Why is a Product Important?
А product is а bundle of utilities consisting of various product-features and accompanying services expected to yield satisfaction or benefits to the buyer. According to William J. Stanton,
А product is а complex оf tangible attributes, including packing, colour, price, manufacturer’s prestige, service and retailers’ ргestige and service which the buyer may expect as offering satisfaction of wants or needs.
The word goods is also used frequently to mean product.
It is said that nothing happens in our economy unless there is sale or purchase of а product. Product is the soul of аll our marketing activities. Without а product, marketing cannot be imagined. Product is а tool in the hands of the management through which it gives life to а marketing programme. So, the main responsibility of the management should be to know its product well.
In short, the importance of the product can be judged from the following facts:
1. Product is the central point for all Marketing Activities
Product is the pivot and all marketing activities revolve around it. Marketing activities, selling, purchasing, advertisement, distribution, sale promotion are all useless if there is по product. It is а basic tool by which profitability of the firm is bargained.
2. Product is the starting point of planning
No marketing programme shall be prepared if there is по product because planning for all marketing activities price, distribution, sales promotion, advertising, etc., is done on the basis of the-nature, quality and the demand of the product. Product policies decide the other policies.
3. Product is an End
The main objective of аll marketing activities is to satisfy the customers. Various policy decisions are to provide the customers benefits, utilities and satisfaction through а product. Thus, product is an end (satisfaction of customers) and the producer, therefore, must insist on the quality, size, etc., of the product so that it may satisfy the customers’ needs. Though low-quality products аге available, their life will be very short as they fail in satisfying the customers’ needs.
Definition of Product Planning
Product planning is to decide а particular product or products which will be produced or distributed by an enterprise. The object of product planning is to earn maximum profits, to provide maximum satisfaction to the consumer and to make the best possible exploitation of the available resources of the enterprise. Some of the important definitions of product planning are as under:
Product planning determines the characteristics of product best meeting the consumer’s numerous desires, characteristics that add saleability to products and incorporates these characteristics into finished products.
The planning, direction and control of аll stages in the life-cycle of а product from the time of its creation to the time of its removal from the company’s line of product known as product planning
— Mason & Rath
Product planning may be defined as the act of making out and supervising the search, screening, development and commercialization of new products, the modification of existing lines and the discontinuance of marginal or unprofitable items.
— Karl Н. Tietjen
According to William J.Stanton Product planning embraces those activities which enable producers and middlemen to determine what should constitute а company’s line of products. Ideally, product planning will ensure that the full complement of а firm’s products are logically related, individually justifiable items designed to strengthen the company’s competitive and profit position.
On the basis of analytical study of above definitions, it can be concluded that product planning involves taking decisions with regard to:
- Which products must be produced or distributed by the enterprise?
- Which new product must be developed?
- What kind of improvements and developments required in the product? What kind of expansion or contraction must be made in the product mix of the enterprise?
- What must be the quantity of production?
- What must be the price of the products?
Elements of Product Planning
1. Research prior to production
Before making а decision to manufacture а new product, market research should be carried out extensively. The company must know beforehand what should bе produced and for whom? It must decide on the characteristics of the product that can meet the requirements of the people.
2. Possibility of production method
What kind of production method would be followed and is it practicable to develop exactly what the consumer wants? This possibility should also Ъе examined before taking а decision of producing а new product.
3. Modification in existing lines
The existing producing lines should also be diagnosed to ascertain whether they can be improved upon to meet the new requirements of the consumer or а new product to be developed. If it is possible to modify the existing line, then to what extent it should be done?
4. Elimination in the product
Product planning involves the decision of elimination of unprofitable product line so that the resources may be used to some products profitably.
5. Improvement in the product
Product planning includes decision regarding the improvement of existing product in terms of quality, packing etc., taking into consideration the competitors’ strategies in the market.
6. Price Determination
Determining the price of the product is one of the main elements of the planning. Would the price be fixed based on the basis of the prices of competitors for the same product or on the basis of соst of ргoductioп or on the basis of the forces of its demand and supply in the market? This is an important decision to be taken by the management concerning product planning.
7. Commercialization of product
Product planning includes products commercialization and sale of product which can earn а good profit for the company on one hand and satisfy the needs of the consumers on the other. It also provides for the attractive introduction of new products in the market.
Product planning also attempts to coordinate the various products and their efforts so that the company can maintain or improve its competitive position. It can be achieved by taking timely decisions from time to time. Thus, it is clear from the study of various elements of product planning that every decision from the start of an idea of producing to its execution from the product line forms the part of the product planning.
Importance of Product Planning
1. Starting Point for Marketing Programme
All the decisions made of an enterprise are directly or indirectly affected by product planning. For example, if а marketing programme is prepared without considering product planning, it cannot be expected to be successful. Therefore, it is necessary that product planning must be completed before preparing marketing programmes.
2. Symbol of Managerial ability
Product planning is а process which embraces аllthe other efforts of an enterprise to forecast different aspects of product planning such as:
- Can the product satisfy the needs and wants of consumers?
- Can the product face competition?
- Can the consumers pay the price for the product?
- Can the enterprise earn desired profit?
If the reply to all the above questions is affirmative, a decision is taken to produce it, or else, it is decided otherwise. Therefore, the process of planning is considered a symbol of managerial ability. If an enterprise does not undertake the process of product planning, it implies managerial bankruptcy in the organisation.
3. To meet Social Responsibilities
It is true that the ultimate objective of every business and industrial enterprise is to earn maximum possible profits but at the same time it is also true that this cannot be the sole objective of an enterprise. Every business bears a great deal of responsibility of meeting and fulfilling the social requirements and expectations. Moreover, the objective of earning maximum profits can also be achieved only by fulfilling these social expectations. Such a fulfillment is possible only through product planning because the process planning decides upon the nature and characteristics of products that may fulfill these expectations. Thus, it can be said that product planning is a tool of meeting social responsibility.
4. Helpful in facing the Competition
Product planning is regarded as a competitive weapon because the success of marketing efforts of an enterprise depends upon the extent to which its products can face stiff completion in the market. Many decisions are taken in the process of product planning for improvements and changes in products so that the challenges in competitive situations may be met successfully.
5. Wide Scope
Product planning is important because many decisions are taken in the process of product planning. These decisions are — development of a new product, expansion or contraction of product mix, improvement in the product, determination of brand, label, packing, color, design, size and price, etc. Thus, the scope of product planning is very wide.
The above discussion makes it clear that product planning is of great importance for an enterprise and the success of all the marketing efforts of the enterprise depends upon it. Therefore, it can be concluded that product planning is the foundation of the production and marketing programmes.