A Synopsis ReportOnTHE STUDY INTO THE PROCESS OF PRODUCT
PLANNING AND DEVELOPMENT IN MARKETING
For the partial fulfillment of the requirement ofMASTER OF
BUSINESS ADMINISTRATIONAffiliated to Uttar Pradesh Technical
University, Lucknow, (U.P.)(2013-2015)
Under The Guidance of: Submitted by:Dr. Avijit Dey Mr. Ankit
Kumar
Roll No.1327270012
GNIT MBA Institute6-C, Knowledge Park-II, Greater Noida ( G. B.
Nagar)
INTRODUCTIONStudy of Product Planning and Development and its
effectiveness in the New Product Development
History of Product Planning:
Modern production planning methods and tools have been developed
since late 19th century. UnderScientific Management, the work for
each man or each machine is mapped out in advance (see image). The
origin of production planning back goes another
century.Kaplan(1986) summarized that "the demand for information
for internal planning and control apparently arose in the first
half of the 19th century when firms, such as textile mills and
railroads, had to devise internal administrative procedures to
coordinate the multiple processes involved in the performance of
the basic activity (the conversion of raw materials into finished
goods by textile mills, the transportation of passengers and
freight by the railroads. Herrmann (1996) further describes the
circumstances in which new methods for internal planning and
control evolved: "The first factories were quite simple and
relatively small. They produced a small number of products in large
batches. Productivity gains came from usinginterchangeable partsto
eliminate time-consuming fitting operations. Through the late
1800s, manufacturing firms were concerned with maximizing the
productivity of the expensive equipment in the factory. Keeping
utilization high was an important objective. Foremen ruled their
shops, coordinating all of the activities needed for the limited
number of products for which they were responsible. They hired
operators, purchased materials, managed production, and delivered
the product. They were experts with superior technical skills, and
they (not a separate staff of clerks) planned production. Even as
factories grew, they were just bigger, not more complex."About
production planning Herrmann (1996) recounts that "production
scheduling started simply also. Schedules, when used at all, listed
only when work on an order should begin or when the order is due.
They didn't provide any information about how long the total order
should take or about the time required for individual operations.
In 1923Industrial Managementcited a Mr. Owens who had observed:
"Production planning is rapidly becoming one of the most vital
necessities of management. It is true that every establishment, no
matter how large or how small has production planning in some form;
but a large percentage of these do not have planning that makes for
an even flow of material, and a minimum amount of money tied up in
inventories.
Product Planning:
Production planningis
theplanningofproductionandmanufacturingprocesses in a company or
industry. It utilizes theresource allocationof activities of
employees, materialsandproduction capacity, in order to serve
different customers. Different types of production methods, such as
single item manufacturing,batch production,mass
production,continuous productionetc. have their own type of
production planning. Production planning can be combined with
production control into production planning and control, or it can
be combined and or integrated into enterprise resource
planning.Production planning is used in companies in several
different industries, including agriculture, industry, amusement
industry etc.Product planning is a plan for the future production,
in which the facilities needed are determined and arranged.A
production planning is made periodically for a specific time
period, called the planning horizon. It can comprise the following
activities: Determination of the required product mix and factory
load to satisfy customers needs. Matching the required level of
production to the existing resources. Schedulingand choosing the
actual work to be started in the manufacturing facility" Setting up
and delivering production orders to production facilities.In order
to develop production plans, the production planner or production
planning department needs to work closely together with the
marketing department and sales department. They can provide sales
forecasts, or a listing of customer orders."The "work is usually
selected from a variety of product types which may require
different resources and serve different customers. Therefore, the
selection must optimize customer-independent performance measures
such as cycle time and customer-dependent performance measures such
as on-time delivery."A critical factors in production planning is
"the accurate estimation of the productive capacity of available
resources, yet this is one of the most difficult tasks to perform
well."Production planning should always take "into account material
availability, resource availability and knowledge of future
demand."Product Development:Product developmentis the process of
designing, creating and marketing newproductsor services to benefit
customers. Sometimes referred to as new product development, the
discipline is focused on developingsystematic methods for guiding
all the processes involved in getting a newproductto market.NPD
Structure:The NPD process consists of a series of activities that
firms employ in the complex process of delivering new products to
the market. Every new product will pass through a series of stages
from ideation through design, manufacturing and market
introduction. The development process basically has three main
phases:1. Fuzzy front-end(FFE) is the set of activities employed
before the formal and well defined NPD or stage-gate process2.
