How to build a product business plan

This is a high level guideline on how to build a product business plan.  Broadly, there are four aspects that you need to cover at a high level. They are as follows:

·         Market  Research focused plan

·         Product focused plan

·         Financial Plan

·         Business execution focused plan

Once the four above sections are completed, you need to create an executive summary.  Now I will discuss the above areas in detail.

Market Research focused plan

The objective of this section would be to discuss the market trends and to give an overall view of the business environment. This section must cover the aspects like trends in the market where your product will compete along with specific opportunities that this product wants to tap. You need to define the problem that your product is going to solve.  Moreover, in this section you need to have a clear segmentation strategy for the market and also need to identify a target segment whose problems your product will solve. You could use some quotations from research firms or other authentic sources to bolster your argument for the need of having this product.

After covering the above aspects, you need to talk about high level customer needs analysis and customer use cases that your product is trying to address.  Next you need to give a view about the competitive landscape for this market. Hence you need to give a view about who are your competitors, who is the market leader, what are the products etc.

Product Focused Plan

In this section you need to cover the specifics about your product and quantify the size of the business. Hence first, you need to add a section on product objectives and the goal for your product. Next you need to talk about the high level product features (only the top five or six) that you are planning.  It is good to have a section on “what it is “and “what it is not”. Next, you need to cover the strategic fitment of your product in the existing portfolio of the company (if there is a portfolio). You also need to have an initial SKU (stock keeping unit) strategy (hence a licensing strategy) for the product.

Financial Plan

In the next section, you need to have the detailed financial projection for the product business.  Hence you need to cover the detailed aspects of the costs involved for developing the product and also the revenue projection for the next three to five years. Thus you need to define a time-line for launching the product.  Specifically you need to have a revenue projection, a view on the cost of goods sold in addition to the cost of developing the product (initial cost), the opex and tax. You need to arrive at the Net profit figures for the projections, the cash flows and the Net Present Value ( NPV) using an appropriate cost of capital. You could also calculate break-even and ROI for this investment. I will be covering this section in detail in a future post.

Business execution focused plan

It is not enough just to have a plan; you need to have an execution strategy as well. Specifically, you need to have a program execution team with roles and nominations identified. Next you need to have a service plan and strategy, supply chain plan and strategy for distribution and sourcing any OEM components, marketing plan  for promotions, technical support plan and strategy, maintenance plan, in-case you are substituting an existing product from your company, you need to provide a migration plan for your customers as well. Additionally, you need to have a plan for customizations ( if  your product needs customizations for deployments), training plan and warranty requirements.

Please note that  the product business plan or business case needs to be customized  to suit your product, your company or your domain. Hence the above mentioned components are high level guidelines which you need to follow but you could deviate to suit your case.

Role of Product Manager

The product manager’s role   is always defined in a fuzzy way in most organizations. Hence though it is understood that the product manager will be responsible for strategy and execution of tasks related to a product business, right from the concept to market phase and then from the cradle to grave phase of the product, the responsibilities vary greatly from one organization to another.

Broadly, the various activities of a product manager in different phases of the product can be summarized as below:

Product Planning phase: In this phase the PM is responsible to define the product, what it will do and why. Hence the PM collects requirements from various channels likes sales and marketing, existing customer feedback, views from potential customers and also competitor analysis.  The planning phase is expected to produce a product roadmap and clear contents for various launch/releases with a set of priority for each feature.  Moreover, the PM has to prepare a business plan for the product to give a view of the market dynamics and the potential revenues that are expected from this business. An initial licensing structure and pricing is also expected at this phase. This is required for investment approvals from leadership. In short, in this phase the product is planned and its business defined.

Product development phase:  Post the approval of investment and a clear agreement with the engineering teams, the product development is initiated. During this phase, the product manager is expected to guide the engineering teams with clarifications about any feature requests and also re-prioritize any specific feature based on specific requirements from customers. Moreover, the acceptance of a feature that has been developed needs to be approved by the product manager.

Marketing phase: While the product is being developed, the product manager needs to align marketing and the supply chain teams to generate orders and to also be able to handle the orders when they arrive. Hence the product manager needs to enable the marketing teams and also produce relevant marketing collaterals that will be used in the field. Moreover, the licenses and orderable items need to be defined and the job to create all orderable SKUs needs to be initiated.  Usually a final approval for the pricing is also done during this phase.

Product Launch: Once the product is developed, it is launched to the external world. The sales teams need to be enabled prior to this so that they are able to define the value for each launched product. Further, all external marketing collaterals need to be available and the PM needs to coordinate with any event organizers or promotional agencies to ensure that the product launch is a success.

In -life phase: Post the launch, the objective of a Product manager is maximize the sales of the product. Hence in this phase the product manager needs to coordinate sales support activities along with pre-sales stakeholders. Moreover, the PM needs to support product demonstrations for customers or sales teams to ensure that the product gets required visibility, both internal as well as external so as to maximize sales.

Product Support phase: Once the product goes live for a customer, the PM needs to act as an escalation point for critical customer faults. Moreover, he should also collect feedback from the customers to get requirements for the next launch/release.

End of Life announcement: Once the next release/version of the product has been approved and is in the marketing phase, an end of life declaration for the existing version need to be announced to the customers. Hence the upgrade strategy, migration paths etc. need to be defined.