smaller.

behind. This gradual abandonment of mass production is due to the decision of companies to offer a steadily wider range of products, and the intention of avoiding the accumulation of large stocks. However, this entails important cutbacks in productivity, which seriously impact the bottom line and will drive companies to seek other ways of propping up the bottom line.

MARKETING MYOPIA?

a review of the ideas of Theodore Levitt

4th belief: THE OBSESSION FOR R&D Is this a belief that could take root in the Spanish tile manufacturing industry with all its negative consequences? It is true that the ceramic tile manufacturing industry has invested very heavily in production in the last decade to increase production. In addition, high and increasing stocks are kept in many companies, signalling excessive production orientation. There has also been increasing pressure on sales, above all in recent years. And there has been insufficient investment in marketing. This explains the poor product differentiation and the high uniformity of manufacturers’ product ranges.

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Selling centres on the needs of the producer, whereas marketing centres on the needs of the consumer”

The picture looks rather similar to the foregoing description. The consequence of this belief is a price war between products with hardly any differentiation, which reproduces a terribly common situation in today’s markets. And the fact is that although it is sometimes difficult to distinguish between them, there are radical differences between companies focusing on sales alone, and those focusing on marketing: • Sales-focused companies are obliged to sell at almost any cost in order to turn products into “fresh” money to feed the bank account, forgetting about the market and marketing. • Marketing-focused companies also sell, but they need to know the real (and changing) needs of consumers to satisfy these with products that the consumers want to buy, together with the related characteristics (presentation, time and place of purchase, payment terms, etc.). Selling centres on the needs of the producer, whereas marketing centres on the needs of the consumer. It is a critical difference in approach. It might be useful now to briefly glance at the case of Henry Ford, founder of the automobile company, paradigm of the creation of the production line (or mass production). Levitt reminds us that Ford’s true genius and the reason for his success did not lie in the development of mass production, but in an essential marketing insight. This insight was that he could sell a great many cars, if he managed to set a sales price that even his workers could afford, at a time when cars were luxury items. From that objective need to achieve low sales prices, which a broad spectrum of the public could afford, came the implementation of mass production as a solution. It was not the other way around. Regrettably, companies focused on mass production usually fall into decline, instead of growing: because the product ceases to adapt itself to the continuously changing needs and tastes of consumers. And at present we face the added disadvantage, compared with the time when Levitt wrote his paper, that tastes and preferences change ever more quickly. Today the tile manufacturing industry is being forced to act in a direction counter to this belief, suggesting that a step is being taken towards overcoming this misconception: increasingly shorter series are being fabricated, leaving mass production

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As we know, R&D is absolutely necessary to achieve innovation in a product, to make it different from the others, or innovation in processes to generate a development in productivity. Both features, differentiation and productivity, are important factors in corporate competitiveness. However, the belief to which Levitt refers is obsessively and uniquely confiding in this activity.

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The danger of which he forewarns us is that excessive attention towards R&D can lead a company into believing that it is an efficient producer of excellent objects, rather than an organization whose mission it is to serve its clients. Thus, companies develop great product quality or excellent new developments from a technical point of view, but in fact turn their backs on actual market needs. At the root of this way of thinking and acting lies the belief that “a quality product sells itself”. And this is not always true, as German manufacturers can bear witness at this very moment. It is in such cases that conceptions spread within the company, which are more widely held than might be imagined, concerning the client-consumer as an unpredictable, capricious, stupid, myopic, stubborn and generally annoying being. Nonetheless, it is he or she who buys. And, therefore is right. Was he not king? The product satisfies the consumer’s need, not the other way around. Is this belief found in the Spanish ceramic tile manufacturing industry? This situation does not seem to occur in the Spanish tile industry, given its low investment in R&D. However, this low R&D investment is the general situation in Spanish enterprise. Investment in R&D does not mean investment in technology, which, as we have seen in the previous belief, has been abundant. Decisions on investment in technology have not been strategic either in the sector, but have stemmed from the machinery and glaze producing companies, and have followed the rhythm of innovation set by these branches, rather than imposing this on them. The problem is that technology is no longer a key factor for success, because it lies within everybody’s reach, whereas R&D can indeed be such a key factor. Regarding this belief, it would appear to be the case that the Spanish tile manufacturing industry has not reached a sufficient level of investment in R&D for there to be an excessive inclination towards this belief. There is always a risk to be run, particularly by companies with large R&D departments and extensive resources: namely, to spend too much time on trying to perfect the same product or, worse still, to perfect the manufacturing process in order to produce the same item with greater productivity, without going beyond this. The organizations we are referring to usually concentrate on what they know and can control: research,

engineering and manufacturing. In all the companies with an R&D component, which as we have already mentioned is essential, these tendencies do occur. The important thing however is that they should be governed by another main focus: everything that is done must be market oriented, directed towards the consumer.

