Product Planning Essentials

Books

Kenneth B. Kahn

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  • Front Matter
  • Back Matter
  • Subject Index
  • Dedication

    To Mary Kay and our two products, Alexander and Michael

    Copyright

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    Preface

    Over the past 6 years, I have been teaching a course entitled product planning at the undergraduate, graduate, and executive education levels. All the while, I have failed to find a book that provides a broad, interdisciplinary view of product planning. Instead, most books focus predominantly on either product development or product management topics. Typical books on product development and product management also are either too qualitative or too quantitative in nature. I, therefore, imagined a book that would unify product development and product management topics under a product planning framework. I also envisioned a book that would balance qualitative and quantitative topics, providing key managerial insights and perspectives along with a set of useful analytical tools that could be readily applied during product planning.

    With these objectives in mind, I have worked diligently to compose the following book. As the title states, this book is a product planning primer. It is not intended to be a comprehensive review of the product planning field. I decided to write a primer because of the dynamic nature of the product planning field and the vast scope of industrial contexts to which product planning applies, characteristics that inhibit a truly comprehensive view. However, even with such dynamics and scope, certain general principles underlying product planning can be and are documented in this book. Accordingly, this book outlines the product planning endeavor by describing the various initiatives that are necessary for successful product planning and by illustrating various tools that can be used in managing the product planning effort. Following an introduction to product planning and key definitions, the books covers strategic issues that emerge during the product life cycle, from product strategy to idea generation, to technical development, commercialization, and life cycle management, and then eventual product dismissal. Such issues include defining customer needs; translating customer needs into technical specifications; generating concepts; evaluating results; conducting market analyses, marketing plan development, market testing, product launch, and brand management; and attending to public policy issues. My hope is that the book will help readers understand good managerial practices for successful product planning. Hence, executives and students alike who want to gain an understanding of the complex, interdisciplinary nature of product planning should find this book a useful desk reference. Those who have reviewed this book have agreed that it indeed meets this objective. I hope this book will be a welcome addition to your management book collection.

    Before beginning, it is necessary to mention several key individuals and companies who have contributed to this book and thereby helped to bring it to fruition. Ms. Julie Wood of the Georgia Tech Library and Information Center is duly recognized for her assistance in compiling the list of situation analysis data sources found in Appendix A of this book. Note that I have used this list in all my product planning classes and have received a great deal of positive feedback from executives and students on its usefulness. I am grateful to Great Lakes Chemical Corporation and S. C. Johnson Wax Company for granting permission to show their product development processes in Chapter 2, proving that companies actually apply the material discussed in this book. Special appreciation goes to the many individuals who took the time to review draft manuscripts of this book and to my product planning classes, whose feedback helped me to refine the content. Last, I wish to thank my family, Mary Kay, Alexander, and Michael who afforded me the time to complete this endeavor.

    KennethKahn
  • Appendix A: Situation Analysis Data Sources

    The following is not an exhaustive list of data sources, but it does represent a good starting point for a situation analysis. Note that much of this list was compiled by Julie Wood, Information Consultant, Georgia Tech Library, Atlanta, Georgia, as a supplement for use in my product planning courses.

