The product or program policy , in conjunction with the other elements of the marketing mix, aims to shape the needs and wishes of customers with the company's products and services . It deals with both real goods (e.g. tangible and intangible goods) and nominal goods (e.g. money, property).
Product policy is understood to mean all activities that are related to the selection and further development of a product or a product bundle and its marketing. Product policy is important for a company if sales are to be secured or increased in a changing environment (primarily through consumers , suppliers and competitors ).
Product policy instruments
The product policy is essentially divided into the following fields of activity:
- Brand Policy (Identification)
- Program and product range policy (supplementary services)
- Packaging policy
- Service policy (service before and after the purchase)
- Performance policy (in the sense of guarantee services).
In addition to the need for product innovation and variation, the responsibility of product policy lies in the strategic assessment of investments and the consequences on the market, as well as in actively changing consumer preferences via market communication . Cooperation with all areas of marketing and customers is important here, as prices, sales and advertising must be planned hand in hand with product policy.
According to the provider's inclination to innovate, pioneering behavior can bring various opportunities and risks. The skimming price strategy with its risk of so-called sunk costs due to greater uncertainty about the further market development is contrasted with the behavior of the early imitators, who buy a lower risk due to the avoidance of errors with the disadvantage of overcoming market barriers.
The so-called modifier , on the other hand, has the chance of filling a market niche ; its risks are limited leeway and high market entry barriers.
The so-called latecomers have the lowest market risks and research and development expenditure.
In contrast to the above description, Homburg / Krohmer only divide the areas of product policy into the categories of innovation management, management of established products and brand management.
Planning new products
Every product that is perceived as new by the customer is a product innovation . This innovation can be based on customer requirements ( market pull ) or it can be based on technological development ( technology push ). Due to the ever shorter product life cycles , the development of new products is very important for a company. The basis for this is innovation and technology management. The systematic approach is described in the innovation process.
Market innovation means that a corresponding offer is available on the market for the first time. The term “absolute innovation” was coined for this. Business innovation refers to an offer that is only new to the company in question, but not to the market itself. In this case one speaks of “relative innovation”. A product innovation is a marketable product / offer that is absolutely or relatively new on the market, while a process innovation represents a new method for creating a marketable offer that is not itself marketable.
When planning and introducing new products, it is important to consider adoption and diffusion processes. They describe the prerequisites and conditions for the successful acceptance and dissemination of innovations in the market. Everett Rogers has defined the following target groups for this: innovators, early adopters, early majority, late majority and latecomers.
The entirety of all products offered by a company is referred to as the product range, product portfolio or range . The product range can be designed in two dimensions. The range indicates the number of product lines that exist side by side. The program depth describes the number of model variants within individual product lines. If the customer needs and / or the products of the competitors change, the product range must be adapted to these. Four changes are possible:
|Product variation||An existing product line is changed in terms of technology, material and / or design.|
|Product differentiation||An already existing product line is supplemented by another variant.|
|Product elimination||A product is withdrawn from the market (abruptly or gradually).|
|Product diversification||Inclusion of new product lines that are horizontally, vertically or laterally related to the previous ones.|
The product policy scope includes:
- Core performance (e.g. problem adequacy and economic efficiency)
- Packaging (e.g. requirements from manufacturers, retailers and consumers)
- Marking (see brand (goods) , branding )
- other factors influencing use (e.g. guarantees, customer service ).
In addition to the core performance and the packaging , the marking is also a product element and has a brand value . Brand policy has the task of ultimately stylizing largely interchangeable products into a stand-alone brand and creating a distinction from competing products. Branded articles give the user security when shopping because they are no longer anonymous. The essential characteristics and tasks of a brand are:
- Brand loyalty and brand loyalty
- Orientation aid in the increasing variety of offers
- Differentiation from competitors
- Legal trademark protection
- Preference formation in favor of one's own offer
- Manufacturer's means of communication
- Conveying security when buying
- Pricing leeway
- Prerequisite for securing and expanding the sales base
- Possibility of target group marketing.
There are numerous decision-making areas within brand management. A brand strategy can be defined for reach, positioning and architecture. The architecture in particular has far-reaching consequences and is not so easy to change. A distinction must be made here between a single brand , multi-brand , umbrella brand and family brand strategy . The appearance of the brand should definitely be coordinated with the other instruments of the marketing mix so that the strategy is perceived as consistent by the customers.
Another important decision-making area is whether a company should carry out a brand expansion (also: brand transfer ) or not. In the search for new growth opportunities, companies often transfer established brand names to products that have not been offered before. The associated transfer of trust capital enables you to achieve high market shares quickly and with low implementation costs (Berend 2002).
The organizational integration of the product policy differs depending on the industry and company size. You can z. B. as a staff unit, as a line, in the matrix organization or in different functional areas such as purchasing, production or marketing.
Operational responsibility for program and product policy can be the responsibility of the marketing department, but it is often also linked to sales. As a rule, there is a program manager who is responsible for the overarching product portfolio management, and several product managers to look after the individual products or product groups.
- Program management
- Pricing policy
- Communication policy
- Distribution policy
- Product range policy
- Time to market
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