Product Planning and development

  1.    Product Planning and development:

Meaning: - Product Planning is the on-going process of identifying and articulating market requirements that define a product's feature set. Product planning serves as the basis for decisions about price, distribution and promotion.

Product planning is the process of creating a product idea and following through on it until the product is introduced to the market. Additionally, a small company must have an exit strategy for its product in case the product does not sell. Product planning entails managing the product throughout its life using various marketing strategies, including product extensions or improvements, increased distribution, price changes and promotions.

Characteristics of Product Planning

             Product investigation

The process of product planning starts with the systematic and scientific investigation undertaken by the business enterprise with a view to know the needs and preferences of consumers regarding quality, size, design, colour, brand, packaging, shape and price etc.,

              Product modification

The product planning of business enterprise ensures the modification of existing products to meet the changing demands of consumers, which in return increases the customer satisfaction and maximizes the profit of an enterprise.        Product elimination

When a product reaches at the decline stage of its life-cycle or there may be acute competition in case of some product or its cost of production is rising and profits are declining, then it becomes necessary for the enterprise to take a decision of modification of existing products or elimination of such products and to divert the resources of the enterprise in producing some new products.

               Possibility of the production of product

The marketing manager has to determine the production possibility of the product and has to decide whether the production is possible or not. If possible then whether it suits the business or not.

 

Importance of Product Planning

The importance of Product Planning can be understood by the following facts:

Starting point of Marketing Planning

The product planning involves decision-making regarding the products to be produced by the enterprise and accordingly prepares the marketing programmes for it. According to William J. Stanton, “Product Planning is the Starting point for the entire marketing programme of the firm”. Thus, it is necessary that product planning must be completed before preparing marketing programme.

Indicator of managerial ability

Product planning is the centre of all marketing activities. It is a process which adopts all the efforts of an enterprise to forecast different aspects of product planning viz. can the product satisfy the needs and wants of consumers? Can the product face the competition? Can the consumers pay the price for the product? Can the enterprise earn desired profits? If the reply to all the questions is affirmative, the decision is taken to produce the product is decided. 

Importance from social viewpoint

The product planning is an important means to fulfil the social responsibilities of the business. It can be achieved by providing employment opportunities to the local public, by providing higher standard of living, by fulfilling social expectations of consumers, etc. These are all possible through proper planning.

Helpful in facing competition

Product planning is regarded as a competitive weapon by making effective decisions regarding product attributes, price, customer service, promotional techniques, etc. The success of marketing efforts depends upon the extent to which the products of the firm can face the competition in the market.

Product mix strategies:-

Also known as product assortment refers to the total number of product lines that a company offers to its customers. For example, a small company may sell multiple lines of products. For ex: - PATHANJALI, HUL, SAMSUNG, SONY, ECT..

Many strategic decisions must be made to manage a company's assortment of products effectively. To start, a firm must select strategies regarding its product mix. One decision is how to position the product relative to competing products and other products sold by the firm.

Another strategic decision is whether or how to expand the product mix by adding items to a line and/or introducing new lines. Altering the design, packaging, or other features of existing products is still another option among the strategies of selecting the best mix. The product mix also can be changed by eliminating an entire line or by simplifying the assortment within a line. Alternatively, management may elect to trade up or trade down relative to existing products.

Major Types of Product Mix Strategies

1) Expansion Strategy: A firm may decide to expand its present mix by increase the number of lines or the depth within the lines. Now lines may be related or unrelated to the present products. The company may also increase the number of items in its product mix.

2) Contraction Strategy: Another product strategy is to narrow the product mix, either by eliminating entire line or by simplifying the assortment with in a line. The objective is to eliminate low-profit products and to get more profit from fewer products.

3) Alteration of existing product: Sometimes organization instead of developing a complete new product improves and establishes product that can be more profitable and less risky than developing completely new one. For material goods, especially, redesigning is often the key to products, and renaissance packaging has been a very popular area for product alteration, particularly in consumer products.