    Sources for Identifying Standard Industrial Classification Codes and Industry Types
    • Standard Industrial Classification (SIC) Manual 1987. The Standard Industrial Classification (SIC) system classifies establishments by their primary type of activity. SIC codes are being replaced by the new North American Industrial Classification System (NAICS).
    • SIC Search Online (http://www.osha.gov/oshstats/sicser.html). This page from OSHA allows one to search SIC codes by keyword or to search for a code to retrieve a description of that code, or to view an outline of the SIC Code Manual.
    • North American Industrial Classification System 1997 and NAICS Online (http://www.census.gov/epcd/www/naics.html). This Web site contains correspondence tables: NAICS to SIC and SIC to NAICS.
    Sources for General Industry Data and Industry Overviews
    • Standard & Poor's Industry Surveys. Features analysts' outlook, industry statistics, and comparative financial data for companies in key industries.
    • Encyclopedia of American Industries. Two volumes, one for manufacturing industries, the other for service and nonmanufacturing. Detailed industry breakdowns with history, overview, and recent developments sections.
    • Service Industries USA. Industry analyses, statistics, and leading organizations.
    • Manufacturing USA. Organized by SIC code, this source incorporates statistical tables from the Census of Manufactures and combines them with Ward's company information. Each industry analysis is enhanced with a state-level U.S. map showing industry concentration.
    • Forbes Annual Report on American Industry (http://www.forbes.com/forbes/SubSect/AnnualRe.htm). Provides comparative financial data on 1,280 companies in 20 industries.
    • Current Industrial Reports (http://www.census.gov/cir/www/index.html). U.S. Census Bureau data measuring industrial activity for selected products. Includes statistics on production, shipments, inventories, and so on.
    • Hoover's Industry Snapshots (http://hoovweb.hoovers.com/features/industry/industries.html). Surveys of nearly 40 industries. Historical information, current developments, financial data, and more.
    • Industry Web Sites (http://bd.dowjones.com/category.asp?CatID=6). Dow Jones Business Directory Guide to Business Web Sites.
    • IndustryLink (http://www.industrylink.com/). Claims to be the premier directory of links to industry Web sites. Covers thousands of Web sites (resource and commercial), organized into 20 major industry categories.
    Sources for Consumer Demographics and Behavior

    Consumer surveys. Many magazines conduct surveys among their subscribers on every type of product or service that could be bought by consumers or, in the case of management publications, by business people or companies. Such studies provide information on such topics as brand preferences, buying influences, package size, and place of purchase. The following is a sample list of trade magazines that offer consumer survey information.

