A Model of Product Portfolio Design: Guiding Consumer Search through Brand Positioning

Ke, T. T., Shin, J., & Yu, J. (2022). A theory of brand positioning: product-portfolio view. Forthcoming at Marketing Science.

48 Pages Posted: 21 Sep 2020 Last revised: 28 Nov 2022

See all articles by T. Tony Ke

T. Tony Ke

The Chinese University of Hong Kong (CUHK)

Jiwoong Shin

Yale School of Management

Jungju Yu

College of Business, Korea Advanced Institute of Science and Technology (KAIST)

Date Written: November 26, 2022

Abstract

Beyond real functional differences, brand positioning can have profound effects on the purchase decisions of consumers. Using a product-portfolio and consumer search framework, we provide a micro-foundation for why and how brand positioning can deliver credible information to consumers. Consumers form their perceptions of a brand from various interactions with all products under the same brand. We conceptualize brand positioning as the average location of a brand's products on a Hotelling-line. When consumers conduct their search for product matches, they are guided by how brands are positioned in the market. We show that niche brands naturally convey more information than mainstream brands. A firm with a mainstream brand has incentives to opportunistically dilute its brand by offering a wide range of products. A niche brand may arise as an equilibrium even in a monopolistic market because it serves as a commitment device for no dilution.

Keywords: brand positioning, product portfolio, mainstream and niche positioning, consumer search, hold-up problem

JEL Classification: C70, D21, D82, D83, L10, M31

Suggested Citation

Ke, Tony and Shin, Jiwoong and Yu, Jungju, A Model of Product Portfolio Design: Guiding Consumer Search through Brand Positioning (November 26, 2022). Ke, T. T., Shin, J., & Yu, J. (2022). A theory of brand positioning: product-portfolio view. Forthcoming at Marketing Science., Available at SSRN: https://ssrn.com/abstract=3688098 or http://dx.doi.org/10.2139/ssrn.3688098

Tony Ke

The Chinese University of Hong Kong (CUHK) ( email )

Shatin, N.T.
Hong Kong
Hong Kong

Jiwoong Shin

Yale School of Management ( email )

165 Whitney Avenue
PO Box 208200
New Haven, CT 06520
United States
2034326665 (Phone)
06520 (Fax)

HOME PAGE: http://faculty.som.yale.edu/JiwoongShin/

Jungju Yu (Contact Author)

College of Business, Korea Advanced Institute of Science and Technology (KAIST) ( email )

85 Hoegiro Dongdaemun-Gu
Seoul 02455
Korea, Republic of (South Korea)

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