IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v48y2002i11p1502-1511.html
   My bibliography  Save this article

Product Design with Multiple Quality-Type Attributes

Author

Listed:
  • Kilsun Kim

    (College of Business Administration, Sogang University, 1 Shinsu-dong, Mapo-Ku, Seoul, Korea, 121-742)

  • Dilip Chhajed

    (Department of Business Administration, University of Illinois at Urbana-Champaign, 1206 South Sixth Street, Champaign, Illinois 61820)

Abstract

We consider a product line design problem with multiple attributes for a monopolist serving a market with two customer segments. Products are designed with quality type attributes for which more is always better than less. By considering multiple attributes, we derive a measure of multidimensional customer preference and offer insights into the optimal product design. When customers'preferences exhibit different orders in different attributes, our results show that products are differentiated horizontally where no one product is better than the other with respect to all attributes, and that there exists a region where the first-best solution for the monopolist is feasible despite the problem of cannibalization. Furthermore, single-product offering strategies are never optimal, so pooling of customer segments or reduction of the number of segments served will not occur.

Suggested Citation

  • Kilsun Kim & Dilip Chhajed, 2002. "Product Design with Multiple Quality-Type Attributes," Management Science, INFORMS, vol. 48(11), pages 1502-1511, November.
    • Handle: RePEc:inm:ormnsc:v:48:y:2002:i:11:p:1502-1511
    DOI: 10.1287/mnsc.48.11.1502.265
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.48.11.1502.265
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.48.11.1502.265?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Allan D. Shocker & V. Srinivasan, 1974. "A Consumer-Based Methodology for the Identification of New Product Ideas," Management Science, INFORMS, vol. 20(6), pages 921-937, February.
    2. D. Sudharshan & Jerrold H. May & Allan D. Shocker, 1987. "A Simulation Comparison of Methods for New Product Location," Marketing Science, INFORMS, vol. 6(2), pages 182-201.
    3. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    4. Suresh K. Nair & Lakshman S. Thakur & Kuang-Wei Wen, 1995. "Near Optimal Solutions for Product Line Design and Selection: Beam Search Heuristics," Management Science, INFORMS, vol. 41(5), pages 767-785, May.
    5. Rajeev Kohli & R. Sukumar, 1990. "Heuristics for Product-Line Design Using Conjoint Analysis," Management Science, INFORMS, vol. 36(12), pages 1464-1478, December.
    6. K. Sridhar Moorthy, 1984. "Market Segmentation, Self-Selection, and Product Line Design," Marketing Science, INFORMS, vol. 3(4), pages 288-307.
    7. Gregory Dobson & Shlomo Kalish, 1993. "Heuristics for Pricing and Positioning a Product-Line Using Conjoint and Cost Data," Management Science, INFORMS, vol. 39(2), pages 160-175, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wilhelm, Wilbert E. & Xu, Kaihong, 2002. "Prescribing product upgrades, prices and production levels over time in a stochastic environment," European Journal of Operational Research, Elsevier, vol. 138(3), pages 601-621, May.
    2. Xue Bai & Sudip Bhattacharjee & Fidan Boylu & Ram Gopal, 2015. "Growth Projections and Assortment Planning of Commodity Products Across Multiple Stores: A Data Mining and Optimization Approach," INFORMS Journal on Computing, INFORMS, vol. 27(4), pages 619-635, November.
    3. Hongmin Li & Scott Webster & Gwangjae Yu, 2020. "Product Design Under Multinomial Logit Choices: Optimization of Quality and Prices in an Evolving Product Line," Manufacturing & Service Operations Management, INFORMS, vol. 22(5), pages 1011-1025, September.
