Full Length Article: Ahmet H. Kirca Praneet Randhawa M. Berk Talay M. Billur Akdeniz

IJRM-01323; No of Pages 19
International Journal of Research in Marketing xxx (xxxx) xxx
Contents lists available at ScienceDirect
IJRM
International Journal of Research in Marketing
journal homepage: www.elsevier.com/locate/ijresmar
Full Length Article
The interactive effects of product and brand portfolio strategies

on brand performance: Longitudinal evidence from the U.S.
automotive industry☆
Ahmet H. Kirca a,⁎, Praneet Randhawa b, M. Berk Talay c, M. Billur Akdeniz d
a
Department of Marketing, The Eli Broad School of Business, Michigan State University, East Lansing, MI 48824, United States of America
b
Department of Marketing and Entrepreneurship, University of Baltimore, Baltimore, MD 21201, United States of America
c
Department of Marketing, Entrepreneurship, and Innovation, Manning School of Business, University of Massachusetts Lowell, Lowell, MA 01854, United States of America
d
Department of Marketing, Peter T. Paul College of Business and Economics, University of New Hampshire, Durham, NH 03824, United States of America
a r t i c l e i n f o a b s t r a c t
Article history: Product and brand portfolio extensions are effective marketing strategies to meet customer
First received on January 16, 2018 and was needs and to create a competitive advantage in the marketplace. Nevertheless, product and
under review for 7½ months brand portfolios can get out of control easily leading to a loss of market focus and market
Available online xxxx
share. This study examines how product portfolio and branding decisions affect brand perfor-
mance (unit sales and market share). Prior research in marketing has investigated the effects
Area Editor: Koen H. Pauwels
of product portfolio and branding strategies on firm performance in isolation. However, these
decisions are rarely isolated events. Usually, for multi-product and multi-brand companies,
Keywords:
product portfolio decisions are determined in conjunction with branding decisions. Using a dy-
Product portfolio strategy
namic panel generalized method of moments estimation on a comprehensive dataset from the
Brand portfolio strategy
Brand performance U.S. automotive industry between 2007 and 2013, this study examines the extent to which
Dynamic panel data model product and brand portfolio characteristics interact to affect brand performance. Findings re-
U.S. automotive industry veal that while brand portfolio scope augments the positive effects of portfolio depth and inno-
vativeness on brand performance, it attenuates the positive effects of product portfolio breadth
on brand performance. Also, brand positioning in auto industry enhances brand performance
only when considered jointly with product portfolio breadth, depth, and innovativeness. Fi-
nally, the present study discovers critical managerial trade-offs between product and brand
portfolio decisions, as product and brand portfolio decisions are intertwined and a careful ex-
amination of the existing product and brand portfolio characteristics seem to be warranted
to maximize brand performance.
© 2019 Elsevier B.V. All rights reserved.
1. Introduction
Product portfolio management is an effective marketing strategy for addressing consumers' heterogeneous needs, managing or-
ganizational budget constraints, and sustaining a competitive edge in the marketplace. Previous empirical research shows that in-
novative product portfolio management activities, such as new product introductions, R&D investments, and new market entry,
☆ The authors have contributed equally to this research.

⁎ Corresponding author.
E-mail addresses: kirca@broad.msu.edu, (A.H. Kirca), prandhawa@ubalt.edu, (P. Randhawa), berk_talay@uml.edu, (M.B. Talay), billur.akdeniz@unh.edu.
(M.B. Akdeniz).
https://doi.org/10.1016/j.ijresmar.2019.09.003
0167-8116/© 2019 Elsevier B.V. All rights reserved.
Please cite this article as: A.H. Kirca, P. Randhawa, M.B. Talay, et al., The interactive effects of product and brand portfolio strategies
on brand performance: Longitudinal evidence from the U.S. automotive industry, International Journal of Research in Marketing,
2 A.H. Kirca et al. / International Journal of Research in Marketing xxx (xxxx) xxx
usually affect firm performance positively (e.g., Kang & Montoya, 2014; Pauwels, Silva-Risso, Srinivasan, & Hanssens, 2004; Rubera,
Chandrasekaran, & Ordanini, 2016; Rubera and Kirca, 2012). As such, product portfolio management is a top priority for firms to
achieve superior performance in competitive industries (Cooper, Edgett, & Kleinschmidt, 2004; Sorescu & Spanjol, 2008;
Srinivasan, Pauwels, Silva-Risso, & Hanssens, 2009). As a growth strategy, product portfolio decisions have negative ramifications
because of high new development costs, risk of cannibalization of existing products, and difficulty of effectively identifying new
consumer trends (Hui, 2004). Portfolio expansions can also lead to a considerably broad and diverse product line, which can easily
get out of control leading to a crippling loss of focus and market share (More, 2009). For instance, in the U.S. automotive industry,
portfolio extensions are risky arguably because of the high costs associated with product development (NPD), as well as the ever-
changing technology and customer preferences. As a result, companies like General Motors (GM) are hard pressed to launch new
models in efforts to meet customer expectations and to streamline their existing offerings toward a more focused portfolio.
