Principles of Marketing Research 3

PRODUCT PLANNING IN SOFT DRINKS PRODUCTION …

51

PRODUCT PLANNING IN SOFT DRINKS PRODUCTION COMPANIES

IN BULGARIA

Head Assist. Radko Radev, Ph.D.

Abstract: The choice of the subject matter for this article is based on the view that product policy has a key role. Given the specifics of the soft drinks sector it suggests a methodical framework for the process of product planning, which contributes to making reasoned management decisions on product policy. In addition, it presents some basic starting formulations that reveal the essence of product management and describes and groups the elements of product policy characteristics for the companies from the sector examined.

Keywords: product planning, product policy, produc mix, product manage- ment, marketing mix.

JEL: M31, M11

Introduction The soft drinks market in Bulgaria is characterised by a wide variety

of products, dynamic changes and intense monopolistic competition. Within its boundaries we can identify a number of product categories and groups characterised by various trends; constantly changing consumer behaviour and preferences; restructured distribution channels – the growth of weight of some and diminishment of others by changing their role and functions performed; the growing importance of the Internet as a communication and distribution channel.

Head Assist. Radko Radev, Ph.D.

52

The class "Soft drinks and bottled water" encompasses many product categories and groups distinguished by similarity in the nature of production and consumer preferences. The major categories include: soft drinks, bottled water, juices, nectar and punch, iced tea, energy drinks and instant drinks. A broader soft drink classification requires the inclusion of various types of dairy drinks, too - ayran, milk and fruit drinks, as well as coffee and traditional teas. Companies that operate in the market differ in their size, market coverage, market position, financial resources and their product policy.

Given the distinct features observed in the market of soft drinks and bottled water, we need to understand the crucial role of product policy in achieving the desired values of company sales and revenue. In this connection we can highlight product management and product planning as its primary function.

The thesis, advocated in this article is that in the context of intense competition and dynamic environment, companies in the sector need a product planning process that enhances decisions making in relation to product policy in a way that contributes to its successful adaptation to the challenges of the market environment. A key aspect that is directly related to the process of product planning is outlining the specific product policy characteristic features that find expression in companies in the sector.

The purpose of this publication is, given the specific features of the soft drinks and bottled water sector, to present and suggest a product planning process which contributes to making informed decisions related to product policy.

To achieve this purpose we also formulate the following tasks: To present in brief some basic initial formulations related to product

policy and product planning; To determine the place of product planning in product

management; To identify the main elements of product policy, reflecting the

specific characteristics of the sector; To offer conceptualized framework for the process of product

planning, which presents the sequence of steps included and to consider these steps in terms of content.

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An important clarification that should be considered is that product planning is not done as an end in itself. Based on the principles of the systems approach and the properties of micro-economic systems, planning a product mix is considered, by default, a key part of marketing, and hence of integrated business planning.

The logical framework of this article is intune with the deductive approach. Based on its philosophy, we first pay attention to some initial formulations, then we proceed to examine in particular the issues related to product planning. In this regard we consider two aspects of product policy and two approaches to its perception, accounting for the specific role of product planning. At the next stage we proceed to a consideration of product planning in a material sense: we reveal its specific place in product management; we present the characteristics of a product policy specific to companies in the sector of soft drinks and bottled water; and finally we provide a methodological framework of the process of product planning. Its specific expression in the companies producing soft drinks and bottled water is determined by the fact that the outlined sector-specific characteristics of product policy are used in the methodological scheme.

1. Initial formulations related to product policy and the role of product planning in its formulation

Issues related to product planning are considered in terms of the

view about the central role of product policy being a key element in the marketing mix.

1 In this context, the role of product planning in general is to

formulate product-market business strategies, which are then translated into specific decisions on the characteristics of product policy. First a business needs to make general decisions related to the product specialisation of the business. They include the determination of the width, the length, and the depth of the product range (the product portfolio). These decisions are closely related to product-market business strategies. In this aspect product planning plays a role as part of strategic business planning

1 Kotler, P., 11th edition. Marketing management. New Jersey: Prentice hall,.

2003, p. 2-29.

Head Assist. Radko Radev, Ph.D.

