Product planning

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 decision-making 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.

Phases of Product Planning Process

Developing the product concept

In the concept phase, managers generate ideas for new products by identifying certain problems that consumers face or various customers needs. For example, a small computer retailer may see the need to create a computer repair division for the products it sells. After idea conception, managers may plan the dimensions and features of the product and develop a trial product.

Studying the market

The next step is studying the competitors. 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. Market research is a complex task, which includes analysis of products that are indirect competitors products manufactured by the company observed.

Market research

A small company should consider doing both qualitative and quantitative marketing research for its new product. Focus groups can be employed to identify relevant 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 in a variety of disciplines such as the social sciences, and is a component of market research.[1] 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.[1] The objective of quantitative research is to develop and employ mathematical models, theories and/or hypotheses pertaining to phenomena.

Market research is the one stage of product planning and regarded as the way to accomplish the activity though designing questions, preparing the samples, collecting data and analysing them. It can be thought of as a kind of the communications between markets as research in question-answer form. For example, customer satisfaction information can be obtained through surveys and market research. In short, market research is applied to get market information, market segmentation, market trend and SWOT analysis. Examples of types of market research are consumer perceptions, market structure, distribution, past trends, strengths and weakness. The process consists of 4 components: definition, collection, analysis and interpretation. The steps are objectives, planning, data collection, data analysis, reporting and marketing decisions.[1]

Market researchers use quantitative and qualitative research to gained better and more complete perspectives about a market segment or hypothesis. Qualitative research involves consideration and analysis that are non-numerical in nature, which includes questions of "how" and "what".[2] Sampson(1967) conveyed “ it is centrally concerned with understanding things rather than with measuring them”, stating that a lack of measurement can not affect the finding's accuracy. Qualitative research is suited to solve the problem areas of basic market exploratory studies, product development and diagnostic studies. In market exploratory studies, the research findings can be used to define consumer segmentations in relation to a product brand or understand the dimensions which differentiate between brands. In new product development, product, packaging, positioning and advertising information can be collected through researching to confirm a new product proposition. In diagnostic studies, qualitative research is used to determine how the brand image has changed since the start of an advertising campaign. (Gordon,Wendy,1943). The methods of qualitative research can be departed into observation and focus groups. Recently, observation is used in observation-based researches, in which people may not articulate correctly and clearly of their thoughts. A particular example is the application in in-store shopping surveys, which regularly allow customers to try the products and ask feedbacks which can be reliable and creditable. Focus group is a tool on the basis of psychotherapy where it has found that if people are divided into small groups and asked to share their opinions suggestions, and open up. Because there will generate a brainstorming effect in the groups so that a comment from one person can stimulate another one's ideas. In general, there are always need four groups to cover a single respondent type. The outcomes of group discussions are rely on the group leaders’ abilities of structuring the discussion, conducting the meeting and analysing and understanding the results.

Quantitative research is about understanding aspects of a market or what kinds of customers making up the market. And it can be split into soft and hard parts. Soft part means phenomena like customer attitudes and hard part is market size, brand shares and so on. Quantitative researchers are different from qualitative researchers, they pay more attention to asking ‘What’ questions. (Allen,Mike,1959) Quantitative research often provides three aims : description, forecasting and decision-making (Franses,Philip Hans,1963). Quantitative market research means getting relevant information or measures from each single customer or shopper who are carrying out a census in the market. It is based on the strict sampling methods so that its data or results have levels of accuracy and can be taken to represent and stand for the population or to projecting. As the large basis will be collected in quantitative research, the types of quantitative data can be fallen into market measures, customer profiles or segmentation and attitudinal data. Firstly, market measures are used to quantify and describe a market like market size, the number of shares the suppliers or brands hold, how often does consumers purchase, schema of purchasing and so on. These data can help company or brand to plan or develop their product or marketing planning. Secondly, if a company want to plan a new product, it is necessary to know about the potential consumer base such as the age of people, what types of products or service they always use. There are various forms are included in profiling data like socio-demographics, geo-demographics customer behavior. The difference between market measures and consumer profiles is that only consumers can be the target people to collect profiling data. Thirdly, attitudinal data needs to collect the minds of individuals and then get results like awareness, beliefs, preference and so on. [3] Attitude can influence behavior so that company or brand can use data to foresee customers’ future behavior and then make product planning or business decision. On the other hand, there are many elements can change customers’ attitude like price or appearance are changed. In a word, it is obvious that the communications between markets not only help each other to gain what they want but also develop the company or brand. It will make positive cycles between markets and then might promote the economy.

