Product Line Strategy Research Articles

Product line strategy and supply chain structures for mass customized production using 3D printing

We develop game-theoretical models to capture unique features: design freedom, natural flexibility, and quality distinction of 3D printing, and propose the customization degree and unique labour division for 3D-printed products. We investigate a manufacturer’s product line strategy with 3D printing. The manufacturer can offer single standardized products (strategy S), single 3D-printed products (strategy T), or both products (strategy L) to consumers through its retailer. We further explore how supply chain structures influence the manufacturer’s product line strategy. We find (i) the optimal customization degree of 3D-printed products is lower under strategy L than strategy T. (ii) When the development cost of 3D-printed products is low/relatively low/moderate/high and the utility from product fit is high/moderate/relatively low/low, the manufacturer adopts strategy L/T/L/S. (iii) The retailer expects the manufacturer to adopt strategy T or L. (iv) In the centralised supply chain, the manufacturer prefers strategy L to T when the development cost of 3D-printed products is low. Moreover, the centralised supply chain is inferior to the manufacturer when the utility from product fit is low under strategy T and when the marginal development cost is intermediate under strategy L. We provide managerial insights for designing mass-customized products and product lines using 3D printing.

Repositioning to sink: The pricing and quality decisions for product line considering the sinking market

Opening up new markets (e.g., the sinking market) is one way to boost growth momentum, especially with the decrease in the rate of technological development and the impact of the black swan event (e.g., the COVID-19 pandemic). Considering the difficulty and cost of developing new products, repositioning existing products by a price markdown is an easier way to expand the market. Companies can implement different pricing strategies for different products to target different markets and make extra profits, but products entering the sinking market may deeply erode the original market. Therefore, balancing the advantages and disadvantages of entering the sinking market is a significant challenge for firms selling products as a product line. By building a theoretical model, we investigate the optimal product line repositioning strategy when companies decide to expand the market. First, we examine the optimal conditions for companies to enter a sinking market. We then analyze the optimal product line strategy in the sinking market. Furthermore, we investigate the interaction between repositioning strategy and quality decisions. The main results indicate that with the increase of the consumers’ willingness to pay at the sinking market and the decrease of the production cost, the seller's motivation to enter the sinking market would be greater. More importantly, entering the sinking market with higher quality can also be the optimal decision. What's more, we also find that the seller implementing low-quality repositioning strategy may prefer fiercer product erosion. Interestingly, the consideration of the quality decision would motivate the seller to enter the sinking market more aggressively even when the production cost is relatively high. Yet, this motivation would be weakened when the production cost is relatively low.

Analysis of the Effect of Product Line Strategy on the Consumptive Behaviour of Polban Students in E-Commerce

This study analyzes the effect of product line strategy on consumptive behaviour. This research case study was conducted on active POLBAN students for the 2019-2022 class. The method used is a quantitative descriptive method where primary data is the source of this research. Primary data was collected from G-Forms questionnaire distribution data distributed to 110 respondents. Primary data has been obtained and analyzed using a data processing validity test, reliability test, normality test, hypothesis test, and correlation analysis. Data analysis was obtained by simple linear regression. This data processing was processed using SPSS 26 software. The results of this study indicate that the product line strategy has a 5.55% influence on consumptive behaviour in online transactions (e-commerce). The magnitude of the proportion is a positive and significant influence. The larger the strategic product line, the higher the consumptive behaviour.

Product line design and low-carbon investment strategies with consumer environmental concern

