The misuse of marketing: An American tragedy

Abstract

T he automobile industry, a microcosm of the American economy, entered 1981 in a state of shock. At one time, the industry, like America, was efficient, industrious, innovative, and very profitable. But by 1981 this was no longer true. Imports took 30 percent of the market; $80 billion was needed for design and retooling; Chrysler obtained a federal loan guarantee; and Ford and General Motors reported record losses. What is happening in the North American auto industry may offer a glimpse in miniature of what ails the entire U.S. economy. Has America lost its competitive edge? In the Harvard Business Review, two writers argued that America's economic malaise can be traced to a failure of the entrepreneurial spirit, a lack of technological innovation, and a shortsighted view of the future. 1 Pundits claim that the auto industry is in trouble because of cheaper imports that get bet ter fuel economy. 2 This 1. Robert H. Hayes and William J. Abemathy, Managing Our Way to Economic Decline, Harvard Business Review, JulyAugust 1980: 67-77. 2. See When it Comes to the Bottom Line on New Cars, Buyers' Yen for Imports is Hardly Surprising, The Wall Street Journal, August 25, 1980: 32. is too simple an answer. A more incisive diagnosis reveals the hard truths. The European and Japanese car makers have simply been bet ter competitors: they anticipated market needs; they built a bet ter produ c t o n e that is more reliable, has bet ter workmanship, and is bet ter engineered; and they did it efficiently. In short, these manufacturers delivered bet ter value to the American consumer. While auto makers regarded small cars as low-technology, cheaply designed products aimed mainly at buyers unable or not willing to purchase a large vehicle, ''3 the foreign manufacturers produced high quality small cars that were recognized as bet ter by the American consumer. The auto makers are not the only vulnerable companies in North America. In countless other manufacturing industries, North American firms are facing tough competition from foreign producers supplying products which offer bet ter value. The television receiver industry, once dominated by domestic suppliers (RCA, GE, Sylvania, and others) has faced an onslaught