Product Management

Part 1: Product Management: An Introduction

Unit 3: The Product Planning System

Learning Objectives
1. To understand the importance of Product Development
2. To understand how Planning is done for Product Development
3. To understand the Process which is used to Develop a Product
4. To understand who is Responsible for the Product Development

1. Product Planning
All Product Planning is done to keep the company ahead of its competition and to give it a
competitive advantage. The Product Planning system must dovetail into the business plan of the
company. The success of the company is determined by the success of its products. Effective
product plans are those which not only take care of market and customer needs but also
support company’s growth strategy. Now in order to create effective the product plans the
product management team and the top management must work in close co-ordination with
each other since.

a. The product management team has the market information that the top management
will need to create effective business strategy.

b. The top management is in a position to give a clear understanding of the company’s

objectives and direction to assist the product management team to develop the right
products that will assist business strategy.

c. Based on the understanding the top management’s objective and direction the product
management team will also be in a position to develop the appropriate execution
strategy and milestones in its execution.

The Product Management team‘s job is to keep a track of the market requirements and map
them against the managements objectives and direction so that they can provide the right
inputs on products to be developed to the top management. The product management
team collates the information from:

a. Customers
 By way of an unsolicited feedback from customers
 Customer surveys
 Customer needs as identified by sales or marketing teams of the company.
b. Think tanks in companies are always evaluating the environment and aligning these
with the companies objectives and directions and creating product ideas for the
product management team to evaluate.

c. Trade fairs – the product management team also visits various trade fairs as this not
only tell them what the competition is planning but also gives them a new insight
into new technologies and developments happening all over the world. This also
assists them in creating business ideas that will give their company a competitive
edge.

d. Competitors activities – since one of the primary objects of product development is

to provide the company a competitive edge to the company, understanding the
competitors activities is very important. Competitor‘s activities also are a source of
product ideas. These are found from some announcements that the competitor
makes in the press, from the sales channel since the distributors are amongst the
first to know if a competitor is planning something new, or from some test
marketing that the competitor undertakes, and many times from raw material
suppliers. Raw material suppliers visit similar companies and come to know of new
developments because they are the one who need to supply material and
components for new products.

e. R&D or technology development by the company – every company that has kept
ahead of competition has also undertaken some form of research and development
of new products. Technology that is developed in-house is also a great source of
product development.

f. Patents and technology search allow the product management team to know what
technologies and processes are available for use. Sometimes the purchase of a
patent/ development of a technology allows the company to develop products for
which the competition may not be able to have an immediate answer. For example
when the Xerox Corporation developed their copier technology there was no other
company in the world which had a similar process and Xerox had a virtual monopoly
over the product sales for many years. It is only later when Xerox became over
confident and stopped investing in the brand and the technology that other
companies like cannon, Toshiba came and overtook them.

The Product Management team continuously evaluates the inputs received by it from
various sources round the year. This information is used by it to develop new products
that have a strategic fit with the business objectives of the company.
 All these activities lead to the identification of the product and the commencement of
the developmental process. This process is a much more complex process as compared
with the initial steps taken in identifying and freezing the customer requirement. These
requirements form a part of a very important document called the “Customer
Requirement Document”. This document if created in the right manner can help a
Product Manager get the product to the market in the most economical manner and
also help him manage the product through its life giving the company maximum returns.

2. Customer Requirement Document

At the heart of the whole process of product planning is the development of the product. Any
delay in the development of the product has a cascading impact on the company‘s sales and
profitability. Hence it is important that before anything else, the decision on what product has
to be developed is taken quickly; this decision pertains to the product‘s broad specifications and
marketing objectives. Once all these have been defined, the actual development of the product
must be undertaken in a manner that reduces the time to market. This phase of product
development is the first operational phase where time and money will begin to be committed by
the company; the longer and more complicated the process, the longer it is likely to take. The
Product Development Process is led by a Product Development Team. This team consists of
people from R&D, Manufacturing, Industrial Engineering, Quality Control, Sales and Marketing.
It is often seen that delays in product development occur because of one or both factors listed
below:
a. There is lack of clarity on what needs to be developed.
b. There is poor co-ordination between the members of the Product Development Team.

Their first task is therefore is to create a single composite document that will lay out what the
customer wants and how the company is going to benefit from it, what functionality needs to
be inbuilt for the customer, etc.

