5.4 Marketing, Promotions, and Product Management

Marketing decides what gets promoted, priced, launched, and retired. Planning decides whether any of it is physically possible in the weeks promised. Domain III tests planners who can restate a marketing plan in units, weeks, and work-center hours.

The Marketing Mix Through a Planner's Eyes

The marketing mix — product, price, place, and promotion, the four Ps — is a set of demand-side levers, and each lands somewhere different in the supply plan.

Planning owes marketing four things: available-to-promise (ATP) visibility by item and week, launch dates that respect long-lead tooling and supplier qualification, the capacity window in which a promoted volume can be built, and a commitment cutoff after which a promotion cannot be supported.

Marketing owes the plan a calendar carrying stock-keeping unit (SKU), dates, discount depth, channel, and expected lift stated against a named baseline. "Big push in Q3" is not a planning input; "SKU-4471, 25 percent off, June 1–30, grocery, +75 percent against a 4,000-unit baseline" converts straight into a master-schedule change.

Reading a Promotion in Units

A promotion produces four effects the exam expects you to separate:

• Lift — incremental volume on the promoted item during the promotion window.
• Post-promotion dip — the trough afterward, caused by pantry loading or trade forward buying.
• Cannibalization — volume taken from a sister item, pack size, or channel rather than created new.
• Capacity spike and pre-build — the promoted rate exceeds the line rate, forcing early production and finished-goods carry.

Worked example. A beverage family has two SKUs. Baseline monthly demand: SKU-A (premium) 4,000 units, SKU-B (value) 5,000 units, family 9,000. Marketing promotes SKU-A in June.

Gross lift on SKU-A is 7,000 − 4,000 = +3,000 units, a 75 percent jump — the number marketing will quote. Decompose it:

• Cannibalized from SKU-B: 5,000 − 3,800 = 1,200 units
• Pulled forward from July: 4,000 − 2,600 = 1,400 units
• Truly incremental: 3,000 − 1,200 − 1,400 = 400 units

Check it at family level over both months: baseline 18,000 versus actual 10,800 + 7,600 = 18,400. The family gained 400 units, about 2.2 percent, while SKU-A ran 75 percent up then 35 percent down. Family volume can be nearly flat while mix swings violently — which is why sales and operations planning (S&OP) argues at family level but the promotion correction is made at SKU level.

Now the capacity consequence. Suppose the SKU-A line runs 5,500 units per month; June needs 7,000:

• Shortfall = 7,000 − 5,500 = 1,500 units
• Pre-build 1,500 units in May, carried as finished goods for roughly four weeks
• May load becomes 4,000 + 1,500 = 5,500 — the line sits at 100 percent in May and June with no recovery room

That carrying cost and lost flexibility are the planner's contribution to the promotion review: netting 400 incremental units while forcing a 1,500-unit pre-build and hollowing out July is often a losing trade.

Managing Product Configuration and Change

Quality function deployment (QFD) translates the voice of the customer (VOC) — the customer's own words from surveys, complaints, warranty data, and interviews — into measurable engineering and process requirements. Its tool is the house of quality: customer requirements (the "whats") down the left, design characteristics (the "hows") across the top, a relationship matrix in the body, competitive benchmarks and targets at the edges, and a correlation "roof" where characteristics fight each other. "Stays cold all day" becomes a target of no more than 2°C rise over 8 hours, then an insulation specification and a process control. QFD forces the trade-offs before tooling is cut.

Concurrent engineering (simultaneous engineering) runs product design, process design, tooling, and supplier qualification in parallel with a cross-functional team instead of throwing a finished drawing over the wall. It compresses time to market and surfaces manufacturability and long-lead problems while the schedule can absorb them.

Modular design builds end items from a limited set of standard modules and options: ten modules combining into hundreds of configurations means you forecast ten things, not hundreds — the basis of planning bills and assemble-to-order (ATO) master scheduling. Postponement (delayed differentiation) holds generic inventory and performs the differentiating operation — labeling, final assembly, localization, packing — as late as possible, ideally after the order arrives. Both exploit risk pooling; postponement converts finished-goods risk into semi-finished flexibility.

Engineering Changes, Effectivity, and Revision Control

An engineering change order (ECO), sometimes an engineering change notice (ECN), authorizes a change to a part, BOM, or routing. The planner's question is never "is the change good?" but "when does it cut in, and what happens to what we already own?"

Effectivity answers that, in two forms:

• Date effectivity — the change applies to everything built or ordered on or after a stated date. Simple, and the MRP default.
• Serial or lot effectivity — the change applies from a specific serial number, unit, or lot forward. Required for regulated, traceable, or configured products such as aircraft, medical devices, and vehicles, where you must know which unit carries which configuration.

Two change strategies follow:

1. Immediate (mandatory) change — cut in at once for safety, regulatory, or functional-failure reasons. Existing stock is scrapped, reworked, or quarantined; open orders are amended.
2. Use-up change — the new revision cuts in when existing material is exhausted; effectivity is set by projecting when old stock runs out.

Worked cut-in. Old bracket on hand = 2,400, an open purchase order delivers 1,000 next week, usage = 400 per week. Total supply = 3,400 ÷ 400 = 8.5 weeks of cover, so effectivity is set at week 9 and the buyer stops reordering the old revision now. Set it at week 4 instead and you strand roughly 1,800 units of obsolete bracket.

Revision control ties every item, BOM, drawing, and purchase order to a revision level, so MRP nets old revision against old demand and a supplier cannot ship revision B against a revision C order. Weak revision control is the usual root cause behind "all the parts are here but the assembly does not fit."

Life-cycle stage sets the posture: introduction uses judgmental forecasts and small-lot flexibility; growth chases capacity; maturity optimizes cost and lot sizes; decline manages obsolescence, phase-out, and last-time buys. Maturity lot sizes on a declining item create write-offs.