Product line extensions: causes and effects

Axarloglou, Kostas

doi:10.1002/mde.1369

Cited by 15 publications

(11 citation statements)

References 30 publications

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“…Some authors argue that, over time, market opportunities may arise by increasing the standardization of consumers' needs, enabling firms to serve a larger number of consumer segments with relatively narrow product lines, thus avoiding product cannibalization problems (Mason and Milne, ). Others posit that, in certain industries, longer product lines provide firms with the opportunity to realize economies of scale and scope and to satisfy ‘variety seeking’ consumer behavior (Axarloglou, ). Other studies suggest that industries characterized by the presence of incumbents with very long product lines can be difficult to penetrate (Bayus and Putsis, ; Putsis and Bayus, ).…”

Section: Theoretical Backgroundmentioning

confidence: 99%

Detecting the relationship between competitive intensity and firm product line length: Evidence from the worldwide mobile phone industry

Giachetti

Dagnino

2013

Strategic Management Journal

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The way firms lengthen or shorten their product line with respect to rivals is regarded as one of the possible strategies firms can pursue to respond to competition. This article builds and tests hypotheses to study the effect of different levels of competitive intensity on product line length. The empirical analysis of data on 3,527 handset models introduced by 66 mobile phone vendors from 1994 to 2010 shows a consistent inverse U-shaped relationship between competitive intensity and the firm's product line length. In this way, we pinpoint an interesting link between the product line extension literature and the competitive dynamics and competitive intensity perspectives.

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Section: Theoretical Backgroundmentioning

confidence: 99%

Detecting the relationship between competitive intensity and firm product line length: Evidence from the worldwide mobile phone industry

Giachetti

Dagnino

2013

Strategic Management Journal

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“…Nevertheless, some product-line extensions may be too much of a good thing (Axarloglou, 2008;Herrmann, Befurt, Heitmann, & Berger, 2007;Quelch & Kenny, 1994). A major risk is too little product differentiation.…”

Section: Similarity Is a Virtue-or Is It?mentioning

confidence: 99%

The Eyes Have It: How a Car's Face Influences Consumer Categorization and Evaluation of Product Line Extensions

Keaveney

Herrmann

Befurt

et al. 2012

Psychology and Marketing

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This research focuses on a previously unexamined risk associated with the widely used new product development strategy of line extensions. Specifically, it explores consumer reactions when line extensions become too visually similar and examines both short-term and longer term strategies for solving the problem. Examined in the context of consumer durables, specifically, automobiles, the results show that consumers who make categorization mistakes when trying to distinguish between two visually similar product lines have more negative attitudes not only toward the product but also toward the parent brand. The results of Study 1 confirm that providing a design vocabulary that articulates the car's design features is effective in reducing consumer's categorization mistakes. In addition, results of Study 2 indicate that changes to the car's "eyes" (headlights) are more effective than changes to the car's "mouth" (grille) in helping consumers to differentiate among cars in the line. C 2011 Wiley Periodicals, Inc.Even before the introductory Dodge neon ads first smiled "Hi," carmakers were aware that many consumers think that cars have faces. While the suggestion that a car has a face may seem as ephemeral as imagining faces in the clouds, professionals from widely diverse backgrounds including automobile enthusiasts and bloggers (autoblog.com), marketing consultants (Welsh, 2006; sensorylogic.com), product-design ana-

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“…For example, [14] develop a heuristic to solve a computationally difficult line extension problem whereas [40] study the optimal timing decision for a product line extension. Later papers are descriptive in nature and empirically study the effectiveness and determinants of product line extensions [18,33,17,32,9,3]. [31] addresses a product line extension decision in the context of impending competition from a generic manufacturer.…”

Section: Related Literaturementioning

confidence: 99%

“…A notable example in this regard is that of Torcetrapib, 1 a CETP 2 inhibitor, which was considered as an upgrade to Pfizer's blockbuster cholesterol drug Lipitor (atorvastatin) with over US$ 12 billion in annual sales. Pfizer was planning to introduce this upgrade to counter the anticipated drop in sales when Lipitor would go off-patent in 2011 3 and had made a significant capacity investment of $90 million as early as 2005 in Loughberg, Ireland. 4 However, on December 2, 2006, Pfizer informed the FDA that it was suspending a Phase 3 clinical trial of its developmental drug Torcetrapib [36] due to potential adverse side effects for patients.…”

Section: Introductionmentioning

confidence: 99%