Thus, both of quantitative and qualitative research can be used to do market research to do the product planning and both of them are realized through communications so they can be regarded as kinds of communications between markets. The differences between quantitative and qualitative research can be summarized that qualitative research is always open-ended, more flexible, gives consumers more creativity, pays more attention to deeper understanding so that they can get deeper data and richer ideas and quantitative research are usually statistical and numerical measurement and people will be divided into groups to get sampling or comparisons.[4]

Product introduction

If the survey results prove favourable, 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.

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. Product life cycle can be viewed as an important source of investment decision for the company.

If a company or brand wants to make sure that its products are successful, it needs to study the product life cycle to analyze market attractiveness and supplement the conclusion before it launches a new product or enters a new market.[5] Product life cycle (PLC) theory is used to be explain the potential life cycle of a product from design to decline and the whole life cycle can be defined as four stages : introduction, growth, maturity and decline.[6] Product life cycle plays an important role in marketing. The first reason is that the managers will follow the four stages to make product plans for pushing out new products. Secondly, the level and growth of sales will change a lot during the four stages so the managers need to adjust the product plan appropriately and timely. The last one is that the prices and costs will decrease markedly in the early stages of the product life cycle.[7]

The first stage is introduction which means it is time for a company or brand to promote its new products. The goal of introduction is to attract customers’ attention as much as possible and confirm the products’ initial distribution, the company does not need to worry about the competition generally as the products are new. In this stage, there will have the first communication between marketers and customers as it will be the first time for consumers to know about the new products. In addition, the cost of the things will be high like research, testing and development and the sales are low as the new products’ market is small.

The second stage is growth. In this stage, the new products have been accepted in the market and their sales and profits has begun to increase, the competition has happened so that the company will promote their quality to stay competitive. The products also have basic consumers’ attention and can develop their loyal customers. There will have second communication as marketers can start to receive customers’ feedback and then make improvements.

The third stage is maturity where the sales and profit have grown slowly and will reach their peak. The firm will face fierce competition in terms of providing high quality products.

The last stage is decline which means the product is going to end and be discontinued. The sales of product will decrease until it is no longer in demand as it has become saturated, all the customers who want to buy this product has already got that. Then the company or brand will cut down the old products and pays attention to designing and developing the new products to gain back the customer base, stay in the markets and make profits.

In conclusion, although the differences will be happened if the product life cycle theory is applied to different types of products, it is important to the marketers. Product life cycle can show the strengths and weaknesses of a product so that the marketers can make a product successful and avoid loss through analyzing them. A well-managed product life cycle can also help a company or brand maximize the profit and stay in the markets for a long time. On the other hand, although the product life cycle theory seems that it just about products and marketers, it has the communications between marketers and customers. The interests, needs and feedback from the customers are necessary to the product life cycle. The consumers have demand and they are interested in the new products, the products can start their introduction, and marketers need to collect and analyze the feedback and then adjust and improve their products to meet consumers’ needs in order to increase the sales and profits in the growth and maturity stages.

References

1. Hague,Paul N.,2002
2. (Gordon,Wendy,1943)
3. (Hague,Paul N.,2002)
4. (Gordon,Wendy,1943)
5. Lambin, Jean-Jacques; Schuiling, Isabelle (2012). Market-Driven Management. doi:10.1007/978-0-230-36312-0. ISBN 978-0-230-27602-4.
6. "Product Life Cycle - Encyclopedia - Business Terms". Inc.com. 2005-11-01. Retrieved 2018-12-26.
7. Marketing Science, 2004

Sources

• Hague,Paul N.(2002) Market research : a guide to planning, methodology and evaluation.London, England: Kogan Page
• Gordon,Wendy.(1943) Qualitative market research : a practitioner's and buyer's guide. Aldershot, Brookfield, USA : Gower
• Mike Allen, Scott Titsworth, Stephen K. Hunt.(1959) Quantitative research in communication.Los Angeles, USA : SAGE
• Philip Hans Franses and Richard Paap.(1963) Quantitative models in marketing research.Cambridge, UK ; New York : Cambridge University Press
• Lambin, J.-J., Chumpitaz, R., & Schuiling, I. (2007). Market – Driven Management, 2nd ed., London, England: Palgrave Macmillan.
• Product Life Cycle (n.d) Retrieved March 28, 2016 from http://www.inc.com/encyclopedia/product-life-cycle.html
• Marketing Science. (2004).Growing, Growing, Gone: Cascades, Diffusion, and Turning Points in the Product Life Cycle.Retrieved from: http://pubsonline.informs.org/doi/pdf/10.1287/mksc.1040.0057