As environmental consciousness among consumers grows, firms are recognizing the importance of adopting carbon abatement technology as a crucial strategy to meet the rising demand for low-carbon products. Our study specifically examines the influence of a low-carbon investment strategy on a firm’s product line design, aiming to better align with consumer needs. Considering the impact of low-carbon investments and consumer environmental concern on the product line design has not been adequately examined in previous research. To fill this gap in research, our study proposes a model of a firm that designs the product line while determining the price and quality of each product. Our findings indicate that the single-product strategy is strictly inferior to the product line strategy when considering the low-carbon investment. This implies that the conventional wisdom that either the single-product strategy or the product line strategy could be an equilibrium strategy does not hold. Intuitively, the firm’s low-carbon investment in a specific product segment solely impacts the corresponding segment’s product quality and pricing decisions. While this intuition holds for the low-carbon investment strategy solely targeting high-end products, it does not apply when the low-carbon investment strategy applies solely to low-end products. Furthermore, our results show that the firm adopts the low-carbon investment strategy and traditional (without low-carbon investment) strategy when consumer environmental concern is relatively high and low, respectively. Finally, our results show that any of the four strategies (the traditional strategy and the low-carbon investment strategies for only low-end products, only high-end products, and both segments) could be optimal, depending on certain conditions, in the product line scenario.

Competitive pricing and product strategies in the presence of consumers’ social comparisons

When buying products that are used in public (e.g., smart phones and cars), consumers may compare their products with those of others they meet in their community. This behavior is referred to as “social comparisons”. In these comparisons, the consumers make (incur) a psychological gain (loss) when they find that their product is superior (inferior). Analytically examining this psychological gain (loss) from “the consumer's social-comparison benefit (cost)”, we show how it would affect the pricing, quality, and product-line strategies of two competing firms. We find that a greater consumer's social-comparison benefit may increase both firms’ profits by reducing their price competition, while a higher consumer's social-comparison cost may decrease both firms’ profits by intensifying their price competition. When the firms can strategically choose their product quality, a greater consumer's social-comparison benefit will lead the firms to increase their quality difference, and a higher consumer's social-comparison cost will lead the firms to reduce their quality difference. When the firms can extend their product lines to sell more than one product, their product lines tend to shrink (expand) as the consumer's social-comparison benefit (cost) increases. If the consumer's social-comparison benefit is low relative to the consumer's social-comparison cost, both firms earn higher profits when they can extend their product lines (versus when they cannot extend their product lines). This result highlights that relative to reducing the quality difference between the two firms, the product-line extension strategy can be a more effective way for the firms to manage consumers’ social comparisons. Our results show that understanding consumers’ social comparisons is important for firms to formulate an effective product offering strategy.

The optimal vehicle product line strategy considering product information disclosure under government carbon regulation

As customers focus on information disclosure of new energy vehicles and automakers attach great importance to product line strategies under carbon regulation, we study the manufacturer's optimal product line strategy considering product information disclosure under the government's carbon regulation. This study contributes to the emerging vehicle product line area by investigating how manufacturers can establish reasonable vehicle product lines and the impact of different carbon regulation policies on product line strategies. Through comprehensive analyses, we find that the carbon tax rate and carbon trading price affect the revenue of different product lines of the manufacturer and the information disclosure level of products. Importantly, we find that if the valuation (market price) of fuel vehicles is low, manufacturers should adopt a single product line strategy. Conversely, if the valuation (market price) of fuel vehicles is high, manufacturers should adopt a hybrid product line strategy. Moreover, our analyses indicate that when the market valuation of new energy vehicles is high and the valuation of fuel vehicles is low, or when the market valuation of new energy vehicles is low and the valuation of fuel vehicles is moderate, manufacturers prefer to produce new energy vehicle to fuel vehicle. In terms of regret aversion strategies for product line design, our research reveals that a low carbon tax rate (carbon trading price) is beneficial to the fuel vehicle, while a high carbon tax rate(carbon trading price) and high information disclosure cost are beneficial to the revenue of new energy vehicle. Finally, we obtain the automakers’ preferences for carbon regulatory policies through manufacturers’ willingness to disclose information, tax rate and carbon trading price.

