BITS Pilani

Pilani Campus

Product Planning
PD Process

Concept and System Design

BITS Pilani, Pilani Campus

 Product Planning

 What is the Product Planning??

 Is an activity that considers the portfolio of projects that an organization might
pursue and determines what subset of these projects will be pursued over what
time period

 In other words, establishing Portfolio of projects and Pipeline of projects ( Portfolio

management and Pipeline Management)

 Product Planning takes place

 before the product development project is formally approved
 before substantial resources are allocated
 before larger development team is formed

 Product Planning is to ensure the product development projects support the broader
innovation strategy of the company

Concept System-Level Detail Testing and Production

Planning Development Design Design Refinement Ramp-Up

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Product Planning

 What is the innovation Strategy??

 The firm’s positioning for developing new technologies and products and facilitates
the division of firm in the following way…..
 Prospectors ( who lead in technology, product , market development and
commercialization, even though an individual product may not lead to profit),
 Analysers ( fast followers or imitators, who let the prospectors lead, but have a
product development process organized to imitate and commercialize quickly
any new product a prospector has put on the market) ,
 Defenders ( those who stake out a product turf and protect it by whatever
means are possible, not necessarily through developing new products), and
 Reactors ( those who have no coherent innovation strategy)

 It is one subset of the firm’s overall Business Strategy.

 Strategy is organization’s vision, mission and values ---- with reference to the time
period…. Usually one year, three years or five years

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Product Planning

 Hence, The product planning activity must addresses following questions

 What product development projects will be undertaken by the firm?

 What mix of fundamentally new products, platforms, and derivative

products should be pursued?

 How do the various projects relate to each other as a portfolio?

 What will be the timing and sequence of the projects?

Concept System-Level Detail Testing and Production

Planning Development Design Design Refinement Ramp-Up

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Product Planning Process

Concept System-Level Detail Testing and Production

Planning Development Design Design Refinement Ramp-Up

Mission statement
 Mission statement should address the following questions for the team:
 What market segments should be considered in designing the
product and developing its features?

 What new technologies (if any) should be incorporated into the new
product?

 What are the manufacturing and service goals and constraints?

 What are the financial targets for the project?

 What are the budget and time frame for the project?
BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
 Product Planning

 Poor Product planning results in:

 Inadequate coverage of target markets with competitive products

 Poor timing of market introductions of products

 Mismatch of PD capacity and the number of PD projects

 Poor distribution of resources- overstaffed and others understaffed

 Initiation and subsequent cancellation of ill-conceived projects

 Frequent changes in the directions of projects.

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Product Development Project
 Product development projects can be classified as four types:

 New product platforms: This type of project involves a major development effort to
create a new family of products based on a new, common platform. The new
product family would address familiar markets and product categories

 Derivatives of existing product platforms: These projects extend an existing

product platform to better address familiar markets with one or more new products

 Incremental improvements to existing products: These projects may only involve

adding or modifying some features of existing products in order to keep the
product line current and competitive

 Fundamentally new products: These projects involve radically different product

may help to address new and unfamiliar markets. Such projects inherently involve
more risk

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

The Product Planning Process

 Product planning decisions generally involve the owners, Sr. Management and
planning takes place annually or few times each year

 The product plan is regularly updated to reflect changes in the competitive

environment, changes in technology, and feedback on the success of existing
products

 Product plans are developed with the company’s goals, capabilities,

constraints, and competitive environment in mind

 Ability of a corporation to adjust the product plan to accommodate for

inconsistencies, infeasibilities and market demands is vital to the long term
success of the enterprise
The Product Planning Process

 To develop a product plan and project mission statements, Karl T. Ulrich

and Eppinger suggest a five-step process:

 Identify opportunities

 Evaluate and prioritize projects

 Allocate resources and plan timing

 Complete pre-project planning

 Reflect on the results and the process

Step 1: Identify Opportunities

 Identification of product development opportunities for all any of the four types of
projects

