Product Life Cycle

Product Life Cycle:
A commercial product undergoes metamorphic stages in its life. These stages constitute the Product Life Cycle (PLC). They illustrate the various phases like induction, growth, maturity and decline of a product in the market.

A product enters into the market owing to a lot of pre-launch research. The product is under constant development and the pre-launch activities are carried out with rigour. Early investors and creditors are identified.

Business Idea:
Till 1958, there were no breads in the organized sector and bread consumption was a habit typified by the British. Then, a mechanised bread unit was set up in Delhi with the name "Delbis" which produced sliced bread and packed it under the Britannia name. Thus, Britannia was not only the pioneer, but also inculcated in the people of Delhi the habit of eating white sliced bread.

Introduction:

The first sale of the product, (bringing in custom) marks the introduction of the product. The first sale of the Delbis bread commemorates its introduction phase.  The introduction stage gives weighted importance to the marketing and promotion of the product. The phase is characterised by low sales and as an outcome, low revenue thence low profit. The product is currently just thrown open into the market and is waiting for acceptance from the customer.

The Britannia bread was introduced in the late 50’s. This phase also sees customers known as the early adopters, who welcome new products with ease and start purchasing the product at this stage.

In its introductory phase, Britannia held the monopoly in the bread market in India.

Growth:

The growth phase shows gradual pickup in sales. Revenue is generated and the product is well recognised and welcome in the market. The early majority breed of customers, start purchasing the product after the initial review showered by the early adopters.

Advertising and marketing play key role in this phase.

From a company offering 2 packs - the 400gm and the 800gm plain white sliced bread - Britannia has evolved into a company offering 22 packs, catering to a variety of taste and price segments in the bread consuming market.

Maturity:

Maturity phase is where the sales are at an all time high. The market is raided by a several new players. The competition is fierce and everyone is vying for market share during this phase. Survival becomes the major objective during this phase.

Britannia Daily Fresh Bread, which finds its way to over 6 lakh households daily, is the main stay of the company’s non-biscuit business at present. Britannia added more variety like
Cherry bread, cup cakes, variants to already existent bread. Britannia hopes to drive this emerging business through the exploding modern trade and has already gained access to Reliance Retail, Trinethra and Fabmall for its breads. Britannia is widely recognized as an innovative marketer.

The late majority is the group of people who start buying at this stage.

Decline:

Decline is when the product no longer finds its place in the shopping basket. The sales declines and gradually the product fades out of the market. 

It is a long time before Daily Fresh sees its decline.

Understanding Consumer and Consumption

Understanding the Consumer and Consumption:

Total Customer Value:

The satisfaction that a customer gets on the purchase decision of a product is called as the total customer value (i.e.) the benefit a customer gets out of the purchase. The various factors that constitutes Total customer value are,

• Image Value-  Britannia is the market leader. So being able to purchase a loaf of Daily Fresh bread adds to the image value of the customer.
• Personnel Value- Since Daily Fresh is a tangible product that doesn not involve any sort of delivery or other intangible services, the utmost personnel value that a customer draws out of the product is the customer care helpline provided on the wrapper.
• Service Value- As discussed earlier, there is no specific service value Dily Fresh delivers to the consumer.
• Product Value- The product in itself delivers a lot of value. The variant are designed to cater to specific target groups- Sandwich bread, White Bread, Multigrain Honey Oats bread et al.

Total Customer cost:

Total customer cost refers to the benefit a customer gets for the payment he makes for a product or a service. Here, the customer will see if their money is spent worth on the particular product. Total customer cost is a cost spent on the following entities.

• Monetary Cost (the price of the product) The consumer pays 21 rupees for an 800 gm loaf of Daily Fresh Bread
• Time Cost (time consumed to buy a product) The time spent in making it to the closest rtail outlet- the kirana, hypermarts, mom and pop stores in order to buy a loaf of bread. And again, bread is a perishable comodity. So the customer needs to frequent these shops on a daily basis inorder to buy bread. This also increases the time spent on buying a loaf of bread as opposed to buying a shampoo/ soap that lasts longer
• Energy Cost (energy spent to buy a product. Energy cost is criticised to be of less depth in this subject) The energy spent in walking or the fuel spent on travelling to the store
• Psychic Cost (other the psychological factors) This doesn’t hold relevance to the product

Consumer Buying Behaviour

Consumer buying process:

There are 6 stages that a consumer goes through before he decides to purchase and thereafter repurchase a product.

