Existing Product Portfolio Research Articles

Country Delight: expanding the consumer’s product pantry

Learning outcomes The case study offers interesting learning possibilities and offers the following learning opportunities to the learner. assess and conduct a macro- and micro-environmental analysis, comprehend the nature of the competitive landscape and how it changes when one looks at a digital-only versus an omnichannel marketplace, examine the product mix and policy of the firm and evaluate how it delivers customer value and analyse the pros and cons of growth strategies available to a firm and arrive at a viable and actionable future business and product strategy. Case overview/synopsis The short case study presents the story of a young start-up called Country Delight. The firm began operations in 2011 and was the brainchild of Chakradhar Gade and Nitin Kaushal. The direct-to-consumer firm addressed urban consumers’ non-articulated, latent need to get “fresh and uncontaminated” milk to their doorstep. Country Delight delivered farmer-to-consumer fresh cow and buffalo milk and milk products based on a well-designed and efficient value chain where the supply chain was either wholly owned or quality monitored by the firm. The firm began operations in India’s National Capital Region and was spread across 15 metro cities. Slowly, over the years, Gade and Kaushal added more product categories.Country Delight had a subscriber base of around 500,000, and the ambitious duo wanted to double their subscriber base and reach one million subscribers by financial year 2025. The firm was looking at various paths to achieve this number. Should Country Delight expand into new geographies? Or look at adding to the existing product portfolio? Diversification into agritourism, like the Pune-based vineyard – Sula, also looked attractive to build consumer engagement. Would taking the consumer to the farmers from whom they sourced the milk and vegetables contribute additional revenue to Country Delight and their farmer-suppliers? As the firm got ready to raise another round of funding, it needed a well-articulated growth strategy that was exciting and profitable for all stakeholders. Complexity academic level This case study presents the dilemma entrepreneurs face as they look at the next phase of growth. Thus, this case study serves as a learning opportunity for a graduate-level course in management and as a sounding board for those who aspire to enter the start-up space. Though this case study has the potential to illustrate basic concepts such as value chain and macro- and micro-environment analysis, the protagonist’s dilemma and the problem statement make it apt for integrated discussions that are critical in advanced electives in marketing management. Supplementary materials Teaching notes are available for educators only. Subject code CSS 8: Marketing.

Method for potential assessment and adaptation for additive manufacturing of conventionally manufactured components

AbstractThe novelty of additive manufacturing (AM) involves new requirements, restrictions and rules, that are considerably different to those of conventional manufacturing methods. Therefore, designers often lack experience and knowledge about identifying AM-suited components. However, to ensure profitability, it is essential to choose components, that are well suited for additive manufacturing. State-of-the-art user-support methods for identifying AM potential widely focus on either economic potential or manufacturability but fail to address both aspects. While machine learning solutions are considered highly efficient, the assessment outcome lacks process transparency, inhibiting troubleshooting, plausibility checks and problem-oriented considerations. This paper proposes a holistic, yet detailed and transparent approach to identify conventionally manufactured parts for AM from an existing product portfolio, enabling decision-making based on quantifiable results. It combines and advances state-of-the-art methods, considering manufacturability, economic profitability and socio-ecological aspects. Besides evaluating AM potential, the method additionally assesses the components' potential for re-design-based enhancement for AM suitability. Besides understanding product functions and present production processes, users are expected to have a basic understanding of company goals. The approach involves inquiries regarding company- and product-specific priorities, enabling a weighted assessment. The weights are determined based on individual company philosophies regarding AM value propositions such as differing stakeholder interests and priorities. Additionally, the approach allows users to investigate different development goals by weighting opportunistic and restrictive assessment. The method application is demonstrated via an assembly comprising 11 parts in a scenario focusing on serviceability, eventually determining suitability statements.

