Blockbuster: How Marketing Myopia Led to its Downfall

As Levitt states, “If a company’s own research does not make a product obsolete, another’s will.” No product has a guaranteed future, and it is important for management to not treat a product as if it does. Despite the difficulty involved with thinking that a successful company could fail, management must operate with a mindset of an uncertain future. Industries do not begin with a firm’s product/service, they begin with the customer and move backwards to satisfy the consumers’ demands and create necessary items.

Blockbuster demonstrates Levitt’s principle of suffering from marketing myopia.  Blockbuster fell victim to creative destruction by other movie rental businesses including Netflix, RedBox, and iO TV On Demand. Blockbuster’s market strategy was to provide customers with an opportunity to enjoy a night by staying home and watching a movie with the family. In addition to movie rentals, movie style popcorn, candy, and beverages are available to purchase at its stores. Unfortunately, when consumer preferences changed, and many began valuing convenience and/or inexpensive options, Blockbuster failed to alter its strategy. This permitted companies such as Netflix and RedBox to steal the market, offering consumers at home delivery/online services and $1 rentals. Despite Blockbuster’s efforts to expand its services and provide customers with more convenient methods of video rental, competitors had already positioned themselves in these areas. Had Blockbuster observed the market’s preferences and initiated its home delivery and On Demand amenities prior to Netflix, it would have likely been able to establish a positive reputation for these services and not need to declare bankruptcy. The company had thought of these ideas prior to competitor’s existence, but failed to act soon enough. Clearly Blockbuster did not believe there could be a competitive substitute for its products and services, a concept Levitt discussed as leading to marketing myopia.