Pragmatic (Start Up) Product Planning

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Marketing & Sales Roundtable

Pragmatic (Start-Up) Product Planning

May 2004



©2004 Arrington, Burke, Remacle 2

Agenda – Pragmatic ProductPlanning

Definitions

Benefits and Issues

Inputs

Top 10 List Appendix

Sample MRD




ProductLifecycle

Product Management




Product Planning Hierarchy

Roadmap

Product Plan

NPP1 NPP2 NPPE1 NPS4

Gatekeepers = Executive Committee

Gate #1

MRD PRDEngineering

SpecPlan of

Record (POR)Launch Plan

Gate #2 Gate #3 Gate #4




ProductPlanning

EarlyCustomer

Buy-in

Lower CostDevelopment,Fewer Revs

Risk Analysis,Mitigation

Faster Time toMarket andRevenue

BOD,Executive Team

AlignmentClear

Direction toDevelopment

Team

Total Product Planning Issues




Product Planning Process Issues

How to instill structure and process in the product planning function withoutintroducing bureaucracy?

How to get sales input without handing over control?

How to balance customer-specific requests with market and competitiveinput?

How to give the detail needed for product development without developinga full functional spec?

How to limit the number of releases to match development and marketingresource constraints?

How to mitigate product slips?

How to manage internal buy-in and approvals? How to reset expectationsdue to dynamic requirements/changes and slippage?

How to ensure product planning is part of strategic roadmap?

How to develop a product with an offshore team involved?




Research Sources and Uses

CorporatePositioning

Process

New ProductPlanning Process

LifecycleManagement

(Financial Modeling)Product Strategy

MarketingProduct Management

Customer Sat Channel calls Shows/Events Reg base, key

accounts Lost accounts

Annual Summit WW Channel,Customer AdvisoryBoards

Trade magazines Lab analysis Web ‘Crush’

Supplier visits Technology Advisory Board

Market analysts(IDC, Gartner, etc.) Financial analysts International?

CustomSurveys

QualitativeFeedback

Competitive Emerging

Technologies Subscription

Market Research




Product Planning: Top 10 List

#10: Segmentation (market and customer) and productroadmap are the foundations of product planning Becomes filter for all product concept and feature requests

#9: Qualitative research with opinion-leading customers in

target customer segment is most important researchcomponent Once identified and tested, build relationships for alpha input, beta

program and ongoing advisory

#8: Market and competitive research complete therequirements, competitive and financial picture Qualitative input from analysts, competitors, industry associations,

customer councils, advisors, gurus, historical/analogue trends, etc.

Structured, time-limited process for input from sales, SEs/FAEs,executives




Product Planning: Top 10 List(cont’d)

#7: Product manager, VP marketing own the productplanning process

With ‘meeting of the minds’, and formal approval process with

engineering and sales VPs, CEO, founders and a defined

cross-functional team#6: Detailed financial model must substantiate business

opportunity:BOM, development budget, salesforecasts by quarter, lifecycle pricing , discounts,marketing budget, etc.

#5: Two major releases/new products annually

Develop a theme/concept/name for releases with featuregroups that address/anticipate specific market needs – not‘bug fixes’




Product Planning: Top 10 List(cont’d)

#4: Establish ‘total product’ features as market

requirements for release

Support plan, partner/channel strategies must be executed inparallel with development

#3: Define clear executive (board?) review and approval

process

Formal presentation and sign-off, with regular reviews asdictated by risk assessment, development progress and market

dynamics

#2: Include launch strategy, plan outline, budget to engage

development team and reinforce delivery expectations

Go/no go dates for key launch expenditures and events




#1: Product Planning is a ContactSport!




Summary

It’s not necessary to turn product planning into a

bureaucratic process, but

It does need to be built upon customer segmentrequirements

Higher probability that you’ll get the product right, the

first time




Appendix




Sample MRD Outline

Preface - The development of a Market RequirementsDocument (MRD) is a critical first step in any newproduct planning effort. The MRD provides a businessview of the market requirements and environment. It also

serves as the foundation for the creation of detailedproduct requirements/engineering specifications, and thestarting point for release and launch planning.