1. Problem Recognition(awareness of need)--difference between the desired state and the actual condition. Deficit in assortment of products. Hunger--Food. Hunger stimulates your need to eat.
   Daily fresh Loaf of bread is purchased inorder to serve breakfast needs of people.
2. Information search--
• Internal search, memory.
• External search if you need more information. Friends and relatives (word of mouth). Marketer dominated sources; comparison shopping; public sources etc.

A successful information search leaves a buyer with possible alternatives, the evoked set.

The only information search that is available in case of this product is the word of mouth. Daily Fresh being a prominent brand is most likely to frequent the shopping lists in a household.

3. Evaluation of Alternatives--need to establish criteria for evaluation, features the buyer wants or does not want. Rank/weight alternatives or resume search.

The possible alternatives that bread can have are the various other breakfast products that are available in the market. The others include cereals and corn flakes. Bread is still the forst option that a household will opt for its ready to serve and almost has no prep time.

4. Purchase decision--Choose buying alternative, includes product, package, store, method of purchase etc.
5. Purchase--May differ from decision, time lapse between 4 & 5, product availability.
6. Post-Purchase Evaluation--outcome: Satisfaction or Dissatisfaction. Cognitive Dissonance, have you made the right decision. This can be reduced by warranties, after sales communication etc.
   After eating an indian meal, may think that really you wanted a chinese meal instead. Daily Fresh offers a huge range of variants. This leads to the customer picking him the type that suits him and his requirement the best. This leads to increased satisfaction and the consumer is most likely to buy the product for a second time.
   

Market Structure and Competition

Market Structure and Competition:

Market Structure:

The Bread industry is low - tech and low margin industry. In 1977, the Government of India had reserved bread industry for small scale industries (SSI). The then existing two large units viz., Britannia Industries Limited and Modern Food Industries Ltd. were however allowed to continue on the basis of their respective existing installed capacity.

35 percent of the total production comes from the small scale sector with about 1500-1800 units in operation. The organized sector accounts for 20 percent of the total production. The balance production comes from the un-organized traditional bakery units operating under cottage/tiny sector numbering approximately 65000 units in the country.

Major players:

 The two major players i.e. BIL & MFIL are having a market share of 10-12 percent and 7-8 percent respectively. Apart from these two, there are few large regional players such as Spencers in South India, Vibbs in Maharashtra, Harvest Gold and Perfect in Delhi, etc.

Bread being consumed by wide cross - section of the society, the marketing of bread is based on a strong retail distribution network which services the customers. As bread industry is a low margin business, cost control is crucial in sustaining profitability in the long run.

The total market size of bread industry is approximately 15 billion standard loaves (SL) or 1.5 million tonnes. The current growth is around 5 - 6 percent p.a. and is expected to remain in the same level in the medium term. Citing the financial distress faced by the bread industry, All India Bread Manufacturers Association sought assistance from government and sought inclusion of bread in Centre-sponsored schemes

Introduction

Introduction

Bakery industry in India is probably the largest among the processed food industries, production of which has been increasing steadily in the country.  Bakery products once considered as sick man’s diet have now become essential food items of the vast majority of population. The two major bakery industries, viz., bread and biscuit account for about 82% of the total bakery products. The annual production of bakery products which includes bread, biscuits, pastries, cakes, buns, rusk, etc  most of which are in the unorganized sector, is estimated to be in excess of 3 million tonnes.  The production of bread and biscuits in the country both in the organized and un-organized sectors is estimated to be around 1.5 million tonnes and 1.1 million tonnes respectively. Of the total production of bread and biscuits about 35% is produced in the organized sector and the remaining is manufactured in the unorganized sector. Indian Bakery sector is indicating significant growth both in terms of volumes and customer base. The sector, which is estimated at Rs 3,500 crore, is currently registering a 40% growth according to industry sources. The production of Bakery products has increased from 5.19 lakh tonnes in 1975 to 18.95 lakh tonnes in 1990 recording four-fold increase in 15 years.

Some of the frequented bakeries in the country: Sweet Chariot, Modern Bakery, Daily Bread in Bangalore, Monginis, Birdie's, Croissants in the west and in the north and eastern parts of the country, there are quite a few big players too.

There are three segments in the Indian bread industry such as Regular, Popular and Nutrichoice. Britannia's major strength has been to build presence across all price segments. They have succeeded in doing so in a well-balanced manner, each segment contributing approximately a third of revenues. Britannia approaches the high-volume, low-price category, through its Regular Bread.