Dayton High School
Mr. Martin
Lesson Objectives
After this lesson, you will be able to:
Describe the process of product planning and
development.
 Define product terms and explain their role in product
planning.
 Explain how changes in the consumer market,
competition, and production capabilities influence
product planning.
 List the six stages of product development.
 Describe and discuss the characteristics of a products
life cycle.

Product Planning

Product planning is the direction and
control of all stages in the life of a
product—from the time of its creation to
the time of its removal from the
company’s product line.

Product planning decisions may be the
most important decisions marketers
make because they commit a
company’s money or capital.
Product Planning Costs Money
Product planning decisions cost money
and takes a great deal of time and effort
to plan new products or change
established ones.
 Manufacturing and equipment cost,
inventory development, handling, and
storage may become major expenses.
 A mistake could cost millions.
The BIC Corporation

spent $11 million to
market a flask of
perfume but only made
$6 million.
Product Terms Defined
Product: Goods or services
 Product Item: A specific, physical product
 Product Line: A group of similar types of
product items that are closely related
because they satisfy a class of customer
needs, are used together, or sold to the
same customer groups
 Product Mix: The total of all product items
and product lines offered for sale by a
company.

Influences on Product Planning
Product Planning involves finding answers to seven
questions:
1. What products do our customers need and want?
2. When should we introduce a new product?
3. How broad a product mix should we offer?
4. Should we expand or modify any product line?
5. What product or products should we drop?
6. How can we develop new uses and a new image
for our product?
7. How should the product be packaged and
branded?
Influences on Product Planning
The answers to these questions will be
guided by the company’s product
objectives.
 Strategies to meet product objectives
may include:

 Introducing new products
 Improving existing products
 Developing a complete product line
 Eliminating unprofitable products
Changes in the Consumer Market
The demands of a constantly changing
consumer market are a powerful
influence on product planning.
 Example:

 A lot of companies are moving into the
digital world by creating phone and tablet
apps for basically anything to account for the
high demand of instant satisfaction.
Competition

Competition is one of the strongest
influences on product development.

If two competing products are very
similar, on marketer may try to make a
better-quality product or offer better
service.
Developing New Products
Six Steps of Product Development Process:
1.
2.
3.
4.
5.
6.
Generating Ideas
Screening Ideas
Evaluating Ideas
Preparing a Prototype of the Product
Testing the Product
Introducing the product into the marketplace
Generating Ideas

Ideas for new products can come from a
company’s customers, employees,
research staff, competitors, or computer
software programs.

Example:
 Post-it Notes
Screening Ideas

A company interested in developing a
new product usually starts out with a
large number of ideas.

The company then reviews them, saving
those that have special merit and
eliminating those that seem unfit.
Evaluating Ideas
Companies carefully evaluate the ideas
that pass the screening stage. They are
put through a thorough business analysis.
 Some questions asked include:

 Will the product meet a definite customer need?
 Will the product be a logical addition to the
company’s product mix?
 Can the product be developed, produced, and
marketed at a reasonable cost?
 Will the product produce a profit for the
company?
Preparing a Prototype
After a company screens and evaluates
a new product idea, work on the actual
product begins.
 A company must develop a product it
can manufacture easily and at a
competitive price.
 A company must design the product and
determine the kind quality of materials to
be used.
 Prototype is a model of a new product.

Testing the Product
Once a prototype has been made, it is
tested.
 It can be tested in a lab, by a special
group of customers, or under actual
market conditions.
 Test Marketing is the introduction of a
product in a small marketing area to
check customers’ reactions.
 The test market is chosen as a
representative of the total market.

Marketing the New Product
When the new product passes all the
tests, it is ready for full-scale
introduction to a market.
 Can be introduced nationwide or to a
limited market.
 A limited market can be a certain state,
type of consumer, geographic region, or
type of marketer.

Product Life Cycle
Product Life Cycle is an identifiable
cycle in a product’s life, which is
represented by its sales history over a
period of time and is usually divided into
the four stages of introduction, growth,
maturity, and decline.
 The stages of PLC are influenced by
marketing conditions such as
competition and consumer behavior.

Introduction Stage
Introduction Stage is the first
appearance of the product on the
market.
 A company puts all its effort into the
marketing and production in order to
make the product a marketing success.
 This is the least profitable segment of a
products life.

Growth Stage
Growth Stage is the period in a product
life cycle when sales and profits are
rising.
 The length of the growth stage depends
on the product and the marketing
techniques used.
 In order for a product to experience
growth, it is important that sales
increase at this time.

Maturity Stage
Maturity Stage is the period in a
products life cycle when sales remain at
a fairly even level.
 Sales begin to level off during this stage.
 When a product matures, it is time for
marketing management to consider
ways to extend the product’s life cycle,
gradually phase it out, or replace it with
another product.

Decline Stage

Decline Stage is the period in a
products life cycle during which sales
slow down.

Sometimes an increased marketing
effort will boost sales again for a while,
but the sales gain is usually temporary
and sometimes not worth the cost.
Influences on the PLC
Managing marketing strategies is
difficult because many factors can
influence the PLC at the same time.
 Three major influences on the PLC are
competition, the product’s features, and
consumer reactions.

Product Elimination
The decision to eliminate a weak
product may be difficult.
 Even though sales may be down for a
product, people may still depend on it.
 If a product is dropped to quickly, the
company’s image may be hurt.

Product Extension
A marketer may discover that changing
a successful product actually would lose
customers.
 The sales and profit position of the
product may be strong.
 This could be a chance to add a new
product to the line, or to gain more
customers by changing the marketing
mix in other ways.

Promote New Uses and Benefits
Old products can have new uses.
 For example:
Arm & Hammer baking soda, which was
originally marketed for baking, is now
also promoted as a refrigerator
freshener and toothpaste.

Change Pricing or Distribution
To answer a competitive challenge, a
marketer may raise or lower the price of
a successful product.
 Although the product does not change,
its image may.
 As a result, customers may consider it a
new bargain or a new prestige item.

Product Modification
Product Modification is a planned
change in a product or its packaging that
may include changes in features, quality,
or style.
 Most product modifications are changed
periodically just to hold a competitive
position.
 New packaging can build customer
interest or add convenience.