The effects of product portfolio management decisions on firm performance cannot be effectively scrutinized without con-
sidering their implications for brands and branding strategy. Product portfolio and branding decisions are closely intertwined
because a product line typically exists under a brand structure (e.g., Brexendorf, Bayus, & Keller, 2015; Varadarajan, DeFanti,
& Busch, 2006). For new products, brands1 provide important information cues that help mitigate risk and reduce uncertainty
surrounding product quality, reliability, and performance (Erdem & Swait, 1998; Sinapuelas, Wang, & Bohlmann, 2015). In
line with this argument, previous research demonstrates that new products launched under powerful parent brands are more
likely to perform better (e.g., Sinapuelas et al., 2015) and successful extensions to an existing product line can strengthen the
parent brand reputation in the eyes of the consumers (e.g., Bayus & Putsis, 1999). Therefore, product portfolio decisions are de-
termined in conjunction with branding decisions as various components of a firm's product and brand strategy interact with
each other. Yet, our knowledge in this domain is limited since much of the prior research in marketing has investigated the in-
dependent effects of product and brand portfolio strategies on firm performance in isolation (cf. Grewal, Chakravarty, Ding, &
Liechty, 2008; Morgan & Rego, 2009).
From a managerial perspective, product and brand portfolio decisions are particularly critical for multi-brand and multi-
product firms operating in innovative and competitive industries. The U.S. automotive industry is an excellent example with
18 auto manufacturers (e.g., Ford Motor, Tesla, and Toyota Motor Corporation), 39 parent brands (e.g., Lincoln, Chevrolet, and
Lexus), and over 400 car models as of 2017 (Autodata Corporation, 2018). In this industry, “focus” is the latest boardroom buzz-
word for these companies (More, 2009). Specifically, the complexity of product portfolio and strategic branding decisions forces
managers in companies like GM to think more creatively about managing and streamlining their product and brand portfolios to
maximize market performance. However, prior literature in marketing fails to provide guidance in terms of how these product
and brand portfolio characteristics are interrelated and how they are associated with firm performance.
To address this gap, we focus on three product portfolio characteristics (breadth, depth, and innovativeness), and two brand
portfolio characteristics (portfolio scope and positioning), based on prior literature in the context of the U.S. automotive indus-
try. We then examine the interactive effects of these portfolio characteristics on market performance (i.e., unit sales and market
share). Using a panel dataset of passenger cars and light trucks in the U.S. automotive industry from 2007 to 2013, we empiri-
cally explore the associations among various combinations of these characteristics and the market performance of parent
brands.
This study makes two distinct contributions to the marketing literature. First, we provide new insights by examining how
product and brand portfolio characteristics interact to affect brand performance. Specifically, our results reveal that product
portfolio and branding decisions are interdependent and they collectively affect market performance of parent brands. As
such, our study makes a unique contribution to the literature because it extends prior studies that examine the effects of the
product and brand portfolio characteristics on various performance metrics in isolation (e.g., Barroso & Giarratana, 2013;
Grewal et al., 2008; Morgan & Rego, 2009; Rao, Agarwal, & Dahlhoff, 2004) (see Table 1 for a summary).
Second, our study discovers three critical managerial trade-offs with regard to product and brand portfolio decisions First, we
find that simultaneously expanding both the product portfolio breadth (number of products) and brand portfolio scope (num-
ber of brands) hamper market performance (unit sales and market share). Second, increasing the brand portfolio scope is not
compatible with expanding the product portfolio breadth. Instead, managers who intend to expand the scope of their brand
portfolios can enhance market performance by increasing product portfolio depth. Finally, there are critical trade-offs involving
different branding strategies. For instance, if managers enter new segments and simultaneously increase product portfolio
breadth, they should invest more into increasing the perceived quality of their brand portfolios rather than increasing their
brand portfolio scope. Our marginal effects analyses, which shed further light on the nature of interactions between product
and brand portfolio characteristics, indicate that the interactions of product portfolio characteristics are significant only for par-
ent brands that own more than six brands. With regard to brand positioning, our analyses indicate that when the perceived
quality of a parent brand is relatively high (i.e., N68 on a 1–100 point scale), product portfolio decisions become even more crit-
ical. As such, our study is the first to bring to light the fact that product and brand portfolio decisions are intertwined as we pro-
vide specific guidelines regarding the product and brand portfolio characteristics that maximizes brand performance.