Product Diversification in Sustainability Transition: The Forest-Based Bioeconomy in Finland

The forest-based bioproduct field has diversified into the chemical, medical, energy, nanoproduct, and construction material sectors. This paper argues that forest-based bioeconomy has kept the focus on conventional products and new bioproducts have primarily been developed as extensions to existing product portfolios due to a lock-in mechanism, i.e., a state where an economy gradually locks itself to a dominant market position due to technical interrelatedness, economies of scale, and quasi-irreversibility of investment. The study examines forest-based product transition in the context of lock-in mechanisms through narrative analysis over the past 170 years. A theoretical framework is formulated based on complex system studies and the economics of lock-in mechanisms. The relation between the lock-in mechanisms of the regime and product diversification is described for the forest-based bioeconomy in Finland. The study supports previous findings indicating that interactions occur between the lock-in mechanisms. Furthermore, lock-in mechanisms can have a neutral, adverse, or beneficial effect on product diversification. The paper extends knowledge about the role and functioning of lock-in mechanisms in changing market environments. Recent trends in network development and foreign investment, and their effects on industrial symbiosis and product diversification, is recommendable to consider in future research.

Should “big food” companies introduce healthier options? The effect of new product announcements on shareholder value

In recent years, big food companies, such as Kellogg, PepsiCo, and Kraft have been under increasing pressure to introduce more healthful offerings to their existing product portfolio. Our research seeks to understand if such announcements are viewed favorably by the stock market. Are firms rewarded for introducing healthy new products? Using established methodologies, we are able to isolate what percent of an increase or decrease in a firm’s stock price can be attributed from such an announcement. Our analysis reveals some interesting results on how healthy new product announcements impact shareholder value. Findings suggest that big food companies are indeed rewarded financially for introducing healthy new products into the marketplace, and this increase is higher than when introducing less healthy products. We also find that positive ingredient additions (e.g., added fiber) are more highly valued than negative ingredient reductions (e.g., reduced sugar). We discuss the significant implications of our findings and provide managerial recommendations.

Strategic management of product and brand extensions: Extending corporate brands in B2B vs. B2C markets

Decisions about expanding an existing product portfolio and capturing new markets are of critical importance to a firm's financial performance and growth. Yet, important questions remain in regard to the extent to which product and brand extensions contribute to a firm's profit in B2B and B2C markets, respectively, and how firms with corporate brands in these markets should pursue an extension strategy that provides maximum impact on firm profit. The authors theorize and empirically address these questions based on a study of firms listed in the U.S. Fortune 500 published ranking. Findings of this research have important prescriptive implications for the management of B2B and B2C firms' growth-based extension strategy and contribute to B2B theory.

Patent cliff and strategic switch: exploring strategic design possibilities in the pharmaceutical industry

Extending the period of the market exclusivity and responding properly to the recent agglomeration of patent expiries are pivotal to the success of pharmaceutical companies. Declining R&D productivity, rising costs of commercialization, near-term patent expirations for many top-selling drugs are forcing companies to adopt new systems to introduce innovative products to market and to focus on strategies that increase the returns from the existing product portfolio. This systematic review explores various strategic and tactical management approaches by synthesizing the relevant literature and practical examples on patent expiration strategies. It further discusses how the mix of competition policies and strategic instruments can be used to maintain declining revenue streams from the blockbuster business model of the pharmaceutical industry. The review provides a comprehensive overview of the research on various strategies, offers both theoretical and practical guidelines for strategy transformation that companies can use to prolong the market exclusivity, and identifies knowledge gaps that needed to be addressed in order to improve efficiency in policy design.

Identifying product opportunities using collaborative filtering-based patent analysis

One practical and low-risk approach to product planning for technology-based firms is to identify application products based on their existing product portfolios. Previous studies, however, have tended to neglect the current product development capabilities of target firms and to apply the technical data of specific fields to their methods, thereby failing to quantify a way of identifying various product opportunities. As a remedy, this paper proposes a new multi-step approach to product recommendation. The steps include (1) generating assignee–product portfolio vectors using text mining on a large-scale sample of patents, (2) recommending untapped products for a target firm by using latent Dirichlet allocation and collaborative filtering, (3) producing a visual map based on the promise and domain heterogeneity of the recommended products. To validate the practicability, we applied our approach to a Korean high-tech manufacturer by using all of the patents registered in the United States Patent and Trademark Office database during the period of time from 2009 to 2013. This study contributes to the systematic discovery of new product opportunities across various domains using the existing product portfolios of firms, and could become the basis for a future product opportunity analysis system.

