Product Planning Essentials

1. Product Planning Essentials Chapter 1

2. Definition of Product Planning • A product is a good or a service • Product Planning comprised of two elements • Product development • Conceive, develop, produce, and test • Product management • Commercialized, sustained, eventually withdrawn • These two elements combine for a “cradle to grave” cycle of products • Same basic cycle for consumer products and services and commercial products and services

3. Product Planning Roles • Resource Allocation • All companies are resource-constrained • People, time, money • Product Mix coordination • Optimal mix of products to fill market targets • Marketing Program support • Information about product performance • Product Portfolio evaluation • Cash, profitability, market position, strategic value

4. What is a Product? • Inventions versus innovations • Inventions are not products; they are technical devices • Innovations are inventions with a marketing program • Continuous innovation – “new and improved” • Discontinuous innovation – “new category”

5. Product from Marketing Perspective • Core benefit surrounded by attribute layers Potential Product Augmented Product Potential – All future features And capabilities of the product Augmented – Differentiated features and capabilities Expected – Base set of buyer’s expectations about product Generic – very basic form of product Core – fundamental service being acquired Expected Product Expected Product Generic Product Core Benefit

6. Product Example • Core Benefit – shelter • Generic product – YMCA or youth hostel • Expected product – Motel 6 • Augmented product – Hilton with concierge, mini-bar, flat screen HD TV • Potential product – Disney arranges air transport, airport shuttle, baggage transfer, pleasant bungalow with kitchen, meals, laundry service – all the comforts of home while on vacation

7. Company Product Porfolio • Companies can provide product for each layer • Marriott portfolio • Generic – Fairfield Inn • Expected – Courtyard, Residence • Augmented – Marriott Hotels, Marriott Suites • Potential – Marriott Resorts • Product line – a group of closely related product items • Internal resource maximization • Positioning signals to consumers • Product mix – combination of product lines • Pillsbury example page 13

8. Six Types of New Products • Cost Improvements • possibly same item with cost reductions (different than price reduction) • Product Improvements • New and improved features • Line Extensions • Tartar control toothpaste, whitening toothpaste • Market Extensions • Arm and Hammer toothpaste, laundry detergent • New Category Entries • Kodak selling batteries • New-to-the-World Products • Cell phone, DVD player, etc.

9. Why is Product Planning Important? • One-third of a companies sales come from products introduced in the past 5 years • Over 90% of product concepts fail during product development process • Of the ones that make it to market, about a third fail • 31% of commercial products, 46% of consumer products • 27% of product line extensions fail • 31% of new brands in existing categories fail • 46% of new products in new categories fail

10. Why so much failure? • Not listening in Product Management class! • Lack of marketing orientation – listening to customers • Driven by engineering – the better mousetrap • Rushed or incomplete product development process • Lack of a defined product development process • Not doing proper market/competitor surveillance

11. The Rest of the Course • Chapters 2-4 – envisioning process • Chapters 5-6 - conceptualizing steps • Chapter 7 – developing and producing steps • Chapters 8-9 – developing and testing steps • Chapter 10 – sustaining and disposing • Chapter 11 – special topics area • Chapter 12 – best practices and key learnings • We’ll go through a competition simulation as well