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1. 1. Product Planning
Meaning :-
In order to maximise his sales revenue and profits, a business firm must continuously adjust and
adapt its products and services to the changing requirements of customers. From time-to- time, it
may have to design and develop new products.
Product planning is the process of searching ideas for new products, screening them systematically,
converting them into tangible products and introducing the new product in the market. It also
involves the formation of product policies and strategies.
Figure 01.
Product planning includes improvements in existing products as well as deletion of unprofitable or
marginal products. It also encompasses product design and engineering which is also called product
development. Product planning comprises all activities starting with the conception of product idea
and ending up with full scale introduction of the product in the market.
It is a complex process requiring effective coordination between different departments of the firm.
It is intimately related with technical operations of the organisation, particularly with engineering,
research and development departments.

2. Any product has two broad objectives—immediate objectives and ultimate objectives. Immediate
objectives include satisfaction of immediate needs of consumers, increasing sales, utilising idle
plant capacity, etc. Permanent or ultimate objectives consist of reduction in production costs,
creation of brand loyalty, monopolising the market, etc.
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.”

3. 2. Product Planning Characteristics
Product investigation 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.
Product modification
The prduct 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.
Product elimination
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 programmers 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
programmed.
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

4. 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.

5. 3. Significance and objects
Product planning and development is a vital function due to several reasons. First, every
product has a limited life span and needs improvement or replacement after some time. Secondly,
needs, fashions and preferences of consumers undergo changes requiring adjustments in products.
Thirdly, new technology creates opportunities for the design and development of better products.
Product planning and development facilitate the profitability and growth of business. Development
of new products enables a business to face competitive pressures and to diversity risks. Product is
the most important constituent of marketing mix.
Finding and meeting the needs of customers is the key element in a successful marketing
strategy. New product development has become all the more important in the modern world
characterised by technological change and market dynamics.
New product development brings opportunities but also involves heavy commitment of
finance, technology and even emotional attachment. New product decisions are necessary as well as
costly. Many new products fail causing ruin to business firms.
Product development is a continuous and dynamic function. Continuous adjustments and
improvements in the product arc necessary to minimise costs of production and to maximise sales.
High rate of product obsolescence requires product innovation frequently. At the same time, cost
and time scales have increased. In some products, the gestation period is very long, sometimes
longer than the life of the product.
As a result the role of R&D expert has become very important. He needs to be in touch with sales
persons and actual end users. Successful technological innovation involves great resources as well
as great risks. Product innovators face spectacular successes as well as disastrous failures.Most of
the new product ideas do not become actual products. Many new products achieve limited
acceptance in the market. This is so because firms very often are reluctant to move away from tried
and tested products.
Thus, product planning is required for the following reasons:
(i) To replace obsolete products;
(ii) To maintain and increase the growth rate/sales revenue of the firm;
(iii) To utilise spare capacity;
(iv) To employ surplus funds or borrowing capacity; and
(v) To diversify risks and face competition.

6. 4. Steps Of Product Planning
Some of the major process of product planning are as follows:
1. Exploration
2. Screening
3. Detailed Business Analysis
4. Development
5. Test Marketing
6. Commercialization
.
1. Exploration:
Product planning begins with the generation and formulation, of ideas or concepts for new products.
The product ideas may come from sales persons who are in constant touch with the needs and
desires of consumers.
Step of
Product
Planning
Exploration
Commercialization
Screening
Test
Marketing
Detailed
Business
Analysis
Development

