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Fusion Product Planning: A Market Offering Perspective
Decision Sciences (2010)
  • Yuwen Chen, University of Rhode Island
  • Janice E Carrillo, University of Florida
  • Asoo J Vakharia, University of Florida
  • Peter Sin, University of Florida

Devices that integrate multiple functions together are popular in consumer electronic markets.We describe these multifunction devices as fusion products as they fuse together products that traditionally stand alone in the marketplace. In this article, we investigate the manufacturer’s fusion product planning decision, adopting a market offering perspective that allows us to address the design and product portfolio decisions simultaneously. The general approach adopted is to develop and analyze a profit-maximizing model for a single firm that integrates product substitution effects in identifying an optimal market offering. In the general model, we demonstrate that the product design and portfolio decisions are analytically difficult to characterize because the number of possible portfolios can be extremely large. The managerial insight from a stylized all-in-one model and numerical analysis is that the manufacturer should, in most cases, select only a subset of fusion and single-function products to satisfy the market’s multidimension needs. This may explain why the function compositions available in certain product markets are limited. In particular, one of the key factors driving the product portfolio decision is the margin associated with the fusion products. If a single all-in-one fusion product has relatively high margins, then this product likely dominates the product portfolio. Also, the congruency of the constituent single-function products is an important factor. When substitution effects are relatively high (i.e., the product set is more congruent), a portfolio containing a smaller number of products is more likely to be optimal.

  • Demand Substitution,
  • Fusion Product,
  • Multifunction Product,
  • New Product Development,
  • and Product Portfolio
Publication Date
May, 2010
Publisher Statement
This is the accepted version of the following article: Chen, Y., Carrillo, J. E., Vakharia, A. J. and Sin, P. (2010), Fusion Product Planning: A Market Offering Perspective. Decision Sciences, 41: 325–353. doi: 10.1111/j.1540-5915.2010.00271.x. Available online at
Citation Information
Yuwen Chen, Janice E Carrillo, Asoo J Vakharia and Peter Sin. "Fusion Product Planning: A Market Offering Perspective" Decision Sciences Vol. 41 Iss. 2 (2010)
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