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Product line extensions: causes and effects

✍ Scribed by Kostas Axarloglou

Publisher
John Wiley and Sons
Year
2008
Tongue
English
Weight
177 KB
Volume
29
Category
Article
ISSN
0143-6570

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✦ Synopsis

Abstract

In this paper, and using data from a sample of five US manufacturing industries, we study the implications of market demand growth on product line extensions and the effects of the latter on industry profit margins. Companies extend their product lines in response to expansions in market demand and this tends to depress profit margins in the industry. Finally, these results are quantitatively significant. Copyright Β© 2007 John Wiley & Sons, Ltd.

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## ABSTRACT This research focuses on a previously unexamined risk associated with the widely used new product development strategy of line extensions. Specifically, it explores consumer reactions when line extensions become too visually similar and examines both short‐term and longer term strategie