PLC, ILC and BLC.

This post will aim at comparing and finding similarities and dissimilarities between PLC (Product Life Cycle), BLC (Brand Life Cycle) and ILC (Industry Life Cycle) based on the following phases:

a. Introduction
b. Growth
c. Maturity
d. Decline

The "Life Cycle"s of either of these refer to the lifetime of each.

For a product, it would be the period from which the product was introduced to the point when it entered the phase where it was either taken off the grid or hit an all time low flat line wherein it has been just surviving without making much noise in the market.

For a Brand, it would mean that time from the when the brand was introduced in the market to the point where it went out of the market or turned into a non-entity due to various factors like inability to sustain, introduction of powerful competitors etc.

In case of an industry, it is the moment which a first mover realizes the potential in a product/service as a business idea and establishes it, later is successful in creating a market for this product and forces competition into the segment. When other players jump into the business after studying the results of the first mover, the singular business can be said to have morphed into a whole industry. It is very difficult to exactly pin-point when an Industry reaches its decline/end as most of the times, it undergoes some kind of an adaptation according to the requirement and the technological development of the current era. There are examples, however, these are specific to the technological evolution involved in the particular service/product. We can, however, based on available examples say that whenever all the BLCs and PLCs in an ILC enter their decline phase is when the industry enters a decline phase.

We can say that the PLC influences the BLC largely depending on the popularity and sales of the product. This in turn influences the ILC to a little or large extent depending on the same parameters. In terms of the graphical representation of the three cycles, the slope of the ILC is largely influenced by current movement in that market segment and the slopes of the Brands (which in turn are a result of the individual product slopes under the brand).


We shall briefly see how the 4 phases play out (what happens in) each of the life cycles.

PLC (Product Life Cycle):

Introduction:

Look after making the target group aware of the product and work towards developing a market for the product as it has been recently launched.

Work upon the belief factor towards a product of a customer.

Product may or may not have any customers.

Growth:

Focus on expanding the spread of the product.

Increase market share.

Grow into a competitive product.

Scope for achieving maximum hike in sales and profit.

Maturity:

Tackle competition.

Maximize profit.

Maintain the market share.

 Decline:

Add innovation.

Improve product by adding features.

Liquidate and sell off product if that is the option.

If there is a segment of buyers that will continue to buy this, keep offering this group the product if that is an option considering the financial conditions.

Slopes of individual players within a category essentially influence the curve of the overall growth graph of the industry.

Considering our Combo Meal, it would currently fall under the maturity phase as it has been there since a long time in the Mc'Donalds menu and has a long way to go before it even starts its decline phase!

BLC (Brand Life Cycle):

Introduction:

At this phase, the inception of the brand has been given a tangible form and the people involved would be actively building their offers and market.

At this point of time, the business may not have many or any customers but it has gone beyond an idea or a concept.

Growth:

In this stage, a brand might be at a point in which it is working towards a definite aim to establish itself in the market as a known name.

It might be that the demand for their offerings and services overpowers their ability to meet it.

Profits might be hard to come by given that advertising and marketing and meeting the demand would take up most of the available funds.

 Maturity:

This is the time when a brand fully well knows what it is doing and is working at full capacity.

They have attained a stability and have expected and constant profits.

They might be in a good position as far as profits are concerned but it might be that the growth and changes in offerings might have hit a flat curve.

Decline:

At its end, a brand would require to be either sold off or revamped. This would require a realistic valuation of the business.

The business at this point would be worth the real value of the brand in the current market place.

At this point, dealing with financial and psychological aspects of a business loss could be yet another concern.

This curve has a slope which is a result of individual slopes of the products contained under a brand. Hence, a rough summation of the product slopes (like in the graph for the PLC) will be very close to this graph (of BLC).

Mc'Donalds is already in the maturity phase. It has a long way to go to start its Decline given its deeply rooted position in the market. It has a legacy that most Brands cannot boast of and a very radical change in the industry or an extremely strong player coming in would have to be the change to even slightly displace Mc'Donalds from its position.

ILC (Industry Life Cycle):

 Embryonic (Introduction):

Vague definitions of products and the business types that will be included in the industry. The exactness of the product and business is relatively unclear.

The target group will not be very clear as to what is up to offers from the newly being formed industry.

Growth:

The industry might become more structured with a clear understanding of the kind and type of products that are being offered from it.

