Product Planning and Development Strategy

INTRODUCTION

Product Planning and Development is the bedrock of any organization. The competitive nature of some organizations requires that managers must introduce new products in order to keep up with rivals. This paper argues using empirical that the success of any organization will depend on its ability to generate new offerings to take the place of products that no longer produce adequate level of sales.

In order to maximise his sales revenue and profits, a business firm must continuously adjust and adapt its products and services to the changing requirements of customers. From time-to- time, it may have to design and develop new products. The process of coming up with a business idea for a manufactured good, preparing the good for production and then introducing it to the market. Product planning involves managing the product's manufacture and development by selecting marketing and distribution approaches, making modifications, setting and changing prices, and offering promotions.

Product planning is the process of searching ideas for new products, screening them systematically, converting them into tangible products and introducing the new product in the market. It also involves the formation of product policies and strategies.

Product planning includes improvements in existing products as well as deletion of unprofitable or marginal products. It also encompasses product design and engineering which is also called product development. Product planning comprises all activities starting with the conception of product idea and ending up with full scale introduction of the product in the market.

Product Planning is the ongoing 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.

It is a complex process requiring effective coordination between different departments of the firm. It is intimately related with technical operations of the organisation, particularly with engineering, research and development departments.

Any product has two broad objectives - immediate objectives and ultimate objectives. Immediate objectives include satisfaction of immediate needs of consumers, increasing sales, utilising idle plant capacity, etc. Permanent or ultimate objectives consist of reduction in production costs, creation of brand loyalty, monopolising the market, etc.

Successful   organizations can be traced or linked   with successful   products.  Therefore, new product planning   and development can be described as the life blood of any business organisation. This point can be supported by the assertion made by Kotler (2000) which says that consumers and especially industrial consumers want and expect a stream of new and improved products. It is thus becoming increasingly risky for an organisation not to innovate since consumers are continuously expecting new and improved products. Continuous innovation that aimed at meeting changing needs of the consumer is one sure way to avert obsolescence and loss of public confidence in the organization.

Recently, as a result of technological innovation and competition in the market place, established products no longer maintain strong market position permanently. Kotler (2000) posited that there are too many competitors with fast moving research laboratories, sophisticated marketing strategies and large budgets standing ready to woo many customers. This implies that forward looking organizations have now realized that the key to competitive advantage is the continuous development of new and improved products, which are aimed at capturing a large share of the market.

According to Sobowale (1997), every business organization that is operating as a going concern implicitly adopts a competitive strategy whether it is stated explicitly or not .He argues further that strategies for competitive advantages are guides to businesses throughout the universe and will remain so in to the 21^st century.

In the light of the foregoing therefore, clear and effective marketing effort is highly needed by organizations in order to succeed nowadays. There is no organization that will fold its hands in this competitive environment without thinking of a well thought out marketing strategy. It is as a result of this that organizations are now intensifying their marketing effort to be a market leader by bringing about new products as a tool.

Product planning covers all activities that will enable the producer and buyer to determine the type of product line an organization should produce. It consists of determining the goods or services that the organization will market and the characteristics of the goods or services. Cooper (1993) argued that new product account for a staging 40 pre cent of company sales, on average. He defines product as ‘new’ if it has been in the market by that organization for five years or less. This figure has been going up tremendously. By 2003 new products are expected to account for over 55 per cent of company sales.   

The competitive nature of organizations requires manufacturers/producers to introduce new products in order to keep up with rivals (Robin 1982). Therefore, manufacturers must generate new offerings to take the place of products that no longer produce adequate level of revenue, since meeting changing needs of customer warrants new product development. The costs for an organization not to embark on new product development  in the long run may be substantial (2000).

The introduction of a new product is preceded by a series of important steps: marketing definition and evaluation (Day, Shocker and Srivastas 1979), idea generation and screening (Urban and Hanser 1980), concept evaluation (Hauser and Urban 1977) and pretest market evaluation (Robinson 1981, Silk and Urban 1978) and test marketing. Test markets are used for two purposes: validation of the sales fore casts made at the pretest market stage and evaluation of alternatives marketing mixes for the new product (Wind 1982 and Nonyelu 2000.

