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.

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.

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.

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.

6 Important Process 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.

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?

(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.

International product promotion

Meaning

Promotion as those activities marketers engage in to advertise and sell their

product. Essentially, it’s all about getting the word out to your target audience and

presenting them with an offer and a message that resonates.

What’s exciting to us is the opportunity to take advantage of the numerous

channels available to marketers today. We believe that the best

communications/promotions strategy incorporates a combination of some of the

following channels:

Print advertising (magazine, newspaper)

Interactive advertising (Internet)

Social media (social sites such as Facebook, Myspace and LinkedIn, and

company blogs)

Direct mail

Email

Telemarketing

Personal sales (salespeople)

Public relations

Television

Radio

Billboard

Tradeshows

Inserts (magazine or newspaper)

Flyers

The challenge is to develop the best mix of the above channels.  Know your target

market.  What are they reading?  Where are they networking?  Where do they

live?  Then, try to figure out how they’d like to hear from you.

The better you are at reaching your prospect or customer at the right time, and with

the right message, the more effective your promotion will be.

Top 10 Role of Advertising in Promotion of a Product

The 10 role of advertising in promotion of the product are as follows:

1. Awareness:

One of the important roles of advertising is to create awareness of the product or

services such as brand name and price. The awareness of the product or services

can be created through highlighting the unique features of the brand. Nowadays,

due to intense competition it is not just enough to create awareness, but top of

mind awareness is needed.

2. Information:

Advertising helps to inform the target audience about the product. Providing

information is closely related to creating awareness of the product. Potential

customers must know about a product, such as product features and uses.

Product information is very much required, especially when the product is

introduced in the market, or when product modification is undertaken. Proper

product information can help the consumers in their purchase decision.

3. Persuasion:

When business firms offer similar products, the firm must not only inform the

customers about the product’s availability, but also persuade them to buy it.

Through persuasive messages, the marketers try to provide reasons regarding the

superiority of their products as compared to others available in the market.

Persuasion can be undertaken through creative advertising messages, product

demonstration at trade fairs, offering free gifts, premium offers and organizing

contests.

4. Attitudes:

Promotion is required to build or reinforce attitudes in the minds of target

audience. The marketers expect the target audience to develop a favourable attitude

towards their brands. Positive attitude towards the brand helps to increase its sales.

Through promotional techniques like advertising, the marketer can correct negative

attitude towards the product, if any. Negative attitude can also be corrected through

public relations and advertising.

5. Reminder:

If target customers already have a positive attitude towards a firm’s product or

service, then a reminder objective may be necessary. The reminder objective is

necessary because the satisfied customers can be targets for competitors’ appeals.

Well-established brands need to remind the customers about their presence in the

market. For instance, ‘Raymond – the complete man’ campaign is designed to

remind the customers.

6. Brand Loyalty:

Advertising helps to develop brand loyalty. Brand loyalty results in repeat

purchases and favourable recommendations to others by existing customers. Sales

promotion, effective personal selling, timely and efficient direct marketing, and

other techniques help to develop brand loyalty.

7. Brand Image:

An advertiser helps to develop a good image of the brand in the minds of target

audience. There are several factors that can be of help to audience. There are

several factors, such as the character of the personality that endorses the brand, the

content of the advertising message, the nature and type of packaging and the type

of programmes or events sponsored, that can help to develop brand image in the

minds of target audience.

8. Counter Competitors’ Claims:

The marketer may counter the claims made by the major competitors. For instance,

competitive advertising is undertaken to counter the claims made by competitors

either directly or indirectly. With the help of creative advertising, the marketers

can claim the superiority of their brand. The marketer may also undertake

aggressive sales promotion to counter the competition in the market.

9. Expansion of Markets:

Successful ads results in expansion of the markets. A marketer may intend to

expand markets from the local level to the regional level, from the regional level to

the national level, and from the national level to the international level. For this

purpose, the marketer may undertake various techniques of promotion.

