Product Planning refers to the systematic decision making related to all aspects of the development and management of a firms’ product line or product mix i.e. the number of product items to be offered by the firm to the market.
Product Planning serves as the basis for decisions about products’ price, distribution and promotion and reduces the risk of product failure and inclusion of unprofitable products. It consists of factors such as creating new products, eliminating old products and improving existing products. The purpose of product planning is to earn maximum profits, to provide maximum satisfaction to the consumers and to make the best possible exploitation of available resources of the enterprise. The term “Product Planning” has been defined by the following eminent authors:
- Johnson: “Product Planning determines the characteristics of product best meeting the consumer’s numerous desires, characteristics that add salability to products and incorporates these characteristics into the finished products.”
- Mason & Rath: “The planning, direction and control of all stages in the life-cycle of a product from the time of its creation to the time of its removal from the company’s line of product is known as Product Planning.
- William J. Stanton: “Product planning embraces all activities which enable producers and middlemen to determine what should constitute a company’s line of products.”
- Karl H. Tretjin: “Product planning is the act of marketing out and supervising the search, screening, development and commercialization of new products, the modification of existing products and the discontinuance of marginal or unprofitable items.”
- Dale Littler: “Product planning determines the characteristics of product, best meeting the consumers’ numerous desires, characteristics that add stability to products and incorporates these characteristics into the finishes goods.”
Characteristics of Product Planning
The following are the characteristics of Product Planning:
The process of product planning starts with the systematic and scientific investigation undertaken by the business enterprise with a view to know the needs and preferences of consumers regarding quality, size, design, colour, brand, packaging, shape and price etc., of the product. So, that the product offered to consumer must satisfy his expectations. Such type of research provides the basis for product planning. Hers, the success and effectiveness of product planning depends on the correctness and accuracy of the results of such investigation.
The product planning of business enterprise ensures the modification of existing products to meet the changing demands of consumers, which in return increases the customer satisfaction and maximizes the profit of an enterprise.
When a product reaches at the decline stage of its life-cycle or there may be acute competition in case of some product or its cost of production is rising and profits are declining, then it becomes necessary for the enterprise to take a decision of modification of existing products or elimination of such products and to divert the resources of the enterprise in producing some new products.
Possibility of the production of product
The marketing manager has to determine the production possibility of the product and has to decide whether the production is possible or not. If possible then whether it suits the business or not.
Such decisions regarding to the business of the firm fall in the scope of product planning.
Importance of Product Planning
The importance of Product Planning can be understood by the following facts:
Starting point of Marketing Planning
The product planning involves decision-making regarding the products to be produced by the enterprise and accordingly prepares the marketing programmes for it. According to William J. Stanton, “Product Planning is the Starting point for the entire marketing programme of the firm”. Thus, it is necessary that product planning must be completed before preparing marketing programme.
Indicator of managerial ability
Product planning is the centre of all marketing activities. It is a process which adopts all the efforts of an enterprise to forecast different aspects of product planning viz. can the product satisfy the needs and wants of consumers? Can the product face the competition? Can the consumers pay the price for the product? Can the enterprise earn desired profits? If the reply to all the questions is affirmative, the decision is taken to produce the product is decided. If an enterprise does not undertake the process of product planning, it can be regarded as, “Lack of product planning that implies managerial bankruptcy in the organization and amounts to leaving the enterprise to trust its own Luck.”
Importance from social viewpoint
The product planning is an important means to fulfill the social responsibilities of the business. It can be achieved by providing employment opportunities to the local public, by providing higher standard of living, by fulfilling social expectations of consumers, etc. These are all possible through proper planning.
Helpful in facing competition
Product planning is regarded as a competitive weapon by making effective decisions regarding product attributes, price, customer service, promotional techniques, etc. The success of marketing efforts depends upon the extent to which the products of the firm can face the competition in the market.