Product Policy
This article covers meaning & importance of Product Policy from marketing perspective.
What is 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 Objectives
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.
Importance of Product Policy
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.
Hence, this concludes the definition of Product Policy along with its overview.
Browse the definition and meaning of more similar terms. The Management Dictionary covers over 1800 business concepts from 5 categories.
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