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in determining the product-market range and the competitive approach to business. Then the business needs to make more specific product decisions of a relatively narrower range. The task of product planning in this case consists of making decisions regarding strategy related to brand names, and the differentiation and positioning of products. The product decisions made through product planning of the last type are the most specific and detailed. They relate to the quality characteristics of products and the packaging of specific product units

2 .

Two aspects of product policy and product planning Since products synthesize the key competencies of the business

organisation, target customer preference to these compared with the preference to those of competitors is an assessment of their quality characteristics.

3 This statement requires considering two aspects of product

policy which are also typical of product planning: the first is external and refers to the fact that the making of product decisions should be based on the markets in which the business organisation operates; the second is internal and comes from the specific features of the organisation and is related to the crucial importance of product policy in the economic model of the operation of business organisations

4 . The consideration of these two

aspects reveals the essence of product policy, which helps to define the role of product planning in determining its characteristic features.

The external aspect starts from the proposition that product policy should be market-justified. The logical conclusion that can be drawn is that, viewed from this perspective, product policy must be consistent with the approaches and principles of the marketing management concept. This makes it necessary to go beyond the narrow perception of product quality, according to which is determined solely by physical characteristics and to accept the view that the assessment of the quality of products, no matter if they are goods or services, is based on the degree to which they meet the

2 Mcdonald, M.H., Marketing plans: How to Prepare Them and how to Use

Them, Oxford, Butterworth-Heinemann, 2007. 3 Georgiev, I., Shterev. N i kolektiv. Ikonomika na predpriyaieto. UI

Stopanstvo, 2008, s,.94-102. 4 Georgiev, I., Radev. R. i kolektiv, Ikonomika na predpriyatieto, UI Sto-

panstvo, 2008, s,.70-89.

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needs of the target markets. This means that decision-making through product planning is based on the concept of consumer value

5/6 and the

value added chain model. 7 They are complemented by the concept of the

hierarchy of perceived customer value which consititutes five conditional levels of product development

8 . In addition, the external aspect accounts

for competitive conditions and other factors in the external environment. In this case, the product-market range and the competitive approach to individual products is determined through strategic product planning. Decisions are made on brand names of products, their differentiating features and competitive positioning, which reflect the specific target market conditions.

The internal aspect in turn reveals the nature of product policy in terms of its role in the execution of the strategies formulated and the achievement of the company's goals

9 . In this context, the "delivery" of

consumer value is not seen as an end in itself, but as a means to achieve the objectives of the business organisation. Through the internal aspect of this examination, product policy is seen as an economic category in which the development and delivery of value to consumers is assessed depending on the economic feasibility of product-market decisions. Those companies which, through their product policy not only meet the needs of the target market, but also achieve it more effectively than their competitors are considered truly competitive

10 . Therefore, in product planning individual

product lines and product units should be seen as centres that generate

5 Kotler, P, Keller, L., K. 12th edition. Marketing management. New Jersey:

Prentice hall,. 2006, p.139-172. 6 Nijssen, E. Frambach, Ruud T. Creating customer value Through Strategic

Marketing Planning. A management Approach, Kluwer Academic Publishers, Boston, 2001.

7 Porter, M., 1-th Edition Competitive Strategy: Techniques for Analyzing

Industries and Competitors, New York: Free Press, 2008. 8 Kotler, P., Keller, L., 12th edition. Marketing management. New Jersey:

Prentice hall,. 2006, p.372-278.

9 Radev, R., „Vzaimoobuslovenost mejdu protsesa na biznes planirane I

produktovo pazarniya profil“, //sp. INdustrialen menidjmant, Sofia, Stopanski fakultet, TU-Sofia, 2012.

10 Kotler, P., 11th edition. Marketing management. New Jersey: Prentice hall,.

2003, p. 17-26, 393-400.

Head Assist. Radko Radev, Ph.D.

56

sales, revenues and profits. Besides the current values of these indicators, the product policy conducted, through sector-specific features, aims to provide the necessary conditions for their growth in the future.

Two basic approaches to the perception of product policy: The two aspects examined are complemented by formulating two approaches to product policy. They more fully reveal its essence, and hence product planning, which in this article is perceived as the main methodological approach to making informed decisions regarding the characteristics of product policy.

