The life cycle of a Product

All products go through a cyclical process which involves various stages of morphing before it becomes a brand.

 Harish Bijoor speaks...

 

Remember that the product is not a product. It's a service. All products satisfy certain wants, needs and desires of customers. The product mindset is one which most people in the manufacturing industries have. The services mindset is more predominant in IT, transportation and consulting firms.

Lets talk about how we move from a commodity to a product. Look at the bullock cart, which is a transport vehicle. This commodity after much iteration was converted into a product, which is a car, for example Reva. The bullock cart is very eco friendly, just like the way a Reva is eco friendly!

Life is cyclical. Lets consider the example of coffee. Initially coffee was just a drink. When there are too many products around, then comes the product brand. A clear example is Nescafe. When all product brands become strong and have a good equity, then comes service as a point of distinction. Now coffee shops want to cut through the clutter of coffee competitors.

A recent study revealed that people come in to experience the ambience at coffee shops. This survey was conducted across 16 cities and it revealed that only 7% of clients visited the store to drink coffee. About 31% of clients wanted to experience the ambiance of the café. For this group the service environment was the key to their customer experience. The study further revealed that, a huge 42% of customers visited cafes to look at other people! This seems to be a common hobby amongst many people these days. After all these changes what happened is that services became more important, and the coffee was just incidental. The service economy then booms. Several brands such as Starbucks arrive on the scene. That's when the "service brand" appears. Each one brand distinguishes itself from the other. This is when the market turns into a dog eat dog market.

At this stage it becomes difficult to replicate success. Barista as of today has about 172 cafés and in 5 years plan to have 300 cafes! Café coffee day has 607 cafes and plan to be at 3000 in about 5 years! The fundamental question arises, if they are enough numbers to cater to a country of 1.9 billion people? This is the glass ceiling for most companies in the services business.

When you reach that glass ceiling stage, what you need to do is break that glass ceiling and invent new products. In the beginning it was a product, then it went into a service and now its back to being a product. This is a divine cyclical process! In this case success as defined by the scale and is now dependent on larger number of service points.  The service has morphed into the product. For example, if Café Coffee Day launches a brand of coffee, which can be made and drunk at home, available through 70,000 outlets in India. The more households the Café Coffee Day product reaches, the more is the success of the product.

Every product has to undergo the product mindset, which is why it should morph into a service. Unless you go to a service mindset, you don't get to experience the customers' needs, wants and desires.  The essence of my message is that any society has a mix of the product and services mindset. The percentages of the mix do vary across countries. In India we have a products mindset in general. In IT/ITES we have more of a services mindset, but this is a very small percentage of the Indian mindset.  Last year we did $360 billion in retail, whereas IT did only $40 billion. In America it's the reverse. Services are bigger than products there.

The service mindset is niche. The service is virtual and is more functionality centric. The product mindset is real and more cosmetic appeal centric. No country can have a 100% of either mindset. Its like what some people call as the "Ardhnareshwari Syndrome", where every human has a mix of the male and female form. The product and services mindset is similar to the ying and yang that we are all familiar with. They co-exist albeit in different proportions all the time. The bottom-line is that, it's essential that service companies need to focus on productizing their offer and product companies need to focus on offering their product as a service.

Harish Bijoor is the CEO of Harish Bijoor Consults. A name Synonymous with Brands, he brings valuable insights on what makes a brand special, and how to create one. He plans to retire at the age of 40.

He was speaking at a Cutting Edge series Panel Discussion organized by Businessgyan and TASMAC  on the topic ‘The Product Mindset'.

Compiled by Rajiv Mathew for Businessgyan

Issue BG91 Oct 08