4. Product Planning &
Screening
MKT4
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Primary Strategic Orientation
Starting point to developing a product
development strategy; must focus on 6 primary
product development orientations:


Time-to-Market – getting the product to the market
fast. Typical of rapidly changing
technologies/fashions. Trade offs: product
optimisation, performance, cost & reliability
Lower Production Cost – lowest cost or highest value.
Usually for commodity types or products reaching
maturity or where there is a consolidation/shrinking
market
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2
Primary Strategic Orientation
(contd)


Low Development Cost – involves tradeoffs
with product performance, innovation, cost &
reliability
Product Performance, Technology &
Innovation – focuses on highest level of
performance, functionality & features.
Involves high risk with newer technologies.
Trade offs: time & cost involved
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3
Primary Strategic Orientation
(Contd)
Quality, Reliability, Robustness – assures
high level of these, i.e., where safety,
reliability issues are important, e.g.,
pharmaceuticals
Service, Responsiveness & Flexibility –
focuses on providing a high level of
responsiveness to customer requirements.
Requires additional resources
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Product Development Process
Again?!
5 Step Process:



Idea generation
Idea screening & evaluaProduct development
Commercialisation
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Product Development Process
(contd)
Idea generation – can be from customers/users
of company products, from market research,
ideas from competitors, from employees/dealers
Idea Screening & evaluation - this step should
consider how attractive product is form long term
& short term perspective; how it will affect
consumers over time.



Need to screen against company’s marketing
strategies/strategic plan
Against company sales/profitability requirements
Against customer/buyers info collected in first stage
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Product Development Process
(contd)


Idea development – Need for customer
feedback again, thru market research, i.e.,
concept testing. Allows company to identify
potential market, estimate cost, revenue,
profitability (idea can be dropped at this
stage)
Product development – first stage product
makes physical appearance (could be on
CAD system)
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Product Development Process
(contd)
Commercialisation – choose marketing
mix and go ahead!
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Strategic Implications of PLC
Embryonic (or introduction): sale rises
slowly as customers try new product.
Need to spend more (say on advertising)
than earnings
Growth: Product is successful and growth
accelerates. Experience curve effect
lowers costs. Need to keep spending on
promotion. Cash inflows may only equal
outflows
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Strategic Implications of PLC
(Contd)
Shakeout: imitators come in, and weaker
similar products leave
Maturity: market saturation and sales stop
rising. The product (if still in the market) starts
paying off, and profits rise further if organization
has good share
Decline: Technical advancement brings new
products. There is a decline. Need to spend
minimal money and strategy of harvest
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PLC
Since the profits (& cashflows) vary
according to stage of growth of the
product, the organization should have a
mix of products at different stages in the
PLC
Many doubt validity of this tool – may not
apply to branded goods which have a very
long & profitable life
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Why extend the PLC?
To gain more sales thru longer presence
By extending each stage of the PLC, there
is a better chance of exposure of the
product to relevant customer groups
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Product Management Strategies for
Extending the PLC
Product diversification – creating different
product variants (e.g., newer versions of
WINDOWS)
New Product uses – applying core products to
different uses (e.g., using Macintosh computer
for desktop publishing), MP3 players, etc
Changing product layers – altering product
features to create different product families (e.g.,
HP ink let and laser printers)
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Product Marketing Strategies for
Extending the PLC
Re-positioning – changing the perceived value/intent of
product
Co-branding – enhancing (or diluting) the products brand
by associating with another strong brand
Re-packaging - e.g., Colgate toothpaste in a new
dispenser
Re-branding – a drastic/costly measure to disassociate
the brand from the previous values attached e.g., DATSUN to NISSAN
Increase frequency of use – e.g., CHIVAS REGAL, from
special occasions to drink more often
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Product Marketing Strategies for
Extending the PLC (contd)
New markets and segments – e.g.,
Eastern Europe & Africa to senior citizens
and women
Pricing & special offers – this is a
positioning tool
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Strategy Application Within the PLC
Model
Introduction – Increasing frequency of use,
pricing
Growth – Pricing, product diversification, new
product uses, changing product layers
Maturity – Re-packaging, Co-branding, Pricing,
Product diversification, New product uses
Decline – Re-branding, Re-positioning, Increase
frequency of use, New markets & segments,
Pricing
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PLC – Limitations & Benefits
Limitations




difficult to foresee transitions in stages; may
cause incorrect application of strategies
Not all products/services go thru every stage
Products do not spend the same amount of
time at each stage
Inefficient when dealing with Brands and
services
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PLC – Limitations & Benefits
(Contd)
Managers need a predictive tool for
strategy and dealing with competitors
Good for strategies application on a macro
basis
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