Product Line Design Strategies Based On Commonality

Accompanied with the rapid development of global economic, enterprises are facing a dynamic competition characterized by ever-changing and segmented markets, differentiated and customized demand. In the new dynamic environment, in order to gain a competitive advantage, enterprises must provide a variety of products to meet the differentiated demands of customers. However, providing multiple products will increase the manufacturing complexity and production costs. Appropriate product line design strategy must be selected so that diverse products can be provided and at the same time the production costs and manufacturing complexity are not too high. Thus, the development of product line design strategies for enterprises is particularly important under this dynamic environment of enterprises competition.The thesis first gives a review about research on product line design. The related studies in the literature on product line design have focused on the research based on modular and commonality. Little attention has been paid to the impact of development costs, customer choices and customer’s environmental preferences on product line design problems. According to the different characteristics or preferences of customers, we classify the customer population into different groups,such as high-valuation market and low-valuation market, green market and general market. Then this thesis investigates different product line design strategies, considering the impacts of customer choices or environmental policy, and calculates the optimal level of quality and the best price level of products. In the last section of this thesis, we discuss the limitation of our research and give a preview of some possible directions of future research.The structure of this thesis is as follows:In Chapter1, firstly, we introduce the background of product line design problems based on commonality. We also describe the research problem and the main contents of this thesis. Then we review the literature on product line design, where the necessity and significance of this thesis is presented. In Chapter2, we give a review about the research on product line design strategies. At first, we introduce the definition and classification of the product line in previous studies. Then we review the relevant research of product line pricing, the cost of product line design, and the competition between different product lines. Finally, we summarize the previous studies about the impacts of consumer perception and green awareness on product line design.In Chapter3, we investigate the product line design strategy based on component commonality with sensitive development cost. This chapter begins with the assumption of developing the commonality. Confronting two market segments with different valuations of quality, a theoretical model is established to determine whether to use the product line based on commonality. Next we present the optimal product design strategy under different conditions. Finally we use the market diversity index defined by Moorthy to analyze its impact on the enterprise’s product line design strategies. Numerical examples are performed to illustrate the influence of some parameters to the optimal product line design strategies.In Chapter4, we investigate the product line design strategy based on component commonality considering the customer choices. This chapter begins with the assumption of confronting two market segments with various valuations of quality, one high-valuation market and one low-valuation market, and considers the impact of customer choices on product line design strategies. Then we use the product line design model proposed by Moorthy (1984) to analyze all the above product line strategies and get the optimal product design strategy under all conditions. Finally, a numerical analysis is taken to verify the conclusions.In Chapter5, the green product line design strategy based on commonality considering the customer’s environmental preferences is studied. This chapter first describes the growing emphasis on environmental protection today. Nowadays, developing green products is inevitability and urgency to enterprise. Then we present the product line design model under the constraint of environmental policy and customer’s environmental preferences. The results show that the optimal product line design strategy may not perhaps benefit the environment. At last, we introduce some subsidy polices and discuss under which policy the enterprise would prefer to develop green products.Chapter6summarizes this thesis and provides some feasible directions for further research.The contributions and innovations of this thesis are briefly described as follows:(1) Considering the impact of commonality development cost sensitivity and the market diversity on product line design strategy. We establish a theoretical model of product line design based on component commonality, and give the optimal product design strategy under different conditions. We also use the market diversity index to analyze its impact on the enterprise’s product line design strategies. As a result, recommendations can be provided to support enterprises to make decision whether to adopt the component commonality strategy for product line design.(2) Considering the impact of customer choices and customer’s environmental preferences on product line design strategies. Two stylized model of product line design are established to determine the optimal product design strategy under different conditions. The results can provide a theoretical basis for enterprises to develop a new product line design strategy under the condition of environmental conservation, and can also give some ideas for policy makers.