The starting point for new product planning

The starting point for new product planning is to examine the company's special skills or experience of its production and ONLINE MARKETING facilities. These are known as the differentiated assets of the business. They may not be unique individually. In combination, however, they may be sufficient to give the firm an 'edge' either in production or in marketing. Companies are said to have positive and negative differentiated assets. This simply means they are good at some things and not so good at others.

Having established the firm's differentiated assets, their values should be measured against the future requirements of the markets in which the company is currently selling or to which it may wish to sell in the future.

The long-term objective of new product planning is to make an improved use of the firm's differentiated assets and to maximize the return on investment. There are also short-term advantages, such as the avoidance of depending upon one market only, the avoidance of staff and labour reductions due to market fluctuation or decline, or the utilization of surplus capacity. Very often, an extension to one's product range enables a better service to be offered to existing customers.

When planning the introduction of new products, the ONLINE MARKETING Manager should find the answers to three pertinent questions: have the company's differentiated assets been identified; have the strategic product objectives been established; have screening factors for the new products been agreed? On the basis of these answers it should be possible to arrive at a specification for the new product which will satisfy all the relevant criteria. This will narrow the field of search.

The screening of a new industrial product for acceptability will be along lines similar to those discussed for new consumer products. Apart from the obvious need for satisfactory performance factors, one should consider the likely stability of any new products to be introduced into industrial markets. Ideally, the newcomer should have a potential life cycle which will be complementary to existing products in the range. Its potential market should be reasonably durable and broad enough to warrant the involvement of the company's resources in its development and exploitation. An ideal attribute for any new product is the likelihood of stable sales even in fluctuating economic conditions.

The introduction of new products as part of a growth programme is only one aspect of the overall product strategy which should be pursued by the company on a continuous basis. There are three major hazards which endanger the future prosperity of all manufacturing organizations. These are:

(1) Dependence on a very limited product range which can be put in peril in the event of changing market conditions.

(2) Seasonality and a consequent violent fluctuation in demand.

(3) Over-dependence on traditional consumer requirements which are liable to change as the result of technological advance.

The Product Life Cycle, which we examined earlier, occurs in all businesses and with all products. It is for this reason that the ONLINE MARKETING Manager must institute regular reappraisals of the situation of the company's existing products and their future viability in relation to changing circumstances. The profitability of each individual product, its market share and the trends which are occurring in that market should be considered. Has the company introduced enough new products or product modifications over recent years, in the light of market trends? Are there any external influences, such as socio-economic changes or competitive activities, which can affect the stability of the current product range? What particular assets has the company and what new assets are emerging within the company which are at present under-utilized?

Based on the answers to these questions one should be able to establish the life-cycle stage for each of the firm's products. Gaps in the existing product range will be highlighted, as will the possible need for product modifications and improvements. Some products may need to be dropped entirely.

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