4) Positioning Strategy: Positioning of product in the market is a major determinant of company profits. A product position is the image that the product projects in relation to competitive product and to other products marketed by the same company.

New product development (NPD)

covers the complete process of bringing a new product to market. New product development is described in the literature as the transformation of a market opportunity into a product available for sale.

The product can be tangible (something physical which one can touch) or intangible (like a service, experience, or belief). A good understanding of customer needs and wants, of the competitive environment and of the nature of the market represents the top required factor for the success of a new product.

Eight Simple Steps For New Product Development

#1.   Idea Generation

The development of a product will start with the concept. The rest of the process will ensure that ideas are tested for their viability, so in the beginning all ideas are good ideas (To a certain extent!)

Ideas can, and will come, from many different directions. The best place to start is with a SWOT analysis, (Strengths, Weaknesses, Opportunities and Threats), which incorporates current market trends. This can be used to analyse your company’s position and find a direction that is in line with your business strategy.

In addition to this business-centred activity, are methods that focus on the customer’s needs and wants. This could be:

• Under-taking market research
• Listening to suggestions from your target audience – including feedback on your current products’ strengths and weaknesses.
• Encouraging suggestions from employees and partners
• Looking at your competitor’s successes and failures

#2.   Idea Screening

This step is crucial to ensure that unsuitable ideas, for whatever reason, are rejected as soon as possible. Ideas need to be considered objectively, ideally by a group or committee.

Specific screening criteria need to be set for this stage, looking at ROI, affordability and market potential. These questions need to be considered carefully, to avoid product failure after considerable investment down the line.

#3.   Concept Development & Testing

You have an idea and it’s passed the screening stage. However, internal opinion isn’t the most important. You need to ask the people that matter – your customers.

Using a small group of your true customer base – those that convert – the idea need to be tested to see their reaction. The idea should now be a concept, with enough in-depth information that the consumer can visualise it.

#4.   Business Analysis

Once the concept has been tested and finalised, a business case needs to be put together to assess whether the new product/service will be profitable. This should include a detailed marketing strategy, highlighting the target market, product positioning and the marketing mix that will be used.

#5.   Product Development

If the new product is approved, it will be passed to the technical and marketing development stage. This is when a prototype or a limited production model will be created. This means you can investigate exact design & specifications and any manufacturing methods, but also gives something tangible for consumer testing, for feedback on specifics like look, feel and packaging for example.

#6.   Test Marketing

Test marketing (or market testing) is different to concept or consumer testing, in that it introduces the prototype product following the proposed marketing plan as whole rather than individual elements.

This process is required to validate the whole concept and is used for further refinement of all elements, from product to marketing message.

#7.   Commercialisation

When the concept has been developed and tested, final decisions need to be made to move the product to its launch into the market. Pricing and marketing plans need to be finalised and the sales teams and distribution briefed, so that the product and company is ready for the final stage.

#8.   Product Launch

A detailed launch plan is needed for this stage to run smoothly and to have maximum impact. It should include decisions surrounding when and where to launch to target your primary consumer group. Finally in order to learn from any mistakes made, a review of the market performance is needed to access the success of the project.

Product life cycle

The product life cycle describes the period of time over which an item is developed, brought to market and eventually removed from the market. The cycle is broken into four stages: introduction, growth, maturity and decline. The idea of the product life cycle is used in marketing to decide when it is appropriate to advertise, reduce prices, explore new markets or create new packaging.

PRODUCT LIFE CYCLE STAGES EXPLAINED

The product life cycle has 4 very clearly defined stages,
each with its own characteristics that mean different things
for business that are trying to manage the life cycle of
 their particular products.

Introduction Stage – This stage of the cycle could be the most expensive for a company launching a new product. The size of the market for the product is small, which means sales are low, although they will be increasing. On the other hand, the cost of things like research and development, consumer testing, and the marketing needed to launch the product can be very high, especially if it’s a competitive sector.

