|
DISSERTATION ABSTRACT GRADUATE
INSTITUTE OF BUSINESS ADMINISTRATION NATIONAL
TAIWAN UNIVERSITY NAME：HSUAN-HSUAN KU MONTH／YEAR：
APRIL, 1997 ADVISER：CHUNG-CHAU CHANG EXPLORING THE IMPACT
OF THE PRODUCT LINE EXTENSIONS ON THE SALES OF THE PARENT
AND COMPETITORS'''' PRODUCTS ─A CONSUMER CHOICE
APPROACH Based on the consumer choice approach, especially
the choice model propositions and the context effects, this
study explores the impact of the product line extensions on
the sales of the parent and competitors'''' products to assess
cannibalization and competition among firms. And for
considering the different order of downward/upward stretch
and the market conditions, we take the extension order, the
number of competitors, and the characteristics of the product
as the mediate variables. The two propositions of choice
model, proportionality and substitutability, are to assess the
impact of the new entrant on the incumbent sales. The
proportionality pro- position assumes that the new item
takes share from existing items in proportion to their original
shares, it has the problem of independent of irrelevant
alternatives . The substitutability proposition assumes the
new item takes share disproportionately from more similar
items. The attraction proposition holds that a new item
may increase the desirability of similar items. The
context effects, for present purposes, refer to the choice
outcome as a function of the particular alter- natives that are
included in the choice set. These alter- natives compete in a
two-dimensional market with product attributes or quality/
price. The results indicate that (1) the positioning of
the line extension product differentially affects the parent
and competitors'''' sales. The degree of cannibalization and
competition is determined not only by similarity, but
context effects; (2) the proportionality proposition is the
best approach to account for the impact of the new entrant on
the incumbent sales; (3) the extension order can not mediate
the impact of line extension on the par- ent and competitors''''
sales significantly. (4) When there are only two brands in
the market(or consideration set), the context effects are
prevalent,and the compromise item takes the most share in two-
dimensional market with pro- duct attriates. In the tradeoff of
quality and price, the best quality item takes the most share.
As the number of competitors increasing or in the low
involvement product categories, the context effects are no
longer existant.
|