Exploring The Impact of Perceived Greenwashing on Repurchase Intention of Green Personal Body Care Products

Nowadays, brands from various industrial sectors have started to release new product line or branding strategy that focuses on preserving nature, one of the examples being green personal body care. The vague and excessive claims made by the brands evoked negative sentiment called perceived greenwashing as the consumers have a negative perception that the brand was deceiving them. This phenomenon is called greenwashing. The research aimed to understand the relationship between perceived greenwashing among Indonesian consumers with its consequences, such as word of mouth, green personal body care, attitude, and repurchase intention. A survey was conducted among Indonesian green personal body care consumers, receiving 108 valid responses in total. The data was later analyzed using descriptive analysis and PLS-SEM. The findings suggested a negative relationship between perceived greenwashing with word of mouth and green brand image. The two constructs were also the predictor of attitude toward green personal body care products. Attitude is the predictor of repurchase intention. The green brand image was also found to mediate the relationship between perceived greenwashing and attitude, also perceived greenwashing and repurchase intention. Keywords: green personal body care, perceived greenwashing, word of mouth, green brand image, repurchase intention

Vehicle product-line strategy under dual-credit and subsidy back-slope policies for conventional/new energy vehicles

This study considers a monopoly automaker under dual-credit and subsidy back-slope policies to explore the automaker’s optimal product-line strategies and the impacts of the two policies on the economy and environment. By constructing a stylized pricing model that takes heterogeneous consumption preferences into account, we investigate how two policy programs, i.e., considering both dual-credit policy and subsidy back-slope policy (DS program) and only dual-credit policy (D program), affect the automaker’s product-line strategies, and determine the optimal vehicle pricing, energy-saving level and carbon emissions. The automaker has three product-lines strategies, i.e., conventional vehicle line (CV, C-plan), new energy vehicle line (NEV, N-plan), and CV-NEV line (M-plan). Then, sensitivity analyses are given to examine the impacts of exogenous variables (NEV credit price, subsidy back-slope) and endogenous variables (NEV technology capacity) on the automaker’s strategies. The results show that the automaker’s NEV technology capacity plays a vital role in the development of the environmentally friendly auto industry. Only when the technology capability reaches a certain threshold, the automaker is willing to take the initiative to produce NEVs. Subsidy back-slope can cause the sales countercurrent of NEVs, which can be alleviated by the NEV credit pricing mechanism.

Analysis on the influence of retailer's introduction of store brand under manufacturer's product line strategy

<p style='text-indent:20px;'>As the introduction of store brand (SB) by retailers becomes more common, national brand manufacturers (NBM) in the market often respond with a product line strategy. Then how should retailers decide their product lines under the situation that NBM adopt product line strategy? Under the manufacturer's product line strategy, this paper compares and analyzes three competitive strategies for retailers to introduce high-end SB, low-end SB and SB product line. The results show that: First, no matter what kind of competition strategy the retailer adopts, (1) the introduction of SB occupies the market share of NB; (2) the retailer gains the highest unit income from the high-end products of NB manufacturers. Second, the relationship between production cost and encroachment effects directly affects the retailer's choice of optimal competitive strategy and the manufacturer's preference for its competitive strategy choice. Finally, from the perspective of profit maximization, the optimal choice for retailers is the product line competition strategy, but this strategy is not obvious compared with the high-end competition strategy. Therefore, when retailers introduce product lines, if they are effectively threatened by national brand manufacturers (for example, NBM refuses to provide national brands to retailers), retailers may choose the suboptimal strategy, that is, to introduce store brand high-end products. When the high-end products of store brands are better than the low-end products of national brands and the production cost of products is relatively high, this strategy just meets the expectations of national brand manufacturers for retailers to introduce strategies.</p>

Manufacturers' product-line strategies under various government regulations

Severe environmental pollution and shortage of resources have led the government to issue strict regulatory policies, such as cap-and-trade, strict carbon cap, and carbon tax. Moreover, the manufacturer can design two kinds of product lines to respond to government regulations. Specifically, the manufacturer can produce normal products (NPs) with higher prices and emissions, and low-carbon remanufactured products (LCRPs) with lower prices and emissions. This paper studies how the manufacturer designs the product line under different regulatory policies. The results show that, under cap-and-trade, when carbon quotas are fewer (relatively higher), the manufacturer would produce NPs and LCRPs (only LCRPs); when carbon quotas are very large, the manufacturer's production would grind to a halt. Moreover, under the strict carbon cap, the manufacturer would produce only LCRPs in the lower carbon cap and produce both NPs and LCRPS in the relatively higher cap. Besides, under the carbon tax, the manufacturer would produce NPs and LCRPs at a lower tax rate, produce only LCRPs at a relatively high tax rate, and stagnate production at a very large tax rate. Furthermore, we analyze consumer surplus and social welfare under different government regulations.