The first approach considers product policy in a narrow range. This implies a narrower scope of product planning. It includes only the decisions on product characteristics, i.e. it deals with the issues related to the variety of products offered (width, length and depth of range) and the characteristics of individual product units. Product planning, which is based on this approach to product policy, is based on the principles of production, product, or, in the best case, of the selling concept of management. As a result of its adoption we can expect a higher probability the product decisions made won’t respond to market conditions and internal characteristics

11 .

The second approach considers product policy in a wider range: in addition to product-related policies it also covers issues related to market characteristics - target segments, geographic markets and distribution channels. In this context, issues related to differentiation, positioning and consumer value are retranslated into characteristics inherent to product policy. Product planning that comes from this approach to product policy is based on the principles and approaches of the marketing management concept. It is not opposed to the first approach, but complements it, as through it the product policy is justified from a market perspective.

12

The product planning process suggested below is based on an understanding of the active role of product policy in relation to the main market and economic results. In this light we have used a broader

11

Georgiev, I., Radev. R. i kolektiv, Ikonomika na predpriyatieto, UI Sto- panstvo, 2008, s. 84-86.

12 Nijssen, E. Frambach, Ruud T. Creating customer value Through Strategic

Marketing Planning. A management Approach, Kluwer Academic Publishers, Boston, 2001.

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approach to product policy. It is based on the approaches and principles of the marketing concept of management, reflecting both formulated aspects of product policy. Modern conditions require product policy to, also comply with the principles of social responsibility.

2. Product planning in soft drinks and bottled water companies

Since product planning is not carried out for its own sake but as a

core function of product management, it is necessary to clarify two important issues before proceeding to a particular examination of its methodological framework. First we examine the role of product planning in product management, which generally consists of making reasoned product decisions. Secondly, we categorise the main features (decisions) of product policy which are typical of soft drinks and bottled water production companies. Through these we reveal the scope and content of product planning on the one hand, and the decisions to be taken via its implementation on the other.

2.1. The role of product planning in product management The basis of decisions related to product policy and their successful

implementation in practice is product management and, in particular, product planning as its main function. In the classic sense, management is seen as a process and structure

13 . This allows us to interpret the issues

related to product management in this way - as a process and structure. In this context, we define the role of product planning.

Product management as a process When viewed as a process, product management is a logical

sequence of steps by which we make reasoned decisions related to

13

Zlatev, V. Menidjmant bez granitsi. UI„Stopanstvo”, Sofia, 1999, s.12.

Head Assist. Radko Radev, Ph.D.

58

product policy and provide conditions for successful implementation. In this regard, product planning is seen as a sequence of stages that must be passed in order to make decisions related to product policy as a whole and its individual characteristics. A key concept, which is the basis for making informed decisions, is the life cycle of the product. Also utilised are: the method of chain value, portfolio models, product-market matrix, ABC analysis, SWOT analysis, expert methods, investment and economic methods and others. The sequence of stages of product planning provides the methodological consistency of these instruments. This provides reasoning for the decisions related to product policy from a market and economic perspective. Besides deciding on product policy, which is provided through planning, product management responsibilities include ensuring its implementation in practice and the execution of control. The aim is to achieve a balanced product portfolio, thereby ensuring the sustainability of economic performance, including sales, revenue and profit.

Product management as a structure Considered as a structure, product management is associated with

those individuals (positions) that are authorised to make decisions on product policy and to provide the necessary preconditions for implementing it in practice. Since product policy is a ‘bridge’ that links the key competencies of business organizations and market demand, are the marketing

14 and manufacturing

15 functional areas the most directly involved

in product management and product planning, respectively. Innovation also plays an essential role in connection with the modification of existing and the development of new products

16 . This is the main reason that product

planning is conducted mainly by individuals employed in these three areas. Their responsibilities vary depending on the specific characteristics of the

14

Kotler, P.,11th edition. Marketing management. New Jersey: Prentice hall, 2003.

15 Mahadevan, B.,.Operation Management: Theory and Practice, Pearson

Education India, 2009, p. 53-137. 16

Georgiev, Iv., Cvetkov, C., Blagoev, D. Menidzhmant na firmenite inovacii i investicii. Sofiya, UI “Stopanstvo”, 2013..