Organizational Inertia and Excessive Product Proliferation

Abstract This study investigates the internal factors of excessive product proliferation. Since empirical literature on product over-proliferation focused on how to optimize existing product portfolio, the causes of excessive product proliferation have so far attracted little attention. This study employs a case study of Shiseido, a famous Japanese cosmetics company, with particular attention to product proliferation in the Shiseido chain store channel, because external factors are mostly absent from this case. My results indicate that intra- and inter-organizational inertia affects product line management. Due to Shiseido’s effort in the 1990s, the company could maintain the advantage it and its cosmetics store channel held with much the strategy as had been used until the mid-1970s. This strengthen intra-organizational inertia at Shiseido. Inter-organizational inertia with cosmetics stores makes Shiseido’s strategic change more difficult, which causes excess proliferation.

An empirical study of servitization paradox in China

There is a paradox experienced by manufacturing firms attempting to servitize that their substantial investment in adding services to the existing product portfolio does not bring expected higher returns. The purposes of this paper are to gain more understanding as to the servitization status in Zhejiang Province of China and the influence of servitization on business performance of manufacturers. We conduct a regression analysis based on 134 listed manufacturing firms in 12 sectors in Zhejiang Province of China in 2012. Our results show that there is a significant positive relationship between servitization and business performance for manufacturing firms in Zhejiang; a U-shape relationship between servitization and profit per capita of firms is identified. In addition, the strategy of servitization is more suitable for larger firms and the effect of servitization in boosting business performance becomes more prominent once servitization has grown beyond certain threshold.

Virtual Vehicle Design based on Key Performance Indicators Assessing the Vehicle Portfolio

This paper focuses on the manufacturer's conflict in the conceptual design of commercial vehicles between highly customized special vehicles and the greatest possible degree of standardization. Modularity and standardization are crucial success factors for realizing high variance at the best cost efficiency in development and production as well for achieving the highest quality standards at reduced efforts for technical validation. The presented virtual design approach for commercial vehicle concepts allows for purposeful design and integration of new concepts and technologies on the component level in an existing product portfolio - not neglecting manufacture's portfolio requirements concerning standardization and modularity. The integrated tool chain helps to bring trade-offs to a head that exist in balancing between dedicated vehicles with best customer-relevant characteristics and standardized vehicles with the highest degree of commonality. For this, one core aspect is KPI-based portfolio assessment which is presented in the focus of this paper. The embedding in an integrated tool chain, its setting and functionality are outlined in overview.

Product Innovation, Firm Renewal and Family Governance

We examine the role of product innovation as a primary vehicle for competency renewal. We model the product introduction process as a decision contingent on the pre-introduction conditions regarding the characteristics of the product portfolio, family governance and firm financial status. When shareholders value control over company assets, as in family firms, the potential loss of control due to the introduction of risky products may induce a decision-maker to avoid the introduction of products riskier than the existing product portfolio. However, if a risky product can help a company to expand its domain of competence, this preference-driven selection process can adversely affect long term company renewal. We test the moderating role of family management in a three-stage framework where the determination of the risk threshold by a family firm drives the decision to introduce a new product and, in turn, affects its ability to renew competences.

Product Portfolio Management—Governance for Commercial and Technical Portfolios over Life Cycle

Companies face an important question on whether they should allow product portfolio renewal to occur without interference by merely adding new products, or should the renewal be governed based on strategic and financial targets over life cycle? New product development phase is well covered in the product portfolio management (PPM) context, but later product life cycle phases are not covered well in this context. Neither are the different product structure levels adequately taken into account, instead the current PPM only discusses the “product” in general terms. Based on analysing the portfolio related practical challenges in ten case companies, and realising the deficiencies of current PPM theory motivated this explorative multiple case study. The principal results of this study involve revealing the need for a new potential PPM governance model that enables managing commercial and technical product portfolios over life cycle phases. A governance model framework, based on horizontal and vertical portfolios managed by two centralised teams, is proposed. Based on the data, and views of industrial experts, the created new PPM governance model has potential to aid business managers in understanding PPM as an entity that has a role in managing existing product portfolios and their renewal based on commercial and technical portfolios over life cycle as collaboration between business and engineering teams in all organisational levels.