1
Note that the terms brand and parent brand are used interchangeably in this study because manufacturers in the automotive industry represent the corporate
brands that own multiple parent brands. In this context, parent brand refers to a car make and our study examines performance at the parent brand level (i.e., car make).
To illustrate, Toyota Motor Corporation (i.e., manufacturer) owns Toyota, Lexus, Scion and Ford Motor Company owns Ford and Lincoln as parent brands. Further down
the brand hierarchy, Toyota parent brand owns car models such as Rav4, Venza, and Camry; and car models have various product trims (e.g., Rav4 has trims such as LE,
XLE, and Limited).
A.H. Kirca et al. / International Journal of Research in Marketing xxx (xxxx) xxx 3
Table 1
Representative research on product/brand portfolio strategies and firm performance.
Study Key Findings Focal construct(s) Performance metric(s) Interaction Effect
Product portfolio Brand Market-based Financial Main

portfolio measure value-based effect
measure
Kekre and Broader product lines lead to higher Product line – ⋅ Profits ✓ –
Srinivas- market share and increased firm breadth ⋅ Market
an profitability but do not lead to higher share
(1990) production costs.
Randall Firms with low-quality products tend ⋅ Product – Brand equity – ✓ –
et al. to have lower brand equity versus quality
(1998) firms that have higher quality products ⋅ Product line
in their product lines. breadth
⋅ Price
premium
Hui (2004) Consumers view products under the Product variety Brand value – – ✓ –
same brand as close substitutes and
the proximity of products correlates
positively with brand value. Thus,
product variety for branded
multi-product firms leads to a
decreasing demand.
Rao et al. Corporate branding strategy is Branding strategy Tobin's q ✓ –
(2004) associated with the highest values of (corporate branding,
Tobin's q followed by mixed branding house of brands, mixed
strategy. branding)
Aribarg Across-tier Interbrand variant overlap – Brand portfolio variety Profits – ✓ –
and diminishes preference for an upper-tier
Arora brand and enhances preference for a
(2008) lower-tier brand. A multi-brand firm
enhances its brand portfolio profits by
pruning its variants to reduce overlap.
Grewal Shareholder expectations of firms with ⋅ Product – – Tobin's q ✓ ✓
et al. broad new drug portfolios and portfolio (drug
(2008) potential blockbusters are higher. Most breadth development
shareholders focus on the final stage of ⋅ Product stages)
the drug development and do not pay portfolio
attention to portfolio depth. depth
⋅ Blockbuster
strategy
Morgan Brand portfolio strategy has a complex – Brand portfolio strategy Market share ⋅ Tobin's q ✓ –
and relationship to firm performance with (number of brands, Advertising ⋅ Cash flow
Rego multiple directionality effects on segments, brand spending/sales ⋅ Cash flow
(2009) marketing and financial performance competition, perceived ratio variability
metrics. quality, price) SG&A/sales
ratio
Bharadwaj Unanticipated changes in perceived – Perceived brand quality – ⋅ Stock return ✓ ✓
et al. brand quality are positively associated ⋅ Systematic (current-period
(2011) with stock returns and negatively risk earnings and
associated with idiosyncratic and risk ⋅ Idiosyncratic competition).
of stock returns. risk
Barroso There is a U-shaped (inverted ⋅ Product – Profits – ✓ ✓
and U-shaped) relationship between portfolio (product space
Giarrata- portfolio breadth (depth) and firm breadth complexity)
na performance. ⋅ Product
(2013) portfolio
depth
Kang and A large product portfolio helps a firm's ⋅ Product – Sales Stock returns ✓ –
Montoya financial performance with differences portfolio Profits
(2014) in the impact between new and ⋅ Product
mature products. development
⋅ Market
entry
Caldieraro Product line extensions aimed at Product line – Profit – ✓ –
et al. matching competitors' product extension Market share
(2015) features may eventually erode the
advantages enjoyed by the extending
firm.
Hsu et al. Five brand architecture strategies have – Brand architecture – ⋅ Stock return ✓ –
(continued on next page)
Table 1 (continued)
Study Key Findings Focal construct(s) Performance metric(s) Interaction Effect
Product portfolio Brand Market-based Financial Main

portfolio measure value-based effect
measure
(2016) differential effects on stock returns and strategy (branded house, ⋅ Idiosyncratic
risk. sub-branding, endorsed risk
branding,
house-of-brands, hybrid
brands).
Cillo et al. Product portfolio innovativeness Product portfolio – – Stock holding ✓ ✓
(2018) impacts stock returns via investors' innovativeness (national
stock holding and this relationship is culture)
moderated by the culture.