7. Middlemen, research and development department, trade and technical journals, consumers, trade
associations, chambers of commerce, government agencies, research laboratories and executives
can be other fruitful sources of product ideas.
New ideas may also emerge from individual innovators, suggestion schemes, marketing research,
cost studies, service organisations, etc. At this stage, the products of competitors, institutes and
allied products should also be considered.
2. Screening:
This stage involves a preliminary comparison and evaluation of product ideas to select the most
promising idea which warrants further consideration. A large number of ideas may be available. It
is necessary to eliminate the ideas which have no potential. Careful screening helps to avoid
wastage of time and resources in impracticable or uneconomical ideas.
A clear understanding of company objectives and facilities is essential for successful screening.
This will help to reject the ideas which are inconsistent with the strategy and resources of the
enterprise.
In recent years, leading companies have developed specific criteria for screening. Such criteria
consist of:
(a) profitability requirements over a period of time;
(b) annual value of production;
(c) unit profit margin;
(d) new capital required;
(e) use of existing distribution network, etc.
3. Detailed Business Analysis:
Those ideas and concepts which survive the screening stage are put to rigorous economic
evaluation. The technical and economic factors involved in the ideas are analysed in sufficient
detail to judge the commercial viability and technical feasibility. A statement of expected costs,
sales and profits over a period of time is prepared. Business analysis may also involve some
preliminary testing and analytical studies which is known as concept testing.
Business analysis is made to answer the following questions:
(а) Is the product idea technically feasible?
(b) Is there an adequate market demand?

8. (c) Is it necessary to obtain patent right?
(d) What is the raw material position?
(e) Will machinery be imported?
(f) Are the production facilities suitable?
(g) How much will it cost to produce and sell?
4. Development:
At this stage, a design or specification of the product is prepared. The product idea is given a
practical shape in the form of a working model or prototype. The idea on paper is converted into a
physical product. The prototype is tested in the laboratory to ensure that it meets all technical
specifications.
5. Test Marketing:
A sample of the product is then tested in a selected market to find but the reactions or responses of
consumers. The working model or prototype is produced in a limited quantity and it is tested in the
market before starting full scale production.
On the basis of the feedback from consumers, necessary improvements (redesigning) arc made in
the product. Test marketing is a vital phase of product development as it helps to “tie up the loose
ends” before launching the product in the market.
6. Commercialization:
In this final stage, the product is actually introduced in the market on a full scale. The pricing,
channels and promotional methods are finalised. The product is fully integrated into the company’s
normal operations and it no longer remains a new product.

9. 5. Factors affecting product planning and development
In any manufacturing industry, production is the driving force to which most other functions
react. The changing business environment in which pharmaceutical manufacturers are acting creates
the need for more effective production processes planning and control methods, which are able to
deal with uncertainties in internal processes and external deliveries. In this article we have briefly
highlighted the challenges and factors affecting Production Planning and Control (PPC) and role of
Master Production Schedule (MPS). We will begin this article with the objective of PPC.
The ultimate objective of PPC is to contribute to the profit of organization accomplished by keeping
the customers satisfied through the meeting of delivery schedules. The specific objective is to
establish routes and schedules for work that will ensure the optimum utilization of materials,
workers and machines and to provide the means for ensuring operation of the plant in accordance
with these plans.

10. Challenges in Production Planning and Control
Combining Functions – It is desirable that a minimum changes be made after schedules are
established. This objective can be approached if the amount of work scheduled for the factory or
department is equal or slightly greater than the production cycle.
Follow-up – When jobs are started and completed on schedule, there should be very little concern
about the meeting of commitments. Optimum operation of the plant is attained only if the original
plan has been carefully prepared to utilize the manufacturing facilities fully and effectively.
Re-planning – Often required in manufacturing. Changes in market conditions, manufacturing
methods, etc. affecting the plant will often indicate that a new manufacturing plan is required.
Factors Affecting Production Planning and Control
Market Forecast – It will indicate future trends in demand for manufactured products. Work shift
policies, plans for an increase or decrease in manufacturing activity are based upon the market
forecast and in turn affect the production planning and control.
Sales Order – It is a rewrite of the customer order specifying what has been purchased (product,
quantity and authorizing shipment of the goods to the customer). Variation or changes in sales order
will drastically affect production planning and control.
Standard Process Sheet – It is prepared by process engineering group or process owner and it is
the source of basic data which may include type of machine to be used, time required for
processing, etc. For e.g. if any machine is under breakdown, the standard process sheet will be
disturbed which in turn affect production planning and control.
Load Charts – These charts are prepared for each workstation or machine in the plant or may be
for groups of machines or departments.
Project Planning Method – The product to be produced are manufactured in quantities and their
total processing time can be measured. The best known methods are Critical Path Method (CPM)
and Program Evaluation and Review Technique (PERT).
Planning is the process of selecting and sequencing activities such that they achieve one or more
goals and satisfy a set of domain constraints. Schedules should reflect the temporal relationships
between activities and the capacity limitations of a set of shared resources. Master Production
Schedule is main driver and information source for further material requirements planning and
accompanying calls or supplies and allows making detailed production schedules for production
system. The high re-planning frequency in order to overcome the uncertainty induces the system
nervousness. The system nervousness can be defined as – State of a system when a minor changes
in Master Production Schedule creates significant changes in Materials Requirement Planning
(MRP).

