Posted in Marketing and Strategy Terms, Total Reads: 5854
Definition: Product Policy
Product policy is defined as the broad guidelines related to the production and development of a product. These policies are generally decided by the top management of a company i.e. board of directors. It is like a long term planning with respect to the product-mix of the company in order to deliver maximum customer satisfaction.
Product policy of a company has certain objectives
1. Survival: - The main objective of any company is to stay in the market profitably.
2. Growth: - Based on the long term goals of the company the policies are defined to get a good growth in the market.
3. Flexibility: - The product policy needs to be flexible to the changing needs of the customers, government regulations, global trends and economy.
4. Scalability: - The companies should use its resources properly to make the most of its valuable resources. With time the company needs to develop economies of scale to improve profits.
Product life cycle plays a very important while defining product policies.
When a product is in introduction stage the company needs to decide upon its pricing strategy whether it wants penetration pricing or skimming. To achieve quick breakeven the companies use skimming technique otherwise use penetration to keep the competition out of the market. Also the focus should be on creating awareness about the product and building the brand.
In growth stage the company needs to maintain its profit by improving the product quality. It takes some time to recreate the advertising strategy.
In maturity stage the very few firms are left in the business. The product’s sales growth slows down and the company needs to target its loyal customers. A product change or communication changes is required at this stage.
In decline stage the sales for the product begin to fall and very few firms are left in the industry.