Product is, probably, the most crucial component of the 6Ps. It originates directly from your consumer through an unmet need that they have.
This can be a physical item, a service, a platform or software. It is produced at a cost and is made available to the target audience at a price to help fulfil the need. Whatever the nature of the product, it always follows a lifecycle. A company can increase its competitive edge by ensuring a thorough understanding of the potential lifecycle of the product for proactive launches of product extensions or timely re-launches. Re-launches help the brand/product to remain relevant in a changing market or at the end of its lifecycle.
The 4 commonly used stages are introduction, growth, maturity and decline.
We like the hubspot model as it breaks this down into 6 stages – development, introduction, growth, maturity, saturation and decline.
Development: The development stage of the product life cycle is the research phase before a product is commercially launched for wider consumption. In the FMCG context, this is when the innovation team develops/conceptualises the product and the branding in collaboration with the R & D team, with key consumer focus groups providing feedback.
Introduction: The introduction phase is when a product is commercially launched. In the FMCG context, this is when marketing teams begin building product awareness amongst consumers and sales teams reach out to potential customers. Typically, when a product is introduced, sales volumes are low and demand builds slowly. This phase is dominated by advertising and marketing campaigns educating both the consumer and the customer (supermarket/wholesaler/distributor etc).
Growth: During this stage, consumers have accepted the product in the market and customers are beginning to buy in. This is the stage when competition begins developing.
During this phase, marketing campaigns often shift from getting customers’ buy-in to establishing a brand presence so consumers choose them over developing competitors. Additionally, as companies grow, they’ll grow distribution at existing and new customers.
Maturity: Once the brand/product gains strong foothold in market, it enters the maturity phase, with gradual slowdown in sales. The brand/product is already the market leader and demand grows only at the replacement rate.
Saturation: This means that a majority of the brand’s/product’s target households will own or use the product. At this stage, sales grows more or less on par with population. Price competition becomes intense and the brand/product teams focus on retaining shelf space and even their listings at stores.
Decline: If the product/brand doesn’t become or retain its position as the preferred brand for consumers, it enters the last stage – decline. Usually, this happens to strong brands only in the case of industry transformation. Eg. Kodak. Sales will decrease during this time and the only way to win at this stage is to innovate and launch a new or transformative solution.
It goes without saying that functionally, the product must be able to perform its function as promised and it must be available when the consumer needs it.
At this moment in time, availability in store is proving to be a bigger challenge than others. This is driving consumers to look towards what they already have for solutions and in the cases of some products/brands, is speeding up the onset of the ‘decline’ phase before the products/brands even get to the ‘saturation’ phase.
Why is availability at risk?
2021 has been a challenging year for the grocery sector. While the HGV crisis was not specifically driven by the pandemic, it only made it worse. This has caused unprecedented levels of stock outs in supermarkets. And then there is the legacy of COVID on consumption behaviour.
Covid has had a lasting impact on our lives, from the increase in home based working (driving higher consumption of toilet paper and cleaning products at home vs the office) to cooking meals at home instead of eating out (increased demand for oil, salt, cooking ingredients at the supermarket vs at wholesalers/distributors to the on-trade). People have realised that cooking at home during the pandemic has helped significantly with savings. The same goes for consumption of beer, wine & spirits at home instead of at the on-trade. These are behaviours that are expected to last, especially as the impact of price inflation is felt at home.
The above changes, combined with just in time ordering and production followed by retailers and by suppliers in this sector is putting pressure on availability.
As 2020 demonstrated, at one point, availability trumps price and brand loyalty. And, at the risk of using an over tired idiom, out of sight, out of mind.