    • American Demographics Magazine (http://www.demographics.com). Four years' worth of articles are available via the Web site.
    • Drug & Cosmetic Industry. Magazine of manufacturing, formulation, research & development, packaging and marketing.
    • Food Technology. Food industry, trade, and research.
    • Beverage World
    • Carpet & Floorcoverings Review
    • Carpet & Rug Industry
    • Chain Store Age. Trade magazine for the retail market.
    • Chemical Times & Trends
    • Computerworld
    • Drug & Cosmetic Industry
    • Electronic Business
    • Food Technology.
    • Knitting International. This publication claims to be the “leading technical and management journal for hosiery, underwear, knitwear and knitted fabric manufacturers.”
    • Lifestyle Market Analyst. Breaks down the U.S. population geographically and demographically. Includes extensive lifestyle information on popular interests, hobbies, and activities. Covers analysis of geographic markets, particular market segments, and consumer segment groups.
    • Pulp & Paper
    • Rubber World. Trade magazine for rubber and associated chemicals industry.
    • SocioAbs. Key source for research in workplace behavior and social trends.
    • Ward's Auto World. Trade magazine and annual report covering the auto industry.
    Sources for Collecting Competitor Data
    Rankings and Market Share: Print Resources
    • Market Share Reporter. Features published “top” lists and pie charts for a variety of market statistics related to industry. Accessed by company name, product name, or industry.
    • Dun's Business Rankings. About 8,000 public and private companies are ranked according to sales volume and number of employees. Companies are ranked within states and within 150 industry categories.
    • Ward's Business Directory of U.S. Private and Public Companies. Volume 5 of this directory ranks the profiled companies by SIC code category according to sales volume. Volume 8 ranks companies by NAICS codes. A total sales amount is given for each category, enabling an approximate market share calculation for each company.
    • The Forbes 500 Annual Directory. Lists and ranks the 500 largest publicly traded, U.S.-based companies, both industrial and service. The firms are ranked separately according to year-end sales, profits, assets, and market value.
    • Fortune magazine. Publishes a number of annual company rankings, including the Fortune 500 (published every April or May), the Global 500 (published in July), and the Service 500 (published in June).
    Rankings and Market Share: Electronic and Internet Resources
    • Price's List of Lists (http://pop.circ.gwu.edu/~gprice/listof.htm). Compiled by Gary Price, Gelman Library, George Washington University, this site serves as a clearinghouse for internet-based lists of information, including rankings of different people, organizations, companies, and so on.
    • Fortune and Forbes Company Rankings within Industries. Provides rankings of top companies within particular industries (aerospace, beverages, hotels, insurance, metals, telecommunications, and many more). Brief profiles of the companies are included.
    • GaleNet (http://galenet.gale.com). Gale Business Resources Company and U.S. Industry Module features comprehensive information on 445,000 U.S. and international companies, thorough histories and chronologies of major companies, and in-depth coverage of major U.S. industries, including full-text essays, rankings, market shares, trade and professional associations, and statistical analyses.
    Sources for Product-Related Data
    • Encyclopedia of Consumer Brands. This three-volume encyclopedia contains articles with bibliographies on about 600 popular U.S. brands. Examples of headings include brand origins, early marketing strategy, advertising, brand development, and competition.
    • F&S Index—United States. This index covers company, product, and industry information from financial publications, business-oriented newspapers, trade magazines, and special reports. The index also contains citations to articles on new products, technological innovation, and social and political factors affecting business.
    • Thomas Register Catalog File. Identifies which companies make what products. Includes a trademark index and some manufacturers' catalogs. Volumes 19 to 25 of the Thomas Register contain product catalogs of nearly 2,000 companies that are referenced in the Products & Services and Company Profiles sections of The Thomas Register of American Manufacturers. The Thomas Register Supplier Finder database is also available on the Web at http://www.thomasregister.com:8000/home.html.
    Sources for Corporate Financial Data and Industry Statistics
    • Almanac of Business and Industrial Financial Ratios. Features Internal Revenue Service-based composite financial data covering about 4.3 million companies for 179 industries (arranged by SIC code). Tables feature 10–year trends in selected ratios and factors.
