Managing Product Variety: An Integrative Review and Research Directions

Abstract

Rapidly evolving technologies, global competition, and sophisticated customers have contributed to an increase in product variety in many industries. However, simply increasing variety does not guarantee an increase in long run profits, and can in fact worsen a firm's competitiveness. This makes variety management a crucial dimension of successful business practice. In this paper, I first provide a framework for managerial decisions about variety. Variety decisions can be viewed as variety-creation decisions that determine the amount, type, and timing of end-product variety, and variety-implementation decisions, which focus on the design and operation of internal processes and a supply chain to support a firm's variety-creation strategy. I sort the gamut of variety-related decisions into four key decision themes in variety creation: 1) dimensions of variety, 2) product architecture, 3) degree of customization, and 4) timing, and three key decision themes in variety implementation: 1) process capabilities, 2) points of variegation, and 3) day-to-day decisions. I describe each theme, and then review the relevant literature on each theme, with a focus on research that adds insight on problems faced in practice. Finally, I identify untapped avenues for future research that would be of value to the practicing manager, paying special attention to interdependencies among decision themes.

Keywords: Managing Product Variety, Variety Creation, Variety Implementation