Innovate or die is the stark message for businesses, but it is no less true, as no business can sell the same product in its existing form for an indefinite period. Along with dynamic changes in the business environment, businesses need to respond to these changes through their products and services. If products offered are not tailored according to the needs and requirements of consumers, they will switch to competitor products. This in turn would reduce sales and profits. Hence, product innovation means product planning is a crucial function in any business.
What Is Product Planning?
Product planning is a process that involves all the activities, right from the conception of the product idea to the introduction of the product in the market. It includes product engineering and product design. Product planning basically represents the core of the process of manufacturing. Its main purpose is to organize resources in such a manner so as to manage costs, time, staff, and other resources. Any manufacturing process reaches its full potential if the product planning operation is efficient at its best.
Process of product planning
New products are not just limited to physical goods, but include new applications and new innovations as well. Product Planning may take either of the two forms:
- Creating an entirely new product or adding an existing product line.
- Modifying an existing product suitable to latest changes.
Development of new products is important to meet the ever-changing ‘needs and wants’ of consumers. Businesses may also introduce new products or update existing versions if products have reached the end of their lifecycle. Product planning is also important to counter competitors and environmental changes that the company wishes to capitalise on. Once a decision is made to undertake product planning, the following steps are followed:
- Idea Generation
The process of product planning typically commences with idea generation. A brainstorming session may be held to decide on types of products that need to be manufactured. Product concepts are devised to fill the void in the marketplace or to meet customer expectations. For this reason, it is important to undertake market research, SWOT (Strength, Weaknesses, Opportunities and Threat) analysis of the company, and analysis of competitors’ products, while encouraging product ideas from employees and partners. - Idea Screening
This stage is crucial as it helps to eliminate ideas that are not feasible. Ideas are short-listed and finally, the most preferred product is zeroed in on. Idea screening is an essential process of filtering. Factors like return on investment, market potential, company objectives, and affordability are taken into consideration while selecting the final idea. These factors are considered carefully, so as to avoid product failure down the line. - Concept Development
Customers are regarded as central to any business. Hence, it is important that their feedback is taken into consideration. It helps to develop a better understanding of customer needs and to identify the marketing message of the product. Businesses may also hire external market research teams to conduct surveys via the internet, phone or mail. These professionals conduct surveys and the information is then tabulated into bar graphs, pie diagrams, line bars, and other analytical tools for the ease of understanding. - Product Development
Once the product concept gets a go-ahead, it is then passed to the marketing stage for the creation of a limited production model in which companies develop their products on a small scale in the beginning to see if the response is favorable. This helps to reduce costs in case the product fails to take off. Companies also run advertisements and sales promotions, while tracking sales to determine the potential for success. - Product Lifecycle
Product planning does not stop with the introduction of the product. It also includes managing the product at various stages in the lifecycle. In the initial phase, sales may show a steady increase. Over time, competitors will introduce similar products that will result in a decrease in sales or a diminished market share. At this stage, various strategies need to be implemented, such as reduction of product prices, mass production, promotions and offers, product modifications, and the formulation of different marketing and distribution approaches.
The process of product planning should be seen as a form of continuous development, with limitless opportunities. Though it requires heavy commitment of technology, finance and staff, it helps in preventing a product failure. Product planning helps to diversify risks, face competition, replace obsolete products, and increase growth rate and sales revenue for the company.
