Product Line Planning
Product Line Planning encompasses legacy products and current products. It even extends to products that are in the development stage.
Companies like Microsoft and Intel already have newer products in the pipeline even as they are launching products. They hold the market and the financial strength to fund such ventures. In fact as bell weather companies it becomes something akin to a responsibility for them to continue to plan for the future. Most companies, however, are dependent on customer interest to fund new projects. For these companies product line planning caters to the following three categories.
Cost reduction
Mature products are often revamped to improve profit margin. Certain components that go into the product might be replaced by alternate vendors. It is also common practice to re-spin the product into a 'lite' one. 'Lite' products often have lower cost, lower selling price and also higher margin. The trade-off might be by way of features. Certain unused features or redundant ones might be removed leading to cost reduction. The same customer can buy this product for a different application or it could be bought by a customer operating at the second-tier level. Almost all the electronic products in the consumer space adopt this strategy by providing different products at different costs with different feature sets. This is similar to cars having standard, deluxe and luxury editions.
Patent protection
A second reason to retain certain mature products in the product line will be to protect existing patents. It is a product manager's prerogative to understand the intellectual property or IP behind every one of the products in the portfolio. Selling rights on a certain product to reduce maintenance costs will be beneficial as long as the IP that goes with it does not affect other products under development. Losing IP will have adverse effects in the long run as the owner of IP always holds the right to sell. It is quite possible in such cases to license the products instead of a full fledged sale. The licensee will pay the IP owner royalty while bearing the maintenance challenges that go with the product.
Developing new products
Innovation, Research and Development are key to move any company forward. Developing new products is the most important ingredient in product line planning and needs to be discussed in detail.
