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Product Policy of An Organization and Selection of A Profitable Product

This document discusses product policy and selection of profitable products. It explains that product policy is a top management decision that becomes the unique selling proposition of a company. Organizations can opt for different policies like lowest price, highest quality, or compromise between cost and quality depending on the product. When selecting a profitable product, organizations should do a SWOT analysis to understand their strengths, weaknesses, opportunities, and threats. They should also consider customer requirements, cost, design, and in-service needs to pick the optimal product.

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63 views16 pages

Product Policy of An Organization and Selection of A Profitable Product

This document discusses product policy and selection of profitable products. It explains that product policy is a top management decision that becomes the unique selling proposition of a company. Organizations can opt for different policies like lowest price, highest quality, or compromise between cost and quality depending on the product. When selecting a profitable product, organizations should do a SWOT analysis to understand their strengths, weaknesses, opportunities, and threats. They should also consider customer requirements, cost, design, and in-service needs to pick the optimal product.

Uploaded by

arun
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Lesson 03

Product Design and Development


Product Policy of an Organization and Selection of a
Profitable Product

Dr. Inderdeep Singh


Department of Mechanical and Industrial Engineering

1
Product Policy of an Organization
Product Policy of an Organization

 Product policy is the top management decision.


 Every organization has its own product strategies or policies.
 These policies becomes the unique selling proposition (USP) of
the company.

 The same company can opt for different policies for the different
products.
Various Product Policies
 Lowest price
 Highest quality
 Compromise between cost and quality
 Safety
Lowest price
• Lower cost is the main criteria used to compete in the market.

• Company offer the product at the cheaper price than its competitor.

• Profit is less, but the company makes the substantial profit by the
large volume.
Example: Sanitary paper,
Carry bags
Highest quality

• Some organizations offer highest quality products irrespective of


the cost.

• It is to fulfill the need of special class of customers who value the


quality as the only criteria to purchase the product.

Example: Medical Equipment


Compromise between cost and quality
• Some organizations offer the product with the optimum blend of
quality and cost to capture the larger section of the customers.

• The products are reasonably of good quality in proportion to its


price.

• The
organizations try to give good value to the customer for his
money
Example: Mobile, Television
Safety

• Safety is the main criteria on which they compete the market.


Example: Electrical gadgets,
Medical instruments,
Home appliances
• Product policy is not only concerned with the product, but also with the functions
the product fulfills.

• Products can be classified according to various features, some of which are


important in preparing product policies.
Feature Explanation Example
Durability Non-durable Vs. Durable Hair spray Vs. Automobile
Re-usability Non- reusable Vs. Reusable Detergent Vs. Glass bottles
Recyclability Non-recyclable Vs. Recyclable Pesticides Vs. Paper
Way of Mass production (Standardized) Vs. Light bulb Vs. Craft made furniture
production Craft made goods (Non-standardized)
Selection of a Profitable Product
Selection of a Profitable Product
• Before selecting a product, organizations have to carryout SWOT
Analysis in order to know their strength areas, weaknesses or
limitations, opportunities and the perceived threat.

• Product selection is a team effort.


SWOT Analysis
Strength

Threat SWOT Weakness

Opportunity
Strengths Weaknesses
• Abundant financial resources • Limited financial resources
• Well-known brand name • Weak spending on R & D
• Superior management talent • Limited distribution
• Better marketing skills • Higher costs
• Committed employees • Poor marketing skills
• Limited management skills
• Under-trained employees.
Opportunities Threats
• Rapid market growth • Entry of foreign competitors
• Changing customer needs/tastes • Introduction of new substitute
• New uses for product discovered products
• Sales decline for a substitute product • Product life cycle in decline
• Economic downturn.
The Challenges in Selection
An ever-increasing variety of products are now available, each having
its own

• Characteristics,
• Applications,
• Advantages,
• Limitations.
Select the optimal product according to the requirement of customers,
cost, design, in-service requirements etc.
Thank You

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