- Education And Career
- Companies & Markets
- Gadgets & Technology
- After Hours
- Banking & Finance
- Energy & Infra
- Case Study
- Web Exclusive
- Property Review
- Digital India
- Work Life Balance
- Test category by sumit
The Vanishing Point
Photo Credit :
Has it disappeared? As it turns out, not completely. The shoeshine boys at Mumbai's suburban railway stations still use them, so they are available somewhere. But wax shoe polish is among a number of familiar product categories that are disappearing.
Remember Sony's Walkman that spawned a number of imitators? Apple's iPods are just the latest personal music devices — along with other MP3 players that have replaced cassette-playing Walkmans. Even audiocassettes are
almost history, as are videocassette recorders (VCRs) and videotapes.
Many of these products — and product categories — have been replaced by better and advanced versions. The rate of obsolescence in consumer electronics keeps growing faster every decade. But even at the edge of consumer and personal care products such as tooth powder or talcum powder, customers like Baliga find that familiar products are slowly disappearing from store shelves.
The changes are often subtle and slow, but manage to surprise us nevertheless. What is happening in consumer markets? For one thing, demographic and lifestyle changes — helped by rising incomes — have changed consumer preferences. Then, technology and innovation are helping replace existing product versions with newer ones.
Slowly and surely, we are at the leading edge of shifts in consumer behaviour that is changing many industries — agreed, mostly small ones – and firms. Individually, many of these vanishing product categories are small markets, but cumulatively they add up to a lot.
Times Are Changing
Bhushan Kumar, managing director, T Series, which was once India's largest cassette manufacturer, recalls the hard times his company had when the world was transitioning to compact discs (CDs). "We used to make 800,000 cassettes a day eight or nine years ago," he says. "Now, we are down to about 10,000, mainly for markets in Uttar Pradesh and Bihar." But Kumar also believes that they saw it coming and embraced the newer technology to remain a successful in music publishing and marketing business.
In the lead-up to the monsoon in Mumbai, the demand for mosquito repellents tends to rise. The mosquito mat — the square pad placed in an electrical device whose fumes repelled the mosquito — was once a staple product. It is losing popularity, and being replaced by liquid repellents. But the mosquito coil, an even earlier product serving the same market, is still available in rural India where electricity is harder to come by. Similarly, toothpowder that was manufactured by multinational Colgate Palmolive and Dabur may have disappeared from cities, but is still available in rural markets.
"We cannot call it a vanishing category," says Dabur's marketing head (oral category), Rana Banerjee. "There is still a lot of potential in the segment." He says the IRS data indicates that about 24 per cent of households still use toothpowder, though he did not offer details.
Uttar Pradesh and Bihar are the largest markets for toothpowder, Banerjee adds. Another product that shifted to the rural market is talcum powder, the use of which has declined in cities and been replaced by roll-on deodorants and sprays.
Changes in lifestyle may have led to the fall in these categories, but that depends on how they are defined. "As consumers evolve, categories defined narrowly may disappear," says Devendra Chawla, president of FMCG business at Future Group. "But by defining category at the larger level, the form of delivery might change, as will the speed of this change."
Grinding It Out
Technological advances also ‘kill' product categories, but more often than not, it transforms and enlarges them. For example, small mixer grinders have replaced large food processors, (the way audiocassettes gave way to CDs and MP3 players); CRT (cathode-ray tube) television sets have all but disappeared, replaced by flat-screens: less space, greater picture quality.
"Technology reduces the cost of the replacement dramatically. CDs are now much cheaper than they used to be," says Amitabh Mall, partner with Boston Consulting Group, a global firm. "The decline in CRT TVs is as much about superior technology as it is about rising incomes and ability to pay."
Or take scooters: geared scooters such as those manufactured by Bajaj Auto have been replaced by gearless ones such as Honda's Activa or the TVS Motors' Scooty. The target audience has also undergone a transformation. Scooters are the preferred choice of women, while men have gone on to the motorbike.
|Next In Line...|
|devices and products that mark the day today are potential Red List candidates for tomorrow. Take DVDs. The cost of a movie DVD is about Rs 300-600. On-demand services such as Netflix in the US are catching up and you can already watch movies for a meagre rental. In data storage, DVDs are giving way to external hard drives and pen drives.|
But even these are under threat, with Cloud stores getting safer and cheaper. Land phones could become as rare as the good old rotary phones as people are increasingly opting for mobiles. According to one estimate, more than one in five US homes (22.7 per cent) had cell phones and no landlines, in the first half of 2009, up from 10.5 per cent in 2006. Another example is compact digital cameras — single-lens reflex (SLR) ones are getting cheaper. And, yes, auto rickshaws. As soaring crude prices inflame fuel-efficiency research, cars of the future will be giving rickshaws a run for their money.
The list of disappearing products can be a very long one: floppy drives, rotary dial phones, carbon paper, photographic film (including Polaroids and associated cameras), even the humble telegram (this last is really not a product as much as it is a service; Western Union in the US has now become a remitter of money using the same distribution).
But Harish Bijoor of the Mumbai-based firm, Harish Bijoor Consultants, does not believe that categories die. "They may die in one market, but take birth in another," he says. The new markets may be smaller, and perhaps less visible.
Categories may also disappear because of market polarisation — products at the high end cater to those consumers in each of absolute quality and others gravitate to the lowest end to meet the demands of consumers looking for absolute value. The middle gets squeezed.
Sometimes, manufacturers drive the end of the product life cycle, replacing a particular product with a better version. Take Maruti Suzuki, the company that revolutionised India's small car market in 1984 with the Maruti 800. With the exponential growth of this market, Tata Motors, Hyundai, Ford and General Motors launched models that competed with Maruti 800 and its sister products such as Alto, Zen, Swift and A-Star. Maruti will phase out the model by 2015.
A product can be ‘killed' after being acquired by a bigger brand; look at Gold Spot, after Parle's soft drinks were acquired by Coca-Cola, which launched its own Fanta. But Coca-Cola could not do the same with Thums Up, which continued to be a bigger seller than Coke or rival Pepsi for years after being acquired.
"The important lessons for manufacturers are to set up internal processes for continuous innovation that challenge norms and think out of the box. If you don't innovate, someone else will make you irrelevant," says BCG's Mall.
Future Group's Chawla agrees. "Companies need to work at higher level on category management of which brand management would be a subset," he says. "The big challenge of marketing is to stay relevant." And some have learnt that — such as FM radio companies. It was a category that nearly died a few years ago, but revived after bringing in content and programming that was relevant to young audiences, and is in sync with the times.
The next time you go to the store, take a good look around at the products on the shelves. A year or so from now, they may not be around.
(This story was published in Businessworld Issue Dated 08-08-2011)