Growth Stage – The growth stage is typically characterized by a strong growth in sales and profits, and because the company can start to benefit from economies of scale in production, the profit margins, as well as the overall amount of profit, will increase. This makes it possible for businesses to invest more money in the promotional activity to maximize the potential of this growth stage.

Maturity Stage – During the maturity stage, the product is established and the aim for the manufacturer is now to maintain the market share they have built up. This is probably the most competitive time for most products and businesses need to invest wisely in any marketing they undertake. They also need to consider any product modifications or improvements to the production process which might give them a competitive advantage.

Decline Stage – Eventually, the market for a product will start to shrink, and this is what’s known as the decline stage. This shrinkage could be due to the market becoming saturated (i.e. all the customers who will buy the product have already purchased it), or because the consumers are switching to a different type of product. While this decline may be inevitable, it may still be possible for companies to make some profit by switching to less-expensive production methods and cheaper markets.

BRANDING

The American Marketing Association defines a brand as “A name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers. The legal term for brand is trademark. A brand may identify one item, a family of items, or all items of that seller. If used for the firm as a whole, the preferred term is trade name.”

ESSENTIALS OF GOOD BRANDS
1. Should be easy to pronounce

  2. It should be easy to remember
3. Able to attract the attention
4. Should suggest the company or product image
5. Should easy to recognize
6. Brand identity should be very clearly
7. The brand name should be registered
8. Should suggest the product benefits or suggest its usage


Types of brand

Ø Individual products:- car, bike etc.
Ø Product ranges: - Mercedes Benz, Audi etc.
Ø Services: - hospital educational etc.
Ø Organizations: - Company etc.
Ø Individuals: - celebrity, actors etc.
Ø Groups: - pop group, rock group etc.
Ø Events:-Olympics, car racing etc.
Ø Geographic places: - Country, state, city etc.
Ø Private label brands: - Mineral water brands etc.
Ø Media brands: - Channels etc.
Ø E-brands: - Flipkart, Amazon etc.

'Brand Equity'

Brand Equity is the value and strength of the Brand that decides it’s worth. It can also be defined as the differential impact of brand knowledge on consumer’s response to the Brand Marketing. Brand Equity exists as a function of consumer choice in the market place. The concept of Brand Equity comes into existence when consumer makes a choice of a product or a service. It occurs when the consumer is familiar with the brand and holds some favourable positive strong and distinctive brand associations in the memory.

Brand equity refers to a value premium that a company generates from a product with a recognizable name, when compared to a generic equivalent. Companies can create brand equity for their products by making them memorable, easily recognizable, and superior in quality and reliability. Mass marketing campaigns also help to create brand equity.

Brand equity has three basic components: consumer perception, negative or positive effects, and the resulting value. First and foremost, brand equity is built by consumer perception, which includes both knowledge and experience with a brand and its products.

Packaging

Packaging is the technology of enclosing or protecting products for distribution, storage, sale, and use. Packaging also refers to the process of designing, evaluating, and producing packages. Packaging can be described as a coordinated system of preparing goods for transport, warehousing, logistics, sale, and end use. Packaging contains, protects, preserves, transports, informs, and sells. In many countries it is fully integrated into government, business, institutional, industrial, and personal use.

Packaging has to fulfill a number of important functions, including

Ø  communicating the brand and its benefits;

Ø  protecting the product from damage and contamination during shipment, as well as damage and tampering once it’s in retail outlets;

Ø  preventing leakage of the contents;

Ø  presenting government-required warning and information labels.

Sometimes packaging can fulfill other functions, such as serving as part of an in-store display designed to promote the offering.

Labelling

Sellers must label products. The label may be a simple tag attached to the product or an elaborately designed graphic. The label might carry the brand name or a great deal of information. Labels identify the product or the brand. Eg. The name frooti is stamped on Mango Juice.

The label might grade the product, they might describe the product, who made it, where it was made when it was made, expiry date, what it contains, how it is to be used. Finally the label Marketing Management should promote the product through graphics. It is mandatory to print MRP on all packaged products