 It is ‘opportunity funnel’ because it brings together inputs from across the enterprise

 Opportunities may be collected passively and explicitly . New product Ideas can come
from
 Marketing and Sales
 R&D , Technology development teams
 Product Development Teams
 Manufacturing , Operation Teams , and maintenance and service teams
 3rd parties such as Suppliers, business partners

 In explicit attempt, firm can adopt a process for generating, recognizing, and evaluating
opportunities. – Identification of Customer Needs

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Step 1: Identify Opportunities

 Each promising opportunity is described in a short, coherent statement and can be

uploaded into the database.

 Following are some opportunity statements proposed at Xerox

 Create a document distribution system in which a networked printing device resides

on each office worker’s desk and automatically delivers mail and other documents

 Create document delivery software that allows the digital delivery and storage of
most intra-organizational documents via a worker’s personal computer.

 Several Web-based idea management systems are available for gathering and storing
information on opportunities

o What is the process in your organization -- Idea bank/portal, Innovation register etc.,

o https://www.spigit.com/demo/

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Step 2: Evaluate and Prioritize Projects

 Opportunity funnel can collect hundreds or even thousands of opportunities over

period of time

 The second step is to select the most promising projects to pursue

 Four basic perspectives are useful in evaluating and prioritizing opportunities for
new products:
 Competitive strategy
 Market segmentation
 Technological trajectories
 Product platforms.

 Evaluating opportunities for fundamentally new products

 Balancing of the portfolio of projects

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Step 2: Evaluate and Prioritize Projects

Competitive strategy
Market segmentation
 Competitive Strategy Technological trajectories
Product platforms.
It is basic approach to markets and products with respect to competitors.
Suggested strategies are
 Technology leadership: the firm places great emphasis on basic R&D of new
technologies and on the deployment of these technologies through product
development

 Cost leadership: This strategy requires the firm to compete on production efficiency,
either through economies of scale, use of superior manufacturing methods, low-cost
labour, or better management of the production system

 Customer focus:
o Rapid development of derivative products with new features or functions on
known product platforms to address changing needs and preferences

o This leads to broad product line featuring high product variety for
heterogeneous customer segments

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Step 2: Evaluate and Prioritize Projects

Competitive strategy
Market segmentation
Technological trajectories
 Competitive Strategy Product platforms.
 Imitative:
o This strategy involves closely following trends in the market, allowing
competitors to launch new products. When viable opportunities have been
identified, the firm quickly launches new products to imitate the successful
competitors

o A fast development process is essential to effectively implement this strategy

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Step 2: Evaluate and Prioritize Projects Competitive strategy
Market segmentation
Technological trajectories
Mobile phones requires all four approaches to keep market share Product platforms.
Step 2: Evaluate and Prioritize Projects

Competitive strategy
Market segmentation
Technological trajectories
 Market Segmentation: Product platforms.

 Customers can be usefully thought of as belonging to distinct market segments

 By mapping competitors’ products and the firm’s own products onto segments, the
firm can assess the product opportunities

 Dividing a market into segments allows the firm to consider the actions of
competitors and the strength of the firm’s existing products

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Step 2: Evaluate and Prioritize Projects
Competitive strategy
Market segmentation
Market Segment Map Technological trajectories
Who does this work??
Product platforms.
65 ppm 65 ppm
network
$23k $31k
55 ppm 60 ppm
Department Lakes network
$20k
Project
$35k Lakes
40 ppm
Extensions
$16k
Market Segment

25 ppm
$10k
35 ppm
$15k
40 ppm
$20k
Legend
Xerox
Workgroup product
30 ppm 40 ppm
network competitor
$10k $20k product

Hodaka Project potential

20 ppm 25 ppm 30 ppm competitor
$8k $9k $10k
Personal
20 ppm
$7k

1997 1998 1999 2000 Year of

How to create (effective)Technology Road map for an organization?? Release
Step 2: Evaluate and Prioritize Projects

Competitive strategy
Market segmentation
Technological Trajectories Technological trajectories
Product platforms.

