Final answer:
A runout policy of product deletion refers to a company allowing a product to decline without making changes, aligning with an exit strategy when facing sustained losses. In a broader context, planned obsolescence also leads to products being replaced more frequently.
Step-by-step explanation:
The student's question relates to a runout policy of product deletion, which generally means allowing a product to decline in the market without making significant changes to the product strategy. Companies might adopt this approach when they determine that the product will not be able to sustain a profitable market position, which aligns with the concept of an exit strategy. The exit occurs when firms reduce or cease production in response to sustained losses. When a business is making losses, it can either continue minimally if its revenues cover the variable costs or shut down in the short run. However, if losses continue, these firms will eventually cease production altogether. Similarly, planned obsolescence is when a product is intentionally designed to have a limited useful life so it will need to be replaced frequently, such as the case with nylon stockings that get runs or ladders after a few uses, ensuring that consumers continue to purchase new ones.