Product Management Process
This is a description of the process to introduce a new product.
It is important to arrange your own thoughts and to communicate them. However, it is a waste to take too long. You want to tell people – including yourself – that you have considered things carefully. Those who might want to know about your idea include advisors, lenders, suppliers, partners and employees. If you provide too much information, you may overwhelm your audience. Instead of your reader being delighted, he may decide he doesn’t have time to look at the detail.
The process described here isn’t definitive. This isn’t the only way to run a project. If you think there is better way, please let me know. This is a simple version and only a start. Each of the steps I mention probably has a process or best practice.
Generate Development Plan
Create a plan:
- Use definition of solution,
- Define scope,
- Break down plan,
- Estimate effort of each part.
- Include necessary prototypes, testing etc.
- Check times are acceptable,
- If estimates are higher that business case estimates, iterate business case,
- Refine requirements.
Implement Development Plan
Implement the plan.
Whatever the activity, your business has expenses. Adding a product increases these expenses.
- Working capital,
- To cover operating expenses (rent, salaries, raw materials):
- Tooling and facilities,
As there will be time while you spend money before the new activity starts bringing in revenue. Some form of funding is going to necessary. This might use your own savings, some of your own income or use surplus from your existing business. Otherwise, the money will have to come from outside. If this happens your investor or lender will have to buy into your idea. You will need to explain why it is a good idea, that you have thought of everything and that he will make a good return. Your invested will want to see all the planning activities described here.
Funding comes in two basis forms, and will probably be a combination of:
- An investor buys a share of the enterprise
- Self, friends and family, venture, angel, stock market, Crowd.
- A lender lends money to the enterprise
- Bank, self, friends and family, peer to peer, bond market.
Unless you have an established business with existing income, funds will probably come from yourself, friends and family, peer-to-peer lending, crowdfunding or from an angel investors.
An expert on peer-to-peer lending and equity crowd funding is Business Agent. It is worth calling them on 01920 486440.
Generate Marketing Plan
Plan all aspects of Marketing:
- Either plan within a budget already decided,
- Or estimate what needs doing and have it approved.
- Unique Selling Proposition,
Appropriate mix and communication plan
- Collateral/sales material,
- Promotional deals,
- Sales/Partner training.
Generate Sales Plan
Plan all aspects of Sales:
- Decide on sales strategy:
- Recruit Sales people,
- Recruit partners,
- Sales training,
- Establish sales process,
- Establish goals and forecast.
Generate Supply Plan
Plan all aspects of Supply:
- Decide on supply strategy:
- Set procurement strategy,
- Generate key Invitations to Tender,
- Plan logistics,
- Plan Fulfillment.
Implement Supply Plan
- Recruit and procure to operate supply chain,
- If planned, build and set up manufacturing,
- Operate procurement,
- Operate Logistics,
- Operate Fulfillment.
Launch and Promotion
Launch is when product becomes available:
- As in marketing Plan;
- Might be an event,
- Might be a campaign,
- Communicates messages to customers.
Promotion is on-going:
- Communication activity.
Sales is the the on-going process of customers buying the product:
- Taking orders,
- Overseeing fulfillment,
- Forecasting demand to supply chain.
Retirement not included in the diagram:
- Based on review of business case:
- The Product not expected to achieve commercial goals.
- Or mandated by supply considerations. (E.G. a key component is no longer available)
- Management (who’ll want to know what happening, why, and how it will affect the rest of the business).
- Marketing (websites, collateral will have to be changed. Will the product be replaced? There needs to be messaging for Customers)
- Sales (They will want to talk to their customers. A cancellation may affect goals etc.,)
- Customers (Their plans may rely on the Product; they may need to source an alternative or they may want to buy existing stock while they can)
- Supply (We need to shut down production infrastructure to save cost. Resources may be redeployed)
Please read on:
The Business Plan is different from the business Case! Both are important. The Business Case is the how we plan a product line. A Business Plan describes a whole business.
|Business Plan||Business Case|
|Cash Flow||Sum of all Products||Yes|
|Sales Forecast||In Monetary Terms||Yes|
|Valuation||For whole company||Of Product-line, based on cash-flow of project|
|Exit||Yes||No (but retirement of product)|
|Product requirements or definition||No||Yes|
|Supply Plan||Summary only||Yes|
Generating a solution from:
- Idea(s) – sometimes the idea comes first
- Market need – Is the needed to solve a particular problem? Will it make money for the buyer? Save money?
- Market conditions – How big is the market for the idea? Is the market growing?
- Competitive analysis – Is something available which does the same thing? Do it do it as well? Is it cheaper? More established?
- Price and cost goal are set first – How much will someone pay to solve the problem?
In classic marketing theory, a solution is the response to a particular problem. In practice, ideas often comes first: “a solution looking for a problem”. The best ideas may come from unlikely places, or from people who not looking for solution to a problem. They may not know of the problem. In this case, we still have to match the solution to the problem and need for a solution.
The Business Case will have outputs:
- Definition of Solution (Requirement document)
- Cost estimates,
- Cash flow
These are needed to develop the solution, to estimate the costs of development and manufacturing.
This is an analytical method to forecast the business opportunity and to scale supply chain, marketing and sales resources. Once the product is available this method can be replaced to some extent by measured results.
TAM: Total Addressable (or available) Market is the whole size of the relevant market. Typically, a number from an uncontentious source will be used. This will also bound the market a solution is after and establish an absolute maximum.
SAM: Served Available Market is market that can be addressed by the solution and the organization. e.g. It may be bounded by the capability of the solution and the geographic reach of the organization selling it. SOM, where “O” stands for “Obtainable” can be used. It is smaller than SAM.
Marketshare is percentage of SAM (or SOM) if it is used that is expected to be sold to.
TM Target Market is the product of marketshare and SAM (or SOM if it is used). We can use this for forecasting revenue