Product designstarts with the development of the new product and it
ends at pre-commercialization analysis stage.3. Fuzzy back-endor
commercialization phase represent the action steps where the
production and market launch occur.The front-end phases have been
very well researched, with valuable models proposed. Peter Koen et
al. provides a five-step front-end activity called front-end
innovation: opportunity identification, opportunity analysis, idea
genesis, idea selection, and idea and technology development. He
also includes an engine in the middle of the five front-end stages
and the possible outside barriers that can influence the process
outcome. The engine represents the management driving the
activities described. The front end of the innovation is the
greatest area of weakness in the NPD process. This is mainly
because the FFE is often chaotic, unpredictable and
unstructured.Engineering design is the process whereby a technical
solution is developed iteratively to solve a given problem.The
design stage is very important because at this stage most of the
product life cycle costs are engaged. Previous research shows that
70% - 80% of the final product quality and 70% of the product
entire life-cycle cost are determined in the product design phase,
therefore the design-manufacturing interface represent the greatest
opportunity for cost reduction.Design projects last from a few
weeks to three years with an average of one year.Design and
Commercialization phases usually start a very early collaboration.
When the concept design is finished it will be sent to
manufacturing plant for prototyping, developing a Concurrent
Engineering approach by implementing practices such
asQFD,DFM/DFAand more. The output of the design (engineering) is a
set of product and process specifications mostly in the form of
drawings, and the output of manufacturing is the product ready for
sale.Basically, the design team will develop drawings with
technical specifications representing the future product, and will
send it to the manufacturing plant to be executed. Solving
product/process fit problems is of high priority in information
communication design because 90% of the development effort must be
scrapped if any changes are made after the release to
manufacturing.
NPD Models:Conceptual models have been designed in order to
facilitate a smooth process. The concept adopted by IDEO, a
successful design and consulting firm, is one of the most
researched processes in regard to new product development and is a
five-step procedure.These steps are listed in chronological
order:1. Understand and observe the market, the client, the
technology, and the limitations of the problem;2. Synthesize the
information collected at the first step;3. Visualise new customers
using the product;4. Prototype, evaluate and improve the concept;5.
Implementation of design changes which are associated with more
technologically advanced procedures and therefore this step will
require more time.One of the first developed models that today
companies still use in the NPD process is the Booz, Allen and
Hamilton (BAH) Model, published in 1982. This is the best known
model because it underlies the NPD systems that have been put
forward later.This model represent the foundation of all the other
models that have been developed afterwards. Significant work has
been conducted in order to propose better models, but in fact these
models can be easily linked to BAH model. The seven steps of BAH
model are: newproduct strategy, idea generation, screening and
evaluation, business analysis, development, testing, and
commercialization.A pioneer of NPD research is Robert G. Cooper.
Over the last two decades he conducted significant work in the area
of NPD. The Stage-Gate model developed in the 1980s was proposed as
a new tool for managing new products development processes.The 2010
APQC benchmarking study reveals that 88% of U.S. businesses employ
a stage-gate system to manage new products, from idea to launch. In
return, the companies that adopt this system are reported to
receive benefits such as improved team work, shorter cycle time,
improved success rates, earlier detection of failure, a better
launch, and even shorter cycle times reduced by about 30%.These
findings highlight the importance of the stage-gate model, making
it the single most important discovery in the area of new product
development.
PURPOSE:1. To achieve coordination among various departments
relating to production.2. To make adequate arrangement of men,
money, materials, machines tools, implements and equipment relating
to production.3. To decide about the production targets to be
achieved by keeping in view the sales forecast.4. To keep
production operation continuous.5. To achieve desired share of the
market.6. To fix right type of man for right type of job.7. To
achieve the desired level of profit.8. To make all arrangements to
remove possible obstacles in the way of smooth production.9. To
achieve economy in production cost and time.10. To initiate
production on modern lines.11. To operate the plant at planned
level of efficiency.12. To develop alternative plans in order to
meet any emergency or contingency.