Product line strategy and environmental impact oriented to carbon tax constraints

Under the constraints of the government's carbon tax policy, manufacturers have to consider whether to develop low-carbon product lines or adjust their existing product lines to promote carbon reduction. Therefore, we construct three models to explore the impact of consumer product acceptance on manufacturers' product line strategies under the carbon tax policy. Furthermore, we also investigate the social welfare and environmental impacts of manufacturers' different product line strategies. We find that manufacturers prefer to produce both low-carbon and ordinary products, but they may have worse negative impacts on the environment. We show that social welfare is not always better when manufacturers produce low-carbon products than ordinary products. Interestingly, we find that when carbon taxes are higher, it may be more profitable for manufacturers to produce ordinary products than low-carbon products and that manufacturers producing low-carbon products may lead to worse environmental impacts.

Linkage Between Product Line Strategy and Competitive Advantage: Does Environmental Dynamism Matter?

Changes in the operating environment normally force many firms to reconsider and adopt new strategies in search of new techniques and innovative management philosophies that can improve their competitiveness. This study is aimed at investigating the link between product line strategy and competitive advantage taking into consideration frequency and intensity of change in the operating environment, and enhancing the literature on strategic management and competitive advantage. The study involved a questionnaire-based survey of managers from a variety of manufacturing firms in Nigeria. A total of 215 responses were received and subjected to multiple regression analyses. Findings of the study revealed that product line strategy, which involves vertical and horizontal line extension line modernization and line pruning strategies constructs, has a significant effect on the firm’s competitive advantage. Further, that the relationship between product line strategy and firm competitive advantage was influenced by the environmental dynamism construct including changes in industry, competition and consumer. This study can help managers to understand the role of changes in environmental factors when formulating strategies concerning their product line. We, therefore, concluded that managers and other decision-makers can make informed decisions on the product line by paying attention to the firm’s external environment.

Manufacturers' product line strategies and environmental impacts under carbon cap and trade policies.

This paper explores the impact of carbon cap-and-trade policies and consumer low-carbon preferences on the choice of manufacturers' product lines. We further investigate the optimal decisions of manufacturers under different product line strategies. Moreover, we analyze consumer surplus, environmental impact, and social welfare under different product line strategies. The results show that producing low-carbon and ordinary products is the optimal product line strategy for manufacturers. In addition, we demonstrate that when considering carbon cap-and-trade policies and consumers' low-carbon preferences, the consumer surplus, environmental impact, and social welfare when manufacturers produce low-carbon products are always better than in other scenarios. Furthermore, our research results also show that with the increase of carbon trading prices, the consumer surplus and social welfare when manufacturers choose to produce low-carbon products are always better than in other scenarios. However, we find that the environmental impact is not always outperforming when manufacturers choose a product line that produces low-carbon products than other scenarios.

Vehicle product-line strategy under government subsidy programs for electric/hybrid vehicles

To reduce the carbon emissions produced by the traditional fuel-driven vehicles, governments have recently proposed various subsidy programs to promote the electric/hybrid vehicles (EVs), such as the consumer subsidy (CS) program and the R&D subsidy (RS) program. In the presence of subsidy programs, vehicle manufacturers would decide whether to develop or adjust their product lines, i.e., whether to produce traditional fuel vehicles (FVs) and/or electric/hybrid vehicles. We show that when the manufacturer’s technology capacity for improving the energy-saving levels of EVs is at an intermediate level, she prefers to produce both types of vehicles, and otherwise, she would choose to offer one type of vehicle only. Moreover, contrary to our intuition that the government programs can always decrease the carbon emissions, we find that both CS and RS programs might pose negative impacts on the environment. These programs can effectively reduce the carbon emissions only when the manufacturer decides to offer both EVs and FVs. Moreover, we show that the economic and environmental interests of the subsidy programs may not be always aligned. We derive the conditions under which the CS program can outperform the RS program from both the environmental and economic perspectives. In addition, we also discuss a mixed subsidy program (MS) wherein the government offers both a consumer subsidy and a R&D subsidy simultaneously. We discuss whether this mixed program can reduce carbon emissions more effectively than the CS and RS programs.