 In technology-intensive businesses, a key product planning decision is when to

adopt a new basic technology in a product line

 Technology S-curves are helpful to think about such decisions. The technology S-
curve displays the performance of the product over time, usually with respect to a
single performance variable such as resolution, speed, or reliability.

Maturity

growth

Infancy

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Step 2: Evaluate and Prioritize Projects
Competitive strategy
Market segmentation
Technology S-Curves Technological trajectories
Product platforms.
Digital
Technology
Copier Performance

Light-Lens
Technology

Time
Step 2: Evaluate and Prioritize Projects

Competitive strategy
Market segmentation
 Product Platform Planning Technological trajectories
Product platforms.

 The product platform is the set of assets shared across a set of products.

 Components and subassemblies are often the most important of these assets

 An effective platform can allow a variety of derivative products to be created more

rapidly and easily, with each product providing the features and functions desired by
a particular market segment.

 Developing new platform development projects takes 2 to 10 times more expensive

and time consuming than derivative product development projects of same
platform.

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Step 2: Evaluate and Prioritize Projects

Competitive strategy
Market segmentation
Technological trajectories
 Product Platform Planning Product platforms.
 Exhibit illustrates the leverage of an effective product platform. The critical strategic
decision at this stage is whether a project will develop a derivative product from an
existing platform or develop an entirely new platform.

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Step 2: Evaluate and Prioritize Projects
Competitive strategy
Market segmentation
Technological trajectories
Product platforms.
Technology Roadmap: XEROX
Functional Elements
 Decisions about new product Technologies

platforms are very closely Photo- Cylindrical 3-Pitch Belt n-Pitch Belt
receptor
related to “technology Drum Photoreceptor Photoreceptor

roadmap” of a firm. A Scanner 2D CCD Array Full-Width, Linear Array

Layout w/Optical Reduc.
technology roadmap is a way to without Optical Reduction

represent future use of various Toner High Low Melting Low Melting Point,
technologies Type Temperature Point Low Emission

Output Monochrome: Paper, Fax, Scan, Color: Paper, Fax, Scan,

Modes Local Network, Internet Local Network, Internet

 Motorola, Philips, Xerox, and User Keypad Touch Screen Touch Screen, Remote PC
other leaders in fast-moving Interface

high-technology industries are Image Automatic Image Quality

using this process. Processing 600 dpi 600/1200 dpi 1200 dpi 1800 dpi

Diagnostics On-Board Remote-Dialup Remote

Diagnostics Diagnostics Repair

Document Document Document Document

Centre Centre Centre Centre
220, 230 240, 255, 265 2XX 3XX
Hodaka Lakes Lakes Next
Project Project Extensions Platform
Time
BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
Step 2: Evaluate and Prioritize Projects

 Evaluating Fundamentally New Product Opportunities

 In addition to new versions of products in existing products , the firm may have
many opportunities in either new markets or fundamentally new technologies.

 Criteria for evaluating fundamentally new product opportunities include:

(these criteria are useful in evaluating any product opportunity)

 Market size (units/year × average price).

 Market growth rate (percent per year).
 Competitive intensity (number of competitors and their strengths)
 Depth of the firm’s existing knowledge of the market
 Depth of the firm’s existing knowledge of the technology
 Fit with the firm’s other products
 Fit with the firm’s capabilities
 Potential for patents, trade secrets, or other barriers to competition
 Existence of a product champion within the firm.

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Step 2: Evaluate and Prioritize Projects

 Balancing the Portfolio

 There are many methods to help managers manage an organization’s portfolio of

development projects.

 Several of these methods involve mapping the portfolio along useful dimensions so
that managers may consider the strategic implications of their planning decisions. s
such as technical risk, financial return, market attractiveness etc.,.

