PRODUCT PLANNING

Chapter 4

Baylon, JeanHernandez,

BabylynNiu, Reimond

Outline:

Product planningThe Product Planning ProcessFour types of Product Development ProcessThe Process

Step 1: Identify OpportunitiesStep 2: Evaluate and prioritize projects

Four basic perspectivesBalancing portfolio

Step 3: Allocate Resources and Plan TimingResource allocationProject timingThe Product Plan

Step 4: Complete Pre-Project PlanningMission StatementAssumption and ConstrainsStaffing and Other Pre-Project Planning Activities

Step 5: Reflect on the Results and the process

Product planning

The Product Planning Process

Product plan identifies the portfolio of products to be developed by the organization and the timing of their introduction to the market.

Organizations that do not carefully plan the portfolio of development

projects to pursue are often plagued with inefficiencies such as:

Inadequate coverage of target markets with competitive products.Poor timing of market introductions of products.Mismatch between aggregate development capacity and the number of projects pursued.

Poor distribution of resources, with some projects overstaffed and others understaffed.Initiation and subsequent cancellation of ill-conceived projects.Frequent changes in the directions of projects.

Four Types of product Development Projects

New product platformsDerivatives of existing product platformsIncremental improvements to the existing productsFundamentally new products

Four Types of product Development Projects

New product platforms

Derivatives of existing product

platforms

Incremental improvements

to existing products

Fundamentally new products

This type of project involves a major development effort to create a new family of products based on a new, common platforms

These projects extend an existing product platform to better address familiar markets with one or more new products.

These projects may only involve adding or modifying some features of existing products in order to keep the product line current and competitive.

These projects involve radically different product or production technologies and may help to address new and unfamiliar markets.

The Process

These planning activities focus on a portfolio of opportunities and potential projects and are sometimes referred to as portfolio management, aggregate product planning, product line planning, or product management.

To develop a product plan and project mission statements, we

suggest a five-step process:

Identify opportunitiesEvaluate and prioritize projectsAllocate resources and plan timingComplete pre-project planningReflect on the results and the process

Step 1: Identify Opportunities

Step 2; Evaluate and Prioritized Projects

Step 2; Evaluate and Prioritized Projects

FOUR BASIC PERSPECTIVES

Competitive StrategyMarket segmentationTechnological trajectoriesProduct platforms

Competitive Strategy

An organization’s competitive strategy defines a basic approach to markets and products with respect to competitors. The choice of which opportunities to pursue can be guided by this strategy.

Competitive Strategy

Several strategies:

Technology leadership

Cost leadershipCustomer focus

Imitative

To implement this strategy, the firm places great emphasis on basic research and development of new technologies.

This strategy requires the firm to compete on production efficiency, either through economies of scale, use of superior manufacturing methods, low-cost labor, or better management of the production system.

The firm works closely with new and existing customers to assess their changing needs and preferences.

Involves closely following trends in the market, allowing competitors to explore which new products are successful for each segment.

Market Segmentation

Customer can be usefully thought of as to distinct market segments.

Technological Trajectories

In technology-intensive businesses, a key product planning decision is when to adopt a new basic technology in a product line.Technology S-curves are conceptual tool to help think about such decisions

Light-lens Technology

TimeToday

Digital Technology

Copi

er P

rodu

ct P

erfo

rman

ce

TechnologyS-curve

Product Platform PlanningThe product

platform is the set of assets shared across a set of products.Technology Roadmap is a way to represent the expected availability and future use of various technologies relevant to the product being considered.

Platform A Platform B Project

Research and Technology

Development

Platform Product

Development

Derivative Product

Development

Legend

Product Release

Platform Development

Project

time

CylindricalDrum

HodakaProject

3-Pitch BeltPhotoreceptor

n-Pitch BeltReceptor

Document Centre

220, 203

Document Centre 240,

255 265

Document Centre

2XX

Document Centre

3XX

Technologies

20 CCD Arrayw/ Optical Reduc

Full-Width, Linear ArrayLow Emission

High Temperture

Low Melting Point

Low Melting Point,Low Emission

Monochrome: Paper, Fax, ScanLocal Network, Internet

Color: Paper, Fax, ScanLocal Network, Internet

Keypad Touchscreen Touch Screen, Remote PC

Automatic Image Quality600 dpi 600/1200 dpi 1200 dpi 1800 dpi

On-BoardDiagnotic

Remote-DialupDiagnostics

RemoteRepair

LakesProject

LakesExtensions

NextPlatform

Photo-receptor

ScannerLayout

TonerType

OutputModes

UserInterface

ImageProcessing

Diagnostic

time

Technology Roadmap

Functional Elements

Evaluating Fundamental New Product Opportunities

In addition to new versions of products in existing product categories, the firm faces many opportunities in either new markets or fundamentally new technologies.

Some criteria for evaluating fundamentally new product

opportunities includes:

Market size.Market growth rate.Competitive intensity.Depth of the firm’s existing knowledge of the market.Depth of the firm’s knowledge of technology.

Fit with the firm’s other products.Fit with the firm’s capabilities.Potential for patents, trade secrets, or other barriers to competition.Existence of a product champion within the firm.

Balancing the PortfolioThere are many methods to help manager manage an organization’s portfolio of development projects.Product-process change matrix plots the portfolio of projects along two specific dimension: the extent to which the project involves a change in the product line and the extent to which the project involves change in production processes.

Step 3: Allocate Resources and Plan

Timing

Resource Allocation

Many organizations take on too many projects without regards for the limited availability of development resources.Aggregate Planning helps an organization make efficient use of its resources by pursuing only those projects that can reasonably be completed with the budgeted resources.

Project TimingTiming of product introductions

The sooner a product is brought to market the better.

Technology readinessRobust technology can be integrated into products much more quickly and reliably.

Market readinessDetermines whether early adopters buy the low-end or high-end products.

Competitionanticipated release of competing products may accelerate the timing of development products.

The Product Plan

The plan may include a mix of fundamentally new products, platform projects, and derivative projects of varying size.

Step 4: Complete Pre-Product Planning

Core teamActivity involves a small, cross-functional team of people

Mission Statements

Brief description of the productBenefit propositionKey business goalsTarget market for the productAssumption and constraints that guide the development effort.Stakeholders

Mission Statements

1). Brief description of the product

Identifies the basic function of the product but avoids implying a specific product concept.

Mission Statements2). Benefit propositionArticulates the critical few reasons a customer would buy the product

3). Key business goalsGoals for time, cost and quality

4). Target market for the product

Identifies the primary market as well as any secondary markets that should be considered in the development effort.

Mission Statements

5). Assumption and constraints that guide the development effort.

They help to maintain a manageable project scope

6). StakeholdersAll of the groups of people who are affected by the product’s success or failure.

Assumptionsand Constraints

ManufacturingServiceEnvironment

Staffing and Other Pre-Project Planning Activities

Involve getting key members of the development staff to “sign-up” for a new project .

Budgets are also generally established during pre-project planning.

Step 5: Reflect on the Results and the

Process

Several questions to assess the quality of both the process and the

results:

Is the opportunity funnel collecting an exciting and diverse set or product opportunities?Does the product plan support the competitive strategy of the firm?Are the total resources allocated to product development sufficient to pursue the firm’s competitive strategy?Have creative ways of leveraging finite resources been considered, such as the use or product platforms, joint ventures and partnerships with suppliers?

Several questions to assess the quality of both the process and the

results:

Does the core team accept the challenges of the resulting mission statement?Are the assumptions listed in the mission statement consistent?Are the assumptions listed in the mission statement really necessary or is it the project over constrained?How can the product planning process be improved?

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