PRODUCT LIFE CYCLE

Product life cycle is the market span of a product from its introduction till the time its demand drops to zero. A business analyst uses product life cycle to analyse and map the common stages of commercial products.

For any product to come into the market, a lot of research and development processes are gone through. The business idea is developed as the first step. The early investors invest in the project and debts are taken. 

All the pre-launch activities are carried out in this process.

For example, Bingo, as a business idea would have been clicked during the research and development stage. The investors, suppliers and the early employees are all a part of this stage. The company’s in-house team had 8 members. And the chefs tried out new recipes during this phase

The product life cycle has four different stages (i.e.) introduction, growth, maturity and decline.

Introduction:

A product life cycle starts after the first purchase of the product. The first Bingo packet sold will mark the beginning of the product life cycle of Bingo. The introduction stage is when the marketing team gives more importance to promotion and initial distribution. The sales remain slow in this phase, because for a product to be accepted in a market, it takes time. The profit remains low not only because of low sales, but also because their revenues are returned to the debters during the initial stage.

Early adopters are people who adopt to a new product very easily. They will start purchasing the product in this stage.

Launched in March 2007, Bingo offered two types of snack- Potato wafers and finger chips in different flavour (Masala, Salted, Tomato and South Inspired). It advertised to promote the product in different mediums like TV, Radio, hoardings etc.

Growth:

This is the phase where the market starts accepting the product. The sales increase gradually and steadily. The brand will want to improve the product and thus provides better customer value. A large amount of money is spent on advertising and the main marketing goal being increase in sales.

Early majority are a set of consumers who will wait for the early reviews of the product to buy the same. They do a little bit of research before they purchase. The purchase made by the early majority marks the growth phase of a product.

Bingo overtook the market share of lays in 9 months of its launch. It had 16% of market share in this phase. Various Promotional events, advertising blitzkrieg and multimedia campaign were done during this stage. It focussed on Brand Recall. The advertisements were done in regional languages and it focussed on brand management.

Maturity:

Maturity stage is where the sales are high, in its peak. The other competitors enter the market with alternative solutions and innovative strategies, thus making the market fierce. So, to survive the competition, the industry will strive to differentiate their products from the competitors’.

The late majority are people who will wait longer to purchase a product. They research the product with the alternatives to make a purchase decision. They buying the product, refers to its Maturity stage.

During the Maturity Phase, Bingo added more flavours to the shelf. Their market had expanded to all the cities. The sales were high and the turnover was remarkable. A heavy dosage of advertising was done during the cricket matches (IPL).

Decline:

The decline stage is where the market of the product falls out. The sales will begin to decline to reach the saturation point, where the demand becomes zero. The market will see the product as old and useless. The brand will try to come up with new ideas to keep the product alive in this stage.

Laggards are people who do not respond to any kind of marketing message. They will not purchase a product due to various reasons, no matter what kind of market message they are being exposed to. They fall under this stage of the product life cycle.

Many new entrants came into the market (Hippo, Kurkure etc.). The demand for Bingo is going downhill. The product, without further changes and innovation, will meet its dead-end soon.

Market Structure and Competition

Market Structure

A market structure is the interconnected characters of a market that can be subjected to the number of identical products in the same category. This can be defined by four different criteria like number of firms, their sizes, amount of product differentiation and the ease of entry and exit.

Any market has a market leader who owns the maximum share, and a market nichers owning the minimum. The market challenger and the market followers come in between. All of them together form a hypothetical market structure.

COMPETITION

Any market structure consists of four basic entities

·         Perfect competition: Perfect competition is when many small firms compete against each other. The firms produce a remarkable output level at minimum costs to survive the market.

·          Monopoly: A monopoly has no competition at all. Thus the output drive is minimised and the profits are increased.

·         Oligopoly: An oligopoly is when only a very few firms are there is the market. The costs of the products are increased or decreased in all the firms together, or in other words, when one firm decides to lower the costs, all the firms do so.

·          Monopolistic competition: In monopolistic competition many industry compete but with different product category.

PORTERS FIVE FORCE MODEL- Analysing competition

Threat of new entrant

Any kind of competition caused by a new entrant to the industry is put into this category.

Since the market is growing 30% annually, the new entrants consider this as a profitable venture. A new brand will give the same values to the customers but it a lower price (Balaji’s strategy). This can be seen as a threat. The threat of new entrant for Bingo is relatively moderate.

Industry attractiveness

The factors like competition, competitor’s marketing strategy, pricing strategy etc constitute to the industry attractiveness of a market.

High competition, low difference in quality and the customers easily switching brands are the common threats in this industry. Thus the threat of industry attractiveness is high.

Bargaining power of suppliers

The power of suppliers as a stake holder in a company is very high.

The suppliers are the people who provide raw materials like potato, spices, packaging etc. If any one of this industry is increasing their price or shortage the inputs, it affects the entire industry. ITC is an e-Chou pal venture and it permits steady supply of raw materials at stable prices. Thus the threat from the suppliers is low

Bargaining power of customers

Any product is made so that a customer purchases the product. The customer has a variety of brands to choose their product from and thus have the power to bargain (except in monopoly market).

Price sensitivity is high in this market. If one of the player decides to lower the price, the entire market lowers their price, else their product won’t sell. Brand loyalty is low in this market. Thus the threat of the customers’ bargaining power is high.

There is one more additional threat to a market other than the ones mentioned above,

Threat of substitutes

Substitutes are brands that are of a different product category, but still is able to replace the desired brand.