MARKETING MYOPIA?

a review of the ideas of Theodore Levitt

4. CONCLUSIONS After the foregoing review, we can briefly summarize whether the mistaken assumptions or beliefs that Levitt referred to in his paper are present or not in the Spanish ceramic tile manufacturing industry. lst belief: The myth of indefinite market growth as a result of population growth and improvement in the standard of living should not be very deeply rooted for those who observe the evolution of the sector from a broad perspective, not bound to a circumstantial economic situation. 2nd belief: The belief in the non-existence of substitute products does not appear to be present, since such products are abundant in the market, although there could be a certain hubris owing to the excellent qualities of ceramic tile and an ignorance of the advances in substitute products. 3rd belief: The unbeatability of mass production is a belief that we consider has been present in the tile industry until quite recently. This may even still be the case in some companies. 4th belief: The obsession for R&D has not taken root, given the low investment in this activity, though this is a deficiency of the Spanish industry in general. Therefore, if the presence of these beliefs in a widespread form in the sector is the criterion, fast and sudden decline of the sector is not to be expected in the near term. However, it is certainly true that the industry has entered a stage of maturity, in which some companies that are not sufficiently flexible and fail to adapt quickly to new market realities will falter. What is this new reality? In our opinion, over and beyond circumstantial economic situations (the exchange rate of the US$, an economic slowdown in key markets, etc) the tile manufacturing industry faces challenges that will give rise to structural changes in the middle term. These challenges, amongst others, in our opinion are as follows: • To accept that emerging competitors are gaining market segments more concerned with price, forcing the industry to sell more up-scale products this is independent of decisions regarding production outsourcing or delocalization, which do not exclude the former and can lead to lower costs but which only lie within the reach of companies with greater resources. • To focus on those consumer segments concerned with other aspects than price which seek more up-scale products or products that have greater value for them. This requires developing a “multi-tier product”, which offers additional advantages in terms of: quality, design, guarantee, aftersales service, trademark, etc • To accept that the market will probably demand of Spanish manufacturers a steady or even lower production, but with a greater value per square metre.

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• To adapt more and better than competitors to the segments of preferred clients for the company, an evolution required by the rapid transition that has taken place in the sector from a demand market (over demand) to a supply market (over supply). • To increase the company’s own capacity to find and develop new different and singular ideas to offer their clients, reducing the dependence on glaze and machinery manufacturing companies in this sense • To adapt to environmental regulations, promoting their use and communicating company respect for these regulations to consumers that are increasingly aware of their environmental responsibilities. There is still in the sector an excessive production or product, rather than market, orientation. For this reason, for the ceramic industry to transform itself into a group of growth and innovating companies, it must convert its activity into a client-satisfying process, in a broad sense, instead of a tile-manufacturing process. It must begin to understand its clients and their needs more closely and better, and based on this understanding, develop in reverse form: creating tile products that satisfy those needs in the broadest possible sense for each group of buyersconsumers. Developing optimum and feasible ways of manufacturing these tiles. And finally, discovering the ideal raw materials for manufacturing these tiles. In a word, companies must be more client oriented, understand client needs and based on this, restructure their entire organization. For this, the relation in the use of the factors must change. At present, 85 per cent of a tile manufacturer’s workforce is directly or indirectly engaged in production. Can you imagine what could happen with 85 per cent of the workforce engaged in marketing and R&D? Let this not surprise you. At the huge IBM company, only 6 per cent of the workers (315,000 workers) are engaged in a factory. The remaining 94 per cent works in immaterial and intellectual services. And even that 6 per cent is largely engaged in service tasks. The good thing is that the changes that are taking place in the sector right now point in this direction. Some companies are now beginning to move; a few already started quite some time ago, which makes them a model to follow.

5. COROLLARY The foregoing all results in the demand for greater intensity in the use of marketing activities in companies. An investment that remains pending, particularly if we take into account that the main asset of the industry is differentiation, in the entire market or in concrete niches (because to be leaders in costs is almost impossible, while to be avoided, no matter what, is hanging in the middle). However, based on recent surveys, we suspect that the point is not that companies do not want more marketing, but that companies may not be very clear about what this is. The question that remains to be answered is serious: do we not know exactly what marketing is or what it is for? Or: do we just reduce this to some operation relating to advertising, trade fairs and little else? Returning to the title of the present paper, perhaps the sector may not be suffering from myopia, but, and this is worse, it may not know what it has. ❏