Business opportunities and (perhaps) different styles of doing business might emerge.

Proper channels of marketing might arise to facilitate the industry as understanding about the industry will gradually increase.

Maturityan (Maturity):

Industry is now fully established with all product categories that are related and are properly included in the Industry.

Old businesses will likely have hit their maturity or decline phases.

Newer players might have been introduced in the Industry and could be vying for a larger market share. Old players would likely be defending their market share by introducing newer strategies using which they would aim at keeping their product afloat.

Decline:

An ILC can be said to approach its end (probably) if and only if all the BLCs included in its scope have neared the end of their lives.

When talking about the Industry, what we are referring to is the Fast-Food joint industry. This is an industry which will change little. Evolution in the form of a change in the style of serving, transition to a more settled ambience and gradual and eventual price rises (inevitable). However, it is far from a decline.

ILC if taken in its broad meaning, we can hardly find examples of an actual Industry that has met its end. Even if the form of the industry has changed drastically in many cases, we have to say that the overall objective would still be catering to the same subject. For instance, we do not find films that are shot using cameras with rotating handles. However, in this case, we can neither say that the camera industry is dead nor can we say that the film industry has died out. Both have moved on to larger and better means of making objectives meet. However, a few examples I think (and I had mentioned in the beginning I would quote) come close to being classified as extinct Industry would be:

a. Soundless films

b. Letterpress printing

c. Zeppelin

d. Typewriter

e. Pager

Human requirements remain more or less constant. That might be the basic reason industries might not be dying. Example of trends in the gaming industry-transition from computer owners to cyber café gaming (not very accessible for certain income groups) to LAN gaming-to advent of gaming consoles to another target group now adopting and sustaining the LAN gaming industry.

Another example would be the evolution of storage devices used in computing, from punch cards-magnetic tapes-floppy disks-CDs-DVDs-Universal Serial Buses and now we are at a point where we depend (knowingly or unknowingly) largely on online storage in the form of Cloud.

More or less, the factors influencing either of the graphs of PLC, BLC and ILC would be types of customers, their immediate needs and willingness to accept change or otherwise. The following table tries to review the diffusion of innovation and types of customers and what influences their behaviors during changing over to newer customs in case of a product.

	Resources
Risk taking ability		High	Low
	High	Innovators, Early adopters	Early Majority
	Low	Late Majority	Laggards

We can clearly see that high risk takers are the ones to jump over to new products while it takes time for majority of the buyers to develop trust in them.

As we come to what we can call a conclusion, we can say that the PLC, BLC and ILC are highly interdependent, not only in terms of their lifetimes but they also influence each other depending on how well a particular cycle is faring in its current phase.

Life cycle time period-PLC, ILC and BLC have different time periods for which they last. PLC and BLC may (or may not) outlast each other. It may often be that the BLC outlasts the PLC though a Product may sometimes outlast a Business.

ILC on the other hand would indicate the entire industry to which the product and business belong. Therefore, unless every business in an industry shuts down, the ILC will not complete. On the other hand, end of the ILC would indicate the end of all the BLCs and PLCs which directly fall in the Industry’s paradigm.

Until the next post, Ameya S S signing off.

P.S.

If you are planning to go to some other fast food place thinking of trying to bring down the market share of Mc'Donalds-all the best! If you are not-doesn't make a difference really. They are cemented in well, perhaps even ready for lasting an impending apocalypse (and making great business in the crisis time selling burgers and fries!).

Competition and Competitors!

Now we just have to start this one with the conflict between the concepts of 'Competition' and 'Competitor'. So "what" is competition and "who" is a competitor? The words highlighted in the question more or less give away their meanings. 

Competition can be called a state which a player enters while fighting or rivaling with another player in the same segment of products for the same area and same share of the market.

whereas,

Competitor is an entity who is competing against another entity in the same marketing space, with a similar product and for the same market share as the other entity.

It can be noticed that in both the explanations, the common paradigm is the same market share and product. This means if the product and the market space being talked about for the distinct entities lie in comparable spaces, then and then only could it be said that the entities are in competition with each other.


