James Surowiecki, in his new Yorker column on the current state of newspaper business (spoiler: they’re in trouble, but he doesn’t prescribe any particular way out of their mess) has an excellent summary of Theodore Levitt’s 1960 article “Marketing Myopia.”
Levitt argued that a focus on products rather than on customers led the [railroad] companies to misunderstand their core business. Had the bosses realized that they were in the transportation business, rather than the railroad business, they could have moved into trucking and air transport, rather than letting other companies dominate.
A quick search turned up a PDF rendering of “Marketing Myopia”. I remember reading this in grad school, but hadn’t looked at it since then. On a reskim I particularly enjoyed this nugget about the “Population Myth” (emphasis mine):
The belief that profits are assured by an expanding an more affluent population is dear to the heart of every industry. It takes the edge off apprehensions everybody understandably feels about the future. If consumers are multiplying and also buying more of your product or service, you can face the future with considerably more comfort than if the market is shrinking. An expanding market keeps the manufacturer from having to think very hard or imaginatively. If thinking is an intellectual response to a problem, then the absence of a problem leads to the absence of thinking. If your product has an automatically expanding market, then you will not give much thought to how to expand it.