The Explainer: Don’t Just Sell Stuff — Satisfy Needs

Theodore Levitt’s classic theory says that an industry is a customer-satisfying process, not a goods-producing process.

An industry begins with the customer and his or her needs, not with a patent, a raw material, or a selling skill. Given the customer’s needs, the industry develops backwards, first concerning itself with the physical delivery of customer satisfactions. Then it moves back further to creating the things by which these satisfactions are in part achieved.

How these materials are created is a matter of indifference to the customer, hence the particular form of manufacturing, processing, or what have you cannot be considered as a vital aspect of the industry. Finally, the industry moves back still further to finding the raw materials necessary for making its products.

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