Unit 2: Product planning and development
Product and Brand Management notes · PTU syllabus (MBA 926-18)
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Unit summary
New products are risky, so firms plan carefully, test before launch and track performance after it. This unit covers the objectives, strategic reasons, process and challenges of product planning, demand forecasting, estimating market opportunity, types and design of test marketing, market entry decisions, and national launching and tracking.
After this unit you can
- Explain the objectives, process and challenges of product planning
- Forecast demand and estimate market opportunity
- Design test markets and take market entry decisions
- Plan national launch and post-launch tracking
PTU syllabus topics
- Objectives
- strategic reasons
- processes
- challenges of product planning
- demand forecasting
- estimating market opportunity
- test marketing types and design
- market entry decisions
- national launching and tracking
- 1
Idea generation
- 2
Screening
- 3
Concept testing
- 4
Business analysis
- 5
Product development
- 6
Test marketing
- 7
Commercialisation
National launch and tracking
Topic 1
Product planning: objectives and strategic reasons
- Objectives: growth, profitability, using capacity and capabilities, replacing declining products, meeting customer needs, defending against competitors.
- Strategic reasons for new products: changing customer needs, technology, competition, product life cycles, regulation, diversification of risk.
New-to-the-world
Entirely new markets
New product lines
New to the firm
Additions to existing lines
Improvements and revisions
Repositionings
Existing products for new uses or segments
Cost reductions
Same performance, lower cost
Topic 2
The product planning process
A product is anything offered to a market for attention, acquisition, use or consumption that satisfies a want or need. Levels: core benefit, actual product (features, design, brand, packaging) and augmented product (installation, warranty, after-sales service).
- 1
Idea generation
- 2
Idea screening
- 3
Concept development and testing
- 4
Marketing strategy development
- 5
Business analysis
- 6
Product development
- 7
Test marketing
- 8
Commercialisation
Topic 3
Challenges of product planning
- High failure rates, rising development costs, shorter life cycles, fragmented markets, regulatory hurdles, capital constraints, speed to market, cannibalisation.
- Reasons for failure: poor market research, weak differentiation, poor timing, inadequate launch support, overestimation of demand.
Topic 4
Demand forecasting and market opportunity
- Market potential: maximum total sales of a product by all firms in a market over a period.
- Sales potential: the maximum share of market potential a firm can achieve.
- Sales forecast: expected actual sales under a given marketing plan.
Market potential
Number of potential buyers × average quantity bought × average price
Market build-up
Sum of potential from each segment or territory
Buying power index
Weighted index of income, retail sales and population by region
Example
5 crore potential households × 4 packs a year × ₹50 = ₹1,000 crore market potential; a 15% achievable share gives ₹150 crore sales potential.
- Forecasting new products: concept and purchase-intention tests (top-two-box scores adjusted for overstatement), analogous products, diffusion models (Bass model — innovators and imitators), test market results.
First-year volume
Target households × awareness × availability × trial rate × units per trial + repeat purchases
Topic 5
Test marketing
Standard test market
Launch in a few representative cities through normal channels
Realistic; costly, slow, exposes plans
Controlled test market
Research firm places product in selected stores and tracks sales
Faster; less realistic distribution
Simulated test market
Shoppers see ads and buy in a mock store; models forecast sales
Cheap and quick; relies on models
Online and digital tests
Limited online launch, A/B tests, crowdfunding
Fast feedback; online sample bias
- Design: choose representative cities, duration (long enough for repeat purchase), measures (trial, repeat, share), control markets, competitive reactions.
Topic 6
Market entry decisions
- Timing: first entry (pioneer advantage) vs parallel vs late entry (learn from others).
- Where: single city, regional rollout, or national launch.
- To whom: early adopters and heavy users first.
- How: launch marketing mix, channel strategy, communication, pricing.
Topic 7
National launching and tracking
- 1Launch plan
Timing, territories, stock building, sales force training
- 2Trade launch
Distributor and retailer meetings, schemes
- 3Consumer launch
Advertising, sampling, PR, digital buzz
- 4Tracking
Awareness, trial, repeat, distribution, share
- 5Corrective action
Adjust price, pack, communication
- Tracking tools: retail audits, consumer panels, awareness and usage surveys, online reviews and social listening.
Key terms
- New-to-the-world product
- Product creating a new market
- Concept test
- Testing reactions to a product idea before development
- Simulated test market
- Laboratory store used to forecast sales
- Bass model
- Diffusion model with innovation and imitation coefficients
- Rollout
- Gradual launch across regions
Quick revision
- Objectives and strategic reasons; six categories of new products.
- NPD process; challenges and causes of failure.
- Market and sales potential; concept tests; Bass model; trial–repeat.
- Standard, controlled, simulated and digital test markets.
- Entry timing; rollout; launch and tracking.
Important exam questions
Practice questions written to the PTU exam pattern for this unit's syllabus: short answers (Section A style) and long answers (Sections B and C style).
Short-answer questions
- Q1.State three strategic reasons for new products.
- Q2.Name the six categories of new products.
- Q3.Why do new products fail?
- Q4.What is a simulated test market?
- Q5.Distinguish pioneer and late entry.
- Q6.Name two post-launch tracking measures.
Long-answer questions
- Q1.Explain the objectives and process of product planning.
- Q2.Explain methods of demand forecasting and estimating market opportunity for new products.
- Q3.Explain the types and design of test marketing.
- Q4.Discuss market entry decisions and national launch and tracking.
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