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organisations, the life cycle of the products that are included in the product portfolio,

17 the organisational structure and other internal features.

18

When there is concentric diversification in the companies in the sector, it is possible the business to have a product manager position. A product manager is directly responsible for the management and the development of a product (product line).

19 The organisational chart of a

business organisation may also include the position of brand manager when the brand (trademark) portfolio requires such a decision. His functions are related to the development and the fulfilment of the objectives of a specific brand of product (s).

20

2.2. Characteristic features of product policy in the soft drinks and bottled water sector A literature review and empirical research carried out by the author

21/22

permit to proceed with defining and classification of the major elements of product policy. The elements through which product policy reveals its content can be classified into three main groups (Fig. 1):

 The first group includes those elements of product policy which

are strategic in nature: product categories within a product class, product

range and its individual components (1.1.- 1.3.). They are of the greatest

scope since they are used to determine the product range of the business

organisation within the class of soft drinks and bottled water.

17

Morse, S., Successful Product Management: A Guide to Strategy, Planning and Development, ogan Page Publishers, 1998, р. 93-98.

18 Zahid, I., Product Management: The Art and Science of Managing Network

and Communications Industry Products, Xlibris Corporation, 2013, р. 24. 19

Zahid, I., Ibid, р. 23. 20

Riezebos, R., Riezebos, H. J. , Brand Management: A Theoretical and Practical Approach, Pearson Education, 2003.

21 Radev, R. Marketingovoto planirane kato faktor za povishavane na pazarni

potencial na predpriyatiyata ot sektor bezalkoholni napitki i butilirani vodi Sofiya: UNSS, 2010, s.183.

22 Radev, R. Izpalnyavan universitetski proekt NID NI 2-7/2011: “Harak-

teristiki na biznes planiraneto vav firmite ot sektora na barzooborotnite stoki“. Sofiya: UNSS.

Head Assist. Radko Radev, Ph.D.

60

 Width of range

 Product-market unit (PMU)

 Legth of product line (PL)

 Length of range

 Depth of PMU

 Depth of PL  Depth of PR

 Life cycle

1.3. BRANDS

 A family brand for all product lines

 Different brands for each product line

 Many brands within each product line

 Expanding the brand  Creating new brands  Introduction of new brands for

new and existing categories

 Positioning  Level of development

  Една фамилна марка за

всички продуктови линии

 Отделни марки за всяка продуктова линия

 Множество марки в рамките на всяка отделна продуктова

линия

 Разширяване на марката  Създаване на нови марки  Въвеждане на нови марки за

нови и съществуващи категории

 Позициониране  Ниво на разработване

 Bottled watter  Carbonated  Non-carbonated  Energy  Instant  Hot drinks  Life cycle

1.2. PRODUCT RANGE

3.1. BOTTLE

 Релеф и материал

 Отвор – диаметър,

големина, резба

 Цвят

 Пропорционалност

 Съответствие на

капачка и етикет

 Отразява характера и

на позиционирането

 Разфасовка

3.2. CAP

3.3. LABEL

 Shape and size  Position  Adhesion  Coluor  Material  Inscription  Logo  Legal requirements  Price  Compatibility with bottle and label  Reflects positioning

 Colour  Shape  Embossment  Inscription  Logo  Method of opening  Compatibility with bottle and label

 Reflects the nature of positioning

 Embossment and material  Opening – diameter, size, carving

 Colour  Proportionality  Compatibility with cap and label

 Reflects the nature of positioning

 Packaging

 Packing: o bottle o cap o label o stretch folio  Content: o taste o colur o aroma  Image: o distributors o end customers

2.1. DIFFERENIATION

 Refreshment  Invigoration  Health  Energy  Tone  Tartness  Thirst  Status  Exclusive offer

2.2. BENEFITS

1.1. CATEGORIES

PRODUCT

POLICY

Fig. 1. Elements of the product policy of companies from the Soft Drinks

sector 23

23

Adapted from: Radev, R. 2010, Marketingovoto planirane kato faktor za povishavane na pazarniya potencial na predpriyatiyata ot sektor bezalkoholni napitki i butilirani vodi. Sofiya: UNSS, s.183.

