Marketing & Sales Roundtable

Pragmatic (Start-Up) Product Planning

May 2004

Agenda Pragmatic Product Planning

Definitions Benefits and Issues Inputs Top 10 List Appendix
Sample MRD

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Product Management

Product Lifecycle

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Product Planning Hierarchy

Roadmap Product Plan
NPP1 NPP2 NPPE1 NPS4

Gate #1

Gate #2

Gate #3

Gate #4

MRD

PRD

Engineering Spec

Plan of Record (POR)

Launch Plan

Gatekeepers = Executive Committee

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Total Product Planning Issues

BOD, Executive Team Alignment Risk Analysis, Mitigation

Clear Direction to Development Team

Product Planning
Lower Cost Development, Fewer Revs Faster Time to Market and Revenue Early Customer Buy-in

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Product Planning Process Issues

How to instill structure and process in the product planning function without introducing bureaucracy? How to get sales input without handing over control? How to balance customer-specific requests with market and competitive input? How to give the detail needed for product development without developing a full functional spec? How to limit the number of releases to match development and marketing resource constraints? How to mitigate product slips? How to manage internal buy-in and approvals? How to reset expectations due to dynamic requirements/changes and slippage? How to ensure product planning is part of strategic roadmap? How to develop a product with an offshore team involved?
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Research Sources and Uses

Corporate Positioning Process
New Product Planning Process

Lifecycle Management (Financial Modeling)

Product Strategy

Marketing Product Management

Subscription Market Research

Market analysts (IDC, Gartner, etc.) Financial analysts International?

Custom Surveys
Customer Sat Channel calls Shows/Events Reg base, key accounts Lost accounts

Qualitative Feedback
Annual Summit WW Channel, Customer Advisory Boards

Competitive
Trade magazines Lab analysis Web Crush

Emerging Technologies
Supplier visits Technology Advisory Board

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Product Planning: Top 10 List

#10: Segmentation (market and customer) and product roadmap are the foundations of product planning
Becomes filter for all product concept and feature requests

#9: Qualitative research with opinion-leading customers in target customer segment is most important research component
Once identified and tested, build relationships for alpha input, beta program and ongoing advisory

#8: Market and competitive research complete the requirements, competitive and financial picture
Qualitative input from analysts, competitors, industry associations, customer councils, advisors, gurus, historical/analogue trends, etc. Structured, time-limited process for input from sales, SEs/FAEs, executives

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Product Planning: Top 10 List (contd)

#7: Product manager, VP marketing own the product planning process
With meeting of the minds, and formal approval process with engineering and sales VPs, CEO, founders and a defined cross-functional team

#6: Detailed financial model must substantiate business opportunity:BOM, development budget, sales forecasts by quarter, lifecycle pricing , discounts, marketing budget, etc. #5: Two major releases/new products annually
Develop a theme/concept/name for releases with feature groups that address/anticipate specific market needs not bug fixes
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Product Planning: Top 10 List (contd)

#4: Establish total product features as market requirements for release
Support plan, partner/channel strategies must be executed in parallel with development

#3: Define clear executive (board?) review and approval process

Formal presentation and sign-off, with regular reviews as dictated by risk assessment, development progress and market dynamics

#2: Include launch strategy, plan outline, budget to engage development team and reinforce delivery expectations
Go/no go dates for key launch expenditures and events
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#1: Product Planning is a Contact Sport!

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Summary
Its not necessary to turn product planning into a bureaucratic process, but It does need to be built upon customer segment requirements Higher probability that youll get the product right, the first time

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Appendix

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Sample MRD Outline

Preface - The development of a Market Requirements Document (MRD) is a critical first step in any new product planning effort. The MRD provides a business view of the market requirements and environment. It also serves as the foundation for the creation of detailed product requirements/engineering specifications, and the starting point for release and launch planning. The MRD in the Product Planning Process
MRD PRD Engineering Spec Plan of Record (POR) Release (Launch) Plan

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Sample MRD Outline

When to Create/Refine an MRD New product planning Product enhancement or extension planning Objectives and Uses of an MRD Confirm market/customer need and opportunity Ensure product strategy development and refinement is market- and customer-driven Evaluate potential business model options and opportunity for ROI Identify potential partner categories and requirements in timely way Understand barriers and risks Product reviews (review and refine MRD assumptions on quarterly basis) Allocate resources Risks of Not Producing an MRD Technology risk Technology wont work as envisioned Key component not available Product risk Wrong product Wrong price point Market risk No market technology looking for problem Established market me too product facing entrenched competition Unattractive market not big enough to be interesting Business risk Too expensive to develop (time and $$) Not profitable to manufacture and sell

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Sample MRD Outline

MRD Outline I. Product Overview This section of the MRD introduces the product concept and structure. Also outlined here are assumptions regarding key requirements, release schedule and potential risks and dependencies. A. Product description (high-level) 1. Market category a. What is it (Component/SW/HW/System, usage)? b. Where does it fit in the market (per industry/market analysts schema)? c. Product category name (e.g. PC, PDA, Infrastructure SW) 2. Architecture/Core structure a. Component block diagram b. HW processor, OS, storage, NW, etc. c. SW - server, client, modules d. System HW, SW, NW, etc. 3. Key features and capabilities B. Problem addressed and benefits provided by the product (prioritized in order of importance to customers) C. Value proposition D. Other market requirements identified but not essential to this rev E. Product release schedule 1. Alpha 2. Beta 3. Release (general availability) F. Risks and dependencies 1. Technology development feasibility, component availability 2. Product - performance 3. Market timing, competition, etc.

