Broader Product Line: A Necessity to Achieve Success?

Kekre, Sunder; Srinivasan, Kannan

doi:10.1287/mnsc.36.10.1216

Cited by 469 publications

(384 citation statements)

References 18 publications

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“…Our model brings the market competition and cost-reduction perspectives together and studies their interactions. For the most part, our theoretical work supports the general belief that modularity facilitates product variety and some empirical observations that a broader product line results in higher market share and price (Kekre and Srinivasan 1990, Hypotheses 1 and 2).…”

Section: Introduction and Literature Reviewsupporting

confidence: 83%

“…The cost and revenue trade-off makes product line and price decisions sensitive to firms' technological factors (design and production costs). These exogenous factors, plus endogenous decision variables (product variety and prices), are vital to the success of any product line extension and hence have been widely studied empirically (e.g., Bayus andPutsis 1999, Kekre andSrinivasan 1990).…”

Section: Comparative Staticsmentioning

confidence: 99%

“…Several empirical studies support this belief. For instance, Kekre and Srinivasan (1990) study the relationships among product line length, market share, and price by exploring Profit Impact of Marketing Strategies (PIMS), a self-reported survey from more than 200 companies' data. Bayus and Putsis (1999) considered these same decision variables as jointly endogenous factors in their analysis of the computer industry over the period [1981][1982][1983][1984][1985][1986][1987][1988][1989][1990][1991][1992].…”

Section: Introduction and Literature Reviewmentioning

confidence: 99%

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Product Line Selection and Pricing with Modularity in Design

Hopp

2005

M&SOM

125

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T his paper addresses the strategic impact of modular design on the optimal length and price of a differentiated product line. We represent consumer demand with a Bayesian logit model. We also break operations costs into product design and production components. Our analysis shows that reducing product development costs via modular design always makes it attractive to offer greater product variety. However, reducing production costs can sometimes motivate a reduction in variety for a risk-averse producer in a multiple-segment market. We also characterize the impacts of degree of modularity and production cost on price markup and market share. Finally, we show that the optimal product line length is monotonic in risk attitude and the monotonic weak majorization, partial order on product assortment.

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Section: Introduction and Literature Reviewsupporting

confidence: 83%

Section: Comparative Staticsmentioning

confidence: 99%

Section: Introduction and Literature Reviewmentioning

confidence: 99%

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Product Line Selection and Pricing with Modularity in Design

Hopp

2005

M&SOM

125

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“…(Clark 1985) (Sanchez and Mahoney 1996) (von Hippel 1990) (Henderson and Clark 1990) (Simon 1969) (Whitney 1993) (Huang and Kusiak 1998) What variants of the product (De Groote 1994) (Ishii et al 1995) (Lancaster 1990) will be offered? (Ho and Tang 1998) (Kekre and Srinivasan 1990) (Martin and Ishii 1996) Which components will be (Fisher et al 1998 Who will produce the (Dyer 1996) (Liker et al 1996a) (Mahoney 1992) components and assemble (Dyer 1997) (Liker et al 1996b) (Monteverde and Teece the product? 1982) What is the configuration of (Fisher 1997) (Lee 1996 What is the detailed design of (Boothroyd et al 1994) (Ettlie 1995) (Smith 1997) the components, including (Chen et al 1994) (Navinchandra 1994) ) material and process (Poli et al 1993) (Thierry el al.…”

Section: Decisions Within a Development Projectmentioning

confidence: 99%

Product Development Decisions: A Review of the Literature

2001

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T his paper is a review of research in product development, which we define as the transformation of a market opportunity into a product available for sale. Our review is broad, encompassing work in the academic fields of marketing, operations management, and engineering design. The value of this breadth is in conveying the shape of the entire research landscape. We focus on product development projects within a single firm. We also devote our attention to the development of physical goods, although much of the work we describe applies to products of all kinds. We look inside the "black box" of product development at the fundamental decisions that are made by intention or default. In doing so, we adopt the perspective of product development as a deliberate business process involving hundreds of decisions, many of which can be usefully supported by knowledge and tools. We contrast this approach to prior reviews of the literature, which tend to examine the importance of environmental and contextual variables, such as market growth rate, the competitive environment, or the level of top-management support.

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“…Similarly, Stalk and Webber (1993), Henkoff (1995), and Schiller (1996) describe pruning of product lines in several other industries. From a marketing perspective, there are often fears that such a reduction may detract from brand image or market share (Kahn 1995, Chong et al 1998, Kekre and Srinivasan 1990. Randall et al (1998) discuss the dangers of extending a product line.…”

Section: Literature Reviewmentioning

confidence: 99%

Building Efficient Product Portfolios at John Deere and Company

Yunes

Napolitano

Scheller‐Wolf

et al. 2007

Operations Research

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Company (Deere), one of the world's leading producers of machinery, manufactures products composed of various features, within which a customer may select one of a number of possible options. On any given Deere product line, there may be tens of thousands of combinations of options (configurations) that are feasible. Maintaining such a large number of configurations inflates overhead costs; consequently, Deere wishes to reduce the number of configurations from their product lines without upsetting customers or sacrificing profits. In this paper, we provide a detailed explanation of the marketing and operational methodology used, and tools built, to evaluate the potential for streamlining two product lines at Deere. We illustrate our work with computational results from Deere, highlighting important customer behavior characteristics that impact product line diversity. For the two very different studied product lines, a potential increase in profit from 8% to 18% has been identified, possible through reducing the number of configurations by 20% to 50% from present levels, while maintaining the current high customer service levels. Based on our analysis and the insights it generated, Deere recently implemented a new product line strategy. We briefly detail this strategy, which has thus far increased profits by tens of millions of dollars.

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Broader Product Line: A Necessity to Achieve Success?

Cited by 469 publications

References 18 publications

Product Line Selection and Pricing with Modularity in Design

Product Line Selection and Pricing with Modularity in Design

Product Development Decisions: A Review of the Literature

Building Efficient Product Portfolios at John Deere and Company

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