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

2. Product Planning

3. 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

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

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

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

7. 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

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

9. 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

10. 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:

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

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

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

14. 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

15. 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”

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

17. 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

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

19. 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?

20. 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

21. 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

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

23. 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.

24. 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

25. Competitive Strategy Technology leadership Cost leadership
Customer focus
Imitative

26. 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.

27. 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.

28. Technology S-curves

29. 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..

30. Platforms vs Derivatives

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

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

33. 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

34. 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?

35. 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

36. 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

37. 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.

38. Appendix

39. Market Requirements Document MRD

40. 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.

41. 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.

42. Market Requirements Document MRD Sample Outline

43. Product Requirements Document PRD

44. 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.

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

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

47. 1. Revision History
Document PRD revisions

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

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

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

51. 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?

52. 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.

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

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

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

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

57. 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.

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

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

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