    • Predicasts Basebook. Gives charts of commercially published time-series data arranged by SIC, plus topics such as gross national product, population, and employment. Statistics include consumption, production, and wage rates.
    • Predicasts Forecasts. Gives forecast information on topics covered by Basebook.
    • Annual Report Gallery (http://www.reportgalIery.com). This Web site lists annual reports that are available on the Internet and links to those reports.
    • 1992 Census of Retail Trade. Lists retail industry statistics by geographic area, state, merchandise line, and subject heading.
    • U.S. Census of Manufactures (http://www.census.gov/econ/www/manumenu.html). Provides manufacturer statistics by industry type.
    • U.S. Census Statistical Briefs and Census Briefs. Lists industry-specific census briefs.
    • Statistical Abstract of the United States (http://www.census.gov/statab/www/). This source contains a collection of statistics on social and economic conditions in the United States. Selected international data are also included. The 1997 edition includes 97 new tables covering topics such as pet ownership and consumer finance.
    • Bureau of Labor Statistics (http://www.bls.gov/). The Bureau of Labor Statistics collects data and provides statistics and analysis on U.S. employment, unemployment, prices, living conditions, compensation, working conditions, productivity, international programs, and other topics.
    • County Business Patterns (http://www.census.gov/epcd/cbp/view/cbpview.html). This is an annual series providing economic profiles of counties, states, and the United States. Data include employment, payroll, and number of establishments by industry.
    • State and Metropolitan Area Data Book (http://www.census.gov/statab/www/smadb.html). This is a collection of census statistical tables broken down by state and by metropolitan area.
    Key Databases for Finding Articles and Information
    • ABI/Inform. Covers business and management topics including company histories, competitive intelligence, and product development. Topics include advertising, banking, broadcasting, computers, economics, foreign investment, health care, insurance, international trade, management, marketing, public administration, real estate, taxation, telecommunications, and transportation. The database contains citations and abstracts from over 1,400 U.S. and international journals and trade magazines.
    • Business & Industry. Contains important facts and key events dealing with public and private companies, industries, products, and markets for all manufacturing and service industries at an international level. Covers about 700 trade magazines, newsletters, and general business and international business dailies.
    • Business Dateline. Covers topics such as agriculture, company profiles, corporate strategies, executive profiles, financial services, high technology, manufacturing, marketing, regional business environments, retailing, and service industries. The database contains full-text articles from over 262 sources, including regional publications, press releases, and major newspapers.
    • EBSCO Business Search. Covers over 900 business-related publications, both scholarly and popular press.
    • Findex. Indexes research studies, surveys, and audits for all types of industries. The entries are divided into 12 broad categories: basic industries and related equipment; business and finance; construction, materials, and machinery; consumer durables; consumer nondurables; data processing systems and electronics; defense and security systems; energy, utilities, and related equipment; health care; media and publishing; retailing and consumer services; and transportation. The database also provides company profiles for 400 top corporations.
    • Lexis-Nexis. Contains over 5,300 publications. Many types of publications are included: newspapers (in English and many other languages), legal news, general interest magazines, medical journals, trade publications, company financial information, transcripts, wire service reports, government publications, law reviews, and reference works (such as the Market Share Reporter, the Encyclopedia of Associations, and Ulrich's International Periodical Directory).
    • NETFirst. Contains bibliographic citations (complete with summary descriptions and subject headings) describing Internet-accessible resources, including World Wide Web pages, interest groups, library catalogs, FTP sites, Internet services, Gopher servers, electronic journals, and newsletters. Records contain location information that can be used to connect users to resources of interest.
    Trade Association Directories and a Sample of Useful Trade Association Web Sites

