Strategic Planning
Part 5 of 7

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Product Volume and Varieties The Product Life Cycle

The next critical marketing issue revolves around the volume and variety needed for each product. They are a reflection of the product's position in its life cycle. As a product changes stages in its life cycle, the required vol­umes and varieties also change. The product life cycle affects volumes and varieties as follows:

• Stage 1: Introduction: Low Volumes and Rapidly Changing (High) Variety
• Stage 2: Growth: Higher Volumes and Less Variety
• Stage 3: Maturity: Much Higher Volumes and Very Low Variety
• Stage 4: Decline: Lower Volumes and Somewhat Higher Variety

Marketing analysis will combine the volume and variety indicated by the product's location on its life cycle diagram, the volume and variety indicated by the market niche and the competitive advantages to be employed, and volume and variety estimates from its own forecasts or other external sources to determine the final volumes and vari­eties to be included in the marketing strategy.

The Marketing Strategy

So this analysis and the resulting marketing strategy should determine the following criteria for each product in each market segment where the product is sold now or will be sold in the near future:

• Required Product Varieties (i.e., Features, Functions, and Options)
• Needed Product Volumes
• Product Cost/Price Structure
• Order Winners, Order Qualifiers, and Non-Issues for the market segment
• A definition of exactly how the company will compete for this product in each market niche including the competitive advantages to be pursued
• The combination of products into product families based on important similarities

The above criteria for each product for each market niche are woven into the formal marketing strategic plan. At this point, the corporate and marketing strategies are directly coordinated and linked. Any conflicts between these two strategies have been identified and resolved by top man­agement in the best overall interest of the firm. Both are targeting the same set of strategic initiatives.

Step 3: A Manufacturing Functional Strategy

Once the marketing strategy is complete, the task for manufacturing is finally clear. Without a detailed market­ing strategy, manufacturing is unsure how to deploy its resources and may fail to create or support those competi­tive advantages marketing needs to be effective. In addi­tion, the marketing strategic planning process will force the company to better analyze its products, its markets, and define exactly how it intends to compete at a very detailed level. Too often this analysis is performed in a superficial manner or is not performed at all.

Manufacturing Structural and Inirastructural Choices

Based on the marketing strategy, Manufacturing must now determine how to deploy its resources to create the competitive advantages that the marketing strategy has specified and how to make the products in the requested volumes and varieties. Manufacturing strategic decisions fall into two general categories called Structural or Hard Choices and Infrastructural or Soft Choices. The elements of each of these categories are as follows:

• Structural (Hard) Choices

— Process and Technology Choices
— Plant/Facilities/Equipment Decisions
— Capacity Management Strategy
— Factory Focus Decisions
— Vertical Integration Alternatives

• Infrastructural (Soft) Choices

— Organizational Structure
— Workforce Empowerment Decisions
— Quality Systems
— Manufacturing Control Systems
— Information Systems

Structural or hard choices tend to change less frequently but in larger, more discrete steps than infrastructural or soft choices. However, structural choices should be re­viewed in detail each time the corporate strategic plan is reviewed or the formal strategic planning process is initiated.

Changes to infrastructural or soft choices tend to be evolu­tionary in nature changing in smaller increments over longer periods of time.

To be Continued