PRODUCT PLANNING IN SOFT DRINKS PRODUCTION …

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The first subgroup includes characteristics external to the

organisation (1.1.). For example, the main categories of products that are

identified within the product class "Soft drinks and bottled water"

[sweetened soft drinks, bottled water, juices and nectars, punches, ice

teas, energy drinks]. Each category is comprised of various groups and

subgroups of products. These categories and groups are specified on the

basis of physical characteristics and consumer groups, the satisfaction of

whose needs they target.

The second subgroup is comprised of characteristics which are

internal to the organisation. They express the main features of the range -

width, length and depth. They are determined based on the characteristics

of the previous group (1.2.).

Width is the first major feature, which encompasses the total

number of product lines that make up the homogeneous product range.

The different product lines include product units of a certain similarity in

manufacture and / or final consumption which correspond to an objective

product category characteristic of the market. The maximum scope of the

product range coincides with the total number of categories in the class

"Soft drinks and bottled waters": sweetened carbonated drinks, bottled

water, juices and nectars, fruit punches, iced tea, energy drinks. The length of the range is determined by the length of the

individual product lines, which in turn depends on the main product units that constitute them. The major product units are considered as the basic product types and / or the individual brands included in the product line. The individual basic product units correspond to a specific product group within a category or a segment: bottled water – mineral, spring, table, flavoured, carbonated, various brands; carbonated drinks - basic taste characteristics, dietary characteristics, brands; juices: nectars, juices, fruit punches, brands; energy drinks: taste characteristics, content of an invigorating nature, carbonation, brands; iced teas - tastes, brands, volume, type and material of packaging, instant drinks - powder and tablet.

When different brands resulting from the implementation of differentiated marketing are used within a product line, each brand is considered a key product unit. [For example, the length of the product line

Head Assist. Radko Radev, Ph.D.

62

"Soft drinks" of Coca-Cola, Bulgaria is defined as follows: a group of Cola drinks (P11) - "Coca-Cola"; a second group of fruit flavour drinks (P12) - "Fanta" (licensed brand), a third group of fruit flavour (P13) "Schweppes" (licensed brand), a fourth group of "crazy" taste (P14) "Sprite" (licensed brand) (P15), a fourth group of fruit flavour "Lift" (a local brand) (P16).

One possible situation is that the main product unit is determined by the basic product variety: [Product line "Bottled water" by Devin AD includes: a first group - "Devin - mineral water" (P21), a second group - "Devin – spring water" (P22), a third group -" Devin - carbonated" (P23), a fourth group - flavoured soda "Devin - Fresh" (P24;].

The depth is the next important feature of the range and different product lines. It is determined by the different varieties of the main product units that comprise the individual product lines. The development of varieties aims to meet the specific needs related to the consumption of a particular product group from a particular market segment: packaging, colour, taste, and flavour. The depth of range is the sum of the depths of individual product lines, i.e. of all varieties of the main product units within the different product lines. [Example: The depth of TPK "Mihalkovo" the product portfolio of which includes bottled water, is determined by the depth of the only product line. It comprises two product groups which are offered under the same brand, "Mihalkovo - carbonated mineral water", "Mihalkovo – spring water" as "Mihalkovo - carbonated mineral water" and is available in three packagings 0,300 l - glass, 0,500 l – PET, 1,500 liters - PET, spring water "Mihalkovo" in 0,500 l].

Because of the importance of brands as a key intangible asset that is the basis of the objectives of the companies in the sector, the related issues are identified as the third subgroup of characteristics (1.3.)

24 /25 .

 The second group of characteristics relates to options for differentiation

(2.1.) and the possibilities for positioning based on estimated consumer benefits (2.2.). Unlike the product features from the previous group, which provides guidance for the development of all functional areas

24

http://www.marketingpower.com/Pages/default.aspx 25

Kotler, P., 11th edition. Marketing management. New Jersey: Prentice hall,. 2003, p. 418-435.

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of the business organisation, those of the present are related to strategic marketing aspects – the differentiation and positioning of products for target customers and competitors in the market.

26/27/28/29

 The third group of characteristics includes a detailed examination of the packaging, which is the external expression of the specific product units (3.1. - 3.3.). Planning of the packaging must be based on: the desired perception of the brand in the target consumer’s mind (positioning, differentiation, distinctiveness), its functionality (in terms of reliability, convenience, logistics) and cost-effectiveness (related to costs and benefits)

30 .

