What Is Product Planning? (With Steps and Examples)
By Indeed Editorial Team
Published 21 September 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Companies that manufacture or develop products often use product planning strategies to guide these processes. Having a product development plan allows businesses to assess their current customer demographics, identify markets for expansion and create product development goals that help them gain, retain and serve their customers. Learning about product planning can help you create a product development strategy that grows your business.
In this article, we discuss 'What is product planning?,' explore the steps of this process and provide different examples of what product planning can look like.
What Is Product Planning?
If you have wondered 'What is product planning?,' you might find it interesting to know that product planning is the process of developing successful products to offer your customers. It includes all aspects of the product development cycle, including market research, strategic planning, product design and development, manufacturing and pricing. A product development plan helps you construct realistic goals for each stage of the development process. It also allows you to measure your progress toward those goals, evaluate your successes and make adjustments as needed.
Benefits Of Product Planning
Taking the time to go through the stages of product planning can provide companies with an array of advantages, including:
Satisfy customer needs: One of the primary goals of creating a new product is typically to solve a customer's painpoints or satisfy their unmet needs. The product planning process can help ensure that your eventual product brings value into your customers' lives.
Efficiently allocate resources: With product planning, organisations can more effectively determine the type and quantity of resources they need for product development, manufacturing or distribution.
Optimise branding: Businesses with a reputation for offering well-functioning products at reasonable pricing points can improve their branding efforts. Following the product planning process may help organisations ensure that their products go through rigorous developmental and testing processes prior to their release.
Steps Of Product Planning
Following are the typical steps in the product planning process:
Create product concepts
The first step in product planning is typically coming up with conceptual designs for new products. This includes discussing your customers' pain points or unmet needs and exploring how your product ideas might alleviate or solve those.
During this stage, it is okay to freely associate potential product ideas without necessarily knowing how you might develop or manufacture them. The goal of this step is to generate as many ideas as possible.
Analyse your competitors
Conduct competitor analysis to see if other businesses already have produced similar products or products that meet similar customer needs. If you discover that other companies already have products out that are alike to your ideas, consider what features or improvements your products could offer that might distinguish them within the market. This step is important because it can help the business that you work for decide if you are going to change the market with an entirely new product or disrupt the market by offering modifications to an existing product.
Understand your target market
Know which customers you want to target with your new product. Conducting market research helps you identify the needs of your customers, clarify your focus on key demographics and design products with the specific desires of your customers in mind. As part of this stage of the product planning process, performing quantitative and qualitative research through surveys, focus groups, interviews and other methods can help you gain insight into what your customers want and how your products can fit their needs.
Focus on customer retention
Another approach to product planning is to consider opportunities to retain current customers. Businesses often look to implement new products that appeal to their current customers in order to keep them and encourage repeat purchases. To improve customer retention, businesses can conduct research into their current customers' buying habits to identify their most popular products, notice which products customers often purchase together and determine whether they can offer additional products to supplement or support the functions of their existing products.
Develop an MVP
Create a minimum viable product (MVP), meaning an early version of your product that offers customers an idea of what the eventual product might do for them. An MVP can give both employees and prospective customers a tangible item that they can use, test and improve. Once you have an MVP, you can get feedback on your product about potential modifications and what customers like or want to see changed.
Optimise for growth
One important consideration during the product planning process is optimising your manufacturing operations and product availability for growth. This means accounting for the expenses of developing, manufacturing, transporting, storing and selling a new product while anticipating your earnings to ensure your new product is profitable. Conduct research about how likely your customers are to purchase your product and how much they might feel willing to pay for it so you can budget effectively.
Launch the product
Once you have fully developed, tested and improved your product, it is time to prepare for the product release. At this stage, the marketing and sales team typically handle most of the responsibilities related to the product, such as generating advertising copy, building relationships with target audience members and making pre-sales. If the company you work for also handles manufacturing or distribution, those departments also ramp up production to prepare for the launch.
Maintain the product's lifecycle
The final stage in the product planning process is maintaining the product throughout the remainder of its life. Depending on the type of product you are offering, this might involve conducting further user experience tests, providing add-on features or releasing upgraded models. You might also consider releasing the product to new markets, such as by bringing it to international markets or targeting individuals in different demographic groups.
Examples Of Product Planning
Here are a few examples of what product planning can look like across industries and to fulfil various customer needs:
Following is an example of how the market research stage of product planning can help businesses use their understanding of their target audience to develop new products:
Blue Hibiscus Beauty manufactures and sells makeup, skincare products and hair accessories through its online store. As part of its market research strategy, it distributes surveys to each customer who makes a purchase from its shop. The survey includes several demographic questions and an open-ended response portion that asks each participant to describe what products they would most like Blue Hibiscus Beauty to offer. Based on the survey results, the company learns that its core demographic of female shoppers between the ages of 18 and 25 want sustainable and easy-to-apply eyeliner, so it begins developing this product.
Here is an example of how a business that wants to boost its customer retention rates might use product planning strategies to achieve this goal:
Remote Work Fitness sells home workout equipment to its customers and wishes to expand its available products to improve its customer retention. Through its market research, the business identifies that most customers purchase only a few pieces of home gym equipment and rarely return to purchase additional equipment, despite leaving positive reviews. Remote Work Fitness decides to expand its product selection to include dietary supplements to appeal to its customer base of home exercise enthusiasts. Since customers need to resupply their supplements periodically, introducing this product may improve Remote Work Fitness' customer retention.
Below is an example of how a retail shop might use the product planning process to gain new customers and improve its distribution range:
Garden Fleece Market is a community grocery store that sells fresh produce from local farmers. Although it has a loyal customer base, the store hopes to increase its new customers by 25% over the next fiscal year. To attract new customers, the store makes the decision to widen its product selection to include a butcher, a bakery and a selection of locally made care products like lip balm, lotion, bar soap and essential oils. Garden Fleece Market's plan to expand its product selection involves contacting local vendors to supply these items. By stocking more diverse products, the store hopes to gain new customers.
Here is an example of how you might use physical data to inform your future product planning:
Tilly's Knitting Supply Store is a small business that sells craft supplies. The business is interested in expanding to include a custom picture frame service. The company plans to create these custom frames in-store by working directly with customers to design and craft each frame. As part of its product plan, Tilly's Knitting Supply Store performs thorough research to gain an estimate of how many customers might use the service each quarter. It then creates a budget to determine how much to spend on materials and how much to charge for the services in order to make a profit.
Please note that none of the companies, institutions or organisations mentioned in this article are associated with Indeed.
Explore more articles
- 15 Examples Of Useful Open Source Data Modelling Tools
- What Is AHT? (With Importance And Steps To Improve It)
- What Is A Time And Materials Contract? (With Benefits)
- What Is mPOS? (Definition, Advantages And Tips For Choosing)
- What Is A BSN Degree? Definition And Career Opportunities
- What Is The Kirkpatrick Model? (And How To Use It)
- A Guide To SAP Databases (With Examples And Benefits)
- Types Of Project Organisational Structure For The Workplace
- What Is The Quick Analysis Tool In Excel? And How To Use It
- What Is Data Visualisation? Importance, Types And How To
- What Are Current Assets? Plus How To Calculate Their Value
- Cinematography Vs. Videography: Differences And Salary Info