Influence of multimarket contact on product line configuration decisions

Abstract

ABSTRACT Multimarket competition with multiple firms is crucial for marketers in product decisions. Despite its importance in marketing decisions, empirical research on product line configurations in multimarket contact (MMC) is limited. Utilizing panel data from the fast-moving consumer goods from four geographic zones encompassing 80,000 households in urban and rural markets, the authors empirically confirm that as MMC with rivals increases, focal firms tend to become more aggressive by adjusting their product line configurations. Moreover, when the focal firm holds a high market share and resource centrality in the focal market, it exhibits deterrence by maintaining the status quo. Similarly, when examining the interaction effect of MMC with focal market profitability, we observe that the focal firm becomes aggressive and adjusts its configuration. This study extends current research on product line configuration decisions, especially when the boundaries of physical markets are becoming increasingly blurred with the rise of e-commerce and hyperlocal models increasing multimarket contacts.