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Product Variety
July 2010
Written by:
Wajahat Hussain
Instructed By:
In the world of dynamism and competition, companies are striving hard to find
ways of profitability. Companies are finding ways to attract, retain and satisfy
more and more customers. Trying to get loyalty of the customer by satisfying
his/her needs best. Product variety is seen in this regard as one of those tools used
to satisfy customers and meet organizational goals. Yet its been proven that
product variety dose not guarantee profitability in long run and sometimes even
choices. Researches say that it is human urge to have new and many options while
making choice over a time period. But careful management of product variety is
very much crucial to business success. Right blend of varieties at right time can
surely satisfy the customer but wrong management can confuse and frustrate the
consumer choice. It is not just an easy task. Cost and other limitations- technology
This paper explains how product variety satisfies customer. What are the
product variety.
Hope this paper will help in further studies. Wish all the readers a good luck
Team Members
Acknowledgement
“All gratitude and thanks to almighty “ALLAH” the gracious, the most merciful
and beneficent “
ALLAH gave us courage to undertake and complete this task. We are very much
obliged to our ever caring and loving parents whose prayers have enabled to
reach this stage.
We are grateful to almighty ALLAH who made us able to complete the work
presented in this report. It is due to HIS unending mercy that this work moved
towards success.
We are highly indebted to Mr. Suhail Nazar, Assitant Professor, DMS, for
providing us an opportunity to write this research paper, which is vital ingredient
to advance studies.
Regards
Team Members
Abstract
find ways of profitability. Product variety is one of those tools used to attract,
retain and satisfy customer. This paper tries to understand the influence of product
variety on customer satisfaction. How it affects customer satisfaction what are the
First we will explain the product variety, how its management can be done,
how it affects the customer satisfaction, what are the costs associated with it?
In our research we came to the point that product variety really has affects
satisfaction.
Introduction
find ways of profitability. Product variety is one of those tools used to attract,
retain and satisfy customer. This paper tries to understand the influence of product
customer satisfaction. But it does not guarantee profitability in long run in fact can
integrated in one product line (e.g., Dixit and Stiglitz 1977). In current years,
Careful and optimal level of product variety can lead to customer satisfaction and
generate profitability.
strategy.
Measuring customer satisfaction is very necessary. It gives insight that
wider variety means better choice thus is habitually desirable. Product variety that
matches customer demand let firms charge higher selling price and/or increase
sales volume. Increasing product variety has somewhat positive impact over the
product line's revenue. However, the exact effect is usually difficult to state,
to satisfy the need best is in genes of the consumer (Hansen 1972, Raju 1980,
If customer is getting what it want than surely it get satisfied. In this paper
first we will explain the product variety, how its management can be done, how it
affects the customer satisfaction, what are the costs associated with it?
satisfaction.
Product Variety
integrated in one product line (e.g., Dixit and Stiglitz 1977). Product variety
decisions have both operations and marketing implications (Null Lifang Wu,
2007).
Product variety tries to meet the demand and needs of the customers. But it does
not guarantee profit. Cost for providing product variety and management is high
(Kevin Lancaster).
How firm choose to create variety in their products and how functions and supply
chain are managed to foster variety are key factors for successful strategy, thus
1998).
levels, over different time spans, within and crossways functional and
organizational boundaries, before and after product launch (Ramdas and Kamalini
2003)
For the best fit of product variety management and firm’s objectives, firm should
strive to balance the revenue and cost impact of variety decisions (Lancaster 1990)
• Distribution
• Lead-time
• Responsiveness
Cost of product variety is high due to economies of scales and distribution cost.
It also incurs many indirect costs that are not easily traceable. For example, higher
the product variety more the complexity would be of manufacturing and in supply
chain coordination. When different SKUs and the included components are added,
turn neutralize the cost pressure of high variety strategy (Ho and Tang 1998).
On the distribution side, wide product line scatters the overall demand and in
doing so makes worse the disreputable mismatch between supply and demand in
From the above discussion, it is clear that revenue and cost implications of
preferences and choices in order to meet their demand. But it’s not an easy task.
It’s really very difficult to gather information about consumer preferences. Even
increase in variety
(Kevin Lancaster)
Variety and Customer Satisfaction
needs.
(Barbra Kahn)
The simple answer to this is that they need better options in order to satisfy their
need. And mostly they search variety in low-risk products (FMCGs) daily-
consumed products (Van Trijp, 1995). So more the product variety in this section
more the satisfaction will be and vice versa. Where as when consumer is making
single choice and is not much aware of the options offered here offering to much
variety could confuse the consumer and frustrate the choices (Barbra Kahn). More
in this regard is that consumer wants something new when gets bored with its
current choice. When a consumer reaches the optimal level of consumptions the
satiation sets in and desire for something new sets in for the next choice (Jeuland
it’s in genes of the consumer to explore something neew even there is no satiation
(Hansen 1972, Raju 1980, Baumgartner and steenKamp 1996). Consumers are not
Consumers in order to satisfy needs require variety. One other believe in requiring
variety according to researches is that consumer feel that they cant get all in one
product. To get best they require multiple products or simply variety (Barbra
Kahn). Not all attributes of the products are of same level (Hurber and Reibster
1978). Thus to get maximum for their needs consumer require or search for the
mix of products each having own distinct advantage (Farquhar and Rao1976).
uncertainty in future preferences (Kahnman and snell 1990, Simson 1990, Walsh
1993) for example choosing the restaurant before the selection of meal, making
sense to choose a place that would provide sufficient variety (Kahn and Lehman
1991).
Conclusion
In the world of dynamism and competition, companies are striving hard to find
ways of profitability. Companies are finding ways to attract, retain and satisfy
more and more customers. Trying to get loyalty of the customer by satisfying
his/her needs best. Product variety is seen in this regard as one of those tools used
to satisfy customers and meet organizational goals. Yet its been proven that
product variety dose not guarantee profitability in long run and sometimes even
choices. Researches say that it is human urge to have new and many options while
making choice over a time period. But careful management of product variety is
very much crucial to business success. Right blend of varieties at right time can
surely satisfy the customer but wrong management can confuse and frustrate the
consumer choice. It is not just an easy task. Cost and other limitations- technology
concerns (fortune magazine, 1991)”. Consumer seeks variety because they require
better options in order to satisfy their need. And mostly they search variety in low-
risk products (FMCGs) daily-consumed products (Van Trijp, 1995). So more the
product variety in this section more the satisfaction will be and vice versa. Where
as when consumer is making single choice and is not much aware of the options
offered here offering to much variety could confuse the consumer and frustrate the
Thus with careful management and providing optimal level of product variety
• MacDuffie, J.P., Sethuraman, K., and Fisher, M.L. (1996), ‘Product Variety
and Manufacturing
An Integrative Model.
Uncertainty.
research advances