Seasonality in Business - The Trendsetter

Published by MBA Skool Team, Published on June 15, 2014

Every business seeks to maximise its sales and profits by targeting its customers. Various strategies are adopted, promotional marketing campaigns are launched, product tweaks are done etc. But sometimes despite all efforts, the markets suddenly fall from a high and go into a slumber for some time. After a few months or weeks, the business again picks up pace and shows signs of improvement. The reason behind this is a business phenomenon which is termed as seasonality.

Seasonality is the fluctuation of a business due to the effect of seasons or a particular time of the year where the business experiences an abnormal surge or dip. And this seasonality happens year on year because of the changing behaviour of the customer with the time, which affects the demand.

Image Courtesy:, Danilo Rizzuti

One of the simplest examples can be given below. The business of warm clothes, jackets, gloves etc is seasonal as it has a strong demand only during winters. When the winters are approaching, the demand for warm clothes increases and as and when the temperature dips, the demand for coats and jackets is at its peak. After a few weeks when the day turn longer and warmer, the demand for warm clothes declines gradually and when the summers arrive, the demand for warm clothes is nil. This phenomenon repeats every year and has a seasonal effect to it. A similar trend is experienced for products like cold creams, fire-place equipment, heaters etc which are used in winters. Hence this is termed as seasonality.

A similar trend is experienced during monsoons, when water proof clothing, anti-skid tyres, anti-fogging lamps etc are popular among the customers. During summers the demand for soft drinks, sun-tan lotions, beach wear, coolers etc is on the rise. Thus, companies have to always consider this phenomenon when they are trying to understand their target audience.

In the Indian telecom sector, seasonality occurs during the summer season because 60% of the population is a farming population. The farmers do not have disposable income for their mobile phones as they wait for monsoons for their crops to flourish. Hence the summers have a negative impact on the seasonal business owing to seasonality. However, a good rainfall ensures that the farmers earn well from their crops and hence have a strong spending capacity.

Tourism, education, telecom are a few industries where seasons play an important role in defining the yearly business trend. Sub continent countries have a strong tourism in winters whereas people prefer going to Europe in the summers.

The education sector also experiences annual seasonal phases where during the exams the tendency for students to buy books, study online etc increases and then goes into a slumber during winter or summer breaks.

Businesses always make strategies beneficial for their growth. Spending millions of dollars for marketing or having new ideas for innovation. But sometimes external factors define the demand for products and services. And one such recurring phenomenon which companies have to tackle is seasonality.

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