Current Brand and product portfolio Product portfolio Brand portfolio Sales – ✓ ✓
study characteristics have interactive effects characteristics: characteristics: number Market share (brand portfolio
on market performance. breadth, depth, of brands, perceived characteristics)
innovativeness quality
Our manuscript is organized as follows: First, we provide a detailed assessment of the automotive industry and its relevance for
our research. Then, we explain the key product and brand portfolio characteristics that we focus in our study and we present dif-
ferent streams of literature that investigated their effects on firm performance. Next, we introduce our data and methodology. Fol-
lowing a thorough explanation of results and their robustness checks, we conclude with a discussion of our findings, implications,
and future research avenues.
2. Conceptual background
2.1. Innovation, product diversification, and brand management in the automotive industry
Product and brand portfolio decisions are critical for auto manufacturers, which compete in a large variety of product cate-
gories (i.e., car segments) with several parent brands and car models that are regularly upgraded leading to extensive product
diversification over time. As an industry in which the new product development (NPD) costs are already high, continuous inno-
vation in highly diversified product lines increases the costs even more. Companies in the automotive industry invest approx-
imately 4% of their budget on R&D activities every year with a special focus on product innovation to fuel demand even in
times of declining revenues (IBISWorld, 2017).
Historically, the automotive industry is characterized by the ceaseless efforts of automakers to introduce both radical and in-
cremental product and marketing innovations. These companies now engage in a rate of innovation greater than any other time
in history due to global competition, connectivity and digitalization, tougher regulations, and shifts in consumer attitudes
(Hoovers, 2018). According to Boston Consulting Group's (BCG) survey, 14 largest automakers are regularly among the top
50 most innovative companies with Toyota, Ford, and BMW often ranking in the top 10. For the first time since BCG began
conducting this survey back in 2005, there are more auto manufacturers in the list of most innovative companies than
consumer- or technology-based companies (BCG, 2014). NPD and innovation in the auto industry are not only costly but also
risky to pursue because product line changes often take a considerable amount of time and money from idea generation to actual
market launch, while facing uncertain market outcomes (Pauwels et al., 2004; Talay, Akdeniz, & Kirca, 2017). Nevertheless, con-
tinuous efforts of NPD and innovation have led to broad product portfolios of automakers in recent years.
Given the size of the auto industry and its significance for the economy, researchers have closely examined the different in-
novation strategies adopted by auto manufacturers. For instance, Barroso and Giarratana (2013) examine the curvilinear effects
of product portfolio breadth and depth on firm performance in the Spanish auto industry. This study indicates that the effects of
product diversification are contingent on product space complexity. Pauwels et al. (2004) and Srinivasan et al. (2009) focus on
the impact of NPD and innovation portfolios of U.S. automakers on firm value. Pauwels et al. (2004) demonstrate that new prod-
ucts increase firm value, while Srinivasan et al. (2009) emphasize the significantly higher impact of truly innovative portfolios
compared with minor updates and styling changes on automakers' stock returns. In addition, several studies have examined the
product diversification of U.S. automakers, distinguishing between generalist (i.e., broad niche) and specialist (i.e., narrow
niche) strategies and their impact on firm survival (Dobrev, Kim, & Carroll, 2002; Dobrev, Kim, & Hannan, 2001). More recently,
Talay and Townsend (2015) uncover the need for continuous innovation for automakers' positive market performance due to
the hypercompetitive nature of the industry.
As such, the automotive industry is frequently used in prior literature as a fertile ground for research into the connections
between new product portfolio strategies and firm performance. In this study, we focus on automotive companies because
they manage both large and diverse product and brand portfolios, providing an ideal context for our research. Also, the auto in-
dustry constantly modifies its brand and product portfolios to better adapt to the rapidly changing business environment. At the
same time, this is a highly R&D-intensive industry, where companies continuously develop new models and upgrade or with-
draw existing models to stimulate demand.
