- Meaning and Definitions of Product Planning.
- Objectives of Product Planning.
- Importance of Product Planning.
- Elements of Product Planning.
- Types of Mass Customization.
What is Product Planning ?
Marketing encompasses decisions related to product, price, place, and promotion. Every decision is critical for the effective marketing of the brand. One of these decisions is the product decision which includes all the major aspects related with the product itself. Product planning and development is the most critical aspect of the product decision. Product planning is comprised of both the corporate plan as well as the marketing plan, based on which the product plans are made. Product planning is followed by product development, which involves finding ways to produce the product based on the blueprint of product derived during product plan. The development process also involves the decision regarding product's feasibility and profitability, i.e., whether developing the product will be profitable for the firm in the long-run or not.
Product planning involves various other decisions like designing, packaging and labeling, branding, pricing, and making alterations in the product as per the requirements of the customers. These decisions are to be taken by the marketing managers.
Definition of Product Planning
According to W.J. Stanton :
“Product planning embraces all activities which enable producers and middlemen to determine what should constitute Company's line of products",
According to Johnson :
“Product planning determines the characteristics of product best meeting the consumer's numerous desires, characteristics that add stability to products and incorporates these characteristics into the finished product".
According to Karl H. Tietjin :
"Product planning is the act of making out and supervising the search, screening, development and commercialization of new products; the modification of existing line and discontinuance of marginal or unprofitable items”.
Therefore, we can conclude that the product planning and development is comprised of the product mix decisions related with the product and services which the firm intends to produce and sell. It also includes decisions regarding product policy and strategies, which serve as guidelines for the target market and therefore, help in formulating the target market objectives.
Marketing Management Related Terms :
Objectives of Product Planning
Some of the specific objectives set-up during product planning are as follows :
1) To Identify and Fulfill Customers' Needs :
The very first objective of any product planning is to determine the customers' needs and thereafter designing the required products and services. To fulfill this objective all the resources and efforts of the firm are directed towards it.
2) To Determine Strengths and Weaknesses of the Firm :
Another objective of product planning is to determine the strengths and weaknesses of the firm so as to effectively develop the blueprint of the required product. It helps in developing such products which reduce the weaknesses of the firm and empower its strength.
3) To Ensure Optimum Utilization of Resources :
Ensuring optimum utilization of resources is also an objective of the product planning. Here, the objective is to maintain the minimum cost level of the production while allocating firm's resources in manufacturing the product. Product planning involves development of product by either manufacturing a new product or by modifying the existing one as per the customers' need. This involves use of various resources. The objective here is to economically use the costly and limited resources so as to make the production process cost-effective.
4) To Assure Firm's Survival :
Another objective of any product planning process is to assure the firm's survival in the future. A firm's long-term survival is determined by the performance of its products in market. The products that fulfill all the requirements of the customers help in the long-term growth and success of the firm. In order to survive for a longer period of time, the firm needs to incorporate innovation and renovation in its products and services.
5) To Enhance Level of Sales :
The main motive of all the firms is to enhance their sales level for earning profit. For achieving this objective, the firm uses product planning as a tool because when the product will be effective then only its sale will increase.
Importance of Product Planning
1) Initiator of the Marketing Programe :
In marketing, product planning is one of the processes undertaken at the very beginning of the marketing programe. It involves planning and deciding about the product at different stages of the product life cycle. The marketing policies, strategies, programes and procedures are greatly influenced by the decision taken regarding modification, customization, standardization and elimination of a product. Inefficient product planning will put a negative impact on all other decisions, programes, and policies, since all of them are derived or formulated on the basis of product planning.
2) Impacts Marketing Actions :
Marketing activities rotate around product planning. Hence, inappropriate planning influences the marketing activities and may lead to managerial inefficiencies in the firm. The various elements associated with the marketing programe like advertising policies, distribution channels, pricing policies, personal selling, sales promotion, etc., are all influenced by the product planning decisions.
