Assortment policy of the enterprise

Commodity policy is a set of activities, as well as strategies aimed at defining business goals and achieving them. This is a plan formulated in advance by the company, which produces or promotes the goods of a certain type. The product policy includes the assortment policy of the enterprise and the use of commodity strategies. Commodity strategy is determined by the general strategic course of the enterprise.

The assortment policy is the definition of a set of those commodity groups that become the most preferable for the successful operation of the enterprise and ensure the economic efficiency of its activities, the formation of an assortment of products in accordance with the needs of the market, the financial condition of the enterprise and its strategic goals.

At formation of assortment production should:

- identify the relationship between new products that require modification and improvement, traditional products, as well as obsolete products;

- to establish the range of products and planned quantitative and qualitative indicators ;

- determine the number of models, as well as modifications of the same products;

- determine the composition of the life cycle of each product, as well as the prospects for updating the range.

Assortment policy is formed to achieve long-term goals and is especially significant in tough competitive conditions, which show high requirements for the product both in assortment and in quality. Its questions are taken at the strategic level of the enterprise and take into account its overall strategic goals.

The assortment policy, its development and implementation is created under the following conditions:

• There must be a clear understanding of the overall strategy of the enterprise in the market;

• Good knowledge of the market and the nature of the requirements of the target buyer category are necessary;

• It is necessary to have a clear idea of the available resources and capabilities of the enterprise, both today and in the future.

The assortment policy should be justified, proceeding from the general principles providing for the simultaneous entry of the following commodity groups into the market:

- basic - goods, which bring the enterprise the bulk of the profit;

- supporting - goods that bring the enterprise less profit than the main ones, but constantly enter the market and stabilize revenues;

- strategic - goods, from which the company plans to make significant profits in the future;

- tactical - goods, designed to stimulate the sale of the main commodity group.

Changes in the assortment can be based on three approaches:

1. Vertical changes in the assortment. Such processes are part of the vertical diversification of the company's production activities and are aimed at expanding or narrowing the production of those components that were previously purchased from suppliers, as well as creating its own sales network to promote the company's products.

2. Horizontal changes are one of the components of horizontal diversification. This is what the changes in the assortment are called within the existing activities, either in related areas or entering a new market within the framework of cooperation without transitions to adjacent levels.

3. Comprehensive changes. They are diversification both horizontally and vertically.

The expansion or narrowing of the assortment may be due to two reasons. Usually, this expansion, associated with the process of diversification, or a narrowing, caused by the need for integration, both horizontal and vertical.