Process:
1:Idea Generation
Ideationis thecreativeprocess of generating, developing, and
communicating new ideas, where anideais understood as a basic
element of thought that can be either visual, concrete, or
abstract.Ideation comprises all stages of a thought cycle,
frominnovation, to development, to actualization. As such, it is an
essential part of thedesign process, both in education and
practice.
2. Idea Screening:
A process used to
evaluateinnovativeproductideas,strategiesandmarketingtrends. Idea
screeningcriteriaare used to determinecompatibilitywith
overallbusiness objectivesand whether the idea
wouldofferaviablereturn on investment. Whatever does not meet these
criteria is typically discarded.
3. Concept Testing:Concept testing(ormarket testing) is the
process of usingquantitative methodsandqualitative methodsto
evaluate consumer response to a product idea prior to the
introduction of a product to themarket. It can also be used to
generate communication designed to alter consumer attitudes toward
existing products. These methods involve the evaluation
byconsumersof product concepts having certain rational benefits,
such as "a detergent that removes stains but is gentle on fabrics,"
or non-rational benefits, such as "a shampoo that lets you be
yourself." Such methods are commonly referred to as concept testing
and have been performed using field surveys, personal interviews
and focus groups, in combination with various quantitative methods,
to generate and evaluate product concepts.
4. Business Analysis:Business analysisis a researchdisciplineof
identifying business needs and determining solutions to business
problems. Solutions often include a software-systems development
component, but may also consist of process improvement,
organizational change or strategic planning and policy development.
The person who carries out this task is called a business analystor
BA. Business analysts do not work solely on developing software
systems. Those who attempt to do so run the risk of developing an
incomplete solution.
5. Product Development:Product developmentis the process of
designing, creating and marketing newproductsor services to benefit
customers. Sometimes referred to as new product development, the
discipline is focused ondevelopingsystematic methods for guiding
all the processes involved in getting a newproductto market.
6. Test Marketing:
Atest market, in the field of business andmarketing, is a
geographic region or demographic group used to gauge the viability
of a product or service in the massmarketprior to a wide scale
roll-out.
7. Commercialisation:Commercialization orcommercialisationis the
process or cycle of introducing a new product or production method
into the market. The term often connotes especially the entrance
into the mass market as opposed to earlier niche markets, but it
also includes a move from the laboratory into even limited
commerce.
8. Review of Market Performance: Marketing performance
measurement and management(MPM) is a term used by marketing
professionals to describe the analysis and improvement of the
efficiency andeffectivenessof marketing.This is accomplished by
focus on the alignment of marketing activities, strategies, and
metrics with business goals.It involves the creation of a metrics
framework to monitormarketing performance, and then develop and
utilize marketing dashboards to manage marketing performance.
Executive SummaryProduct Planning and DevelopmentProduct
planning and development is a vital function due to several
reasons. First, every product has a limited life span and needs
improvement or replacement after some time. Secondly, needs,
fashions and preferences of consumers undergo changes requiring
adjustments in products.Thirdly, new technology creates
opportunities for the design and development of better products.
Product planning and development facilitate the profitability and
growth of business. Development of new products enables a business
to face competitive pressures and to diversity risks. Product is
the most important constituent of marketing mix.Finding and meeting
the needs of customers is the key element in a successful marketing
strategy. New product development has become all the more important
in the modern world characterised by technological change and
market dynamics.New product development brings opportunities but
also involves heavy commitment of finance, technology and even
emotional attachment. New product decisions are necessary as well
as costly. Many new products fail causing ruin to business
firms.Product development is a continuous and dynamic function.
Continuous adjustments and improvements in the product arc
necessary to minimise costs of production and to maximise sales.
High rate of product obsolescence requires product innovation
frequently. At the same time, cost and time scales have increased.
