The Role of Product Line Length for Brands Marketing Horizontally Differentiated Products PDF Download

Author: Wei-Lin Wang
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Languages : en
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Book Description
"Product line extension is pervasive in categories of horizontally differentiated products. Despite the popularity of this marketing strategy, its effects on performance metrics relevant to brand managers remain largely under-studied. Extending a brand's product line can cause product proliferation (i.e., the marketing of seemingly identical products by a brand), which has been identified to incur several costs. This thesis explores the effects of product line length on the following metrics: product sales, product exit, new product trial, and brand preference. It also considers the structure of a product line in order to assess the impacts of product proliferation. Methodologically, the author develops a dynamic path analysis model, a threshold regression model, and a multiple discrete-continuous model. The empirical results from the U.S. potato chip market suggest that a brand's product line length has positive effects on its product sales and the likelihood of consumers' trial of its new products (i.e., products within the first year after launch). However, it also has a positive effect on the hazard of product exit for its new products and negative effects on consumers' preferences for both the brand and its competitors. The author further characterizes the structure of a product line by distinct SKUs (i.e., SKUs with unique configurations) and duplicate SKUs (i.e., SKUs similar to distinct SKUs previously introduced). The results indicate that the number of a brand's duplicate SKUs, which can measure the degree of product proliferation, has no effect on its product sales. Even though it has a positive effect on the likelihood of new product trial, it has a positive effect on the product exit hazard for the brand's mature products (i.e., products surviving more than one year) and a negative effect on consumers' preference for the brand. In contrast, although the number of a brand's distinct SKUs has a negative effect on the likelihood of new product trial, it has negative effects on the product exit hazard for the brand's mature products and consumers' preference for its competitors." --