    The following is a sample list of trade association Web sites that track their respective industries and provide data and information either free or by fee. Many of these trade associations have their own market research staff.

    Appendix B: Reference Sources for Product Planning

    The following materials and reference sources are not an exhaustive list of product planning references, but they do represent a good starting point on which to base a product planning library and knowledge base.

    Associations
    • American Marketing Association
    • 311 South Wacker Drive, Suite 5800, Chicago, IL 60606
    • Phone: (800) AMA-1150 or (312) 542-9000
    • Fax: (312) 542-9001
    • http://www.ama.org
    • Commercial Development and Marketing Association
    • 1850 M Street, NW, Suite 700, Washington, DC 20036
    • Phone: (202) 721-4110
    • Fax: (202) 296-8120
    • http://www.cdmaonline.org
    • Innovation Network
    • 451 East 58th Avenue, No. 4625, Box 468, Denver, CO 80216
    • Phone: (303) 308-1088
    • Fax: (303) 295-6108
    • http://www.thinksmart.com
    • Product Development and Management Association (PDMA) 236 Route 38 West, Suite 100, Moorestown, NJ 08057-3276 Phone: (800) 232-5241 or (856) 231-1578
    • Fax: (856) 231-4664
    • http://www.pdma.org
    • Project Management Institute (PMI)
    • Four Campus Boulevard, Newtown Square, Pennsylvania 19073–3299
    • Phone: (610) 356–4600
    • Fax: (610) 356-4647
    • http://www.pmi.org
    • Technology Transfer Society (T2S)
    • 2030 SW 34th Street, Box 160, Gainesville, FL 32608
    • Phone: (352) 955-0066
    • Fax: (352) 294-7802
    • http://www.t2s.org
    Suggested Readings
    Aaker, D. A. (1996). Building strong brands. New York: Free Press.
    Altshuller, G. (1997). 40 Principles: TRIZ Keys to Technical Innovation. Worcester, MA: Technical Innovation Center.
    Bralla, J. G. (1996). Design for excellence. New York: McGraw-Hill.
    Clark, K. B., & Fujimoto, T. (1991). Product development performance: Strategy, organization, and management in the world auto industry. Cambridge, MA: Harvard Business School.
    Cooper, R. G. (1993). Winning at new products: Accelerating the process from idea to launch (
    2nd ed.
    ). Reading, MA: Addison-Wesley.
    Cooper, R. G. (1999). Product leadership: Creating and launching superior new products. New York: Perseus.
    Cooper, R. G., Edgett, S. J., & Kleinschmidt, E. J. (1998). Portfolio management for new products. Reading, MA: Addison-Wesley.
    Crawford, C. M., & DiBenedetto, A. (2000). New products management (
    6th ed.
    ). Boston, MA: Irwin-McGraw-Hill.
    Dolan, R. J. (1993). Managing the new product development process: Cases and notes. Reading, MA: Addison-Wesley.
    Griffin, A., Belliveau, P., Markham, S., McDonough, E. F., III, Olson, D., &. Page, A. L. (1997, October). Drivers of NPD success: The 1997 PDMA Report. Chicago: Product Development and Management Association.
    Kotler, P. (2000). Marketing management: Analysis, planning, implementation, and control (
    10th ed.
    ). Upper Saddle Ridge, NJ: Prentice-Hall.
    Kuzcmarski, T. D. (1996). Innovation: Leadership strategies for the competitive edge. Chicago: American Marketing Association.
    Lehmann, D. R., & Winer, R. S. (1997). Analysis for market planning (
    4th ed.
    ). Chicago: Irwin.
    MacKenzie, G. (1996). Orbiting the giant hairball: A corporate fool's guide to surviving with grace. New York: Viking.
    McQuarrie, E. F. (1993). Customer visits: Tools to build market focus. Newbury Park, CA: Sage.
    McQuarrie, E. F. (1996). The market research toolbox: A concise guide for beginners. Thousand Oaks, CA: Sage.
    Mentzer, J. T., & Bienstock, C. C. (1998). Sales forecasting management. Thousand Oaks, CA: Sage. http://dx.doi.org/10.4135/9781452204444
    Moore, G. A. (1991). Crossing the chasm: Marketing and selling technology products to mainstream customers. New York: Harper Business.
    Moore, G. A. (1995). Inside the tornado. New York: Harper Business.
    Pinto, J. K. (Ed.). (1998). Project management handbook. Newtown Square, PA: Project Management Institute/Jossey-Bass.
    Rogers, E. M. (1995). Diffusion of innovations (
    4th ed.
    ). New York: Free Press.
    Rosenau, M.D. Jr. (Ed.). (1996). The PDMA handbook of new product development. New York: John Wiley.
    Ulrich, K. T., & Eppinger, S. D. (1995). Product design and development. New York: McGraw-Hill.
    Urban, G. L., & Hauser, J. R. (1993). Design and marketing of new products (
    2nd ed.
    ). Englewood Cliffs, NJ: Prentice Hall.
    von Hippel, E. (1988). The sources of innovation. New York: Oxford University Press.
    Wheelwright, S. C., & Clark, K. B. (1992). Revolutionizing product development: Quantum leaps in speed, efficiency, and quality. New York: Free Press.
    Wheelwright, S. C., & Clark, K. B. (1995). Leading product development: The senior manager's guide to creating and shaping the enterprise. New York: Free Press.
    Periodicals That Cover Product Planning Issues
    • Academy of Management Executive
    • Academy of Management Review
    • Brand Marketing
    • Business Horizon
    • Business Week
    • California Management Review
    • Fortune
    • Harvard Business Review
    • IEEE Transactions on Engineering Management
    • Inc.
    • Industrial Marketing Management
    • Interfaces
    • Journal of the Academy of Marketing Science
    • Journal of Business Research
    • Journal of Engineering and Technology Management
    • Journal of International Marketing and Marketing Research
    • Journal of Management
    • Journal of Marketing
    • Journal of Marketing Research
    • Journal of Product and Brand Management
    • Journal of Product Innovation Management
    • Machine Design
    • Marketing Management
    • Marketing News
    • Marketing Science
    • Nation's Business
    • R&D Management
    • Research and Technology Management
    • Research-Technology Management
    • Sloan Management Review
    • Strategic Management Journal

