Marketing policies

After market forecasting methods have been established the next step necessary is a consideration of the task of formulating general marketing policies. A policy is a line or course of action predetermined for the purpose of insuring uniformity and consistency of procedure over a considerable period of time under recurrent and essentially similar circumstances.

Generally, the attempt should be made to establish marketing policies for considerable periods of time. Changes should not be made without good reason. To be successful, policies must be followed definitely, and applied impartially. However, common sense must be used in their application.

A classification of general marketing policies, to be useful, must rest upon the basic factors with which particular policies are concerned. Marketing policies may be grouped as : Product policies, price policies, trade channel policies, and dealer and customer policies.

Type of product to be manufactured

The first product policy of importance deals with the general type of product to be manufactured and marketed. While most medium-size or large manufacturing enterprises make and sell a line of products, it is entirely possible and often advisable to place the emphasis upon a particular type of product.

The manufacturer who chooses to produce only convenience goods, or only shopping goods, or only specialty goods, definitely simplifies his problem of marketing. Nor does such a policy of limitation of product type preclude the possibility of building up a "line" of products which will include many different items of varying sizes, styles, and models. Some degree of emphasis on convenience goods, shopping goods, or specialty goods is highly profitable as a matter of product policy.

Quality of the product line

Usually there is a demand for many different qualities of a particular product. The manufacturer should decide roughly on a high, medium, or low quality line. There is ample economic justification for a policy fixing on any one of these qualities. On the other hand, it may be deemed advisable to make and sell several qualities of the same line. It is not unusual in manufacturing for two or more grades to result from the same general process. In such cases, a policy of marking imperfect goods as "seconds" and of developing or reaching the markets for seconds may be adopted.

Where several qualities of the same line are manufactured, the question of branding and of trade-channel policy are important. For instance, it may be desirable to use a brand name only on the first-quality products and to market other grades unbranded and in bulk. Or it may be wise to organize subsidiary companies or special departments to market the medium and low grades through trade channels other than those that are used for the high-grade products.

Definite policies with respect to quality are particularly desirable because of the difficulty of changing quality once a brand name has become identified with a particular product. After a quality reputation has been established for a particular product and its special brand name, it is always dangerous to lower the quality of the brand. If a competitive necessity for a lower quality product appears, it is the part of wisdom to issue a new and inferior product under a new brand name rather than to lower the quality of the old product under its old brand name.

Style in relation to quality

The question of a product policy dealing with style is important. This question can hardly be considered apart from the question of quality. The important decision concerns the relation of style to quality and vice versa. In the case of most shopping goods, fashion or style is an important purchasing consideration.

This type of merchandise appears to be especially subject to rapid shifts in the particular fashions or styles demanded by the ultimate consumer. The manufacturer must adopt some definite policy regarding the emphasis he will place upon style or fashion. If he makes shopping goods in the main, and decides that his emphasis is to be 30 per cent on quality and 70 per cent on style, he must be prepared to make sudden changes or adaptations in his product.

If he manufactures convenience goods, he may perhaps, adopt a policy which is just the reverse of the above in emphasis. Good profit margins are essential. Whatever the natural inclination of the management may be along the lines of a style policy, decisions must be made in a way to give the public what it wants.

Competitive considerations

When decisions regarding type, quality, and style or fashion have been made, the product line should be analysed from the point of view of competitive adaptation. Policies may be adopted that will set up exclusive competitive features. Emphasis may be placed on a special product element as the RCA Manufacturing Company has done with opera records. Additional and special features may be added to the product, such as the autographic pencil device attached to the Eastman Kodak. The product may be simplified as in the case of the buttonless union suits and starchless collars.

The number of articles to be manufactured

The manufacturer must also predetermine his general product policy regarding the number of articles to be produced. He must decide whether he will specialize in one article, whether he will attempt to make a full line, or family of products, or whether he will adopt a middle course. On this question no general rule can be laid down.

Many successful business enterprises have been built upon the one-product policy. Others have been highly successful in marketing a family of products. Decisions must be made only after a careful consideration of production costs and of the market. In many instances, a family of products of the same general type (convenience goods, or shopping goods, or specialty goods) can be marketed by the field sales force as easily as one item can be sold.