The competitive scenario in a market can be properly analysed using Porter's model of 5 forces analysis. The relevant components have been highlighted for the reader:

1. Industry (Segment) Rivalry:

The market in an industry might be already unattractive if the product already has strong substitutes and competitors. This might, more often than not, lead to a large amount of strife between competitors in the form of a war in terms of advertising and prices. A lot of ups and downs might be seen in such a market.

eg: Smokin Joes, Pizza Hut, Dominos, KFC, Burger King etc. along with Mc'Donalds would make up this segment of the fast-food market.

2. Potential Entrants:

Potential entrants in this diagram refers to local entrants into the business which bring in competition to the bigger fish. If the market is already very healthy with big players, a local brand might find it difficult to establish itself in the market. However, being locals, there is a greater understanding of the psyche of the  customer which might prove a deciding factor.

eg: Mc'Donalds would face local competition from popular hubs like King Burger, Burger Barn, Katta, Hite Bar etc. Though these are not establishments large enough to take business away from Mc'Donalds, they have carved a niche for themselves and have a loyal customer base which keeps returning to them.

3. Substitutes:

This here, is another force that may worry a marketer. Substitutes refers to products which might pose a threat from another which is almost identical and might prove to be a better selling one if the company selling it goes for aggressive pricing.

eg: Here, we can say that an upcoming fast-food joint (also offering similar combo meals) comes up and provides a combo at a lower price while maintaining quality on par with Mc'Donalds. Let us assume that the new company start offering discounts if you order a home delivery or order online. In such a case, it might happen that Mc'Donalds loses few of its customers to this new chain! And sometimes, a few might just be the beginning of a lot many. Though this would not be happening anytime soon, given the fact mentioned in the diagram below:

Here we can clearly see that Mc'Donalds is not getting displaced anytime soon. Though an obvious yet interesing fact is that 55% of the market belongs to non-major establishments!

As is customary with all the posts, I will try and close this on a lighter note. Mc'Donalds decision to move into India-excellent move if you are the owner of Mc'Donalds. However, for a person like me who does not really enjoy meals at the place (I may like a burger on an odd day, but I still do not enjoy one even if I like it..), it is a really heartening sight that a lot of stiff competition to Mc'Donalds has been seen in the market lately. Be it Cafe Pollo Campero, Darios, Rolls Mania-Mc'Donalds is being challenged openly in the Indian Market today. Despite this, Mc'Donalds has been, time and again, adopting great planning and campaigns and pricing strategies to maintain its image and customers in the market. This is one excellent reason why we are typing and reading Mc'Donalds here-because a student of marketing can discuss marketing in sufficient detail. After all, Mc'Donalds makes a great study case!

Will be back soon with something called PLC, ILC and BLC! Till then-Ameya S. S. logging off!

Buying decision process and Consumer behavior

Why would a consumer ever buy a product? The answer lies in at least one of the levels described in a pyramid popularly called Maslow's hierarchy of needs:


It is one of the factors mentioned in the pyramid above (with the more basic needs mentioned near the bottom of the pyramid and more complex ones as the pyramid tapers towards its apex) that influences a buyer to go for a particular product depending on his current need and the way the product will be useful in the scenario.

The actual process of buying a product is heavily influenced by two factors, the Consumer Behavior and the Buying Decision Process. We will try and demystify the two seemingly complex terms in this post!

Consumer Behavior:
Consumer Behavior is defined as "the study of how individuals, groups and organizations select, buy, use and dispose of goods, services, ideas or experiences to satisfy their needs and wants".

So we can say that consumer behavior is the study of how a marketeer should position the image and the offering from his product, taking into consideration his target audience and how this group might think, act and react to whatever he decides to project of his product. It will include a detailed study of the profile of his target consumer and his behavioral traits. This includes a study of the following with respect to the consumer:

1. Cultural factors
2. Social factors
3. Personal factors

Cultural factors:
We can say that the unspoken and unwritten rules/code adopted by a group of people may be termed as a culture pertaining to that people. Therefore, anything that falls under that set of rules or habits might influence the buying habits of the people following that culture. Someone who has been an element in the environment defined by such a culture is conditioned by influences of a culture, be them familial, peer or workplace related. Therefore, studying and targeting a particular aspect of the culture of a particular group becomes necessary for a marketer.

Social factors:
In addition to cultural factors, social factors like reference groups, family and social roles and statuses also affect the buying behavior of a consumer.

