Too much of a good thing: The impact of product variety on operations and sales performance

Abstract

a b s t r a c tWe examine the impact of product variety decisions on an operational measure -unit fill rate -and on sales performance. Results are estimated using weekly data over three years from 108 distribution centers of a major soft drink bottler. Our results show that fill rates are negatively associated with product variety at a diminishing rate. In addition, we examine the total effect of product variety on sales including both the direct effect and the indirect effect through operations performance. The total impact of product variety on sales initially is positive, although at a diminishing rate. However, beyond a certain level, increased product variety actually results in lower sales; that is, "too much of a good thing". Thus, the findings provide a comprehensive understanding of the impact of product variety on operations and sales performance.

Product portfolio management – Targets and key performance indicators for product portfolio renewal over life cycle

“…The common belief is that a diverse product portfolio will have a positive effect on a company's sales volumes, and the product variety is often justified by fulfilling customers' requirements (Wan et al, 2012). Product variety has emerged as a source of competitive differentiation in response to requests for increasingly customised products and services (Hayes et al, 2005).…”

“…Product variety has emerged as a source of competitive differentiation in response to requests for increasingly customised products and services (Hayes et al, 2005). However, too wide product range can lead to mass confusion by the customers, thus weakening sales (Wan et al, 2012). In fact, internal product variety and complexity usually reduce sales per product variant (Cooper and Griffiths, 1994;Randall and Ulrich, 2001;Thonemann and Bradley, 2002;Wan et al, 2012).…”

“…However, too wide product range can lead to mass confusion by the customers, thus weakening sales (Wan et al, 2012). In fact, internal product variety and complexity usually reduce sales per product variant (Cooper and Griffiths, 1994;Randall and Ulrich, 2001;Thonemann and Bradley, 2002;Wan et al, 2012). According to Orfi et al (2011) the product variety leads to product complexity with negative impacts on productivity, costs, new product development time, and customer satisfaction.…”

Product configuration system and its impact on product's life cycle complexity

“…Regarding methods for reduction of process complexity, optimization of the different lifecycle processes is discussed, in areas such as supplier-customer relationship [39], manufacturing process [40], production process [41], [42] and distribution [43]. Reference [44] suggests mass customization as a strategy for eliminating complexity caused by increasing variation in product architecture, inventory and order taking process.…”

Automobile Variety in Emerging Countries: A Comparative Study between Brazil and USA

“…The definition of finding the appropriate level of variety in the product consists of a balance between marketing and production efficiency [11,12], and its impacts on sales are not established in the literature [12,13]. The variety level that a company should offer to its customers is still an important question [14,15].…”