Addressing a product management's orphan: How to externally implement product eliminations in a B2B setting

Abstract

While product eliminations (PEs) may help suppliers reduce unprofitable products and the cost of increasingly complex portfolios, they often have deleterious consequences for customer–supplier relationships. This dilemma even increases as a supplier's attempt to mitigate deleterious consequences for customers through customer-oriented PE implementation may at the same time hinder optimal internal adjustments and related cost-saving potential, thus running counter to the actual purpose of PEs. This study investigates whether and how a supplier should act in the customer's interest to maximize gains from implementing PEs. We identify key approaches of customer-oriented PE implementation and performance outcomes. Using a multiple-informant supplier sample and a customer validation sample, we show that, depending on the availability of alternatives to customers and the type of PE implementation activity, customer-oriented PE implementation can either pay off considerably or be disadvantageous to a supplier. While PE compensation is always detrimental to overall PE performance, both PE communication and PE support are mostly beneficial. By contrast, PE participation is ambiguous to overall PE performance, as it generally helps retain customer goodwill but also decreases supplier cost-savings from PEs.