    References

    Aaker, D. A. (1996). Building strong brands. New York: Free Press.
    Altshuller, G. (1997). 40 principles: TRIZ keys to technical innovation. Worcester, MA: Technical Innovation Center.
    Association of National Advertisers. (1984). Prescription for new product success. New York: Association of National Advertisers.
    Booz, Allen, & Hamilton. (1982). New products management for the ‘80s. Chicago: Author.
    Bralla, J. G. (1996). Design for excellence. New York: McGraw-Hill.
    Clark, K. B., & Fujimoto, T. (1991). Product development performance: Strategy, organization, and management in the world auto industry. Boston: Harvard Business School.
    Cooper, R. G. (1982). New product success in industrial firms. Industrial Marketing Management, 11(3), 215–223. http://dx.doi.org/10.1016/0019-8501%2882%2990052-9
    Cooper, R. G. (1993). Winning at new products: Accelerating the process from idea to launch (
    2nd ed.
    ). Reading, MA: Addison-Wesley.
    Cooper, R. G., Edgett, S. J., & Kleinschmidt, E. J. (1998). Portfolio management for new products. Reading, MA: Addison-Wesley.
    Copeland, L., & Griggs, L. (1985). Going international: How to make friends and deal effectively in the global marketplace. New York: Random House.
    Crawford, C. M. (1987). New products management (
    2nd ed.
    ). Homewood, IL: Irwin.
    Crawford, C. M. (1997). New products management (
    5th ed.
    ). Boston: Irwin.
    Dhalla, N. K., & Yuspeh, S. (1976). Forget the product life-cycle concept. Harvard Business Review, 54(1), 102–112.
    Dolan, R. J. (1993). Managing the new product development process: Cases and notes. Reading, MA: Addison-Wesley.
    Fisher, R. J., Maltz, E., & Jaworski, B. J. (1997). Enhancing communication between marketing and engineering: The moderating role of relative functional identification. Journal of Marketing, 62(July), 54–70. http://dx.doi.org/10.2307/1251789
    Flops. (1993, August 16). Business Week, pp. 76–82.
    Griffin, A., & Hauser, J. R. (1993). The voice of the customer. Marketing Science, 22(1), 1–27. http://dx.doi.org/10.1287/mksc.12.1.1
    Griffin, A., & Hauser, J. R. (1996). Integrating R&D and marketing: A review and analysis of the literature. Journal of Product Innovation Management, 23(May), 191–215. http://dx.doi.org/10.1111/1540-5885.1330191
    Griffin, A., & Page, A. L. (1996). PDMA success measurement project: Recommended measures for product development success and failure. Journal of Product Innovation Management, 13(6), 478–496. http://dx.doi.org/10.1016/S0737-6782%2896%2900052-5
    Griffin, A., Belliveau, P., Markham, S., McDonough, E. F., III, Olson, D., & Page, A. L. (1997, October). Drivers of NPD success: The 1997 PDMA report. Chicago: Product Development and Management Association.
    Gupta, A. K., Raj, S. P., & Wilemon, D. (1986). A model for studying R&D-marketing interface in the product innovation process. Journal of Marketing, 50(April), 7–17. http://dx.doi.org/10.2307/1251596
    Hair, J. F., Jr., Anderson, R. E., Tatham, R. L., & Black, W. C. (1998). Multivariate data analysis (
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    Hauser, J. R., & Clausing, D. (1988). The house of quality. Harvard Business Review, 66(3), 63–73.
    Holahan, P. J., & Markham, S. K. (1996). Factors affecting multifunctional team effectiveness. In M. D.Rosenau, Jr. (Ed.), The PDMA handbook of new product development (pp. 119–138). New York: John Wiley.
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    About the Author

    KENNETH B. KAHN (BIE, Georgia Institute of Technology; MSIE, Virginia Polytechnic Institute and State University; Ph.D. in Marketing, Virginia Polytechnic Institute and State University) is Assistant Professor in the Marketing, Logistics, and Transportation Department of the College of Business Administration at the University of Tennessee, Knoxville. His teaching and research interests concern product development, product management, sales forecasting, market analysis, and marketing strategy. He has published in a variety of journals, including the Journal of Product Innovation Management, Journal of Business Research, Journal of Forecasting, Journal of Business Forecasting, IEEE Transactions on Engineering Management, Marketing Management, and R&D Management, in addition to numerous conference presentations.

    His industrial experience includes serving as an industrial engineer and project engineer for the Weyerhaeuser Company and a manufacturing engineer for Respironics, Inc. As a professor, he has worked with on product-planning related projects with a variety of companies, including 3M, Amgen, BellSouth, Borden, Cargill, Ciba Specialty Chemicals, Coca-Cola, Corning, Hanes/L'eggs, Hewlett-Packard, Kellogg, Mary Kay, Miller Brewing, Moen, Motorola, Nabisco, Schering-Plough, Symbol Technologies, and Xerox.

    He is an active member of the Product Development and Management Association (PDMA) and is PDMA certified as a New Product Development Professional (NPDP). A former PDMA board member, he is currently chairperson of the PDMA NPDP Certification Test Development committee. He is also active in the American Marketing Association, Academy of Marketing Science, and Institute of Business Forecasting.


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