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Broader Product Line: A Necessity to Achieve Success?

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Author Info

  • Sunder Kekre

    (Carnegie-Mellon University, Pittsburgh, Pennsylvania 15213)

  • Kannan Srinivasan

    (Carnegie-Mellon University, Pittsburgh, Pennsylvania 15213)

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    Abstract

    Strategic product line breadth decisions evoke differential responses from the manufacturing and the marketing areas: manufacturing prefers keeping process disruptions to a minimum and, as a result, discourages product proliferation; however, marketing, in its attempt to match products to heterogeneous consumer needs and gain market share, emphasizes a broader product line. We systematically investigate the market benefits and cost disadvantages of broader product lines on a large sample of over 1,400 business units. Our results indicate significant market share benefits and increases in firms' profitability with broader product lines; moreover, widely held beliefs of increases in production costs are not empirically supported. American manufacturing firms may indeed be flexible enough to accommodate product variety without significant detrimental effects on costs.

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    File URL: http://dx.doi.org/10.1287/mnsc.36.10.1216
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    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 36 (1990)
    Issue (Month): 10 (October)
    Pages: 1216-1232

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    Handle: RePEc:inm:ormnsc:v:36:y:1990:i:10:p:1216-1232

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    Related research

    Keywords: product line; market share; manufacturing costs; variety; profitability;

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