Incorporating contracts with retailer into product line extension using Stackelberg game and nested bi-level genetic algorithms

Nowadays, product manufacturers commonly establish coordination with members of their distribution channels by making contracts with them. The contract may affect product design to a certain extent. Therefore, manufacturers should consider this in the product planning stage. Some analytical studies have investigated the effect of the contract scheme on the product line strategy. However, how contracts affect the real-world product line design in terms of product attribute settings and consumer choice behaviors is still unclear. Herein, a methodology of incorporating contracts for establishing coordination with distribution channel members into the product line extension is proposed. The Stackelberg game theory is adopted to formulate joint optimization models that involve a manufacturer and a retailer. Four common types of contracts are considered in the models, including wholesale-price (WP), revenue-sharing (RS), quantity-discount (QD), and retail-price-maintenance (RPM) contracts. Then, we adopt a nested bi-level genetic algorithm to identify the joint optimization for the product line extension. A case study of smartphone design is conducted to illustrate the applicability of the proposed methodology; thus, we identify the effects of different contract schemes and their parameter settings on the optimal product design, pricing, market shares, and both-side profits. The case study showed that if a QD parameter is relatively high, the manufacturer should add a lower-quality product in the product line. Meanwhile, an intermediate value of the QD parameter would maximize the manufacturer’s profits and the total profits. An RPM contract leads to a high-quality design for the new product to be launched than other contracts. The novelty of this study is that it incorporates retail contracts into the real-world product line design and builds a joint optimization model to solve it.

Product line design with vertical and horizontal consumer heterogeneity: the effect of distribution channel structure on the optimal quality and customization levels

Purpose The purpose of this study is to analyze the problem of optimal product line design in marketing channels where consumers are heterogeneous in both horizontal and vertical dimensions. Design/methodology/approach This paper develops a model to evaluate when it is preferable for a firm to extend the product line in a vertical or horizontal direction. Consumers are modeled as being vertically heterogeneous with respect to their valuation of quality and horizontally heterogeneous with respect to their preference on the esthetic component of the product. These model characteristics allow us to consider a broader set of product line extension strategies. By considering both a vertically integrated channel and a decentralized channel, this study investigates how channel structure influences optimal product line design. The problem with supplemental numerical analyses is mathematically analyzed. Findings The analysis shows that a horizontal product line extension strategy that offers the customized product can be used as an alternative to a vertical product line extension strategy. If the fixed cost is not too high, offering the customized product with low quality may be preferred to the quality-based segmentation strategy. Furthermore, the analysis shows that the channel structure is influential as the preference for the horizontal product line extension strategy is more pronounced in the decentralized channel than in the centralized channel. Research limitations/implications The analysis presented in this paper is limited by the consideration of full market coverage. Further research is needed to see how the results can be generalized to the case with partial market coverage. Practical implications The analysis suggests that a firm may consider product customization as part of its product line strategy. Information regarding market characteristics and channel structure is important when deciding on the optimal product line design. Originality/value The model reflects a more realistic marketing strategy and channel structure than previous studies that typically consider product line extension in only one direction and focus on the centralized distribution channel. Combining the standard product line extension and customization strategies also represents an important contribution to the literature. These extensions produce interesting new results and insights into a firm’s optimal product line design strategy.

