An empirical investigation of product specific and product non- specific factors in making product continuance/discontinuance decisions

Abstract

The study examined the product evaluation policies used by product managers when making product continuance/discontinuance decisions. Product elimination propensity (PEP) was the primary dependent variable of interest. Twelve independent variables of interest believed to influence PEP were selected based on an extensive literature review and exploratory interviews with product managers. These included six product specific factors (i.e. sales, market share, return on investment, future demand, quality, and liability exposure) and six product non-specific factors (i.e. market growth rate, competitive intensity, account orientation, spatial preemption, resource fit and emotional involvement). Fourteen hypothesized relationships between these endogenous and exogenous variables and PEP were derived from the literature review and were studied in a cross-sectional field setting. Initially, one hundred product executives from major U.S. and Canadian firms were contacted by telephone. Ninety executives expressed both experience in making product/discontinuance decisions and willingness to participate in a written survey on the subject. A thirty-six page policy capturing styled questionnaire containing 30 unique product cases was mailed to each sample frame member. Seventy-two executives responded to the survey, accounting for an 80% response rate and a total of 2153 independent PEP observations. No non-response bias was detected. A variety of regression techniques and nonparametric tests were subsequently applied to the data. Study results indicated there are significant relationships between sales, market share, return on investment, future demand, quality, liability exposure, market growth rate, account orientation, spatial preemption, and company resource fit with product elimination propensity. Additionally, successful firms were found to utilize more decision criteria in their product continuance/discontinuance decisions than were less successful firms. In a follow-up questionnaire, original survey respondents were asked to describe the last two "real world" decisions they were involved in in which products were retained and products were deleted. These responses were similar to those previously obtained, suggesting a high level of correspondence exists between policy capturing formatted PE decisions and real world PE decisions. The study concludes with a discussion of the findings and their implications for practitioners and researchers.