Date of this Version
The Journal of Industrial Economics
We analyze a multiproduct duopoly and ask whether firms should offer general purpose products or tailor their offerings to fit specific consumer needs. Offering a targeted product has two effects: utility increases for some consumers due to increased fit, whereas utility decreases for others due to increased misfit. Previous work has not considered these two effects jointly and has therefore not been able to capture the tradeoff inherent in market segmentation. We show that in addition to the degree of fit and misfit, the intensity of competition and the fixed cost of offering an additional product determine firms' market segmentation strategies.
This is the peer reviewed version of the following article: Ulrich Doraszelski, Michaela Draganska (2006), Market Segmentation Strategies of Multiproduct Firms, Journal of Industrial Economics, 54 (1), 125 - 149, which has been published in final form at http://dx.doi.org/10.1111/j.1467-6427.2006.00278.x . This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving http://olabout.wiley.com/WileyCDA/Section/id-820227.html#terms
Doraszelski, U., & Draganska, M. (2006). Market Segmentation Strategies of Multiproduct Firms. The Journal of Industrial Economics, 54 (1), 125-149. http://dx.doi.org/10.1111/j.1467-6427.2006.00278.x
Date Posted: 27 November 2017
This document has been peer reviewed.