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| Research on Bidimensional Extension Strategy of Product Line under Dual-Channel Supply Chain |
| ZHANG Juan，HAO Meng，HUANG Jian |
| 1. Hohai University, Nanjing, China; 2. Nanjing University of Finance & Economics, Nanjing, China |
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Abstract Focusing on the horizontal and vertical product line extension strategies in different dimensions, this study constructs a dynamic game model between manufacturer and retailer in the context of traditional channel and dual-channel, analyzes the conditions for manufacturer to carry out the two-dimensional product line extension, and examines the impact of manufacturer’s channel invasion on system equilibrium. The results show that manufacturer will carry out two-dimensional product line extension when the horizontal design cost of the product is small and the production cost is moderate, and the product line extension strategy is affected by both product competition and cost efficiency. The manufacturer’s channel invasion increases the possibility of two-dimensional extension of product line, but the use of dual-channel for product line extension is not always optimal, which is determined by consumers’ acceptance of direct sales channel and production cost. In addition, under the two-dimensional product line extension strategy, the manufacturer who engages in channel invasion may result in a lose-lose situation.
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Received: 22 December 2022
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