10. Educating the Customers:

Promotion may be undertaken to educate the customers. For instance, some of the

advertising is undertaken to educate the audience regarding the use of the product,

handling operations, and so on. Public awareness campaigns also educate the

public regarding the negative effects of noise, air and dirt pollution, social evils,

and so on.

Three Steps to Effective Product Promotions

1.Target your effort

Promotions can spur purchases by established customers, reel in new customers,

draw customers from competitors, get current customers to buy differently, and

stimulate business during slow periods. But rarely can one promotion accomplish

all of those objectives at once. As a result, you must decide which of the following

is most important so that you can target your effort:

Do you want customers to purchase more frequently, buy in greater volume, or be

attracted to new or different offerings?

Do you want to lure new customers into your business?

Do you want lapsed customers to give your business another try?

Do you want to boost business during slow hours, weekdays or particular seasons?

After carefully and thoughtfully defining the audience and the change you want

your promotion to inspire, ask yourself this question: If you offer a time-limited

incentive, is it likely that the customers you've targeted will respond? If so,

continue to the next step.

2. Plan your incentive

A well-thought-out, properly targeted promotion prompts customers to take action

by offering one of these incentives:

Price savings, including discounts, coupons or added value offers

Samples or trial offers to provide a low-risk way to try new products or services

Events or experiences to generate crowds, enthusiasm, sales, publicity

As you decide on your incentive, keep these facts in mind:

Price offers must be strong enough to compel, but reasonable enough to keep your

business out of red ink. Avoid uninspiring 10 to 20 percent discounts, but also

avoid very deep discounts unless they promote a loss leader to generate other

higher-margin sales, or unless they'll attract valuable new customers into your

business.

Coupons always make a comeback in penny-pincher markets, which means they're

hugely popular these days. Even young consumers and affluent shoppers--groups

that traditionally shun coupons--are using them, boosting the typical 1 to 2 percent

redemption rate by nearly 20 percent. Printed coupons are still the most widely

circulated, but printable coupons, distributed on web sites and via e-mail, provide a

terrific way to test price offers with business friends and fans before incurring costs

to promote the offer more widely via other media.

3. Know what you want to achieve

Promotions work especially well when consumers are in need of a jolt to take

buying action. Just be clear about what you want to achieve. Set the number of

sales you want to ring up, dollars you want to bring in, customer names you want

to collect, buying patterns you want to change, or any other objective you want

your promotion to achieve. Then determine what your desired change will mean

financially to your business.By knowing the potential bottom-line impact of your

promotion, you'll have the information you need to allocate a promotion budget,

dedicate staff time and invest the energy necessary to host a strong promotion that

will deliver business-boosting results over the time period it covers.

Case study

The Hyundai Motor is a South Korean multinational  automotive manufacturer

headquartered in Seoul, South Korea. The company was founded in 1967 and,

along with its 32.8% owned subsidiary, Kia Motors, together comprise

the Hyundai Motor Group, which is the world's fifth largest automaker based on

annual vehicle sales in 2012. In 2008, Hyundai Motor (without Kia) was ranked as

the eighth largest automaker. As of 2012, the Company sold over 4.4 million

vehicles worldwide in that year, and together with Kia total sales were 7.12

million.

Hyundai is currently the fourth largest vehicle manufacturer in the world. Hyundai

operates the world's largest integrated automobile manufacturing

facility in Ulsan, South Korea, which has an annual production capacity of

1.6 million units. The company employs about 75,000 people worldwide. Hyundai

vehicles are sold in 193 countries through some 6,000 dealerships and showrooms.

Hyundai Motor, which exported its first independently-made vehicle, the Pony, in

1976, now exports over one million high-quality vehicles ranging from sedans,

SUVs, trucks and buses.

In 2010, Hyundai Motor sold about 3.6 million cars worldwide, up 16.3 percent

from 2009.

