Tuesday, September 3, 2013

The challenge of growth in mature markets-Series 2

Innovation in sales is a key metric for the success of the product brand in the long term. It is well known that markets grow by the reduction of unit prices: this is how the computer became a household necessity, mobile phone sales skyrocketed, and so on. In mature markets, the goal is no longer to increase the market in volume, but to increase it in value. Well India still remains 3 digit revenue earning market where as other emerging economies are in the 2 digit category. Coming back to the topic I find that increasing the value proposition in matured markets remains key challenge.

Volume growth is different ball game which is being played by reducing the prices but value proposition, innovation remains the key player. The similar type of story can be found in mobile markets in India where companies like MicroMax, Samsung, LG, Sony etc came with different varieties of products category to different perspective of users. They removed the barriers to consumption and enhanced the value proposition of the mobile market in India. In fact in my research I find that Indian mobile market has changed and served every angle of the brand management. It is one of the best examples that can be taken by the B-school segments. Innovation leads to reduce the generation gap between product life cycles. With time, the brand becomes less narrow-minded, and acknowledging differentiated expectations, decides to respond to them. Hence innovation keeps the brand alive where as the product dies over the time.

In my research I have found the companies in other industries seldom withdraws their old products from the markets. I find that companies needs to implement a new philosophy where product withdrawals are not only accepted but encouraged. This will keep the brand alive and will get entangled with generation gap theory. In my research I have found that some companies only launch an extension after having cancelled another with a low turnover. Well they follow the theory of cash cow and other management metrics. But the product life cycle comes to an end even before the calculation of its death is being derived. This withdrawal does not have to be brutal, but can be done gradually so that clients turn to other products within the range. This leads to successful implementation of new lines of products without losing the brand valuation. This process can be termed as cleaning of products from shelves.

One of the interesting aspect I came across is that new products brings in new consumer to the existing brand and simultaneously the new product gets a new set of consumers. Every new product draws in new consumers distinct from those already consuming the established products. In so doing, they re-evaluate their overall perception of the brand gets a clear analyzed data about consumer market. Value proposition have been increased so that products gathers more brand with changing life cycle of an product.


For example Virgin airlines offered the service of pickup of its passengers at their offices by chauffeurs in Volvo cars and driven to the airport. In addition they were offered access to a shower room after landing, to get ready for their business day. This not only attracted new clients but stimulated a higher frequency rate among all clients. Hence innovation in products helps to increase the sale proposition as well as the brand image. Well the series would continue in my next article. The reason for putting everything separately is that my readers gets a clear understanding of my words and thoughts in the brand management segment.

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