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Sample MRD Outline

II. Product Strategy A. Strategic goals/objectives for the product 1. Role of product in the companys strategy 2. Financial goals B. Market vision Why is this product important to potential customers now and in the future? Why can it be the basis for a sustainable company versus just a point product? 1. Market trends/drivers 2. Technology enablers 3. Market segment problem being addressed by the product C. Targeted market(s) 1. Market segment Who has the problem being addressed (broadly), and the most critical need to get it fixed? 2. Market segment development roadmap potential customer segments (prioritized to the extent possible) a. Critical need drivers must-haves versus nice to haves b. Sample usage scenarios i. Current solution(s) to the problem outlined in B-3 and their deficiencies ii. Priority requirements - table stakes e.g. standards support, integrate-ability, performance, etc.) iii. Barriers to adoption for all participants in the product category, and those specific to company 3. Market size and growth rates (3-5 year CAGRs) See Appendix A for definitions a. Total Available Market (TAM) b. Served Available Market (SAM) D. Competitive Landscape 1. Primary competitor categories (direct/indirect, current/future) strengths and weaknesses 2. Company/product differentiation against each competitor category

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Sample MRD Outline

II. E. Product Strategy - Contd Partnership strategy by category type 1. Technology 2. Product 3. Marketing 4. Sales/distribution 5. Other?

III.

Marketing Planning Assumptions 1. Communications strategy a. High-level message model - key points related to market, technology, product, company b. Market leverage model categorization of market influencers and strategy for reaching them 2. Beta program a. Objectives b. Criteria to select beta customers c. How many and what type d. Duration and management of program 3. Launch strategy (Objectives and key milestone - detailed plan comes later) 4. Sales channel strategy (role of direct versus indirect) 5. International strategy what, if any markets will be addressed in the first release

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Sample MRD Outline

IV. Product Requirements This section outlines product development priorities in more detail, and includes preliminary assumptions regarding future releases and/or product extensions. In the event that the companys product planning process does not include the creation of a PRD, this section is used as the foundation for the development of engineering specifications. A. B. C. D. E. Priority 1 features and capabilities (identify which are mandatory for first release) *See Appendix B for sample list of key elements to be addressed in core product and in support of the product. Priority 2 features and capabilities (highly desirable but may not be committed to yet) Future requirements (may be included in future releases but not committed to at this point) Features that will not be implemented (with explanation of why) End-of-life strategy/plan

V.

Financials
This section should demonstrate that the company has thought through the key financial considerations and include an Excel model demonstrating an attractive business opportunity given estimated (best guess) revenue assumptions and development, manufacturing, sales and marketing costs. A. B. C. D. Bill of materials (preliminary make or buy assumptions for key components) Development budget Customer adoption scenarios (how many, over what period of time) Business model/pricing assumptions (over time) 1. License versus subscription/hosted pricing 2. System versus component (HW/SW/Service) pricing Sales process 1. Revenue targets and discount structures by channel 2. Sales cycles Marketing budget

E.

F.

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Sample MRD Outline

VI. Cross-Functional Project Team (Roles, Responsibilities, Timeframe, Point Person) The product planning process should involve representatives of most functional areas/departments. This section should outline the roles and responsibilities of each department, identify a departmental point person and highlight the points at which his or her input/involvement are required. A. B. C. D. E. F. G. Development/Engineering Marketing Support Operations Sales Legal International Approvals and Certifications

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Sample MRD Outline

Appendix A - Glossary of New Product Planning Terms

PLANNING TOOL
New Product Planning Process Market Requirements Document (MRD) Product Requirements Document (PRD) Engineering Spec

ROLE
Phased approach for managing the development of a new product that reflects stated corporate (and product line) strategies Business view of market requirements and environment, summarizing segmentation strategy, competitive landscape, total product composition and business model/potential ROI. Source of initial product plan business assumptions Definition of features, functions, technical specifications for an individual product of family of products. Basis for development of engineering specifications Detailed engineering specifications based on MRD/PRD inputs. Core of development plan

Plan of Record (POR) Release (Launch) Plan

Launch Plan Product Roadmap

Detailed summary of product development activities, schedule and key milestones, including Beta Engineering/Manufacturing Plan for product release detailing activities, schedule, roles, responsibilities and costs Engineering/Manufacturing-oriented
Marketing plan for product launch detailing activities, schedule, roles, responsibilities and costs Outlines medium to long-term product platform strategy and response to market vision (trends/drivers/enablers). Provides explanation of rationale for product evolution relative to target market segments. Total units/$ available at all potential customer companies for relevant categories of products/services and applications. Top-down approach using market forecast data 100% of the units/$ available from addressable customer companies for addressable percentages of applications that company can serve. Should reflect companys technical capability, market rate of adoption of technology, geographic reach, target market segment, etc.

Total Available Market (TAM) Served Available Market (SAM)

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Sample MRD Outline

Appendix B Sample List of Features/Capabilities * Sample list of elements to be addressed and prioritized in development and communications plans (What are table stakes/must haves? What are differentiators?) Core product features/functions Product performance metrics (relative improvements), dependencies Uptime and QoS Regulatory certifications and adherence to standards (e.g. platforms and protocols supported) Compatibility/interoperability (backward and forward) requirements and testing Bugs/fix requirements Internationalization (e.g. Unicode-enabled) Documentation requirements and plan (users, developers, etc.) Next generation architectural changes Environmental (e.g. ISO 1400, recycling, etc) Maintenance and technical support requirements

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Presenters
Liz Arrington, Consultant Market Focus 650-329-0823 liz@mktfocus.net Patty Burke, Consultant Market Focus patty@mktfocus.net 408-398-4921 Rosemary Remacle, Consultant Market Focus 408-244-0412 rosemary@mktfocus.net
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