New Product Development Management NPDM 3 Mohsen SADEGHI Department of Graduate School of Management and Economics Sharif University of Technology

Product Planning

Product Planning, Mix, and Development The nature and scope of product planning The concept of product mix The different product mix strategies The steps in new product development

Product Mix Includes all the different products that a company makes or sells.

Product Line A group of closely related products manufactured and/or sold by a business.

Product Item A specific model, brand, or size of a product within a product line.

Width of the Gillette Product Mix Product Width The number of different product lines a business manufactures or sells. Width of the Gillette Product Mix

Product Depth The number of product items offered within each product line.

Product Mix Strategies The plan for how the business determines which products it will make or stock May develop completely new products May expand or modify their current product lines May drop existing products

Example: Developing Existing Products Companies constantly review their product mix to see if they can further expand their product lines or modify existing products. Two ways to do this:

Developing Existing Products Line Extensions – new product lines, items, or services Original Product Newer Products

Example: Developing Existing Products Product Modifications – an alteration in a company’s existing product

Product Planning Involves making decisions about those features that are needed to sell a business’s products, services, or ideas.

Product Planning Roles Resource Allocation All companies are resource-constrained People, time, money Product Mix coordination Optimal mix of products to fill market targets Marketing Program support Information about product performance Product Portfolio evaluation (separation of products by their market share and profits or growth rates) Cash, profitability, market position, strategic value

What is a Product? Inventions versus innovations Inventions are not products; they are technical devices Innovations are inventions with a marketing program Continuous innovation – “new and improved” Discontinuous innovation – “new category”

Product Planning positioning The product planning phase precedes the product development process

Product Planning Hierarchy Roadmap Product Plan NPP1 NPP2 NPP3 NPP4 Gate #1 Gate #2 Gate #3 Gate #4 MRD PRD Engineering Spec Plan of Record (POR) Launch Plan Gatekeepers = Executive Committee

Product Planning The Product Planning Process Identify Opportunities Evaluate and Prioritize Projects Allocate Resources and Plan Timing Complete Pre-Project Planning

The Product Planning Process Questions What PD projects will be undertaken? What mix of new products, platforms, and derivative products to pursue? How do the various projects relate to each other as a portfolio? What will be the timing and sequence of the project?

The Product Planning Process The product plan identifies the portfolio of products to be developed by the organization and the timing of their introduction to the market

The Product Plan The product plan identifies the portfolio of projects to be pursued by the development organization The plan may divide projects into four categories: new platforms, derivatives of existing platforms, Incremental improvements to existing products and fundamentally new products

The Process Identify opprtunities Evaluate and prioritize projects Allocate resources and plan timing Complete pre-project planning Reflect on the results and the process

Identify Opportunities Idea Sources for New Products Marketing and sales personnel Research and technolgy development organizations Current product development teams Manufacturing and operation organizations Current or potential customers Third parties such as suppliers, inventors,and business partners.

Evaluate and Prioritize Projects Opportunity funnel can collect 100s or even 1000s of opportunities during a year Select the most promising projects to pursue. Basic perspectives to prioritize: Competitive Strategy, market segmentation, technological trajectories, and product platforms

Competitive Strategy Technology leadership Cost leadership Customer focus Imitative

Market Segmentation Dividing a market into segments allows the firm to consider the actions of competitors and the strength of the existing products of the firm with respect to each well defined group of customers.

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

Technology S-curves

Product Platform Planning A platform development project creates the architecture of a family of products. Derivative Products may be included in the initial platform development effort or derivative products may follow there after. One technique for coordinating technology development with product planning is the technology roadmap..

Platforms vs Derivatives

Allocate Resources and Plan Timing Resource allocation method Project Timing Timing of product introductions Technology readiness Market readiness Competition

Complete Pre-Project Planning Core team Product vision statement Mission statements

Mission statements Brief (one sentence) description of the product Key business goals Target market(s) for the product Assumption and constraints that guide the development effort (Manufacturing, Service, Environment) Stakeholders

Reflect on the results and the process Is the opportunity funnel collecting an exciting and diverse set of product opportunitie? Does the product plan support the competitive strategy of the firm? Does the core team accept the challeges of the resulting mission statement? How can the product planning process be improved?

