Product Family Positioning

Abstract

Due to the development of modern technologies and global manufacturing, it becomes harder and harder for companies to distinguish themselves from their competitors. To keep the competitive advantage, the companies intend to provide a variety of products by differentiating their product lines with the belief that product variety may stimulate sales and thus conduce to revenue (Ho and Tang, 1998). A large product variety does improve sales by providing the customers more choices. However, companies with expanding products face with the challenges of controlling costs. The costs exponentially increase with the variety growth. Further, high variety will result in the proliferation of products and processes and in turn inefficiencies in manufacturing (Child, et al., 1991). Mass customization aims at satisfying individual customer needs with the efficiency of mass production (Pine, 1993a). Customization emphasizes the uniqueness of, and the differences among, products (Jiao and Tseng, 2000). To optimize the product variety, a company must assess the level of variety at which customers will still find the company’s offerings attractive and the level of complexity that will keep the costs low (Jiao, et al., 1998). Developing product families has been recognized as a natural technique to facilitate increasing complexity and cost-effective product development (Meyer, et al., 1997).