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Prof.

Gangadhar Hugar
9 July, 2010
The following factors that impact the attractiveness of the category from
the product managers point of view:
Category size
Market Growth Rate
Stage in Product Life Cycle (PLC)
Sales Cyclicity
Seasonality
Profits
The size of the category is an important consideration for the product
manager whether it is attractive or not.

For example, a Pune-based company, called Weikfields, manufactures


custard powders and has a high market share in the category. The reason
why the HLL and the Nestle are currently not present in the category is
the small size of the category.

Today, many multinationals have been attracted to India because of the size of
the various categories. For instance, the lure of catering to 200 million middle
class customers has attracted several automobile companies (gm, Toyota, Honda,
Ford, Toyota, Skoda, Cherovolet, Volkswagon, Hyundai, etc.) and several
consumer durable companies (LG, Whirlpool, Electrolux, Samsung, Sony and
others).
It is noteworthy that as the market grows, newer companies are attracted
to launch their products and stake a claim in the category. The high
growth of software services has seen many entrepreneurs launching
software and BPO companies. Likewise, the growth in air travel in India
has resulted in several airlines being launched to get a piece of the pie.

On the other hand, as the category size begins to shrink (due to various
changes in technology, shifts in customer preferences, etc.) the number
of players also beings to decrease.
As the product nears the end of its life cycle, the attractiveness
decreases. In fact the product is in the growth stage, the
attractiveness is maximum.

However, when a product is in decline, it makes no sense to


invest in such a product.

For example typewriters have been dealt to death knell by


computers and they are in the decline stage of the PLC. So the
attractiveness is extremely low.

Products that are in the maturity stage also are not attractive
though niche segments can be targeted.

For example, the toothpaste market in India is reaching the


maturity stage but companies like Dabur are targeting niche
segments through products like Meswak.
Business go through ups and downs, for products where the sales are of a
cyclical nature, the attractiveness is much less when the sales cycle is
at a low and market conditions are depressing.

For example, when the stock market sensex plummets, both the interest
in stocks are transaction volumes decrease. The companies that make
products used by stock analysts or investors will discover that their
fortunes are tied with the performance of the stock market.

Likewise, the suppliers to large scale manufacturers engaged in


automobiles, steel etc. also suffer from the aspect of sales cyclicity.
The demand for certain product occurs during particular seasons, thereby
affecting the attractiveness.

For example, soft drinks are more preferred in the summer months. Woolen
clothes re used only in winter clothes are used only in winter in countries having
a tropical climate.

In India the festival season (such as Diwali) is when people make purchases of
new clothes and several other specialties. If the demand for a particular product
is heavily affected owing to the seasonality factor, the product manager should
seriously study the impact to plan accordingly.
For example, the employment of full time labour for products that have seasonal
demand shifts could prove to be a big drain on the company resources.
The profits that a category offers would be a major consideration for the
product manager. Even within the same industry, the profits offered by
various customer segments vary.

For example, in the wrist watch segment, Titan realized that the profits were
higher in the quartz watch segment than in the hand wound watch segment
dominated by HMT.

Likewise, in the information Technology (IT) category, Indian firms were


generally involved in software services wherein they were undertaking low
end coding work. However, they soon realized that the profits were higher
in the consulting domain.

This phenomenon is also referred to as a moving up the value curve. In the


motorbike market, Bajaj Auto is moving into the 150cc category rather than
focusing on the 100cc category because of the profitability in the latter
category.
Before taking decisions, it is necessary to analyze the market
configuration to find out the product categorys structure in
terms of brands, sizes, origins, product variety, and so on.

The product managers judgment helps decide the set of


products or brands in terms of the market. Given this kind of
task the product manager needs to undertake market
mapping with due diligence intelligence.
A market is structured in a unique manner and every marketer entering it
needs to have a good understanding of the prevalent structure.
The aspects that are important in this regard are the various components
that make up the value chain:
Suppliers
Distributors and channel members
And customers
Apart from the value chain, the governmental policies,
trade and business regulations, etc also are important
aspect.
The structure of the market decides the power players and the balance
tilts to those that can command more power and hence enjoy greater
profits.

A good example of the impact of market structure can be understood


from the Indian agricultural market. For centuries, the farmers have been
exploited by the middle men and money lenders who cornered the major
profits.

However, ITC took the initiative to set up e-choupals and have enabled
farmers to directly sell their produce them. By getting better control and
after redefining the market structure, it hopes to sell its products such as
Ashirwad atta at comparatively lower price than its competitors.
Sometimes intrepid marketers have gone about upsetting the existing
distribution structure and gained competitive advantage.

Some marketers have used the Internet to distribute products. It has


helped in gaining direct access to customers and satisfy them.
The market mapping should also be done taking into account the nature of
competition. A market that is dominated by the unorganized sector needs to be
mapped differently compared with a market dominated by big-size multinational
players.

For example, the toy industry in India is heavily controlled by unorganized


sector players while the automobile industry is by big size multinational players.
Therefore, the product strategy for these two categories should be devised after
taking into account the dynamics resulting out of the nature of the competition.

The nature of the competition would also determine the level of products to be
created and offered to the customers.
Analysis of the market would reveal the un-served and underserved
segments. The segment can be at the high end, in the middle or even at the
bottom of the pyramid.

For example, airline services for top level executives have been launched
in India recently while Air Deccan, Spice Jet and Indigo are targeting the
bottom of the pyramid.

The former segment was un-served while the latter was underserved since
they lacked enough options (the only one were the Apex fares offered by
some of the airlines).

The growth rate of the aviation industry in India shows how proper market
mapping can help in growing new segments.

On the other hand, improper market mapping by


miscalculating the needs of underserved segments can
produce disastrous results.