A policy is a guide to action. It is a principle of operation adopted by management to guide those who carry out action. A policy sets the limits within which management determines to operate. Of necessity, therefore, policies are set by top management to guide subordinates in carrying out their respective tasks.
Product policies are company rules to guide those engaged in product planning, development, production, or marketing. A manufacturer's product policies will operate in five specific areas:
(a) Product planning and development.
(b) The product line.
(c) Product identification.
(d) Product style.
(e) Product packaging.
Product planning and development were discussed in the last chapter. In this chapter, we shall discuss the product line, product identification, product style and product packaging. In the previous chapter, we saw that there is nothing more important than a company's product development program
The consumer obtains satisfaction from the use or ownership of a given product. He is interested only in the finished product. He evaluates the total satisfaction he obtains without analyzing the specific elements that make up that total satisfaction. Yet each element must be planned for, and in each area there must be guides for the performers to carry out their individual activities. While the consumer, therefore, sees only the total, and accepts or rejects the total finished product, management must make sure that each element contributes its full share toward that total consumer satisfaction. 2. The product line. The consumer today is offered, literally, tens of thousands of products from which to choose. In a modern supermarket, the housewife can find from 6,000 to 8,000 different items any day of the week.
Technology, as we have seen, has created new products and new industries. Some companies, on the basis of the products they offer, have had sales gains averaging 15 per cent or more per year in the past decade. Others-in antibiotics, for example-have experienced a rate of growth of more than 25 per cent per year. And from a fourth to a third of all the consumer products on the market today did not exist five years ago. In the face of such unprecedented development, no management can afford to be com A product line consists of the products offered by a single firm. There are some companies, known as single- product firms, which manufacture only one item, but the more common practice today is for a firm to have more than one product, or to be, in marketing terms, a multi-product firm. the cigarette field. Most consumers recognize the name of the brand, but not the name of the manufacturer behind that brand. The decision is a matter of company policy. Much depends on such things as how the company grew and the degree of consumer acceptance behind the product at the time it was acquired by the company.
Usually, when a small company is acquired by a larger one, and the small company has a good name and a good product with local or regional good will attached to it, the manufacturer does not destroy the good will by canceling the local name and giving it the name of the parent company or parent brand. But whether it does or not, is a matter of company policy.
A second major policy decision in connection with the product line concerns itself with the number of products in the line, how extensive the line should be, and how the new products shall be added: by mergers, by acquisition, by purchase from another producer, or by new development.
The pressure is constant to expand a product line, and it takes real courage and firm policies on the part of management to resist some of it. Such pressure comes mostly from the sales department, seeking to have the company develop or add products to counter the offerings of competition. Frequently, the pressure is for products which are not related to products already offered, or which cannot be profitably added to the line.
The very fact of offering more than one product to the consumer brings with it a host of policy decisions that management must face before it attempts to market successfully. Even single-product companies may offer their product in different sizes, styles, or colors. For example, the manufacturer of men's shoes may make only men's shoes, but he must offer several sizes, styles, colors, and often several different brands and prices. Each change calls for a management decision. These decisions cannot be made unless and until management has set down basic policies which will determine the kind of decision made.
The manufacturer of multiproducts has to decide whether or not he will market his line under one name, such as the twelve or fifteen different cars all branded "Ford," or the fifty-seven varieties of food all bearing the name "Heinz." Some companies prefer to market each product by its own name, as, for example, General Foods, which markets Minute Tapioca, Maxwell House Coffee, Post Cereals, and many other products, each under its own brand.
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