Ramp-up Management as an Approach to Mitigating Instability in the Adaptation of Solution Spaces in High-Variety Business Environments

In today's markets companies are oftentimes forced to offer a broad product variety, so that they can meet the individual requirements of their customers. Being confronted with such high-variety business environments, suppliers need to practice “solution space development,” i.e. understanding the customers’ idiosyncratic needs and deriving a suitable set of product variants from this knowledge. The diversification of customer demand must not lead to an ill-considered proliferation of variants in a firm's product offering, but any reconsideration of an existing product portfolio has to be done in a careful and purposeful manner: offering limitless choice is economically unfeasible and product variety should only be offered for those product attributes along which customer needs diverge and that can be aligned with the existing product architecture. However, due to unexpected changes in customer preferences, technical turbulences or faulty interpretations of the manufacturer during the development of the initial product offering, an adaptation of the existing solution space of product variants might become necessary at any given time. Whenever such a misfit between the existing product offering and the current customer demand occurs, firms are forced to introduce new product variants to the market. Such an addition of product variants may disrupt the available manufacturing system and cause significant instabilities in the respective value creation processes. This paper investigates whether the implementation of ramp-up management can mitigate the negative effects of this instability.

Systematic Development of a Device for Bituminous Layer Application

A method has been developed that enables a systematic approach to searching for opportunities to design new products by taking account of the relevant business environments. The process of searching for opportunities involves the already recognized social, economic, technological and legislative factors (SETL) through which outside influences are measured, and the use of the SETL factors makes it even more systematic. The industrial application of this method as described below has resulted in an innovative product that has already increased existing productivity by a factor of 3, as well as knowledge transfer. The new product has also expanded a developing product family in the company’s existing product portfolio.

Entry strategies in an emerging technology: a pilot web-based study of graphene firms

We explore pilot web-based methods to probe the strategies followed by new small and medium-sized technology-based firms as they seek to commercialize emerging technologies. Tracking and understanding the behavior of such early commercial entrants is not straightforward because smaller firms with limited resources do not always widely engage in readily visible and accessible activities such as publishing and patenting. However, many new firms, even if small, present information about themselves that is available online. Focusing on the early commercialization of novel graphene technologies, we introduce a "web scraping" approach to systematically capture information contained in the online web pages of a sample of small and medium-sized high technology graphene firms in the US, UK, and China. We analyze this information and devise measures that gauge how firm specialization in the target technology impacts overall market orientation. Three groups of graphene enterprises are identified which vary by their focus on product development, materials development, and integration into existing product portfolios. Country-level factors are important in understanding these early diverging commercial approaches in the nascent graphene market. We consider management and policy implications of our findings, and discuss the value, including strengths and weaknesses, of web scraping as an additional information source on enterprise strategies in emerging technologies.

Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters

Using Chinese manufacturing firm data over the period of 1998-2007, we find that firms become less capital-intensive after exporting, compared to similar non-exporting firms. To rationalize this finding that contrasts with existing evidence for most countries, we develop a variant of the multi-product model of Bernard, Redding, and Schott (2010) to consider products with varying capital intensity. In the model, firms in a labor-abundant country specialize in their core competency by allocating more resources to produce labor-intensive products after exporting. Consistent with the model predictions, we find evidence that the ex-ante more productive firms experience a smaller decline in capital intensity after exporting, but firms that experience a sharper decline in capital intensity after exporting have a larger increase in measured total factor productivity. Using transaction-level data, we confirm that Chinese exporters add new products that are less capital-intensive than their existing product portfolios and drop those that are more capital-intensive over time.