Why is Product Planning Important? One-third of a companies sales come from products introduced in the past 5 years Over 90% of product concepts fail during product development process Of the ones that make it to market, about a third fail 31% of commercial products, 46% of consumer products 27% of product line extensions fail 31% of new brands in existing categories fail 46% of new products in new categories fail

Why so much failure? Not listening in Product Management class Lack of marketing orientation – listening to customers Driven by engineering – the better mouse trap Rushed or incomplete product development process Lack of a defined product development process Not doing proper market/competitor surveillance

Summary Product planning involves a five-step process:1.Identify opportunities, 2. Evaluate and prioritize projects, 3. Allocate resources and plan timing,4. Complete pre-project planning, 5. Reflect on the results and the process. The opportunity funnel collects possibilities for new product platforms A mission statement for each PD project documents, the product vision, business goals, target matkets, critical assumptions, and the product’s stakeholders.

Appendix

Market Requirements Document MRD

Market Requirements Document MRD A market requirements document (MRD) in project management and systems engineering, is a document that expresses the customer's wants and needs for the product or service. It is typically written as a part of product planning or product management. The document should explain: What (new) product is being discussed. Who the target customers are. What products are in competition with the proposed one. Why customers are likely to want this product.

Sample MRD Outline Preface - The development of a Market Requirements Document (MRD) is a critical first step in any new product planning effort. The MRD provides a business view of the market requirements and environment. It also serves as the foundation for the creation of detailed product requirements/engineering specifications, and the starting point for release and launch planning.

Market Requirements Document MRD Sample Outline

Product Requirements Document PRD

Product Requirements Document PRD A product requirements document (PRD) is a document written by a company that defines a product they are making, or the requirements for one or more new features for an existing product. A PRD is often created after a marketing requirements document (MRD) has been written and been given approval by management, and is usually written before (or at least concurrently with) a technical requirements document. It is designed to allow people within a company to understand what a product should do and how it should work. PRDs are most frequently written for software products, but can be used for any type of product.A PRD should generally define the problems that a product (or product feature) must solve, but should avoid defining the technical solution to those problems. This distinction allows engineers to use their expertise to provide the optimal solution to the requirements defined in the PRD.A PRD sometimes serves as a marketing requirements document as well, particularly if the product is small or uncomplicated.

Product Requirements Document PRD Revision History Approval History Purpose of this document Introduction Purpose and Strategy Goals - Key Benefits Positioning Target Market

Product Requirements Document PRD Product Overview Features and Functionality Competitive Matrix Constraints and Dependencies Service Provisioning and Maintenance Requirements Future Plans

1. Revision History Document PRD revisions

2. Approval History What people will need to approve PRD? What dates should the approvals be due back on?

3. Purpose of this document Document the purpose of the Product Requirements Document Communicate the purpose of the PRD to stakeholders

4. Introduction Describes nature of product/service release as well as deployment details and communication

5. Purpose and Strategy Why is the product important? Who are the target customers for this product/feature? Are there any schedule requirements with regard to releases? What is the proposed strategy for the product from a product-marketing standpoint? What is the proposed implementation strategy: what modules/products will this feature interact with?

6. Goals - Key Benefits What problem is this product attempting to remedy? What key benefits will this product bring to any existing product suites? What functionality will this provide that will address an issue or improve the customer experience? Include a section if this product/feature is a direct result of customer/user feedback or recommendation.

7. Positioning This section should describe the product positioning in terms of its competitors and features.

9. Product Overview Describes what it is, what it does, how it works.

10. Features and Functionality Describe the features and functionality and associated benefits.

11. Competitive Matrix The competitive matrix should clearly specify the landscape for this new service/feature. Consider including competitor functionality matrix.

12. Constraints and Dependencies This section should detail any known or potential risks such as: resource constraints (Engineering or otherwise) or other implications of implementing feature.

13. Service Provisioning and Maintenance Describes how the service will be provisioned and maintained.

14. Requirements Functional Requirements External Interface Requirements Performance Requirements Security Requirements Usability Requirements Test Requirements Billing Requirements Pricing Requirements

14. Requirements (Page 2) Reporting Requirements Distribution and Marketing Requirements Documentation & Training Requirements Support Requirements Installation & Maintenance Requirements Environmental Requirements