3) Results in Customer Satisfaction :
As product planning is totally based on the assessment of the needs and requirements of the customers, only reasonable products and services are offered by the firms. This leads to the customer satisfaction. Obsolete or useless products are also eliminated through product planning, which ultimately helps the customers. Thus, customer satisfaction is the end result of an effective product planning.
4) Ensures Profitability of the Product :
Earning profits is the ultimate motive o all the firms. They focus on selling the product as per customers need and in return make profit on such sale. In doing so, product planning serves as the best way to manage fulfillment of customers needs as well as making profits out of it. For ensuring profitability of the product, the firm undertakes various researches from time to time to Know the change in the taste and preferences, needs, habits, status etc. of the customers. Based on the results of these researches, firm goes for product modification.
5) Profit Prediction :
With the help of product planning, a firm can very easily forecast its profits at different stages of product life cycle, the only thing required by the firm is to know the stage of the PLC. Also, in case of firm's declining phase, the marketers may decide about which product needs to be developed and which product should be eliminated so as to retain the stability of the firm. Such decision will be helped by appropriate product planning.
Elements of Product Planning
The various elements of product planning are as follows :
1) Product Innovation :
Product innovation is associated with modifying a product or having all new product offering some productive use. The term 'innovation' is thus related with bringing change and growth in the product. The firms which lack innovation usually fail to maintain stability in the competitive market. Product innovation helps in driving the market demand for the product and gaining profits by increasing sales. It is a method through which an idea can be converted into product and successively into profit after the product is sold.
2) Product Diversification :
The extension in the width and depth of the product line is known as ‘product diversification'. Number of product lines represents the width whereas number of variants, i.e., sizes, 'styles,, quality, colors, designs, etc., represents the depth of the product line. Product diversification
helps in incorporating growth and stability to the firm and also helps in enhancing profits. When the firm lacks managerial efficiency and finance, then at that time, product diversification seems to be the savior. It helps in balancing the losses of one product with the profit earned by the other. Further, the risk is minimized with the help of diversified product line.
3) Product Standardization :
Another element of product planning is product standardization. It includes limiting the number of variants or types of product under a particular product class. Here, uniform quality products with limited variants or larger quantities are manufactured so as to optimally utilize the scarce resources. Economies of cost as well as the human resources are the end result of such standardization processes.
4) Product Elimination :
Product elimination is also an element of the product planning. In this, several products are removed from the product line due to some defects or technological obsolescence. To determine which product is to be eliminated is a very delicate issue, therefore, it cannot be decided instantly. As the firm has invested time money and effort in a particular product, it is not easy for the marketer to eliminate it. Ethical concern also there in informing the public about the elimination. However, eliminating the right product helps in preventing the misuse of the resources and the funds can be diverted into more productive investment. Therefore, the product elimination decision should be based on deep research comprising the historical and financial research related with product.
5) Product Customization :
Product planning also includes product customization. This refers to the production of customized goods and services meant for a particular segment or type of customer. Both manufacturing and service industries can implement the product customization process.
Types of Mass Customization
Tseng and Jiao have defined the concept of mass customization as "producing goods and services to meet individual customer's needs with near mass production efficiency".
There are four types of mass customization described by J Pine II :
i) Collaborative Customization (also Considered Co-Creation) :
In collaborative customization, the firms interact with individual customers in order to know their product requirements and accordingly produce their product so that it fulfills the customer's need. Example for this can be of a cloth manufacturer who manufactures a particular kurta for an individual customer.
ii) Adaptive Customization :
Such type of customization of product is in the hands of the end-users or consumers. A standardized product is offered to the customers and they themselves alter it.
iii) Transparent Customization :
Here, the firms manufacture products of unique nature for an individual customer without clearly telling them that the product has been customized for them. Therefore, in case of transparent customization, customer's needs should be accurately assessed.
iv) Cosmetic Customization :
In cosmetic customization, the tangible products are marketed on individual basis. This means that different customers are served different ways by the marketer.