2.2. Key characteristics of a product portfolio
Product diversification that results from high R&D investments and innovation is a strategic choice for a company with specific
benefits and costs associated with it (Palich, Cardinal, & Miller, 2000; Ramanujam & Varadarajan, 1989). Marketing, strategy, and
innovation literatures have extensively studied the effects of product diversification on firms' financial and market performance
(Barroso & Giarratana, 2013; Bordley, 2003; Grewal et al., 2008; Pauwels et al., 2004; Sorescu, Chandy, & Prabhu, 2003). The extent
of product portfolio diversification in the auto industry leads to a complex and heterogeneous product space where various prod-
uct attributes influence the purchase behavior via higher search costs and cognitive efforts. Consistent with product diversification
literature (cf. Barroso & Giarratana, 2013), we identify two major product diversification strategies based on a company's niche
width, defined as the extent to which it sells different product categories and targets different types of consumers: generalist ver-
sus specialist strategies. The main point of distinction refers to whether an organization chooses to spread its resources across a
wide spectrum of product categories to distribute its risks (i.e., generalist strategy), or concentrates its resources in a narrow spec-
trum to earn a high return (i.e., specialist strategy). Drawing upon this theoretical distinction and related marketing research, we
first focus on portfolio breadth (e.g., generalist strategy), followed by portfolio depth (e.g., specialist strategy). Finally, drawing
upon prior marketing literature, we also include the overall innovativeness level of the portfolio as an important product portfolio
characteristic (cf. Cillo, Griffith, & Rubera, 2018; Rubera et al., 2016)
2.2.1. Portfolio breadth

Portfolio breadth refers to the number of different product categories targeted by an auto manufacturer's product portfolio. For
instance, according to the Ward's Auto categorization, there are 27 different product categories (i.e., car segments) in the U.S. auto
industry, some of which are small cars (e.g., Ford Fiesta), sports utility vehicles (e.g., Toyota RAV4), vans (e.g., Dodge Grand Car-
avan), pickups (e.g., Toyota Tacoma), and sports cars (e.g., Porsche Cayman). The higher the number of product categories that a
company has in its portfolio the wider is its product portfolio breadth. Previous research presents contradictory viewpoints regard-
ing the association between portfolio breadth and market performance. It is often argued that the potential benefits of a wide
product portfolio include leveraging firm resources across various product categories, balancing risks with various NPD projects,
developing diverse competencies to address various customer needs, managing the one-stop shopping experience especially for
brand loyalists, and facilitating a more consistent future cash flow (e.g., Bordley, 2003; Grewal et al., 2008; Leenders &
Wierenga, 2008; Luo, 2002; Ramanujam & Varadarajan, 1989). However, research also highlights several costs associated with
an increased product breadth, such as heightened level of operational and managerial costs due to low levels of firm experience
in certain product categories, higher risks of product development in these categories and the risk of alienating loyal customers
in certain product categories (e.g., Barroso & Giarratana, 2013; Stern & Henderson, 2004).
2.2.2. Portfolio depth

Portfolio depth refers to the extent to which resource allocation varies across different product categories for auto manufac-
turers (cf. Grewal et al., 2008). Accordingly, a firm with a deep product portfolio can produce a larger variety in a product category,
while a firm with a shallow portfolio produces fewer products within each product category but distributes its resources more
evenly across different product categories. For instance, in the SUV category, the product varieties that can be offered are small
SUVs, middle SUVs, middle luxury SUVs, large SUVs, and large luxury SUVs. If a car company such as Porsche intensely allocates
its resources on sports cars and SUVs while keeping its portfolio shallower in others, such as small cars, pickups, and minivans,
then it has a deeper portfolio compared to other companies such as Toyota that allocates its resources more evenly among differ-
ent car segments.
Like product breadth, the extant literature provides strong but conflicting arguments for the association between product port-
folio depth and market performance. Due to deep learning, firms can experience a higher level of operational efficiency and prod-
uct quality, matching the needs of customers of a certain product category (e.g., Jacobs & Swink, 2011; Stern & Henderson, 2004;
Zahavi & Lavie, 2013). However, a serious downside of deep product portfolios is product redundancy and cannibalization due to
diversification in similar product versions (e.g., Bordley, 2003; Ramdas & Sawhney, 2001). For instance, Ford Explorer and Mercury
Mariner, both owned by Ford Motor Company, are very similar vehicles competing in the small SUV product category. As the Ford
Explorer outperformed the Mercury Mariner, Ford eventually decided to prune Mercury Mariner from its product portfolio. To fur-
ther illustrate, we provide examples of portfolio breadth and depth of five auto manufacturers across nine major product catego-
ries in Table 2. Of the five manufacturers, while Toyota has the largest breadth by targeting all nine product categories, Tesla only
targets a few. Furthermore, if we look across product categories, we observe that Ford Motor has the largest variety of product
offerings in full-size SUV and BMW has the deepest portfolio in full-size car and small SUV categories than any other automotive
companies.
2.2.3. Portfolio innovativeness

Portfolio innovativeness refers to the overall level of innovativeness of a product portfolio driven by the level of innovation of
each new and existing car model in a firm's existing product portfolio (cf. Cillo et al., 2018; Pauwels et al., 2004). Innovation in the
automotive industry has a unique and critical impact across the spectrum of product offerings. The automotive industry is unique
Table 2
Examples of product portfolio breadth and depth from the U.S. automotive industry in 2017.
