Design Management Academy 2017 Hong Kong

Track 5.b Markets and Design: Vertical and Horizontal Product Differentiation

Gorm Gabrielsen, Copenhagen Business School, Denmark
Sylvia Liu, Hong Kong Polytechnic University, Hong Kong
*Tore Kristensen, Copenhagen Business School, Denmark
* contact: tk.marktg@cbs.dk

Vertical and horizontal product differentiation refers to specialization and development of a single product line in contrast to the generalized demand and application across industries and markets. The distinction has a long history in both economics and marketing.

The concepts were put into a design context by John Heskett in the Interim Report 2003. He distinguished between the vertical dimensions “inch up” for luxury goods or highly technological products or services and “scale down” for product increasingly facing a scale of economics due to simplifications of operations and material. The horizontal axis was made up of a “covering strategy” for traditional Long Product Life Cycle (PLC) products and “product churning” for high speed PLC products such as toys and fashion design. Each of these situations means different design strategies and understanding of markets. This session aims at developing and testing a common procedure for all situations, enabling the best match between market challenges and design. Special attention will be given to market heterogeneity and diversity of customers.

Individual contributions may focus on strategic visions of companies aiming at designing products in a chosen industry as well as depending on groupings of individual customers, shopping environments, market heterogeneity, mobility barriers and brand loyalties. Also studies focusing on value creation in both economic and other terms integrated with design artefact elements will be desired.

Indicative References

Davies, A. & Cline, T. (2005). A consumer behavior approach to modeling monopolistic competition. Journal of Economic Psychology, 26, 797–82 www.elsevier.com/locate/joep

Evans, C. (2001). The enchanted spectacle. Fashion Theory, 5(3), 271–310 doi: 10.2752/136270401778960865

Interim Report of the Hong Kong Polytechnic University Design Task Force on the Future of Design Education in Hong Kong. (2003)  https://www.scribd.com/document/86447/UST-CUHK-merger-Task-force-report

Kristensen, T., Teixeira, C., Poggenpohl, S. (2016). A john heskett reader design, history, economics edited and with an introduction by clive dilnot with contributions. pp.215–223. London: Bloomsbury.

Paul Krugman Scale Economies, Product Differentiation, (Dec., 1980) and the Pattern of Trade the American Economic Review, 70,5, pp. 950–959 Stable URL: http://www.jstor.org/stable/1805774

Saviolo, S. & Marazza, A. (2012). Lifestyle Brands. Retrieved from http://www.palgraveconnect.com/pc/doifinder/10.1057/9781137285935.0001