Aspects of Product Planning

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.

Developing the Product Concept

The first phase of product planning is developing the product concept. Marketing managers usually
create ideas for new products by identifying certain problems that consumers must solve or various
customer needs. For example, a small computer retailer may see the need to create a computer repair
division for the products it sells. After the product idea is conceived, managers will start planning the
dimensions and features of the product. Some small companies will even develop a product mock-up
or model.

Studying the Market

The next step in the product planning process is studying the competition. Most small companies will
order secondary research information from vendors such as the NPD Group and Forrester Research.
Secondary research usually provides details on key competitors and their market share, which is the
percent of total sales that they hold in the marketplace. Some companies may also do a SWOT analysis
(strengths, weaknesses, opportunities and threats), according to NetMBA.com, which will help them
compare their strengths and weaknesses against those of key competitors. The business can then
determine places in which it has an advantage over the competition to identify areas of opportunity.
For example, a small company with a high-quality image may be able to find additional markets for its
products.

Marketing Research

A small company should consider doing both qualitative and quantitative marketing research for its
new product. Focus groups are an example of qualitative information. Focus groups allow companies
to ask their consumers about their likes and dislike of a product in small groups. A focus group allows
the company to tweak the product concept before testing it through phone surveys--a more
quantitative marketing research function. Phone surveys enables a company to test its product
concept on a larger scale, the results of which are more predictable across the general population.

Product Introduction

If the survey results prove favorable, the company may decide to sell the new product on a small scale
or regional basis. During this time, the company will distribute the products in one or more cities. The
company will run advertisements and sales promotions for the product, tracking sales results to
determine the products potential success. If sales figures are favorable, the company will then expand
distribution even further. Eventually, the company may be able to sell the product on a national basis.

Product Life Cycle

Product planning must also include managing the product through various stages of its product life
cycle. These stages include the introduction, growth, maturity and decline stages. Sales are usually
strong during the growth phase, while competition is low. However, continued success of the product
will pique the interest of competitors, which will develop products of their own. The introduction of
these competitive products may force a small company to lower its price. This low pricing strategy
may help prevent the small company from losing market share. The company may also decide to
better differentiate its product to keep its prices steady. For example, a small cell phone company may
develop new, useful features on its cell phones that competitors do not have.

Fashion Product Definition

Fashion product can be either softline or hardline and is identified as fashion if its lifecycle is short,
i.e. the product's lifecycle will include a single selling season or less. Fashion products change
frequently; the product delivered for a new season may be similar to product delivered in the past,
but it is not the identical product. For example, colors may have changed for an outerwear jacket,
or features may be updated for a boat. Fashion products require the assortment planning process
to determine the amount of required receipts, which once derived are input to the allocation
system.

EXHIBIT 2 – Fashion Product Assortment Planning Process: Fashion product utilizes the
full assortment planning process that includes the following steps,
Basic Product Definition

Basic product can also be either softline or hardline and is identified as 'basic' if its lifecycle is long,
i.e., the identical product will be delivered several times over the course of multiple seasons. Basic
products essentially do not change; colors and features remain constant over the product's life.
Sales and inventory for basic products are managed through the replenishment system. The
assortment planning process serves as a checkpoint to determine if the product meets
performance criteria and should continue to be included in the assortment.

EXHIBIT 3 – Basic Product Planning Process: Inventory management for basic products
occurs in the replenishment system. The assortment planning process for basic products
is modified,

Basic products can be included in assortment plans, thus providing a complete picture of The
Multi-Channel Retailer product offering. This complete picture is necessary to the proper
management of the merchandise assortment and it can be difficult to make decisions about
fashion products - i.e. what to include and what not to include - without understanding the entire
product mix. It is important to note that detailed plans for each basic product should not be
developed; as the time and effort is to plan each basic product in assortment planning is
redundant and may be counter to the replenishment system. Basic products should be planned at
an aggregated level, i.e., the portion of basic products in each class. This approach allows the
appropriate resources to be devoted to developing Fashion product assortment plans.

Annually, each basic product's performance should be reviewed against the parent category's
established sales and margin threshold by to determine if the product should be dropped from the
assortment or continue in the assortment. Any product performing below the threshold is dropped
from the assortment. The process of dropping basic products ensures freshness in the product
offering and maximizes return on inventory investment.

EXHIBIT 4 – Advantages & Disadvantages of Fashion vs. Basic Assortment Planning

 Process For New Product Development

Developing the tangible product or service is only a small part of the new product development
process, which includes the complete journey from generating the initial idea to bringing the product
to market.

By setting out the steps involved, and sticking to them, your product development will become a more
focused and flexible approach that can be adapted for all different types of products and services.

#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.

This stage gives you a chance to develop the concept further, considering their feedback, but also to
start thinking about what your marketing message will be.

#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.

This analysis needs to include: whether there is a demand for the product, a full appraisal of the costs,
competition and identification of a break-even point.

#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. 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.