Re‐energizing a product portfolio: case study of a pharmaceutical merger

PurposeIn 2007 global mergers and acquisitions (M&A) activity totaled a record $4.38 trillion, up 21 percent from 2006. Despite current turbulence in the world financial markets, 44 percent of privately held businesses globally are planning to grow through acquisition in the next three years. Following a merger or an acquisition, a combined firm may need to streamline an inefficient product portfolio so as to increase revenues and profitability. The consequences of retaining inefficient portfolios can be more than internal competition and inadequate financial returns. This paper seeks to illustrate key processes, methods and the value of strategic marketing research and science in helping make critical decisions that reshape an inefficient portfolio of 12 pharmaceutical products, created as the result of a merger of two large, global pharmaceutical firms.Design/methodology/approachUsing a case study, the paper posits that taking a customer‐centric, market‐driven view of the value of products in a portfolio almost always results in significant insight that helps streamlining. Applying relevant tools and techniques from the disciplines of strategic marketing, market research and marketing science crystallizes insight into objective criteria that can then be used to make informed and valid decisions.FindingsResults illustrate the importance of customer‐centric, market‐driven constructs in influencing critical market outcomes, which, in turn, provide rational insight into structuring existing product portfolios. Product, customer and market drivers that drive product and portfolio performance are explicated and recommended for analysis and ongoing tracking. Results are presented in terms of altered customer behaviors, product and portfolio revenue and profitability.Originality/valueThe paper highlights the critical role of relying on the core elements of strategic marketing and research in solving one of the most common and important business issues of our time. Key themes are stressed through focusing on insights reiterating the role of core marketing principles such as differentiation, positioning and strategy simulations. When combined with the insights provided by comparable other business functions such as financial modeling and valuation, this can only result in smart business strategy.

International acquisition and other growth strategies: Some lessons from the food and drink industry

AbstractThis article explores profitable international growth strategies when markets are mature through a two‐stage study of companies in the food and drink industry. The first stage assessed 400 announcements about such strategies made by medium‐ and large‐sized food and drink firms in the period 1998–2001. The second stage examined in depth the international growth strategies of the world's 35 leading food and drink companies over the period 1985–2001. Both stages showed that acquisition was the most widely used method of international expansion. The second stage suggested that organic international growth (i.e., based on the company's current product portfolio) was the other main option for such expansion. Importantly, the international acquisition route was usually focused on the existing product portfolio of a company. In this sense, there was clear convergence between the purpose of an international acquisition (i.e., to support or enhance the existing product portfolio outside the home country) and the broader company purpose of delivering successful organic growth from its current range of products. The second study also suggested that international acquisitions can bring faster sales growth than organic activity but come with greater risk and other potential problems. The research identified some practical lessons derived from such strategies in the food and drink industry. © 2006 Wiley Periodicals, Inc.

A generic framework for analysing product cannibalisation

This paper contributes a generic framework for analysing product cannibalisation. Although the factors affecting product cannibalisation in mature product portfolios have been well studied, issues regarding the performance of a new product and its impact on an existing product portfolio have not been addressed in the context of cannibalisation. Since it is critical to be able to estimate the impact of a new product on other products in the product portfolio, this paper presents a descriptive model to discuss the issues associated with product cannibalisation, specifically the impact of new product introduction on an existing product portfolio. The product portfolio model and different quantitative measures that can be used to understand the impact of new product introduction are discussed, along with a case study to illustrate the cannibalisation indicators developed in this research. This model can then be used along with quantitative methods in strategic decision-making regarding the introduction of new...

Multi-Attribute Value Approach to Business Airplane Product Assessment

A new approach to airplane product specification and assessment is introduced for the early, fuzzy frontend product development process. A highly adaptable and generalizable multi-attribute method is developed for rapidly assessing the value of new product designs relative to proposed or existing product portfolios. A process for determining the empirical role product attributes have played in differentiating products in competitive markets is introduced through the use of consumer-revealed preference data. The value approach is applied specifically to the business airplane industry with a discussion of how model parameters were selected, a sensitivity analysis, and comments on the data used in the analysis. Advantages of the new approach vis ` a vis existing aircraft industry assessment methods include the simplicity of the method, its adaptability to the changing needs of designers, and its ability to more correctly portray aspects of the current and historical business aviation market.