If the products are naturally related, like "Heinz's 57 Varieties" and the "National Biscuit" and "Sunshine" items and if the retail outlets are the same for all the individual members, the family policy may be quite profitable.

Limitations on family-of-products lines

The family-of-products policy, however, can easily be carried too far. Natural relationships usually should not be overstepped, nor should an attempt be made to manufacture and sell a family of products if the markets for the suggested products are so widely different as to necessitate separate sales forces for each market, unless this plan is necessary for other reasons that are particularly sound.

Likewise, it should be remembered that if a family-of-products policy loads down the manufacturer's salesmen with too many products he certainly cannot be a specialty salesman on each and every one. His task cannot be allowed to become the complicated task of the salesman for the general jobber.

Diversification versus simplification

Closely connected with the preceding question of policy is the matter of sizes, models, and styles. It may be desirable to operate on a policy of simplification, or the limiting of the number of sizes, models and styles produced, and standardization. On this point there is likely to be considerable friction between the sales department and the manufacturing department.

Salesmen like to work along the lines of least resistance. Consequently, they exert some pressure in the direction of a product line which offers many different sizes and styles.

The manufacturing executives, on the other hand, are almost certain to be committed to the theory that efficiency comes with a policy of standardized mass production. Hence they dislike to see much diversity in the product line. Generally speaking, the policy of simplification and standardization is profitable. Its general advantages include :

• Lower production costs
• Lower marketing costs
• Improved quality
• Improved service
• Reduced price
• Higher wages

Against these advantages must be measured the limitations of specialization. In the main, they are : Decreased sales, neglect of dealer's full needs, and sales monotony. Certainly, it is safe to say that in the case of a product line, the purchase of which need not or perhaps should not involve the individuality and personal preference of the buyer, simplification and standardization may be extremely advisable.

The manufacturer or producer of fabricating goods or accessory goods can very often make an effective use of this principle. However, in the case of consumer's goods, it should be remembered that the ultimate consumer is consciously extending taste and style as purchasing factors. Consumer demand is the governing influence and if that demand involves the possibility of choosing from a varied assortment of styles and sizes, the policy of simplification should not be carried too far.

The guarantee

Another matter that has a direct reference to the product line and that should be expressed in a predetermined policy is the matter of guarantee. In the earlier days of marketing history the guarantee was little known and used.

The common law developed the business maxim of caveat emptor, let the buyer beware. To-day, however, very few reputable manufacturers are willing to hide behind this seeming legal justification of unsound practices. The manufacturer or distributor who does not in some degree guarantee the things he sells is decidedly the exception.

Implied or expressed guarantees

In most cases, the modern purchaser assumes an implied guarantee that he will be able to secure service from the manufacturer of a particular product line such as he can expect reasonably when price is taken into account. Naturally, the implied guarantee has distinct limitations. It does not bind the house.

Nevertheless, the ultimate consumer usually will expect a reputable concern to deliver goods as represented, and to make adjustments if the goods do not prove to be as represented. This situation will exist unless there is an expressed statement to the contrary or unless no representations are made and the goods are marked "seconds" or "manufacturer's rejects."

Generally speaking, the expressed guarantee is desirable because it adds slightly more definiteness to an inevitable implication which may be stretched very far by an unscrupulous purchaser. As a business builder, no other policy is more effective than an expressed guarantee which binds the seller to stand behind his goods.

Limited performance guarantees

It is advisable to determine whether or not the expressed guarantee should be limited or unlimited. It may be desirable, for example, to limit the expressed guarantee to particular features of performance. When a manufacturer of automobile tires agrees to replace a tire which fails, at a cost of one-twelfth of its original price, for every month it has been used, up to 12 months, he is offering a guarantee of performance.

The same would be true of a manufacturer of electric washing machines who guarantees for certain districts that, barring an increase in rates, the cost of electricity for operating the machines will not exceed two cents per hour. Obviously, performance may be measured in terms of time as well as wear or costs. An automobile manufacturer who guarantees his crankshaft against breakage for two years is also issuing a performance guarantee. This type of guarantee is usually highly explicit and specific in statement. It has the advantage of limiting adjustment if the product is absolutely right with respect to the detailed performance guaranteed.