Although not examined in detail, the elements presented reflect the role of innovation and production as main functional areas directly related to product policy. The interdependence between strategic business decisions and the characteristics of product policy is also accounted for.

2.3. A conceptualised framework of product planning

The methodica framework presented for product planning (Fig. 2) aims to frame the sequence of steps to make informed decisions on the characteristics of product policy for soft drinks and bottled water companies. The process presented does not aim to plan for a specific (existing or new) product unit, but making decisions on the overall product policy of the company. The proposed framework consists of ten conditionally distinguished stages the content of which is known. The key variables, used within product planning, refer to the groups and subgroups of key features of the product policy presented above.

In the first stage the ultimate marketing objectives of the company in terms of volume of sales, market share, total sales compared to competitors and others are considered. The presence of this stage

26

Treacy, М., Wiersema, F,. “Customer Intimacy and Other Value Disciplines // Harvard Business Review, Nov. – Dec. 1987, p. 101 – 109.

27 Reeves, R.’, Reality in Advertising, New York: Alfred A. Knopf, 1960.

28 Kotler, P., 11th edition. Marketing management. New Jersey: Prentice hall,.

2003, p. 310-315. 29

Wind, Y., Product Policy: Concepts, Methods and Strategy//Business Horizons, May-June 1982, p. 65-62.

30 Kotler, P. Ibid.

Head Assist. Radko Radev, Ph.D.

64

emphasises the role of product policy as a major marketing variable that is a basis for their achievement. This stage is the starting point for the subsequent stages.

1. Overview of marketing objectives and

strategies

2. Product odit

4. Product trends analysis and forecasts

of

5. Evaluation of the product portfolio to

achieve marketing objectives

6. Decisiding on the "product-market"

strategies and objectives

7. Deciding on the width, length and

depth of assortment

8. Deciding on the brand portfolio,

product differentiation and positioning

9. Approval of the the product policy for

implementation, its coordination with

the rest elements

10. Implementation and control over the

product policy

3. Analysis of the competitive products

Fig. 2: A methodic framework of the product planning process 31

31

Radev, R., Usavarshenstvane na planiraneto na produktoviya miks – osnovna predpostavka za ustojchiv rastezh na firmite proizvoditeli na napitki v Balgariya// ІH Mezhdunarodna nauchna konferenciya „Menidzhmanta i inzhenering”, Sozopol, 2011.

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The second stage is to implement a product audit. It is seen as an important component of an integrated marketing audit. Through its implementation it is intended to establish the product profile of a company within the product class BNBV. All elements of product policy in the first group (1.1. - 1.3.) are audited. The audit goes deeper by product lines and product units, including individual brands; the differentiation achieved (subgroup 2.1.) and positioning (2.2.) are established; the visual and functional characteristics of packages are evaluated (sub 3.1. - 3.3.). The study at this stage goes deeper, the analysis of product characteristics being extended by an analysis of the market position of the products that are included in the product portfolio. An important part of this stage is to establish the contribution of products to the formation of sales, revenue and profit.

Competitive comparative analysis is conducted in the third stage. Direct and the indirect competitors (existing and potential) in the target segments distribution channels are identified. Their products – the product portfolio as a whole, product lines, brands, major product units, varieties and the range as a whole, are analysed and compared with those of the company. The market positions of individual products are analysed. Along with product policy, the rest, of the elements of the marketing mix are analysed, as well as the level of technology and innovation, objectives and strategies, financial resources, and other. The purpose of this stage is not only to characterise the current product policy of competitors, but to provide possible methods of development.

The fourth stage involves analysis and forecast of market trends for the entire product class, individual product categories (e.g. bottled water) and product groups (e.g. mineral, springs, table water). The aim is to esablish the current market situation, and identify trends and relationships. Another important result which is pursued at this stage is related to making reasonable assumptions about the potential for the development of existing product categories and groups by geographical markets, segments and distribution channels. The probability for the emergence of new product groups and product lines within the class as well as the emergence of new market segments, is forecast. The focus of this stage are the characteristics of subgroup 1.1.

