Exploring Heterogeneity of Customer Preference to Balance Commonality and Market Coverage

Offering increased variety in a market is one method of capturing greater market share. However, we generally observe diminishing marginal returns in share as the size of the product line is increased. Leveraging commonality is a means of offsetting this constraint as it leads to reductions in manufacturing costs and build complexity. Product platforms strive to capitalize on the naturally occurring phenomena that yield commonality in a product line. The structure of design variable values of individually optimized products create opportunities for commonality in a bottom-up platform, while a top-down platform discovers opportunities for commonality through similarity in customer preferences. This paper explores the effect of changing the number of products, and commonality between those products, on market share. Results from designing a varying number of products independently are leveraged to create a bottom-up product platform. A top-down product platform approach based on a heterogeneous discrete choice model and a multiobjective genetic algorithm is presented that allow commonality decisions and product configuration to occur simultaneously. Using the platforming techniques presented in this paper, it is shown that the top-down platforming approach allows for more well-informed platformed design by providing knowledge of the tradeoff between commonality and market share.