Product planning and development involves the creation of a product proposal, a proof-of-concept report and a test market study. When an idea is generated, a product proposal should be created that discusses how it will be profitable to the company and identifies any associated risks. If the product is found to be within the company's scope of interest and budget, it is reviewed further, based on marketing, production and competitive considerations. Once it passes the further review, plans for its design, production and special circumstances are finalized and assigned to someone chosen to head the project. A prototype is then made and test marketed to gauge customer reactions, concerns or satisfaction.
Product proposals are the first step in product planning and development. When an idea merits consideration by a company, a proposal provides management with the reasons why this product will be a positive contribution to its current offerings. Not only does the proposal discuss specifics about the product idea, but it also outlines associated risks and financial estimates. It should touch upon marketing, production and competitive areas to discuss what will be needed and if additional resources or equipment will be required. Once the proposal is approved, management will assign the project to someone who will be responsible for it through the planning and development stage.
A proof-of-concept report typically is developed after the product's proposal has been approved, moving it forward into the development stage. This report provides details of the product specifications, manufacturing requirements, patents required and prototyping results. At this stage, the product's features have been finalized, the design has been researched and a prototype has been developed. Market research should also be done to ensure the product meets customer expectations and needs as well as has a strong positioning and marketing strategy. If it appears that the product will not meet the needs of consumers or give the company an advantage over existing competition, the product will need to be modified.
Usually, a prototype is test marketed in the final stage of product planning and development, before it is released to the general public. This stage allows the business to make any final modifications to its product's design, features or packaging. It also allows it to see how it will rank amongst its competitors and if its marketing strategy should be changed. Prototype development and test marketing should be repeated until the company receives the desired consumer response before moving from the product planning and development stage into production.