    4. Baier, Daniel & Gaul, Wolfgang, 1998. "Optimal product positioning based on paired comparison data," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 365-392, November.
    5. Albritton, M. David & McMullen, Patrick R., 2007. "Optimal product design using a colony of virtual ants," European Journal of Operational Research, Elsevier, vol. 176(1), pages 498-520, January.
    6. G. E. Fruchter & A. Fligler & R. S. Winer, 2006. "Optimal Product Line Design: Genetic Algorithm Approach to Mitigate Cannibalization," Journal of Optimization Theory and Applications, Springer, vol. 131(2), pages 227-244, November.
    7. Kwong, C.K. & Luo, X.G. & Tang, J.F., 2011. "A methodology for optimal product positioning with engineering constraints consideration," International Journal of Production Economics, Elsevier, vol. 132(1), pages 93-100, July.
    8. Winfried Steiner & Harald Hruschka, 2002. "A Probabilistic One-Step Approach to the Optimal Product Line Design Problem Using Conjoint and Cost Data," Review of Marketing Science Working Papers 1-4-1003, Berkeley Electronic Press.
    9. Xinfang (Jocelyn) Wang & Jeffrey D. Camm & David J. Curry, 2009. "A Branch-and-Price Approach to the Share-of-Choice Product Line Design Problem," Management Science, INFORMS, vol. 55(10), pages 1718-1728, October.
    10. Palsule-Desai, Omkar D. & Tirupati, Devanath & Shah, Janat, 2015. "Product line design and positioning using add-on services," International Journal of Production Economics, Elsevier, vol. 163(C), pages 16-33.
    11. Tan Wang & Genaro Gutierrez, 2022. "Robust Product Line Design by Protecting the Downside While Minding the Upside," Production and Operations Management, Production and Operations Management Society, vol. 31(1), pages 194-217, January.
    12. Day, Jamison M. & Venkataramanan, M.A., 2006. "Profitability in product line pricing and composition with manufacturing commonalities," European Journal of Operational Research, Elsevier, vol. 175(3), pages 1782-1797, December.
    13. Winfried J. Steiner & Harald Hruschka, 2002. "Produktliniengestaltung mit Genetischen Algorithmen," Schmalenbach Journal of Business Research, Springer, vol. 54(7), pages 575-601, November.
    14. Sarangi, Subrat & Chakraborty, Abhishek & Triantis, Konstantinos P., 2021. "Multimarket competition effects on product line decisions – A multi-objective decision model in fast moving consumer goods industry," Journal of Business Research, Elsevier, vol. 133(C), pages 388-398.
    15. Umpfenbach, Edward Lawrence & Dalkiran, Evrim & Chinnam, Ratna Babu & Murat, Alper Ekrem, 2018. "Promoting sustainability of automotive products through strategic assortment planning," European Journal of Operational Research, Elsevier, vol. 269(1), pages 272-285.
    16. Alexandre Belloni & Robert Freund & Matthew Selove & Duncan Simester, 2008. "Optimizing Product Line Designs: Efficient Methods and Comparisons," Management Science, INFORMS, vol. 54(9), pages 1544-1552, September.
    17. Tallys H. Yunes & Dominic Napolitano & Alan Scheller-Wolf & Sridhar Tayur, 2007. "Building Efficient Product Portfolios at John Deere and Company," Operations Research, INFORMS, vol. 55(4), pages 615-629, August.
    18. Jianqing “Fisher” Wu & Mohit Tawarmalani & Karthik N. Kannan, 2019. "Cardinality Bundling with Spence–Mirrlees Reservation Prices," Management Science, INFORMS, vol. 65(4), pages 1891-1908, April.
    19. Leyuan Shi & Sigurdur Ólafsson & Qun Chen, 2001. "An Optimization Framework for Product Design," Management Science, INFORMS, vol. 47(12), pages 1681-1692, December.
    20. P. K. Kannan & Barbara Kline Pope & Sanjay Jain, 2009. "—Pricing Digital Content Product Lines: A Model and Application for the National Academies Press," Marketing Science, INFORMS, vol. 28(4), pages 620-636, 07-08.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:48:y:2002:i:11:p:1502-1511. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.