Product planning is the starting point for entire marketing programme in a firm. All marketing efforts revolve around the product planning. This process assists the firm in deciding
– what to produce ?
– why to produce?
– how to produce ?
– for whom to produce ?
– how much to produce ?
Product Planning – Definition, Objectives and Significance
1. “Product planning is an act of marketing out and supervising the search, screening, development and commercialisation of new products ; the modification of existing lines; and the discontinuance of marginal or unprofitable items.” – Karl H. Tietjen
2. “Product planning involves devising procedure to evaluate the performance of products, and planning the modification, where necessary, of existing products aimed at extending their lives ; the deletion of those products which have reached the ‘terminal’ stage of their lives ; and the development and marketing of new products.” – Dale Littlar
Objectives of Product Planning
Product planning plays a significant role in achieving the following major objectives:
1 . Satisfy the customer needs. The prime objective of product planning is to meet the consumer needs and requirements. Customer is the King in the modern marketing system. Hence, all marketing efforts lead to meet the customer needs efficiently. It helps in matching the products of the firm to the needs of customers by supplying existing products, modifying them or producing new products. It identifies the needs, requirements, likes and preferences and guides the resources of company towards achievement of this want satisfying.
2. Identification of the strongths and weaknesses of firm. Product planning identifies the core-competence of the firm along with its weaknesses. Every company has its own strengths and weaknesses in this dynamic business world. It highlights the strong and weak points of the business organisation through SWOT Analysis. It helps to plan the future activities in the set of given strengths and weaknesses. Therefore, identification of strengths of weaknesses becomes the major objective of product planning. Product planning develops new products and modifies existing one to minimise the weaknesses and maximise the strengths of the firm.
3. Ensure best use of limited resources. One of the main objectives of product planning is to ensure the better utilisation of limited resources such as men, money, materials, methods, machines and marketing. It helps to minimise the cost level of production. The limited resources of the firm should be so used as to get better and cheaper production as product planning is basically concerned with development of new products, modification of existing product line in accordance with changing customer behaviour. It depend upon the nature and extent of internal resources of the company.
4 . Ensure survival of firm. The smooth functioning and survival of a business organisation rests heavily on its product line. The firms which produce the products to meet the ever changing needs and requirements of its customers can work and survive successfully in this competitive market. Product planning ensures the long run survival of firm by understanding the likely changes in products, technologies, product ideas, raw materials etc.
5. Increase in the sales of firm. It also helps in increasing the sales of firm. Sales is the only sources of income for a firm. Products are developed by firm with the help of product planning is meant for sale in the market. The success and survival of the firm depends upon the sales volume of product in the cut throat competition. Hence, one of the important objectives of product planning is to increase the sales of firm which result in increased profit.
Significance of Product Planning
Product planning is a systematic process. Its Significance to a business organisation is discussed as follow:
1. Strong Trade Relations. It assist the firm to regularly retain its existing customers and acquire the new customers. Strong busimess relations can be developed by the firm with outsiders through product planning.
2. Minimise the risks. Product planning helps in reducing the risks of a firm as it includes all those aspects of the product that prevent miscalculations or loopholes. A firm can avoid obstacles arising in the market through regular research and surveys.
3. Assists to face competition. One of the important feature of the market is competition. Product planning enables the frm to place the product in a strong position in stiff competitive market. The product of the firm can create threat to the cempetitors in the market.
4. Improves the life span of the product. The product of the frm can enjoy a longer life in the market with the help of product planning activities. People become habitual to use the product and do not like to miss it. The product can enjey good relationship with customers in the market during this time of association. It also generates good sales for the firm.
5. Helps to perform social responsibility. A significant role is played by a firm for the wellare of the seciety. Product planning offers lot of benefits to the firm alongwith the society. It is the prime accountability of the company to check that the customers are not denied any benefits regarding the quality, prices etc. of the product.
6. Effective marketing programme. Product planning leads to a healthy marketing programme through estimating the future trends of the market. The firm can modify its marketing policy elfectively by studying the present market situation. It enables the firms to place a right activity in the right position to attain best from the outcome.
7. Optimum use of resources. It also helps the firm to utilise its all the limited resources effectively. Effective planning studies all the manufacturing aspects of the firm so that the maximum benefits can be derived out of each. Product planning avoids the mis-use and wastage of resources.
8. Builds reputation. It increases the goodwill of the organisation. The product and the firm become familiar to the customer for long when a product performs well in a market. Trade relations can be established with other countries to secure the additional market through a sound reputation.