Product line design and quality differentiation for green and non-green products in a supply chain

Motivated by the real practices in the circular economy, this paper aims to identify optimal product line design for green and non-green products in terms of quality differentiation. We develop a price and quality driven consumer choice model in a two-echelon supply chain through using a game-theoretical approach. Our study shows that no matter how high or low the product quality difference is, when the consumers’ willingness to pay (WTP) for responsibility is relatively low, a single product line strategy will be prioritised over a two-product line strategy; whereas when the consumers’ WTP for responsibility is relatively high, a two-product line strategy is more desirable. Moreover, we find that enhancing product quality could increase consumer welfare and reduce environmental impact. Only when green and non-green product quality difference is large enough, designing and selling green products is beneficial to consumers, brings the slightest pressure on the environment, and generates the highest social welfare. Furthermore, we extend the model by introducing a simplified contract and find that a simplified contract is not able to increase the manufacturer's profit, but may increase the retailer's profit and consumer surplus as well as generate better performance in environmental protection and social welfare.

Linking Product Line Strategies to Competitive Advantage

Purpose-This study examines the relationships between product line strategies and competitive advantage in Nigerian foods and beverages industry.
 Design/Methodology-Data were obtained from a sample of 278 employees choosing from 8 companies in the foods and beverages industry located in north-eastern Nigeria using a self-administered questionnaire. Pearson's correlation and Multiple regression were conducted in the data analysis.
 Findings-Findings of the research revealed that all four hypotheses were supported signifying that product line strategies have significant effects on the competitive advantage of foods and beverages companies in Nigeria.
 Practical Implications-The study combined the dimensions of product line strategies to determine optimal product line in the food and beverages industry. It provides the decision makers of food and beverages firms in Nigeria with a guide for determining the blend of product line strategies to adopt in order to gain competitive advantage. It also served as a guide to potential investors in the food and beverages industry to make an informed decision that can strategically improve the efficiency and effectiveness through its advocacy on reforming product line strategies.

Scrap or Sell: The Decision on Production Yield Loss

Many production processes not only produce desired quality products (high‐end products), but also generate yield loss or Not‐Quite‐Perfect Products (NQPPs) that do not fully meet the quality standards. In practice, a manufacturer may choose to (1) scrap all NQPPs at a cost and carry the high‐end products only, or (2) sell some or all NQPPs to a value‐conscious low‐end market and carry both high‐end products and low‐end products (NQPPs). This research studies the optimal decision on production yield loss (scrap or sell) and the corresponding pricing and operational strategies under different practical situations. Building upon a standard marketing model for two separated markets, that is, the high‐end and the low‐end markets, we model the manufacturer’s profit maximization problem as a nonlinear programming problem. We characterize the optimal yield–loss decision and the corresponding optimal pricing for each market and production quantity. We also consider the situation that the NQPPs may face competition in the low‐end market with products designed and produced specifically for that market. In contrast to the common belief that selling NQPPs to a low‐end market can recover some of the cost and hence lead to a higher profit, we show that when the yield rate is small or large enough, selling NQPPs may hurt the manufacturer due to the loss of full control over both markets. This is especially true when competition exists in the low‐end market. This research provides practitioners with detailed guidelines on when and how a specific yield loss (product line or marketing) strategy should be adopted. Managerial insights are generated for the optimal yield loss strategies; numerical tests further demonstrate our results.

An Economic Analysis of Customer Co-design

A key barrier to companies successfully engaging customers in the design of new products is customers fearing that they will be forced to pay much more for the custom products they help design. This fear is justified by the fact that once the customer has invested significant time and effort in co-designing a product, the firm can extract the entire consumer surplus through higher prices. At the same time, the firm allowing its customers to co-design products would be unlikely to commit to a price up front before knowing the complete design of the custom product, since it would then face a significant risk of losing money. In this paper, we develop analytical models for this problem, and show how a firm can motivate its customers to engage in co-design. We also show how offering co-design can impact the firm’s product (line) strategies and the quality of its products, including motivating the firm to increase the quality of its standard product, sometimes even beyond the efficient quality level. The effect of market and firm characteristics on the value of engaging customers in the co-design process is also examined. In addition, we analyze the effects of (a) information asymmetry about the firm’s co-design capability, and (b) competition, on the firm’s decisions regarding co-design. These results provide valuable insights for managers considering investment in technology to support customer co-design. The online appendix is available at https://doi.org/10.1287/isre.2017.0729 .