Question no. 2 - MMPC-006 - Marketing Management - MBA and MBA (Banking & Finance)

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                            MBA and MBA (Banking & Finance)

                            MMPC-006 - Marketing Management

Question No. 2 

(a) What is a Product? Discuss the various classifications of products with suitable examples. Elaborate the importance of Branding and Packaging decisions with respect to an FMCG product proposed to be launched in the Indian market. 

A brand mark is a symbol used for the purpose of identification. It can be a mark, a design; a distinctive logo type or a colouring scheme, a picture, etc. In other words, it is not a name but a means of identification, e.g., picture of an elephant in a distinct frame used by the Department of Tourism, Government of India or the famous starcircle of a Mercedes Benz car, or Tin circle which you must have seen on buses and trucks made by TELCO. A trade mark is the legalised version of a brand. Brand falls

under the category of industrial property rights and, therefore, subject to certain rules and regulations, it can be registered and protected from being used by others. `A brand or a part of a brand that is given legal protection because it is capable of exclusive appropriation' is defined as a trade mark. It is strictly speaking a legal concept, even though brand and trade mark are quite often used synonymously.

It’s an accepted fact that people judge by outward appearance, and nowhere is this more true that on the retail shelf. When it comes to buying behaviour in FMCG goods, consumers assess a product by its packaging.

After all, it’s the customer’s first interaction with the product. It is the first thing she sees and touches. Most of the time, for an undecided customer, it is this first impression that persuades or dissuades her from buying. No wonder, packaging is considered an important tool for marketing and brand building.

Purpose of Packaging

Marketing is much more than just your product’s face. Packaging serves many practical purposes:

Protection: This is the first and foremost purpose of packaging. It physically protects the goods from damage caused by exposure to sun, dust, temperature changes & contaminants; it protects against loss of nutritional value such as denaturing of proteins, oxidation of fats, etc. Packaging preserves the hygroscopic nature of the product.

Information: One of the important functions is to communicate product information, which can assist consumers in making their decisions effectively. An example of such significant information is food labeling. The trend towards healthier eating has highlighted the importance of labeling, which gives the consumers an opportunity to cautiously consider alternatives and make informed decisions. Moreover, evolving mandatory requirements demand certain information to be provided by the manufacturer. Information typically covers directions for use, storage instructions, ingredients, warnings, helpline information and any government required warnings.

Aesthetics: In the contemporary world of supermarkets and countless me-too products, packaging plays an integral role in helping it stand out and grab the buyer’s attention. Aesthetic value increases chances of it being accepted and tried by the consumer. Packaging is a platform to build brand, enhance aesthetics and protect the form and shape. We all know that a deformed or dented pack is unacceptable to consumers, and so many SKUs are sent back – causing losses to the manufacturer.

Transportation: Goods have to be transported, distributed, stored and warehoused during their journey from production to consumption. Packaging ensures durability and strength, so the goods can withstand transportation stress and make the process of handling goods more convenient for all parties involved.

Security: To ensure that there is no tampering with the goods packaging is crucial. The package of a product will secure the goods from any foreign elements or alterations. High-quality packages will reduce the risk of any pilferage.

Convenience: It’s the age of innovation in packaging – and breakthroughs that enhance convenience, usability and sustainability are always appreciated. Some examples are Kissan jam tubes that eliminate the need for spoons; Act-II popcorn microwave pack; Bru coffee containers with aroma lock.

However basic considerations still remain important – ease of opening, pouring and re-sealing, re-usability of containers, and easy disposability of discarded packs.

The challenge

FMCG, as the name spells out, are fast moving consumer goods and include non-durable household goods such as packaged foods, beverages, toiletries, over-the-counter drugs, and other consumables. In a world of over-crowded shelves, growing consumerism, increasing awareness of environmental concerns, rising need for convenience, deeper penetration into rural & remote markets, etc., FMCG manufacturers need to pay minute attention to their packaging. Weight, cost and availability of packaging material play a key role. Packaging needs to contain, preserve and transport the product with safety and durability. The challenge lies in providing packaging that fulfills all these considerations and impressing consumers while managing the cost so that it does not mark up the price for the end user – or neglect environmental concerns.

Conclusion

Nichrome, India’s leading provider of integrated packaging solutions offers a wide variety of automated packaging machines and end-to-end packaging systems for diverse FMCG products.

(b) Discuss the concept of Product Life Cycle (PLC). Explain the various stage of PLC with a consumer durable example of your choice. 

What Is the Product Life Cycle?

The product life cycle is the process a product goes through from when it is first introduced into the market until it declines or is removed from the market. The life cycle has four stages—introduction, growth, maturity, and decline. 

While some products may remain in a prolonged maturity state for some time, all products eventually phase out of the market due to several factors including saturation, increased competition, decreased demand, and dropping sales.

Companies use PLC analysis (the process of examining their product's life cycle) to create strategies to sustain their product's longevity or change it to meet market demand or adapt with/to developing technologies. 