In some products, the gestation period is very long, sometimes
longer than the life of the product.As a result the role of R&D
expert has become very important. He needs to be in touch with
sales persons and actual end users. Successful technological
innovation involves great resources as well as great risks. Product
innovators face spectacular successes as well as disastrous
failures.Most of the new product ideas do not become actual
products. Many new products achieve limited acceptance in the
market. This is so because firms very often are reluctant to move
away from tried and tested products.Thus, product planning is
required for the following reasons:(i) To replace obsolete
products;(ii) To maintain and increase the growth rate/sales
revenue of the firm;(iii) To utilise spare capacity;(iv) To employ
surplus funds or borrowing capacity; and(v) To diversify risks and
face competition.
1. Objective of the Research
This project aims at studying the process of Product Planning
and Development. Sometimes referred to as new product development,
the discipline is focused on developingsystematic methods for
guiding all the processes involved in getting a newproductto
market.Thus broad objectives of the study includes: To know the
Product Planning & Development Cycle To study the objectives
and target customers To identify the customer and to know the
buying preference of the customers
2. Research Methodology:Research methodology is simple framework
or plan for the study that is as guide in collection and analyzing
the data. It is the blue print that is followed in completes the
study. Thus, good research methodology ensures the completion of
project efficiency and affectivity. Since there are many aspect of
research methodology, the line of action has to be chosen from the
variety of alternatives, to choose the suitable method through the
assessment from various alternatives. Research methodology gives
the researcher an opportunity to put forward his argument for
having opted for certain alternatives and also at the same time he
can justify his ruling out some other possibility likes. Why
research study has been undertaken, how the research problem has
been formulated what data has been collected, what particular
technique if analyzing the data has been used and lot of similar
type question are usually answered when we talk of research problem
in study.
Sample Design: 69 responsdentsSample Composition: Youth Service
Class HousewivesThe details of the methodology adopted are
presented below:The QuestionnaireKeeping in view the objective of
the study, questionnaire was designed and tested on few employees.
After getting the proper response and sanction from the concerned
department the questionnaire was finalised.
PRIMARY DATA Market Survey. Personal Interview.
SECONDARY DATA
Magazines. Internet. Business Journal.
Response to QuestionnaireIn all 80 questionnaire were given to
employees falling in the category of supervisors and above. Out of
which 54 could be collected back duly completed. The researcher
individually contacted the employees to get response on the
questionnaire.Data entry and analysisIt has been an uphill task to
enter the enormous data received through the questionnaire which
consisted nearly 14 questions.Response to the questions, very few
was valuable for study.
Review of LiteratureWhen an organization introduces a product
into a market they must askthemselves a number ofquestions.
Who is the product aimed at?
What benefit will they expect?
How do they plan to position the product within the market?
What differential advantage will the product offer over
theircompetitors?
We must remember that Marketing isfundamentally about providing
thecorrect bundle of benefits to the end user, hence the saying
Marketing is notabout providing products or services itis
essentially about providingchanging benefits to the changing needs
and demands of the customer(P.Tailor 7/00)Philip Kotler in
Principles of Marketing deviseda very interesting conceptof benefit
building with aproductFor a analysis the bookof Principles of
Marketing by P.Kotler.
Kotler suggested that a product should be viewed in three
levels.Level 1: Core Product. What is the core benefit your product
offers?.Customers who purchase a camera are buying more then just a
camera theyare purchasing memories.Level 2Actual Product: All
cameras capture memories. The aim is to ensurethat your potential
customers purchase your one. The strategy at this levelinvolves
organizations branding, adding features and benefits to
ensurethattheir product offers a differential advantage from their
competitors.Level 3: Augmented product: What additional
non-tangible benefits canyouoffer? Competition at this level is
based around after sales service,warranties, delivery and so on.
John Lewis a retail departmental store offersfree five year
guarantee on purchases of their Television sets, this gives
their`customers the additional benefit of peace of mind over the
five years shouldtheir purchase develop a fault.
Bibliography1. Book: Product Planning Essentials Authors:
Kahn,Kenneth B. Kahn2. Book: Product ManagementAuthor: Lehmann,
Winer 3. Book: Marketing ManagementAuthor: Phillip Kotler4. Book:
The Big Book of MarketingAuthor: Anthony G. Bennett