Broader Product Line: A Necessity to Achieve Success?

Sunder Kekre and Kannan Srinivasan
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Sunder Kekre: Carnegie-Mellon University, Pittsburgh, Pennsylvania 15213
Kannan Srinivasan: Carnegie-Mellon University, Pittsburgh, Pennsylvania 15213

Management Science, 1990, vol. 36, issue 10, 1216-1232

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.

Keywords: product line; market share; manufacturing costs; variety; profitability (search for similar items in EconPapers)
Date: 1990
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