11. The following critical points can be considered in Master Production Schedule:
 Frequent changes in MPS result in due-date changes in open orders, quantity and timing for
planned order of end products.
 Mentioned changes are translated into gross requirements changes for products and timing
of their delivery.
 Unexpected changes in MPS effect that materials, needed for a particular order may not be
available. The availability of materials is often limited due to the fact that suppliers have
similar bottlenecks and schedules variations transmitted from sub-tier suppliers.
The following questions can be considered while scheduling MPS:
 How to make initial MPS that is as feasible as possible?
 How to limit the number of re-planning activities?
 How to be reactive to disturbances in materials flow?
 How to provide planners with accurate information about material resources available which
often lead to bloated inventory and in accurately promised delivery dates to the customers?

12. 6. Market research
A small company should consider doing both qualitative and quantitative marketing research for
its new product. Focus groups are an example of qualitative information. Focus groups allow
companies to ask their consumers about their likes and dislike of a product in small groups. A focus
group allows the company to tweak the product concept before testing it through phone surveys—a
more quantitative marketing research function. Phone surveys enables a company to test its product
concept on a larger scale, the results of which are more predictable across the general population.
Qualitative research is a method of inquiry employed in many different academic disciplines,
traditionally in the social sciences, but also in market research and further contexts.Qualitative
researchers aim to gather an in-depth understanding of human behavior and the reasons that govern
such behavior. The qualitative method investigates the why and how of decision making, not just
what, where, when. Hence, smaller but focused samples are more often used than large samples.
quantitative research refers to the systematic empirical investigation of social phenomena via
statistical, mathematical or numerical data or computational techniques. The objective of
quantitative research is to develop and employ mathematical models, theories and/or hypotheses
pertaining to phenomena.
Market research is the one stage of product planning and it can be regarded as the way to
accomplish the activity though designing questions, preparing the samples, collecting data and
analyzing etc. It also can be considered as a kind of the communications between markets as
research is always question-answer form. For example, suppliers can collect buyers’ suggestions
and opinions through research and then get conclusion so that they can get buyers’ satisfaction . In
short, market research is applied to get market information, market segmentation, market trend and
SWOT analysis such as consumer perceptions, market structure, distribution, past trends,strengths
and weakness. The process to get these information can be divided into four parts which are
definition, collection, analysis and interpretation . The steps are objectives, planning, data
collection, data analysis, reporting and marketing decisions. (Hague,Paul N.,2002)Thereinto, data
collection is the communication process as interviewers ask some questions and shoppers answer
these and marketing decisions are results of communication .
Market researchers always use quantitative and qualitative research to differentiate the
methods of investigation into those which are cared about getting an understanding of a subject and
those which are involved in measuring things . At a word, quantitative and qualitative mean that
one is based on quantity and the other one on quality . Qualitative research can be looked upon as a
number of ways . (Gordon,Wendy,1943) Qualitative researchers do not need to interview so many
people but they speak to really do count . The researchers are interested in asking ‘How’ questions
not like ‘how many’. Sampson(1967) has said that “ it is centrally concerned with understanding
things rather than with measuring them” this means that the lack of measurement can not make sure
that the findings are accuracy. For example, the government has until recently used little qualitative
research as it is worried that the public security would not believe these findings . Qualitative
research is suited to solve the problem areas as following . The first one is basic market exploratory

