The Architecture of Product Offerings
David S. Evans
University of Chicago Law School; University College London; Global Economics Group
January 28, 2006
What choices should you offer your customers and which ones shouldn't you? The answer to this question has profound consequences for business strategy, product design, marketing, and pricing, not to mention product adoption. Designing products and architecting product lines are the most difficult, expensive, and vital decisions that your business will make. They determine a significant part of your development, manufacturing, and distribution costs and most, if not all, of your sales to consumers. Yet, aside from glib anecdotes and vague "lessons learned," existing management literature provides little guidance to managers and entrepreneurs. Product-offering architecture (POA) fills that void. This management concept is based on field research on product offerings, business models, and pricing in diverse industries and draws on theoretical work on bundling, versioning, and other aspects of product architecture. POA provides a unified framework for making informed decisions about consumer choice and optimal product design. The POA principles set forth here help enable companies to increase long-run profits, identify product innovations, and avoid disruptive competition. Product-offering architecture provides a framework and set of principles for assisting businesses in achieving that proper balance. Armed with both POA and the knowledge about your customers, your markets and the costs of your product, your business can design products and product lines that maximize its profits and provide customers with just the right amount of choice.
Number of Pages in PDF File: 30
Keywords: Product Offering, Bundling, Product Architectureworking papers series
Date posted: May 16, 2006
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