The limited guarantee of quality

The limited guarantee of quality is generally less specific and definite than the limited guarantee of performance. It is naturally more general because it attempts to make a broad statement that will develop confidence in the quality of an article as a whole. When the automobile tire manufacturers began to use a guarantee against imperfections in their goods rather than a mileage guarantee, they substituted a quality guarantee for a performance guarantee.

When the washing machine manufacturer offers a bond that guarantees his product against all imperfections in workmanship and material for a period of one year, a time limitation appears. The guarantee is similar to that of the automobile manufacturer who guarantees his car against mechanical defects for 90 days. Because of the general character of the quality guarantee, a fool-proof product line is necessary, and usually it is the part of wisdom to set up some specific time limitation.

Unlimited guarantees

An unlimited guarantee policy may also be used although in most cases it is open to considerable abuse by the ultimate consumer. "The customer is always right" has been applied as a slogan by many retail establishments, and some, at least, have lived up to the letter of the slogan with apparent profit.

Generally speaking, an unlimited guarantee is somewhat dangerous when the product is complex and demands a considerable degree of skill in its operation. When an unlimited guarantee has been expressly indicated, it is exceedingly difficult to do anything else but make complete restitution, even when the breakdown is due to conscious or unconscious carelessness in operation.

The mail-order guarantee

The mail-order house is perhaps the chief user of the unlimited guarantee. One well-known Chicago concern uses the following statement:

We guarantee that every article in this catalogue is honestly described and illustrated. We guarantee that any article purchased from us will give full and complete service. If for any reason whatever you are not satisfied with any article purchased from us, we want you to return it to us at our expense. We will then exchange it for exactly what you want or will return your money, including any transportation charges you have paid.

This type of retail institution needs a strong and all-inclusive guarantee to develop complete confidence on the part of the ultimate consumer and to influence him to buy by mail. On the average, the mail-order customer will not abuse the privilege of adjustment to the same extent as will the customer of a retail store located in his own trading area. It is a good deal of trouble to return articles in the first case, and extremely easy in the second.

The guarantee and the distributor

Whatever the type of guarantee that may be decided upon, the manufacturer must outline his policy of standing behind his distributors in cases of complaints or of request for adjustment under the guarantee. For example, if the guarantee contains a money-back provision, in most cases some arrangement should be made with the distributor so that an ultimate consumer can receive his money back from the distributor from whom he purchased the goods without waiting for the article to be sent to the factory.

In cases where the product line is subject to deterioration or perishability, the matter of standing behind the dealer may be of special importance. In the sale of candy, prepared foods, yeast, and the like, it will be almost necessary to provide a liberal replacement policy to distributors in case of deterioration through delay in delivery, or even in case of delay in sale by the wholesaler or retailer.

Of course, any policy of standing behind the dealer must be administered with exceeding care. If the manufacturer is excessively liberal in making adjustments to the distributors, they, in turn, may grow careless in checking up the statements made by their customers who complain.

Service policies

Finally, the manufacturer must predetermine his product policy from the standpoint of service. Service may mean a continuing interest in the customer after he has purchased the goods. It may mean real helpfulness preceding the sale, with the purpose of fitting the product to the customer's particular needs. In some cases it implies offering assistance and information in matters only indirectly connected with the seller's goods. Occasionally it may mean nothing at all. There is considerable talk about service which begins and ends in conversation alone. It is easy to over-sell service. It is probably never possible to over-serve.

In general, service, as the word is properly applied in modern business, means giving the buyer something more than so many yards, or so many pounds, or so many units in exchange for the market price. It means the doing of things that increase the comfort, convenience, and the happiness of the buyer, and increase his good will for the seller. A policy of real service, is a policy of enlightened selfishness.

The buyer pays, of course, for all that he gets, whether there is placed at his disposal a service station, a rest room, a repair part service, or the skill of a manufacturer's engineers. But he is often better pleased to pay for a product with service than he would be to buy the bare product at a lower price. The right kind of service is not expensive but it makes sales. No manufacturer or seller can well afford to omit service of some kind from his product policy.

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