 Wheelwright and Clark (1992), plots the portfolio of projects along two specific
dimensions:
o the extent to which the project involves a change in the product line and
o the extent to which the project involves a change in production processes….
called a product-process change matrix.

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Step 3: Allocating Resources and Plan Timing

 Resource Allocation:

 The firm shall have always limited resources and cannot afford to invest in every
product development opportunity

 Too many projects invariably compete for too few resources

 Too many projects with limited development resources leads to productivity drops
off dramatically, projects take longer to complete, products become late to the
market

 Hence, prior evaluation and prioritization of development projects is essential

 And aggregate resource planning helps an organization make efficient use of its
resources for profitable projects

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Example of aggregate resource planning

% of Utilization of resources???
Step 3: Allocating Resources and Plan Timing

 Project Timing ( Pipeline Management)

 Factors to consider while determining the timing and sequence of projects:

o Timing of product introductions: Time to Market– early to market is better

with out compromising the quality … no compromise on schedule

o Technology readiness: A proven, robust technology to be integrated into

products much more quickly and reliably

o Market readiness:
o whether early adopters buy the low-end product or buy the high-end
product offered at a high initial price
o Releasing improvements too quickly can frustrate customers
o Releasing new products too slowly risks lagging behind competitors

o Competition: The anticipated release of competing products may accelerate

the timing of development projects

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Step 3: Allocating Resources and Plan Timing

 The Product Plan

 The set of projects approved by the planning process, sequenced in time, becomes
the product plan. Product plans are updated on a periodic basis, perhaps quarterly
or annually, as part of the firm’s strategic planning activity.

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

Step 4: Complete Pre-Project Planning

 A pre-project planning activity involves CFT .. known as the core team --- wide range
of technical expertise, marketing, manufacturing, and service functions

 This team provides Vision Statement to earlier opportunity statement

Example of Vision statement for one Xerox’s product: “Develop a networked,

mid-range, digital platform for imaging, marking, and finishing”

 Vision statement is very general.

 A mission statement follows to provide clear guidance for the product development
organization …. a more detailed definition of the target market and of the
assumptions under which the development team will operate

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

 Vision, Mission, Charter, Scope

Vision = what a company wants to be in the future?

Mission = Set the direction i.e. what a company wants to do now?

Charter = How we operate? (...the principles, functions and organization…

our constitution)

Scope = What is our sphere of influence and authority?

boundaries around us.
 Lakes Project Mission Statement
Product Description
 Networkable, digital machine with copy, print, fax, and scan functions
Key Business Goals
 Support Xerox strategy of leadership in digital office equipment
 Serve as platform for all future B&W digital products and solutions
 Capture 50% of digital product sales in primary market
 Environmentally friendly
Primary Market
 Office departments, mid-volume (40-65 ppm, above 42,000 avg. copies/mo.)
Secondary Markets
 Quick-print market
 Small ‘satellite’ operations
Assumptions and Constraints
 New product platform
 Digital imaging technology
 Compatible with CentreWare software
 Input devices manufactured in Canada
 Output devices manufactured in Brazil
 Image processing engine manufactured in both USA and Europe
Stakeholders
 Purchasers and Users
 Manufacturing Operations
 Service Operations
 Distributors and Resellers
Step 5: Reflect on the Result and the Process

 In this final step of the Product planning, the team should walk through a check list to
assess the quality of both the process and the results
o Is the ‘opportunity funnel’ collecting right set of products?
o Does the product plan support the competitive strategy of the firm?
o Are the total resources allocated sufficient?
o Have creative ways of leveraging finite resources such as joint ventures, and
partnerships with suppliers?
o Does the core team accept the challenges of the resulting mission statement?
o How can the product planning process be improved?

BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

 How might a portfolio of development projects differ if the firm believes a
particular product technology is currently at position A or B on the technology S-
curve shown below?