Product development

Product development is the process of designing, creating and marketing new products or services to benefit customers. Sometimes referred to as new product development, the discipline is focused on developing systematic methods for guiding all the processes involved in getting a new product to market.

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Product development involves either improving an existing product or its presentation, or developing a new product to target a particular market segment or segments. Consistent product development is a necessity for companies striving to keep up with changes and trends in the marketplace to ensure their future profitability and success. A competitive product development strategy should include a company-wide commitment to creating items that fulfill particular consumer needs or characteristics. These characteristics might include consumers' desire for the following: products that are high-quality or low-cost; products that provide the consumer with speed or flexibility; or products that offer some other form of differentiation that posits them a desirable purchase.

A number of organizations are dedicated to supporting product development professionals, such as the Product Development and Management Association (PDMA) and the Product Development Institute (PDI).

Developing a successful product line doesn’t have to be a fumble in the dark. Here are seven best practices for bringing your product to market as efficiently and economically as possible. 

1. Solicit feedback: The idea is to get people to tell you whether the product meets their needs and, if not, what might improve it. Is the product the right shape? Are buttons or other functional components in the right place? Is it the right color? Does it perform the way people want it to? 

2. Refine your design with simplicity in mind.: A straightforward product design is essential. The same goes for brand continuity among every item you sell. 

3. Don’t skimp on materials or manufacturing: A low-cost vendor isn’t necessarily your best bet. “It’s important not to make purchasing decisions based solely on price,” Ko says. “You have to go for quality and reputation.” That may mean spending a little extra, given that top-shelf suppliers, labs and manufacturers tend to charge more.

4. Price it right: Many entrepreneurs fail to factor in all overhead costs—including shipping and duties—when considering pricing. Other mistakes: gauging incorrectly what consumers will be willing to pay, not knowing where you want to sell the product and thinking you can make the same profit margin from high- and low-end retailers

5. Don’t overstock:  Sure, you don’t want to run out of product. And sure, suppliers offer discounts for larger orders. But tying up all your capital in inventory can turn your company into the Titanic. “If you think you’re going to sell 100 pieces, don’t go and buy 1,000,” Ko says. Instead, buy 110. 

6. Protect your ideas. As early as possible, you should trademark your product name, purchase the corresponding web domain and file a provisional patent application, which won’t break the bank but will allow you to stake a claim on your idea while giving you a year to file a formal application. 

7. Consider retailers and communicate wisely: Landed a meeting with a potential retailer? You need to anticipate all questions they might lob your way so you can help them see how to market and sell your product to their particular customer base. “It’s all about specificity,” says Zivelo’s Birg. 

Significance and Objects of Product Planning and Development Strategy

Product planning and development is a vital function due to several reasons. First, every product has a limited life span and needs improvement or replacement after some time. Secondly, needs, fashions and preferences of consumers undergo changes requiring adjustments in products.

Thirdly, new technology creates opportunities for the design and development of better products. Product planning and development facilitate the profitability and growth of business. Development of new products enables a business to face competitive pressures and to diversity risks. Product is the most important constituent of marketing mix.

Finding and meeting the needs of customers is the key element in a successful marketing strategy. New product development has become all the more important in the modern world characterised by technological change and market dynamics.

New product development brings opportunities but also involves heavy commitment of finance, technology and even emotional attachment. New product decisions are necessary as well as costly. Many new products fail causing ruin to business firms.

Product development is a continuous and dynamic function. Continuous adjustments and improvements in the product arc necessary to minimise costs of production and to maximise sales. High rate of product obsolescence requires product innovation frequently. At the same time, cost and time scales have increased. In some products, the gestation period is very long, sometimes longer than the life of the product.

