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