3. Need for Customer Requirement Document

We have seen that the Project Management Process has five stages which take the product
from its inception to its final withdrawal from the market. In all this, there is one document that
virtually holds the entire process together. This document lays down what each functional area
(within the organization) has to undertake. It also documents the commitments made in time
and cost by each functional area. This is called the Customer Requirement Document (CRD). The
advantages of this document are listed below:
a. It allows you to completely think out the product and strategy in advance.
b. It makes sure you do your groundwork before any activity (commitment in terms of
time and money) starts.
c. It gives everyone involved an idea of the various aspects of the product the Product
Manager is working on.
4. Contents of Customer Requirement Document
Though we need to have a comprehensive document that must contain all the necessary
elements, it is also important that this document is brought out quickly and must contain the
commitments of all the stake holders in the Product Development Team. The reasons for this
urgency are:
a. If we take too much time in getting out the CRD then it may become outdated since the
market is moving so fast and priorities are changing very rapidly.
b. Also all the stake holders in the product development process i.e. R&D, Manufacturing,
Industrial Engineering, Quality Control and Sales must give their inputs and
commitments to time taken and costs likely to be incurred.
c. Thus the development of the CRD must be an interactive process between all the stake
holders.

5. Development of Customer Requirement Document

The prime responsibility for the development of the CRD is with the Product Manager who is
functionally a part of the Marketing Department. The CRD can be developed in two ways:
a. The Product Manager can develop the complete document on his own marking the
activities to be done by various other departments and put time frames in which he
needs the product.
b. The Product Manager can create a broad overview document and then sit along with
the other departments involved in its development and create the detailed document.

6. Strategic Advantage of a Good Customer Requirement Document

This process has the following advantages over the method of a Product Manager making a
complete CRD document and then sending it to the concerned stake holders for development:
a. The Product Manager is much more closely involved with the development team from
the beginning and so has a clear idea of what is possible and what is not.
b. Since the Product Manager has prioritized the development of the features he can
release the product even if all the features are not ready and can strategically keep on
adding more features as time goes along.
c. Even when the product is launched with a few features it does not create a major
upheaval in the development team since they are developing the feature in sequence
of importance.
d. We can bring in customers to meet developers so that they can be sure that features
desired by the customers are developed in a manner that is needed by the customer
and not as convenient to the developer.
e. This way the customers also feel more committed to purchasing the product as they
feel it has been developed for them.
 f. The commitments on time, etc are given by the development team and so they are
more committed to meeting the deadlines.
g. The Product Manager is involved in managing several small functions of manageable
proportions. He is also in a position to decide the strategic launch of the product rather
than having to wait for the full development of the product.
h. The progress of the whole project can be measured in a more accurate manner.
i. During the development process the other departments involved in the development,
quality control, sales, and technology development can work together and in
anticipation of each completing the task.

However, like all processes, this also has its set of disadvantages:
a. This process requires a lot of co-ordination on part of the Product Manager.
b. It becomes very critical that the agreements generated between the Product Manager
and the developers are circulated in time and appropriately amongst the whole team.
c. In this method, unless the Product Manager and the developers agree with each other,
it is not possible to move ahead. Hence it takes a lot of give and take.
d. There is no single comprehensive document to review but many small ones.

7. Use of Archived Products in Product Development

Now we must realize that though it seems that product development is a simple and straight
forward process it is not always that we get products that can be commercialized.

There are many reasons for not commercializing products. Some are
a. The products developed do not meet the customer’s requirement. Many times a
customer may want a product with certain properties but it may not be technically
feasible to get a product with desired features. 3M was asked by one of its customers to
develop an adhesive with certain properties but the product developed did not meet
the customer‘s requirements.
b. Some products are developed as a by-product of another development and so have no
commercial value.
c. Some products are too expensive for current usage and cannot find applications today
for example the use of solar cars. These cars are very expensive as compared to existing
cars which are based on cheap fossil fuel. The solar cars will find an application as fossil
fuel becomes more expensive and global warming makes use of these cars more
difficult.
d. Sometimes the cost of commercialization is very high for example the use of wind
power was known for many years but the cost was too high as compared to cheap fossil
fuel. However today with the increase in cost of fossil fuel, the possibility of its finishing
in the next 50 years or so the use of wind power is becoming more prevalent.