Automotive manufacturer Small car Midsize car Full-size car Small SUV Midsize SUV Full-size SUV Minivan Light truck Sporty car
BMW AG 4 2 5 5 2 0 0 0 3
(Brands: BMW, Mini, and Rolls Royce)
Ford Motor Company 2 2 2 3 3 4 0 2 2
(Brands: Ford and Lincoln)
Hyundai Motor Company 5 4 1 4 2 0 1 0 2
(Brands: Genesis, Kia, Hyundai)
Tesla, Inc. 1 0 1 0 1 0 0 0 0
(Brand: Tesla)
Toyota Motor Company 5 4 2 3 4 3 1 2 3
(Brands: Toyota and Lexus)
Note: Each cell indicates the number of product offerings of an automotive manufacturer in the respective product category. For instance, the top left cell means
that BMW has 4 different compact cars competing in the U.S. automotive industry.
because innovation is critical for every step of the value chain, from a network of suppliers on one end to the extensive distribu-
tion network on the other. More importantly, the billions of dollars of NPD expenses with highly uncertain market outcomes make
the stakes even higher for everyone in the value chain. Innovation has a critical impact on product portfolios in the automotive
industry because product line renewals and extensions constitute a fairly standard process as car models are scheduled for up-
grades or for replacements on a regular basis in various areas, such as technology updates, style makeovers, and marketplace po-
sitioning (Talay et al., 2017). Furthermore, the sequence of NPD stages (i.e., preannouncements, debuts, and market launches) also
follow a structured pathway due to the heavy costs involved in the process.
A product portfolio with higher innovativeness levels entails a higher level of novelty and unfamiliarity for the product offer-
ings. While radical innovations present fewer reliable benchmarks, larger development and launch costs, and higher risk
(e.g., Toyota Prius and Chrysler Prowler), incremental innovations provide external stakeholders with higher familiarity, certainty,
and a better fit with the rest of the portfolio (e.g., Homburg, Bornemann, & Totzek, 2009; Kleinschmidt & Cooper, 1991). Never-
theless, prior research provides evidence supporting the positive effects of product portfolio innovativeness on firm valuation
and market performance (Pauwels et al., 2004; Rubera et al., 2016). In particular, research indicates that firms with innovative
product portfolios outperform their competitors in terms of sales, market share and profitability (Rubera et al., 2016; Schultz,
Salomo, & Talke, 2013).
2.3. Key characteristics of a brand portfolio
Prior marketing literature provides support for a positive relationship between the various aspects of a company's brand port-
folio strategy and its performance (Morgan & Rego, 2009; Wiles, Morgan, & Rego, 2012). Brands are considered as important in-
tangible assets that communicate growth potentials for products and firms (e.g., Hsu, Fournier, & Srinivasan, 2016; Rao et al.,
2004). Based on the dynamics of the automotive industry and prior literature on brand portfolio strategy (e.g., Morgan & Rego,
2009), we focus on the scope and positioning of an automaker's brand portfolio as the most critical characteristics of a brand port-
folio. This approach is warranted given the similar nature of brand structures across the auto industry in which most companies
pursue a house-of-brands strategy.
2.3.1. Brand portfolio scope

The scope of a brand portfolio relates to the number of brands an automaker owns and markets. Complex brand portfolios with
multiple brands are ubiquitous because they allow companies to meet the needs of various customer segments while attaining
marketing efficiency (Lei, Dawar, & Lemmink, 2008). In the U.S. automotive industry, a company like GM has a large brand port-
folio (with eight brands under the GM corporate brand), whereas a company like Tesla operates with only one brand in the in-
dustry. However, regardless of the direct impact of brand portfolio size on market performance, research indicates that
expanding the brand portfolio of a company calls for a more effective portfolio management. This requires allocating more re-
sources to thriving brands, identifying and demoting the weaker ones (Hill, Ettenson, & Tyson, 2005), and strategically thinking
about adding premium brands to the portfolio (e.g., Caldieraro, Kao, & Cunha Jr., 2015; Aribarg and Arora, 2008).
Prior literature provides competing arguments with respect to the impact of brand portfolio size on performance. Several re-
searchers point out that a larger brand portfolio indicates better market coverage in various product categories by targeting var-
ious customer segments (e.g., Kekre & Srinivasan, 1990). A large brand portfolio also help companies enjoy the shared experience
and knowledge in areas such as market research and media presence (Kapferer, 1994; Morgan & Rego, 2009). Moreover, a larger
portfolio is likely to send a more credible signal in terms of a firm's future earnings, growth prospects, and lower cash flow var-
iability as it enables the firm to serve a much larger customer base with constantly evolving needs (Morgan & Rego, 2009; Nguyen,
Zhang, & Calantone, 2018). However, a larger brand portfolio scope may present risks because this may reduce manufacturing and
distribution efficiencies, weaken brand loyalty, and cause price wars as well as brand dilution (e.g., Hill et al., 2005; Morgan &
Rego, 2009; Quelch & Kenny, 1994).