Hyundai Motor, South Korea’s largest automaker, sold 659,565 cars in the Korean

domestic market in 2010, reaching a market share of about 45 percent. Outside

Korea, the company sold about 2.9 million cars in 2010 in over 186 countries

Hyundai Motors India

Hyundai Motor India (HMI), a wholly-owned subsidiary of Hyundai Motor, is the

second-largest carmaker in India. Hyundai opened its second plant in India in

February 2008, a decade after it began operations in the country. The US$1 billion

new plant, which was completed in a record 13 months, doubles Hyundai Motor’s

capacity in India to 600,000 units a year. The new plant is located within the same

525 acre plot in Sriperumbudur, in the state of Tamil Nadu, adjacent to the first

plant.

The new plant is dedicated largely to the production of Hyundai Motor’s latest

offerings in India — the i20 and the i10, winner of the most prestigious ‘Car of the

Year’ awards from the leading automotive magazines and TV channels like

Business Standard Motoring, CNBC-TV18, NDTV Car & Bike and Overdrive

magazine.

Building the i10 (A-segment) and i20 (B-segment) cars for world markets, the

Indian subsidiary is Hyundai’s de facto global hub for small car production.

In 2009, Hyundai opened a US$25 million R&D center in HITECH City in

Hyderabad, India. The new facility will enable Hyundai to respond even more

quickly to changing customer needs across the world and will serve as an

important platform for the development of compact cars.

Product Promotion Strategies Used by Hyundai Motors

Contests

Contests are a frequently used promotional strategy. Many contests don't even

require a purchase. The idea is to promote your brand and put your logo and name

in front of the public rather than make money through a hard-sell campaign. People

like to win prizes. Sponsoring contests can bring attention to your product without

company overtness

Social Media

Social media websites such as Facebook and Google+ offer companies a way to

promote products and services in a more relaxed environment. This is direct

marketing at its best. Social networks connect with a world of potential customers

that can view your company from a different perspective. Rather than seeing your

company as "trying to sell" something, the social network can see a company that

is in touch with people on a more personal level. This can help lessen the divide

between the company and the buyer, which in turn presents a more appealing and

familiar image of the company.

Mail Order Marketing

Customers who come into your business are not to be overlooked. These customers

have already decided to purchase your product. What can be helpful is getting

personal information from these customers. Offer a free product or service in

exchange for the information. These are customers who are already familiar with

your company and represent the target audience you want to market your new

products to.

Product Giveaways

Product giveaways and allowing potential customers to sample a product are

methods used often by companies to introduce new food and household products.

Many of these companies sponsor in-store promotions, giving away product

samples to entice the buying public into trying new products.

Customer Referral Incentive Program

The customer referral incentive program is a way to encourage current customers

to refer new customers to your store. Free products, big discounts and cash rewards

are some of the incentives you can use. This is a promotional strategy that

leverages your customer base as a sales force.

Causes and Charity

Promoting your products while supporting a cause can be an effective promotional

strategy. Giving customers a sense of being a part of something larger simply by

using products they might use anyway creates a win/win situation. You get the

customers and the socially conscious image; customers get a product they can use

and the sense of helping a cause. One way to do this is to give a percentage of

product profit to the cause your company has committed to helping.

Branded Promotional Gifts

Giving away functional branded gifts can be a more effective promotional move

than handing out simple business cards. Put your business card on a magnet, ink

pen or key chain. These are gifts you can give your customers that they may use,

which keeps your business in plain sight rather than in the trash or in a drawer with

other business cards the customer may not look at.

Customer Appreciation Events

An in-store customer appreciation event with free refreshments and door prizes

will draw customers into the store. Emphasis on the appreciation part of the event,

with no purchase of anything necessary, is an effective way to draw not only

current customers but also potential customers through the door. Pizza, hot dogs

and soda are inexpensive food items that can be used to make the event more

attractive. Setting up convenient product displays before the launch of the event

will ensure the products you want to promote are highly visible when the

customers arrive.

After-Sale Customer Surveys

Contacting customers by telephone or through the mail after a sale is a promotional

strategy that puts the importance of customer satisfaction first while leaving the

door open for a promotional opportunity. Skilled salespeople make survey calls to

customers to gather information that can later be used for marketing by asking

questions relating to the way the customers feel about the products and services

purchased. This serves the dual purpose of promoting your company as one that

cares what the customer thinks and one that is always striving to provide the best

service and product.