In the 20th century, the role of marketing in the success of a business cannot be underestimated. The sole purpose of a business is “To create a customer”.
Essentially, the creation of customers involves the identification of their needs, and the finding of ways and means to satisfy them through the optimization of corporate goals. This can be effectively brought about if the organization designs, implements and adheres to sound sales policies.
What is a Sales Policy? What are its Objectives?
A sales policy is a systematic process of developing, coordinating, monitoring the various decisions that have a direct bearing on the company’s sales. The objective of such policies is to furnish effective guidelines for corporate efforts to optimize customer satisfaction, besides stimulating the company’s profitability and competitive strength.
A manufacturing firm needs to design sales policies relating to:
- The products to be offered for sales, i.e., Product Policies;
- The categories of customers to whom the products will be sold, i.e., Distribution Policies.
- The prices at which the products will be sold, i.e., Pricing Policies; and
- The promotional methods utilized for the sale of products, i.e., Promotional Policies.
The various sales policies are closely related. For example, if a producer of men’s ready-to-wear clothes intends to add women’s ready-to-wear clothes to his product line, he will have to design those garments which are definitely superior to the competitor’s brands (Product Policy); to go in for competitive prices (Pricing Policy); and, finally, to popularize the products (Promotional Policy).
The interdependence of a sales policy constrains a management to make a systematic and logical analysis of the various issues involved in it.
Product policy decisions
Several billions of dollars are spent annually by the United States’ industry on technological research and the development of new product. The expenditure of this huge magnitude underscores the importance of product policy decisions to a business. Product policy decisions in today’s business world have become the focal point round which a firm’s marketing philosophy revolves, because they govern marketing decisions relating to prices, promotion and distribution which, to a considerable extent, project the corporate image.
The impact of product decisions affects not only the company’s marketing activities but also such major corporate levels and functions as R & D, resource allocation and long-range planning. From the point of view of marketing the firm’s competitive strength in the market place largely flows from its effective product policy decisions coupled with other elements of the marketing programme and its overall corporate strategy.
The quality of the prevention of the risk of product failure, the history of marketing reveals glaring examples of the failure of a majority of new products because of lack of marketing insight. It has been noted that a large number of products abort in the process of development – even before they are put on the market.
The pace of S & T changes does not permit any effective alternative to product planning and development. In fact, it tends to intensify the uncertainty. Its effects have well been summarized by Weston:
The manifestation of increased technological changes are:
- higher rates at which older products have been obsoleted
- the shorter life of individual product cycle
- the increased rise of product substitution; and of attractive growth potentials in the new and diverse sections of the economy.
In an era of cut-throat competition, companies are making strenuous efforts to innovate, modify or even to abandon existing products with a view to capturing a larger market share; those which fail to do so find a burial site near yester-year’s barrel-markers.
Products bring social and economic wealth to the nation; but there is the negative side of its social importance — for instance, a product that pollutes the environment, or is not safe to use, or is of a spurious quality, poor design, impairs the reputation of the manufacturer.