The fifth stage ends the analytical stage. It helps assess the ability of the company to achieve the desired marketing objectives using the

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66

existing product-market portfolio. Taking into account the results of previous stages, the aspects of the changes in product policy are determined. These may vary: from minor, referring to the elements of the third group, to significant, which are of a strategic nature and refer to the elements of the first group; the changes may concern or not the elements of the second group; a situation where all aspects need to be changed is possible.

In the sixth stage decisions are made on the product-market strategies that are used to achieve the overall marketing goal, and hence the overall goal of the company. One of the following decisions is taken at this stage: the organisation to continue to adhere to current strategies, to modify them or to completely transform them. The marketing and company goals identified in the first stage are also confirmed or changed. These decisions and the results of the previous stage clearly define the guidelines for the development of the business organisation and the nature of change in product policy.

The final conclusions regarding the elements of product policy are drawn in the seventh stage. The nature of the changes depends on the results of the previous stages and the development trends outlined in the preceding two ones. In this regard, the specific characteristics that will be changed are also specified. The different options are: 1) no changes in product policy are made; 2) changes in the elements from the third group (3.1. -3.) are required; 3) changes in the elements from the second group (2.1. - 2.2) are needed; 4) changes in the main features of the range (subgroup 1.2); 5 ) simultaneous change in several or all groups and sub- groups of elements.

In the eighth stage decisions are made on the brand portfolio of the product range of the company. Due to its specific role, the decisions on trade marks (subgroup 1.3.) are considered separately at this stage. Issues concerning differentiating features, benefits provided, and hence the positioning of individual products (2.1. and 2.2.) are directly related to decisions concerning brands. An important issue which should not be overlooked is the packaging of existing and new products.

The ninth stage of the process is related to the adoption and the implementation of product policy as a key element of the marketing mix and

PRODUCT PLANNING IN SOFT DRINKS PRODUCTION …

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of the integrated marketing plan. The need for this stage arises from the earlier statement that decisions related to product policy are not an end in themselves. At this stage, product policy is coordinated with other elements of the marketing mix and with other functional areas (production, innovation, logistics, etc.). The effect of product policy is over the short and long term. In the short term, the expected market and economic results of individual product lines, product units and brands of products are determined. In the medium and short term the issues of improving the performance of existing products are also addressed, but, also, opportunities for market introduction of some products, the development of others and the withdrawal of third ones are identified.

The last, the tenth, stage examines issues related to the implementation of product policy and the execution of relevant control. It emphasizes the continuous nature of product planning as a part of product management, establishing whether the current product policy provides for the achievement of the desired results. In the short term control refers to the achievement of target values of the market and economic indicators by individual products and markets. In the medium and in the long run, it is done with respect to the desired rates of growth of these values; control is also executed on the stages of development and market introduction of new products.

Conclusion The conditions typical for the sector of soft drinks and bottled water

require specific expression in the policies regarding the elements of the marketing mix. Product policy has a key role in this direction. The satisfaction of the needs of target customers, on one hand, and the achievement of the market and the economic goals of the business organisation, on the other hand, depends on the determination of its characterisics.

Given the importance of product policy for determining the goals of business organisations, representatives from various functional areas of business organisations and especially of marketing, innovation and

Head Assist. Radko Radev, Ph.D.

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manufacturing organisations, take active participation in making the related decisions. Representatives of senior management are also involved in making product decisions. The importance and complexity of product policy require the achievement of a high degree of coordination by all parties (stakeholders) that are directly or indirectly related to it. In this connection, product management has a key role. As its main function, product planning is crucial to the adoption and implementation of such a product policy, which most fully contributes to the achievement of the objectives of a business organisation both in the short and in the medium and long term.

The prominent role of product planning requires the proposal of a systematic approach for its implementation in practice. In this direction, this paper suggests a methodical framework for product planning which is suitable for soft drink manufacturers. It is recommended to apply the methodic framework to a certain degree of formalisation which requires knowledge of all the basic aspects (elements) of product policy that arise from the specific characteristics of the sector and the characteristics of individual business organizations.

Except as a formal process, the methodical framework for product planning should be seen as a principled mental model to which managers should adhere when making decisions. The methodical framework, after certain adaptation, can also be applied in multi-product companies from other sectors.

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