2.3.2. Brand portfolio positioning

The positioning of a brand portfolio is closely related to the quality perceptions of the brands owned by an automaker. Per-
ceived quality of a brand captures consumers' quality associations for that brand, as well as how well a brand meets their re-
quirements and expectations (Mitra & Golder, 2006). Since these assessments are subjective and happen in the minds of
consumers, perceived quality is a major factor in determining the brand portfolio positioning of a company (Morgan & Rego,
2009). Given that quality is expensive and consumers have different abilities and willingness to pay for automobiles, it is a crit-
ical aspect of brand portfolios as perceived quality signals different levels of company trustworthiness and expertise in deliver-
ing successful new products (Erdem & Swait, 1998). Firms devote significant resources to quality improvement programs and
staff training (Rust, Zahorik, & Keiningham, 1995) and they voluntarily provide quality information to improve consumer per-
ceptions of brand quality (Bharadwaj, Tuli, & Bonfrer, 2011). This reduces information asymmetry and uncertainty about prod-
uct quality, allows for premium pricing, and leads to larger expected cash flows (Bharadwaj et al., 2011). Furthermore, brand
positioning is closely associated with perceived quality of a car brand because it is a critical driver of consumer purchase behav-
ior as cars are high involvement, experiential, and complex products, the quality of which is uncertain and not easy to decipher
prior to the purchase. In this context, consumers seek out more information and need strong signals to develop their opinions
about competing products based on the perceived quality of brands (Akdeniz, Calantone, & Voorhees, 2014; Punj & Staelin,
1983).
2.4. Interactive effects of product and brand portfolio strategies
Although prior research has investigated extensively the effects of product portfolio and brand portfolio strategies on firm per-
formance in separate streams of research, the interplay between the two has seen little traction in research. Thus, a more compre-
hensive empirical examination of the interactions involving the various characteristics of product and brand portfolio strategies
seems to be warranted given the practical relevance and theoretical significance of these relationships in marketing. Product
and brand managers oftentimes make product portfolio decisions in conjunction with branding decisions as various components
of a firm's product and brand strategy interact and benefit from each other all the time (Brexendorf et al., 2015; Varadarajan
et al., 2006). Usually key stakeholders in the marketplace (e.g., consumer, competitors, and investors) perceive this interrelated
structure as a whole rather than separate parts of dissected silos in terms of product and branding decisions in isolation. In this
study, we investigate the interactive relationships involving product and band portfolio strategies in the context of the automotive
industry.
Similar to the relationships between product and brand portfolio characteristics, and market performance, we found diver-
gent and often conflicting theoretical arguments in the literature pertaining to the interplay between product and brand port-
folio strategies. For instance, building on Gielens and Steenkamp (2007), it can be argued that a higher level of portfolio
innovativeness due to increased complexity and uncertainty may lead to an information asymmetry between the automaker
and its customers. However, a larger brand portfolio scope may signal that the company provides greater market coverage by
satisfying more customer needs. In turn, greater coverage can attenuate the negative effects of increased complexity and uncer-
tainty associated with portfolio innovativeness. Alternatively, a larger scope can lead to the dilution of marketing expenditures
and weakened brand loyalty, which can accentuate the negative effects associated with high product portfolio innovativeness
(Brexendorf et al., 2015; Kumar, 2003; Morgan & Rego, 2009). Given the diversity of arguments and their predictions in the ex-
tant literature, we do not offer any formal hypotheses regarding the effects of various combinations of product and brand port-
folio characteristics on market performance. Rather, we adopt a more exploratory approach to empirically examine all possible
interactions of product and brand portfolio characteristics, and their impacts on market performance. Fig. 1 demonstrates our
research framework.
3. Methodology
3.1. Data
We obtained our dataset mainly from the Ward's Auto, an organization that has covered the automotive industry for over
80 years, and Automotive News (2011), a weekly magazine founded in 1925 for automotive retailers, suppliers, and manufac-
turers. Using these sources, we have compiled a panel dataset of all the passenger cars and light trucks sold in the U.S. automo-
tive market between 2007 and 2013 (i.e., 40 parent brands and 1025 brand-quarter pairs.). The U.S. automotive industry is an
appropriate context for our study for a variety of reasons. First, auto manufacturers manage both large and diverse product and
brand portfolios providing a rich industry context for research (e.g., Mittal & Kamakura, 2001; Srinivasan et al., 2009). Second,
this industry constantly modifies its brand and product portfolios to better adapt to the rapidly changing environment, and thus,
characterized by continuous launches and withdrawals of brands and products. Moreover, it is a highly R&D-intensive industry,
where companies periodically develop new models and upgrade existing ones to stimulate demand. Finally, competition in the
auto industry is fierce yet highly concentrated with the top four auto manufacturers (i.e., GM, Ford Motor, Toyota Motor, FCA/
Chrysler) capturing almost 70% of the industry (Hoovers, 2018). Finally, this industry is a significant contributor to the U.S.