13. studies . For example, the research findings can be used to define consumer segmentations in
relation to a product brand or understand the dimensions which differentiate between brands . The
second one is new product development . For instance, product, packaging, positioning and
advertising information can be collected through researching to confirm a new product proposition .
The third one is diagnostic studies which is used to determine to what extent the brand image has
changed since the start of an advertising campaign. (Gordon,Wendy,1943) . The methods of
qualitative research can be departed into observation and focus groups . Nowadays, observation is
used wherever people think that watching is better to speaking and it plays an important role in
researching people who can not articulate correctly and clearly what they think . It is frequently
applied in shopping surveys particularly in-store, it regularly make customers try products and then
ask them questions or do surveys . The results sometimes will be more reliable and creditable .
Focus groups also can be called group discussions which is a tool on the basis of psychotherapy
where it has found that if people are divided into small groups and asked to share their opinions and
suggestions, they will be open up . Because there will generate a brainstorming effect in the groups
so that a comment from one person can stimulate another one’s ideas . Although qualitative
research does not need many people to attend, one group is not enough that will cause the results
are untypical . In general, there are always need four groups to cover a single respondent type . And
the outcomes of group discussions are rely on the group leaders’ abilities of structuring the
discussion, conducting the meeting and analyzing and understanding the results.
Quantitative research is about understanding aspects of a market or what kinds of customers
making up the market . And it can be split into soft and hard parts . Soft part means phenomena like
customer attitudes and hard part is market size, brand shares and so on . Quantitative researchers are
different from qualitative researchers, they pay more attention to asking ‘What’ questions .
(Allen,Mike,1959) Quantitative research often provides three aims : description, forecasting and
decision-making. (Franses,Philip Hans,1963) Quantitative market research means getting relevant
information or measures from each single customer or shopper who are carrying out a census in the
market . It is based on the strict sampling methods so that its data or results have levels of accuracy
and can be taken to represent and stand for the population or to projecting . As the large basis will
be collected in quantitative research, the types of quantitative data can be fallen into market
measures, customer profiles or segmentation and attitudinal data. Firstly, market measures are used
to quantify and describe a market like market size, the number of shares the suppliers or brands
hold, how often does consumers purchase, schema of purchasing and so on . These data can help
company or brand to plan or develop their product or marketing planning . Secondly, if a company
want to plan a new product, it is necessary to know about the potential consumer base such as the
age of people, what types of products or service they always use . There are various forms are
included in profiling data like socio-demographics, geo-demographics customer behavior . The
difference between market measures and consumer profiles is that only consumers can be the target
people to collect profiling data. Thirdly, attitudinal data needs to collect the minds of individuals
and then get results like awareness, beliefs, preference and so on. (Hague,Paul N.,2002) Attitude
can influence behavior so that company or brand can use data to foresee customers’ future behavior

14. and then make product planning or business decision . On the other hand, there are many elements
can change customers’ attitude like price or appearance are changed . In a word, it is obvious that
the communications between markets not only help each other to gain what they want but also
develop the company or brand . It will make positive cycles between markets and then might
promote the economy .
Thus, both of quantitative and qualitative research can be used to do market research to do the
product planning and both of them are realized through communications so they can be regarded as
kinds of communications between markets. The differences between quantitative and qualitative
research can be summarized that qualitative research is always open-ended, more flexible, gives
consumers more creativity, pays more attention to deeper understanding so that they can get deeper
data and richer ideas and quantitative research are usually statistical and numerical measurement
and people will be divided into groups to get sampling or comparisons. (Gordon,Wendy,1943)