The MRD in the Product Planning Process

MRD PRD

EngineeringSpec

Plan ofRecord(POR)

Release(Launch)Plan




Sample MRD Outline

When to Create/Refine an MRD New product planning Product enhancement or extension planningObjectives and Uses of an MRD Confirm market/customer need and opportunity Ensure product strategy development and refinement is market- and customer-driven Evaluate potential business model options and opportunity for ROI Identify potential partner categories and requirements in timely way Understand barriers and risks

Product reviews (review and refine MRD assumptions on quarterly basis) Allocate resourcesRisks of Not Producing an MRD Technology risk

Technology won’t work as envisioned Key component not available

Product risk Wrong product Wrong price point

Market risk No market – ‘technology looking for problem’ Established market – ‘me too product’ facing entrenched competition

Unattractive market – not big enough to be interesting Business risk

Too expensive to develop (time and $$) Not profitable to manufacture and sell




Sample MRD Outline

MRD Outline

I. Product OverviewThis section of the MRD introduces the product concept and structure. Also outlined here are assumptions regarding keyrequirements, release schedule and potential risks and dependencies.

A. Product description (high-level)

1. Market category

a. What is it (Component/SW/HW/System, usage)?

b. Where does it fit in the market (per industry/market analysts’ schema)?

c. Product category name (e.g. PC, PDA, Infrastructure SW)

2. Architecture/Core structure

a. Component – block diagramb. HW – processor, OS, storage, NW, etc.

c. SW - server, client, modules

d. System – HW, SW, NW, etc.

3. Key features and capabilities

B. Problem addressed and benefits provided by the product (prioritized in order of importance to customers)

C. Value proposition

D. Other market requirements identified but not essential to this rev

E. Product release schedule

1. Alpha2. Beta

3. Release (general availability)

F. Risks and dependencies

1. Technology – development feasibility, component availability

2. Product - performance

3. Market – timing, competition, etc.




Sample MRD Outline

II. Product Strategy

A. Strategic goals/objectives for the product

1. Role of product in the company’s strategy

2. Financial goals

B. Market vision

Why is this product important to potential customers now and in the future? Why can it be the basis for a sustainable companyversus just a point product?

1. Market trends/drivers

2. Technology enablers

3. Market segment problem being addressed by the product

C. Targeted market(s)

1. Market segment – Who has the problem being addressed (broadly), and the most critical need to get it fixed?

2. Market segment development roadmap – potential customer segments (prioritized to the extent possible)

a. Critical need drivers – ‘must-haves’ versus ‘nice to haves’

b. Sample usage scenarios

i. Current solution(s) to the problem outlined in B-3 and their deficiencies

ii. Priority requirements - table stakes – e.g. standards support, integrate-ability, performance, etc.)

iii. Barriers to adoption – for all participants in the product category, and those specific to company

3. Market size and growth rates (3-5 year CAGRs) – See Appendix A for definitions

a. Total Available Market (TAM)

b. Served Available Market (SAM)

D. Competitive Landscape

1. Primary competitor categories (direct/indirect, current/future) – strengths and weaknesses

2. Company/product differentiation against each competitor category




Sample MRD Outline

II. Product Strategy - Cont’d

E. Partnership strategy by category type

1. Technology

2. Product

3. Marketing

4. Sales/distribution

5. Other?

III. Marketing Planning Assumptions

1. Communications strategy

a. High-level message model - key points related to market, technology, product, company

b. Market leverage model – categorization of market influencers and strategy for reaching them

2. Beta program

a. Objectives

b. Criteria to select beta customers

c. How many and what type

d. Duration and management of program3. Launch strategy (Objectives and key milestone - detailed plan comes later)

4. Sales channel strategy (role of direct versus indirect)

5. International strategy – what, if any markets will be addressed in the first release




Sample MRD Outline

IV. Product Requirements

This section outlines product development priorities in more detail, and includes preliminary assumptions regarding future releasesand/or product extensions. In the event that the company’s product planning process does not include the creation of a PRD, thissection is used as the foundation for the development of engineering specifications.

