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Korean Academic Society of Business Administration
[ Article ]
korean management review - Vol. 45, No. 6, pp.1985-2013
ISSN: 1226-1874 (Print)
Print publication date 31 Dec 2016
Received 27 Jul 2016 Accepted 07 Sep 2016
DOI: https://doi.org/10.17287/kmr.2016.45.6.1985

Product Differentiation Research: A Critical Review

Eui Kyo Jeong*
*(First Author) Department of Business Administration, Myongji University ejeong@mju.ac.kr
제품차별화 연구: 비판적 고찰
정의교*
*명지대학교 경영학과 경영전략 전공 부교수, 주저자

Abstract

Product differentiation has been an important field in industrial organization economics and has inspired theoretical and empirical research on competition in strategic management and marketing, among other disciplines. To better understand this important field, we review the literature in a critical manner. Here we have two purposes. First, we update some recent developments in the last decade or two. One interesting aspect of recent developments is an active incorporation of consumer heterogeneity, elastic demand in the model, two-side markets with network externalities, among others. Second, we assess the sensitivity of equilibrium outcomes on their assumptions.

A critical review of the literature allows us to argue that the assumptions of quadratic transportation costs, elastic demand, and concave consumer distribution are influential in determining the level of differentiation. These assumptions, individually or together, increase product differentiation, possibly to the maximum level, by making consumers quite sensitive to (even small) price changes. And we also argue that when we assume multiple products and asymmetric cost positions, we have results similar to those suggested by resource endowments argument in strategic management.

Based on the review, we offer several suggestions for future research. First, given the influential effect of the assumption of quadratic transportation costs, we suggest that researchers should make it clear why they choose to assume quadratic transportation costs over linear transportation costs. We believe this issue could be solved rather easily if researchers are more explicit about the applications of derived results rather than the derivation itself. Second, the impact of elastic demand on the degree of differentiation suggests that researchers should be particularly cautious in empirical research. Any condition that triggers price rigidity should be explicitly represented in the equation. Otherwise the degree of differentiation would not be properly estimated due to the endogeneity caused by the absence of this condition on the right side of the equation. Third, regarding unknown distribution of consumer density, researchers should be advised to include income distribution in their empirical model. Unlike unknown distribution of consumer heterogeneity, income distribution could be available if the target of the application of derived results is known. Lastly, it may prove to be quite fruitful if researchers build upon some of recent developments. Researchers may want to extend vertical differentiation in two-side markets with network externalities that may have interesting implications on on-demand economy or researchers may want to take up the notion of variable elasticity of substitution that could open up new possibilities of expanding research streams on supply-side (e.g., production costs) of product differentiation.

초록

제품차별화(product differentiation)는 산업조직경제학의 중요한 연구 분야로, 경영전략 및 마케팅 분야에서 경쟁에 대한 이론적 혹은 경험적 연구를 수행할 때 많은 시사점을 제시해 왔다. 따라서 제품차별화에 대한 심도있는 이해는 해당 연구분야 그 자체에 대한 이해 뿐만 아니라, 경영전략 및 마케팅 분야에 대한 이해에도 큰 도움이 된다고 할 수 있다. 이에 본 연구에서는 제품차별화의 기존 연구를 비판적으로 고찰하여 해당 분야에 대한 이해를 높이고자 한다. 먼저, 근래에 이룩된 연구 성과를 소개하고 이전 연구와 어떤 관련이 있는지 고찰한다. 소비자 상이성과 수요탄력성의 가정을 바탕으로 한 연구 성과가 그 예가 될 수 있을 것이다. 둘째, 제품차별화에 대한 주요 연구 결과를 가정별로 정리해 봄으로써 연구 결과가 특정 가정에 민감한가를 검토한다.

비판적 고찰의 결과 이차항의 이동비용, 탄력적 수요, 그리고 오목모양의 소비자 분포도 가정이 차별화의 정도에 가장 큰 영향을 미치는 것으로 나타났다. 이 가정들은 소비자들을 가격에 아주 민감하게 만듦으로써 가격경쟁을 최소화하여 이윤을 극대화하기 위한 전략적 효과를 극대화하여, 차별화의 정도를 증가시키는데 최대수준의 차별화(maximum differentiation)까지 이르게 한다. 반면에 이러한 가정들이 없을 경우, 시장점유율을 높혀 이윤을 극대화하기 위해 차별화의 정도는 감소하게 되며 최소수준의 차별화(minimum differentiation)까지 이르게 된다. 이를 바탕으로 이 가정들이 향후 이론 및 경험 연구에 제시하고 있는 시사점을 제시한다. 이와 더불어 시장에 다수의 제품을 출시할 수 있고 기업간 생산비용의 차별화가 존재한다고 가정할 때, 제품차별화의 모델에서 비롯된 결과들은 경영전략의 경험적 연구결과와 아주 흡사하다는 점을 밝히고 있다.

Keywords:

product differentiation, strategic effects, price competition

키워드:

제품차별화, 전략적 효과, 가격경쟁

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∙저자 정의교는 현재 명지대학교 경영학과 경영전략 전공 부교수로 재직 중이다. 서울대학교 경영대학 및 대학원 경영학과를 졸업하였으며, 미국 텍사스A&M 대학에서 경영학박사를 취득하였다. 이후 미국 볼링그린주립대학교 경영학과 조교수 및 성균관대학교 경영학부 조교수를 역임했다. 주요 연구분야는 사업부 수준에서의 경쟁, 협력과 경쟁의 역학 관계 등이다.