As a result the role of R&D expert has become very important. He needs to be in touch with sales persons and actual end users. Successful technological innovation involves great resources as well as great risks. Product innovators face spectacular successes as well as disastrous failures.

Most of the new product ideas do not become actual products. Many new products achieve limited acceptance in the market. This is so because firms very often are reluctant to move away from tried and tested products.

Thus, product planning is required for the following reasons:

(i) To replace obsolete products;

(ii) To maintain and increase the growth rate/sales revenue of the firm;

(iii) To utilise spare capacity;

(iv) To employ surplus funds or borrowing capacity; and

(v) To diversify risks and face competition.

 

PHASES OF PRODUCT PLANNING

1.     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 face or various customers need. 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.

2.     Studying the market

The next step in the product planning process is studying the competition. 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. The business can then determine places in which it has an advantage over the competition to identify areas of opportunity.

3.     Market 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. Qualitative research is a method of inquiry employed in many different academic disciplines, traditionally in the social sciences, but also in market research and further contexts.

Qualitative researchers aim to gather an in-depth understanding of human behavior and the reasons that govern such behavior. The qualitative method investigates the why and how of decision making, not just what, where, when. Hence, smaller but focused samples are more often used than large samples. Quantitative research refers to the systematic empirical investigation of social phenomena via statistical, mathematical or numerical data or computational techniques.

The objective of quantitative research is to develop and employ mathematical models, theories and/or hypotheses pertaining to phenomena.

4.     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.

5.     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. PLC can be viewed as an important source of investment decision for the company.

CONCLUSION

Growth of any organization depends largely on its ability to surpass its competitors and where competitors is very stiff, an organization has to have capability and competent in developing new products, and manage them effectively.

For any organization to achieve competitive advantage in it new product planning and development, marketing managers must consider a host of factors such as the benefits that products bring to consumers, the objectives of the product planning , the product development process and the use of packaging, labeling and branding.

It is important to stress that only the organizations that take strategic marketing seriously and those that strive hard to have competitive advantage in their operation are those that will survive in this century.

Conclusively, organization must pay adequate attention to the evolvement of new products, how these products are delivered and the quality of the new product. Any attempt to ignore any of these important yardsticks will result to giving an edge to competitors.

REFERENCES

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 Cooper, R. G. (1993), Winning at New Product: Accelerating the Process from Idea to   Launch, Addison-Wesley Publishing Company Inc. Canada.

 Courtland, L. B. and John, V. T. (1992), Marketing, McGraw- Hill, Inc. USA. Pp. 298-   307.

 Gbadeyan, R. A. (2000), The Marketing of New Products and Products Failure in          Olujide, J. O. and Bamiduro, J. A. Readings in Elements of Marketing, A Book of      Readings of  Department of Business Administration, University of Ilorin, Ilorin,  Nigeria. P. 118.

 Gordon, G. A. (1969), Paradox of Research Administration, Reprint Series, No. 224,     New York, State School of Industry and Labour Relations, Ithaca, New York,          Cornell University.

 Goulding, I, and Kennedy, A. M. (1983), The Development, Adoption and Diffusion of New Industrial Products, European Journal of Marketing, vol. 17, p.7.

 Guiltain, P. and Paul, G.W. (1983) Marketing Management: Strategies and Programs,   2^nd edition. Mc Graw-Hill Inc. p. 181.

   Kotler, P. (2000), Marketing Management: Analysis, Planning, Implementation, and   Control, Prentice-Hall Int. Inc. New Jersey, USA.

 Kotler, P. and Armstrong G. (1987), Marketing: An Introduction, pp. 283-287.

 Nonyelu, G. N. (2000), Modern Marketing for Nigeria: Principles and Practice, 2^nd        edition, Africana-Feb Publishers Ltd. Onitsha, Nigeria. Pp. 135-138.

 Definition of product development  retrieved from: http://searchcio.techtarget.com/ definition/product-development-or-new-product-development-NPD