Product Planning Strategy - Chapter 3

Product Planning Strategy and Process

• Product planning strategy and process is a chapter 3 topic.
• The strategic planning process follows a pyramid structure, with the mission at the top, followed by objectives, goals, strategies, and finally, programs/tactics.
• Objectives, derived from the mission, are specific elements to be achieved by the company. Examples include: becoming the market leader, recognized leader in innovation, being profitable, increasing sales, and providing outstanding customer service.
• Goals are measurable, time-specific metrics by which objective attainment is gauged. They're narrower and more precise than objectives. An example is "50 percent of company revenue will come from new products introduced within the past three years."
• Strategies define how goals will be achieved, which is like a game plan.
• Programs/Tactics explain how individual strategies will be executed. Multiple tactics can work together under one strategy. An example is a strategy of increased innovation requires resources/training for R&D personnel.
• New product strategy is not limited to new initiatives but is a broader concept, encompassing types of markets (new or current) and technology (current or new).

Strategic Planning Process Details

• Mission: Defines the company's central purpose, direction, and scope. Google's mission is to organize the world's information and make it universally accessible and useful. Nike's mission is to bring inspiration and innovation to every athlete in the world.
• Objectives: Specific elements to be achieved by the company. Example objectives include becoming the market leader. being a recognized leader in innovation, and being profitable.
• Goals: Measurable, time-specific metrics used to define the attainment of an objective. Goals should be quantifiable, helping gauge progress towards a business objective. Examples of marketing goals include a minimum unit sales volume, percentage increase in sales, customer satisfaction, and new product launches.
• Strategies: Game plan for realizing objectives. Strategies outline how businesses will achieve specific goals.
• Programs/Tactics: How individual strategies are carried out. Multiple tactics may be used to support a specific strategy.

New Product Strategy

• A misnomer when product planning assumes that all new products necessarily represent significant changes or major initiatives. New product strategy is broader than immediate customers. It includes current customers, competitor customers, and potential customers.
• New Strategy Types - different types of markets (current or new) and technology.

Product Technology Matrix

• The product/market matrix is a tool for product strategy decisions. The matrix uses four possible product and market strategy scenarios.
• Market Penetration (improving an existing product/service for the existing market).
• Market Development (selling existing products/services to new markets)
• Product Development (creating a new product/service for an existing market)
• Diversification (creating new products/services for new markets).

Product Development Process

• Stage-Gate or phase-review product development process. Another form of this process is called the PACE process.
• The Product Development Institute offers a model for fourth-generation product development process. It adds a discovery stage at the start to increase the chances of successful breakthrough products and improve project selection.
• Transfer technology, meet technical & market needs, manage operations, implement company strategy, and manage internal control.

Common Product Development Process Issues

• Challenges in the product development process:
• Process optimization and validation: Achieving the optimal process may be impossible, and a workable process might be just as effective.
• Top management commitment and involvement are necessary to sustain the process.
• Training critical skills and knowledge are essential for the process.
• Cross-functional communication and collaboration are necessary for product development.
• Product development process should be structured with checkpoints or gates, as well as being flexible to accommodate change.
• Errors (lack of customer focus, flawed research, or meeting only some needs).

Implementing a New Product Development Process

• Five steps for implementing a new product development process, laid out in 1994:
• Establish the need.
• Gain commitment.
• Effect change.
• Work the transition.
• Monitor and improve.

Case Discussion

• A case study on a particular computer component manufacturing company (estimated at $250M per year) has problems getting their new brain wave-activated mouse (no wires) accepted by their existing customer base (OEMs). The new product appears revolutionary, but it lacks widespread market demand, and customers are not willing to pay a premium.