A. Priority 1 features and capabilities (identify which are mandatory for first release) *See Appendix B for sample list of key elements to be addressed in core product and in support of the product.

B. Priority 2 features and capabilities (highly desirable but may not be committed to yet)C. Future requirements (may be included in future releases but not committed to at this point)D. Features that will not be implemented (with explanation of why)E. End-of-life strategy/plan

V. Financials

This section should demonstrate that the company has thought through the key financial considerations and include an Excel modeldemonstrating an attractive business opportunity given estimated (best guess) revenue assumptions and development,manufacturing, sales and marketing costs.

A. Bill of materials (preliminary make or buy assumptions for key components)B. Development budgetC. Customer adoption scenarios (how many, over what period of time)

D. Business model/pricing assumptions (over time)1. License versus subscription/hosted pricing2. System versus component (HW/SW/Service) pricing

E. Sales process1. Revenue targets and discount structures by channel2. Sales cycles

F. Marketing budget




Sample MRD Outline

VI. Cross-Functional Project Team (Roles, Responsibilities, Timeframe, Point Person)

The product planning process should involve representatives of most functional areas/departments. This section should outline theroles and responsibilities of each department, identify a departmental point person and highlight the points at which his or herinput/involvement are required.

A. Development/Engineering

B. Marketing

C. Support

D. Operations

E. Sales

F. Legal

G. International Approvals and Certifications




Sample MRD Outline

PLANNING TOOL ROLENew Product Planning Process Phased approach for managing the development of a new product that reflects stated

corporate (and product line) strategies

Market Requirements Document

(MRD)

Business view of market requirements and environment, summarizing segmentationstrategy, competitive landscape, total product composition and businessmodel/potential ROI. Source of initial product plan business assumptions

Product Requirements Document

(PRD)

Definition of features, functions, technical specifications for an individual product of family of products. Basis for development of engineering specifications

Engineering Spec Detailed engineering specifications based on MRD/PRD inputs. Core of developmentplan

Plan of Record (POR) Detailed summary of product development activities, schedule and key milestones,including Beta – Engineering/Manufacturing

Release (Launch) Plan Plan for product release detailing activities, schedule, roles, responsibilities and costs – Engineering/Manufacturing-oriented

Launch Plan Marketing plan for product launch detailing activities, schedule, roles, responsibilitiesand costs

Product Roadmap Outlines medium to long-term product platform strategy and response to marketvision (trends/drivers/enablers). Provides explanation of rationale for productevolution relative to target market segments.

Total Available Market (TAM) Total units/$ available at all potential customer companies for relevant categories of products/services and applications. Top-down approach using market forecast data

Served Available Market (SAM) 100% of the units/$ available from addressable customer companies for addressablepercentages of applications that company can serve. Should reflect company’s

technical capability, market rate of adoption of technology, geographic reach, targetmarket segment, etc.

Appendix A - Glossary of New Product Planning Terms




Sample MRD Outline

Appendix B – Sample List of Features/Capabilities* Sample list of elements to be addressed and prioritized in development andcommunications plans(What are table stakes/must haves? What are differentiators?)

Core product features/functions

Product performance metrics (relative improvements), dependencies Uptime and QoS Regulatory certifications and adherence to standards (e.g. platforms and

protocols supported) Compatibility/interoperability (backward and forward) requirements and testing Bugs/fix requirements Internationalization (e.g. Unicode-enabled)

Documentation requirements and plan (users, developers, etc.) Next generation architectural changes Environmental (e.g. ISO 1400, recycling, etc) Maintenance and technical support requirements




Presenters

Liz Arrington, Consultant

Market Focus

650-329-0823

[email protected]

Patty Burke, ConsultantMarket Focus

[email protected]

408-398-4921

Rosemary Remacle, ConsultantMarket Focus

408-244-0412

[email protected]

mailto:[email protected]






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