The competition for the market doesn’t occur only from the brands of the same industry, it also arises from the substitute products. The substitute of Bingo might be Marie biscuits, nachos, chakli, banana chips etc.

Understanding Consumers & Consumption

Consumption:

The use of the goods or service is called consumption. The purchase of goods or services are also referred to as consumption. Consumption of Bingo happens when a consumer purchases Bingo or when he eats Bingo.

Understanding Consumers

Consumer behavior is a study of how the consumers select, buy, use and dispose the product that is marketed. A consumer’s behavior is influenced by cultural, social, and personal factors

Cultural factor: The cultural behavior of a person is influenced from his home. The culture, subculture and social class of the individual affect the buying process.

The cultural factors that influence a consumer to buy BINGO would be as follows: The lower class people of the country cannot afford to buy Bingo and few families with orthodox culture don’t encourage Bingo for their kids.

Social Factor: The social behavior of a person comes from the society he lives in. The reference group, friends and peer groups influence the buying process. A consumer will want to buy something just because his friend owns it or something similar to it.

Kids may demand their parents to buy Bingo because one of their friends get Bingo to school. The above behavior of the consumer is because of the social factor

Personal factor: The personal factors of consumer buying decision include their age, occupation, lifestyle, personality and self-concepts. The behavior of a consumer buying a product because it makes sense for himself to own it comes under these personal factors.

Bingo’s target audience are kids and youth. Their occupation is student and they live an I-don’t-care lifestyle. But not all kids and youth buy Bingo. Youth who go to gym do not prefer Bingo, but a student who spends his time in the college/school canteen might buy bingo.

Consumers buying decision can be explained by The Consumer Decision Making Process Model (refer the below figure)

 

Problem Recognition: In this stage, the consumer recognizes his need to purchase any product. For Bingo, The problem recognition stage can be hunger, or need for a quick snack

Information Search: Customers use their purchasing power, to seek further information about the problem recognized  To buy Bingo, the consumers will analyse what is the price of the product, flavors and quantity of one packet.

Alternative Evaluation: A set of brands are reminded to a consumer when a product category is stimulated. These products are perceived to be “acceptable” to them when they consider their alternative opinions. When purchasing Bingo, a consumer will also evaluate the values of its competitive brands like lays, hippo etc.

Purchase: This is the stage when the decision is made. It can either be Purchase or No Purchase. The consumer will either buy Bingo or go for Lays. The consumer buying decision ends here if there is no purchase has been made.

Post Purchase Evaluation: The consumer evaluates the product after consumption and decide if they had their wishes fulfilled. After the consumer consumes Bingo, they evaluates its taste and other values that the product offers them and decides if he has to repurchase or not.

CREATING CUSTOMER VALUE

Customer, the buyers of the product, have a variety of brands and products to choose from before they make a purchase decision of choosing the desired brand. They invest within the bounds of search, costs, knowledge, mobility and income. Thus, they decide to purchase the product that gives them the maximum value. Customer value is given two different views by Philip Kotler, as given in the below figure- one being the total customer value and the other being the total customer cost.

Total Customer Value:

The satisfaction that a customer gets on the purchase decision of a product is called as the total customer value (i.e.) the benefit a customer gets out of the purchase. The various factors that constitutes Total customer value are,

·         Image Value
·         Personnel Value
·         Service Value
·         Product Value

The customer value provided by Bingo are stated below.

ü  It offers a wide range of flavours that are unique and tasty. The quantity of chips provided by Bingo is higher than its competitors like lays
ü  Each category of the brand has a unique value of customer need differentiation. It caters to various needs of the customer
ü  The brand Bingo is a sub-brand of ITC, one of the country’s leading market. Thus, consumers trust for the product and a good image is built.

Total Customer cost:

Total customer cost refers to the benefit a customer gets for the payment he makes for a product or a service. Here, the customer will see if their money is spent worth on the particular product. Total customer cost is a cost spent on the following entities.

·            Monetary Cost (the price of the product)

·           Time Cost (time consumed to buy a product)

·           Energy Cost (energy spent to buy a product. Energy cost is criticised to be of less depth in this subject)

·           Psychic Cost (other the psychological factors)

Total customer cost spent for a Bingo are stated below

ü    Bingo is available in most of the stores from small scale to large scale in a city. Thus the time cost spent is low

ü    Bingo comes in various prices (Rs. 5, 10 and 15) and is nearly equal to that of its competitors.

Marketing

Introduction

American Marketing Association (AMA) defines marketing as, “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners, and society at large” (2007)

The marketing definition given above, emphasises the need for today’s market to value not only the customer but also the “stakeholders”. The “king of the market” has widened from customers to a broad range of stakeholders- that includes employees, distributors, suppliers and partners. Thus, relationship management becomes an important entity of marketing.

To study about marketing and various marketing techniques, a product is taken as an example and each topic is studied with the product. The product that I have taken to study is ITC BINGO.

ITC BINGO:

Bingo, launched in March 2007, is large range of salted potato and finger chips. This brand associates itself to youth, fun and excitement. It caters to the consumers need for a novelty and a variety of snacks.

Bingo has four sub brands:

• Bingo! Yumitos
• Bingo! Madangles
• Bingo! Tedhe Medhe
• Bingo! Tangles 

More about Bingo as a brand, its marketing stories will be posted in the blog with the help of inputs from the classroom and other references.