Does Product Platforming Pay Off?

Abstract

Product platforming-a specific approach to new product development utilizing common technology components or subsystems deployed across multiple products or product lines-has been argued to bring numerous valuable organizational outcomes (e.g., effectiveness of R&D process, superior postlaunch product commercial performance, and ultimately sustained competitive advantage). Yet, large-scale longitudinal empirical examinations of the mechanisms linking product platforming to firm performance are scarce. Drawing on the concepts of architectural leverage and product life cycle flexibility, the article presents the development and empirical test of a set of hypotheses regarding the commercial outcomes of platforming at the product level using a unique dataset comprising all products developed and sold by a large, global LED lighting manufacturer in 2010-2015. The results suggest that platformed products demonstrate significantly higher sales and gross profit margins aggregated over their product life cycle (PLC), vis-a-vis the comparable group of nonplatformed, individually developed products. In addition, the findings demonstrate that a product platforming development approach appears to extend the PLC relative to nonplatformed products based on an integral, nonmodular product architecture. Practitioner PointsA product platforming approach to R&D, implying the development and implementation of technology components or subsystems that are shared across multiple products or product lines, is an effective way to improve the commercial performance of new products.Platformed products achieve higher sales and gross margins over all stages of the product life cycle, compared to nonplatformed products based on an integral, nonmodular product architecture.Product platforming also prolongs the average product life cycle, because of the modular nature of product line architecture that supports platformed components and the flexibility of introducing newer components over time within that same architecture.Managers need to consider various trade-offs that can affect the adoption of a platforming strategy, which include the degree of heterogeneity of customer needs in the target market, as well as different internal organizational approaches to implementing the platforming strategy.

Marketing involvement in product platform creation: The role of personal and structural coordination mechanisms

“…Firstly, as our study focused on product platforms in a single firm, which may reduce the generalizability of results, additional studies in other industries (e.g., machinery) would be useful. Future studies could also examine tech firms operating in different phases of the technology and product life cycle (Meyer et al, 2018).…”

Digital Twins as Software and Service Development Ecosystems in Industry 4.0: Towards a Research Agenda

“…A common approach for this is the adoption of a platform approach [24], which is typically achieved by modularizing the product's architecture [25] or the production system [26]. The key to a platform approach is to achieve economies of scale in production [27] by using common components for a variety of product configurations [28].…”

Value creation mechanisms of business models

“…Value delivery affects the business value capture through reducing the input costs ( C ) that the firm incurs for serving the consumers: the more efficient it is (thanks to, e.g. ruthless cost control, selecting the most efficient suppliers, embracing the platforming approach in product development and manufacturing (Meyer et al, 2018)), the higher the resulting business value capture of the business model: Proposition 3a: The efficiency of value delivery has a positive impact on business value through reducing the input costs. …”