Personal Factors:

Age and Stage-
The selection process of any commodity for personal use of a consumer more than often depends on how old the consumer is. The choices of color, shape, size taste change according to a person's age and are often driving factors in the buying decision of a consumer. Also, by stage, we should refer to changes that come due to emotionally critical events in a person's life like marriage, childbirth, illness, job change, job ending etc. Due to changing mental states in such phases, buying decisions may change accordingly.

For example, considering a Mc'Donalds combo meal, an adult (except the odd case where the toy matters) would hardly go for a 'Happy Meal' and would prefer selecting the burger of his choice depending on factors like his willingness to spend, current preference of vegetarian versus non-vegetarian cravings etc.



The ultimate buying decision is based on a methodical evaluation of alternatives by a consumer even if it does not seem so when we ourselves act as consumers.

It usually looks something like-I require (need/want/desire) something-which I will get (from places/persons/entities/product lines)-of which I think I will shortlist these-of these I will select a single product which relatively fits my expectations the most-I will use this product-I will decide how I like it and if I would use it again or recommend it to someone. 

Depending on the factors like research behind the product and the intensity of requirement, few of the above stages will take either too long or too short. But this can be summed up using a 5 stage model which proposes the same thing:



1. Problem recognition:

The inception of the buying process comes from the consumer realizing that he requires something. This realization later translates into a purchase.

2. Information search:

After realizing the problem, the consumer sets out to search for potential solutions i.e. product/s which might satisfy his current need. This is called the information search phase. This information can be obtained from following sources-

a. Personal: Family, friends, neighbors etc.
b. Commercial: Advertisements, Flyers, Salespersons, Websites etc.
c. Public: Mass media, ratings etc.
d. Experiential: Contact with the product, use, feeling the product etc.

3. Evaluation of alternatives:

At this stage, the consumer is aware of what options he has when it will actually comes to the buying part. So the next difficult process is that of making the choice. The consumer usually has in mind what exactly is he expecting from his potential buy. So it is on the basis of a few parameters that he evaluates and eliminates choices, coming down to a select few in order to make his final decision.

For example, if I am looking for a quick bite which would not cost me a bomb at Mc'Donalds, I would rather go for a Mc'Aloo Tikki or a Mc'Chicken Sandwich in my combo meal rather than a burger in the Mc'Spicy range which does not qualify as both (cheap and quick)!

4. Purchase decision:

This is the stage where the consumer actually makes the decision that is being contemplated so far! This decision comes after consideration of factors such as brand, dealer, quantity, timing and mode of payment.

This is a stage when the marketer has to be extremely wary of the product positioning from the point of view of perceived risks. These may be:

a. Functional risk: Product performance
b. Physical risk: Product may cause physical harm or discomfort to user
c. Financial risk: Worth of the product
d. Social risk: Using the product brings embarrassment to user
e. Psychological risk: Product affects mental well being of the user
f. Time risk: Product is not worth the time invested in it and in cases, time that would be invested later looking for a better replacement.

5. Post-purchase behavior: 

The behavior of a consumer post making a purchase may be termed as post-purchase behavior.
This is based on how was his experience with the product, did the product perform according to the promise, how satisfying was it. Could be termed as "Post-purchase Satisfaction".
The satisfaction level is what determines what the "Post-purchase Actions" might be. If the consumer is very happy with his experience, he might end up as a repeat buyer for the product and also lead to recommendations to potential buyers. At the same time, if the experience of a buyer is not very good, he might do what is called negative publicity for the product leading to the sales getting marred.

Apart from the reaction of a customer to a product and what it offers, post-purchase behavior should consist of a study of how the buyer gets rid of his product. The below figure illustrates how a consumer may go about disposing off a product.

In the end, we may conclude that the whole circle that starts with a thought that says "I think I want to have a combo meal.." may end with either "Okay-I am going to go and get another combo meal again whenever I feel hungry!" or "What did I just eat!". The phases in between include checking your mood, deciding if you want to have a hot coffee or a glass of Coke to go with it, what burger to have (depending on how fat your wallet is!) and who am I going to have the meal with (if it is a similar thinking friend-go ahead. But if it is an important business colleague, in comes the social risk factor!). And thinking of all this from the point of view of a marketer-one who will understand who your consumer is, where is he from, what would be his expectations, how much is he willing to spend on this purchase and all the inferences that follow is a marketer who might just end up being the better seller!

Until the next post where we will discuss Competition then! Think of what you need RIGHT NOW and WHY and HOW you are going to go and get WHICH on of it!