product strategya firm's policy on the range of PRODUCTS which it supplies. Product strategy involves the periodic updating and modification of the firm's existing products or brands (see PRODUCT RANGE); the introduction of NEW PRODUCTS; and the phasing out of old products whose sales are declining, in order to release production and marketing resources which can be devoted to newer, more active products.
Technological innovation results in new products, new cost-reducing production technologies and new materials. Some innovations can serve to improve existing products or reduce their production costs and so prolong their lives. However, many such technological changes serve to limit the lives of products, shortening the PRODUCT LIFE CYCLE and speeding the onset of decline as new products supersede existing products. Furthermore, rapid changes in consumer tastes may render a particular product obsolete after only a short time, as with, for example, fashion products. Consequently a company's product development policy needs to maintain a constant stream of new products over time if it is to succeed in meeting its growth and profitability goals. Product range strategy should provide for launching new products and deleting old ones so as to avoid having a disproportionate number of products at any one stage of their lives. Indeed firms may deliberately follow a strategy of planned obsolescence, bringing out a continuous stream of new products as a means of increasing their total sales by inducing customers to replace products more frequently. See PRODUCT MODIFICATION, PRODUCT RATIONALIZATION, NEW-PRODUCT DEVELOPMENT.