The 4 Stages of the Product Life Cycle

Once a product is developed, it typically goes through the four stages of the product life cycle—from introduction through decline—before eventually being retired from the market. 

The four stages of the product life cycle are introduction, growth, maturity, and decline. 

1. Introduction

Once a product has been developed, it begins the introduction stage of the PLC. In this stage, the product is released into the market for the first time. The release of a product is often a high-stakes time in the product's life cycle, although it does not necessarily make or break the product's eventual success. 

During the introduction stage, marketing and promotion are at a high, and the company often invests quite a bit of effort and capital in promoting the product and getting it into the hands of consumers. This is perhaps best showcased in Apple's (AAPL) - Get Apple Inc. Report famous launch presentations, which highlight the new features of their newly (or soon-to-be) released products. 

It is in this stage that the company is first able to get a sense of how consumers respond to the product, whether they like it, and how successful it may be. However, it is also often a heavy-spending period for the company with no guarantee that the product will pay for itself through sales. 

Costs are generally very high during this stage, and there is typically little competition. The principal goals of the introduction stage are to build demand for the product and get it into the hands of consumers, hoping to later cash in on its growing popularity. 

2. Growth

During the growth stage, consumers start taking to the product and buying it. The product concept is proven as it becomes more popular, and sales increase. 

Other companies become aware of the product and its space in the market as it begins to draw more attention and pull in more revenue. If competition for the product is especially high, the company may still heavily invest in advertising and promotion of the product to beat out competitors. As a result of the product growing, the market itself tends to expand. Products are often tweaked during the growth stage to improve their functions and features.

As the market expands, more competition often drives prices down to make the specific products competitive. However, sales usually increase in volume and continue to generate revenue. Marketing in this stage is aimed at increasing the product's market share. 

3. Maturity

When a product reaches maturity, its sales tend to slow, signaling a largely saturated market. At this point, sales may start to drop. Pricing at this stage tends to get competitive, so profit margins shrink as prices begin to fall due to the weight of outside pressures like increased competition and lower demand. Marketing at this point is targeted at fending off competition, and companies often develop new or altered products to reach different market segments. Given the highly saturated market, less-successful competitors are often pushed out of competition during the maturity stage. This is known as the "shake-out point." 

In this stage, saturation is reached and sales volume is maxed out. Companies often begin innovating to maintain or increase their market share, changing or developing their product to satisfy new demographics or keep up with developing technologies. 

The maturity stage may last a long time or a short time depending on the product. For some brands and products—like Coca-Cola (KO) - Get Coca-Cola Company Report—the maturity stage lasts a long time and is very drawn out. 

4. Decline

Although companies generally attempt to keep their product alive in the maturity stage as long as possible, eventual decline is inevitable for virtually every product.

In the decline stage, product sales drop significantly, and consumer behavior changes, as there is less demand for the product. The company's product loses more and more market share, and competition tends to cause sales to deteriorate. 

Marketing in the decline stage is often minimal or targeted at already-loyal customers, and prices are reduced. 

Eventually, the product is retired out of the market altogether unless it is able to redesign itself to remain relevant or in-demand. For example, products like typewriters, telegrams, and muskets are deep in their decline stages (and in fact are almost or completely retired from the market). 

Examples of the Product Life Cycle

The life cycle of any product always carries it from its introduction to its inevitable decline, but what does this cycle look like in a practical, real-world sense? Here are four examples. 

Typewriter

A classic example of the scope of the product life cycle is the typewriter.

When first introduced in the late 19th century, typewriters grew in popularity as a technology that improved the ease and efficiency of writing. However, new electronic technologies like computers, laptops, and even smartphones replaced typewriters quickly once they were introduced, causing typewriter demand and revenues to drop off. 

Overtaken by the likes of companies like Microsoft (MSFT) - Get Microsoft Corporation Report, typewriters are at the very tail end of their decline phase, with minimal (if existent) sales and drastically decreased demand. Now, the modern world almost exclusively uses desktop computers, laptops, tablets, or smartphones to type. Consequently, these products are experiencing the growth and maturity phases of the product life cycle. 

VCR

Many of us grew up watching videotapes using VCRs (videocassette recorders for any Gen-Z readers), but you would likely be hard-pressed to find one in anyone's home these days. 

With the rise of streaming services like Netflix (NFLX) - Get Netflix, Inc. Report and Amazon (AMZN) - Get Amazon.com, Inc. Report (not to mention the interlude phase of DVDs), VCRs have been effectively phased out and are deep in their decline stage.

Once groundbreaking technology, VCRs are now in very low demand and are bringing in nearly no sales. 

Electric Vehicles

Electric vehicles are still in the growth stage of the product life cycle. Companies like Tesla (TSLA) - Get Tesla Inc Report have been capitalizing on growing demand for years, although recent challenges may signal changes for that particular company.

Still, while the electric car isn't necessarily new, the innovations that companies like Tesla have made in recent years to adapt to new changes in the electric car market signal that the product is still in its growth phase.