Demand Planning

19 years ago   •   2 min read

By Marcia Kadanoff

Insert marketing and the voice of the customer into the new product development process
Companies that build a disciplined process for ROI Marketing and invest
in systems to optimize the MarketMix have a considerable advantage over
their peers.  A more effective and efficient marketing machinery
provides more cash for the company to invest in innovative new products
and services, which in turn promotes growth. 

This should be a virtuous circle, where better marketing leads to
more new products which leads to more growth.  But it’s not,
largely because most new products fail. Why? Most companies do not have
a formal process for inserting the voice of the customer into new
product development.  Or, to the extent they have the beginnings
of a process, it relies on focus groups or other methods that are known
to be unreliable and/or inherently biased.17

Today, helping new products meet with rapid acceptance in the market place ranks last on the CMO’s agenda.18 
Given the importance of new products to driving growth at most
companies, we’d like to see new products ranked #2 or #3.  Right
now, marketing does not always have the credibility it needs to involve
itself in the new product development process.  Credibility will
happen by following the roadmap we’ve outlined above.  And as it
does, senior marketing executive will be asked to step up their
involvement in the new product development process, to make sure the
voice of the customer is represented.

Demand Planning uses marketing science to insert the voice of the
customer into the processes used to create innovative new products and
services, to forecast demand, and for capacity planning.  Benefits

  • improved return on equity – more accurate forecasts result in leaner inventory and fewer mark downs
  • improved cycle times – by eliminating extraneous features that add unnecessary complexity to products
  • more rapid acceptance in market – products are designed to meet the needs of specific target customers
  • higher profitability – scientific pricing and testing to ensure the
    target customer sees the inherent value you’ve built into the feature
    set or services that surround your offering and is willing to pay

Demand Planning puts hard numbers on what
customers value and what they are willing to spend on your next new
product or service.
  Often the results will surprise
you.  Many companies use price as a lever only to find that their
target customer is not price sensitive.  The amount of
money “left on the table” as a result can be staggering.  One
large retailer was about to field a loyalty program to its best
customers based on a 7-10% discount.  Using our MVT Profit
Maximizer service, we were able to show our client that its customers
preferred a very different type of program, one that was not based on
discounts but on early access to new products, a highly personalized
communications program, and an extended warranty program at no
additional cost to the customer.  At stake was $100M in
incremental profits over 5 years.

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