GDP with 0.9% and a growth forecast of 3.1% in 2018 (Statista Industry Report, 2018).
Fig. 1. Research framework. Note: Product portfolio and brand portfolio strategies are continuous variables in our models. Thus, automotive brands fall on continua
across the six cells (i.e., strategies) in the BPP matrix as we examine the interactive effects of product and brand portfolio strategies.
3.2. Measures
3.2.1. Dependent variable

We used quarterly Sales as the dependent variable, which is operationalized as the natural logarithm of the unit sales of the
parent brand i in quarter t. This important performance variable for both marketing scholars and practitioners is widely used in
the literature (e.g., Putsis Jr & Bayus, 2001; Talay et al., 2017). Moreover, unit sales is a key component of the compensation system
in the U.S. automotive industry from salespeople in the dealership all the way to upper-level management.
3.2.2. Independent variables

We have three variables related to product portfolio strategies: breadth, depth, and innovativeness. Similar to Grewal et al.
(2008), we define product portfolio Breadth as the number of different automobile segments (e.g., Small SUV and full-size car)
targeted by parent brand i in quarter t. Based on segmentation of the U.S. market by Ward's Auto, we identified nine segments
for our study (see Table D in the Web Appendix). We operationalized product portfolio Depth as the total number of models
that parent brand i sold in quarter t in the segment with the highest number of products for that same parent brand i (Barroso
& Giarratana, 2013). For product portfolio Innovativeness, drawing upon Pauwels et al. (2004) and Srinivasan et al. (2009), we
used J.D. Power and Associates' rating scale to rate the level of innovativeness of each new and existing car model sold by parent
brand i in quarter t (see Table C in the Web Appendix). We aggregated the model-level innovativeness to parent brand-level in-
novativeness following Pauwels et al. (2004) who use J.D. Power ratings, too. Specifically, we operationalized Innovativeness as the
maximum innovation level for all the parent brand i's vehicle changes in quarter t. For example, if Ford introduces two redesigned
full-size sedans in a given quarter with innovation scores of 2 and 4, respectively, the Innovativeness variable has the value of 4 for
the Ford brand in quarter t.
We included two variables for brand portfolio strategies; number of brands that a parent brand has in its portfolio for port-
folio scope and perceived quality of those brands for portfolio positioning. We operationalized brand portfolio Scope as the total
number of brands sold by parent brand i during quarter t. Data for Perceived Quality of a parent brand i in quarter t was provided
by the Automotive Lease Guide (ALG) based on their Perceived Quality Study, which is based on the opinions of N3000 U.S.
consumers.
3.2.3. Control variables

We controlled for the effects of various theoretically important factors in our analyses to isolate the effects of product and
brand portfolio strategies on market performance. To control for the impact of macroeconomic factors, we used two variables:
Gross Domestic Product (GDP) of the U.S., a commonly used measure as an indicator of the health of the economy and a good pre-
dictor of consumer spending, and Consumer Sentiment, since it might drive consumption patterns, especially for high involve-
ment purchases (Fornell, Rust, & Dekimpe, 2010). GDP was operationalized using the natural logarithm of the GDP of the U.S.
at quarter t as provided by the U.S Bureau of Economic Analysis. For the latter, we used the Consumer Sentiment Index data pro-
vided by the University of Michigan to gauge the consumer sentiment in quarter t.
We used two variables to control for the industry-level heterogeneity. First, we controlled for Gas Price, which affects the size
and structure of demand for in the automotive industry. We obtained the nationwide average of gas price per gallon for quarter t
from the U.S. Energy Information Administration. Second, we included the Competitors' Sales using the natural logarithm of the
total sales of the competitors of the parent brand i in quarter t.
We included three brand-specific control variables in our analyses: price, customer satisfaction and advertising expenditures
to control for heterogeneity at the parent brand level. To calculate the Price of parent brand i in quarter t, we first obtained the
monthly, model-level (e.g., Toyota Camry and Ford Escape) data on MSRP from Ward's Auto.2 Then, we calculated the monthly
model-sales-weighted average price for brand i and aggregated to quarter level to operationalize Price. Customer Satisfaction
scores for brand i in quarter t were obtained from the American Customer Satisfaction Index. Finally, we used the natural loga-
rithm of the Advertising expenditures of parent brand i in quarter t provided by TNS Media Intelligence. We present the data
sources and variable operationalizations in Table 3.
3.3. Empirical model
Panel data estimations are inherently prone to various estimation issues like serial correlation, heteroskedasticity, unob-
served unit-specific heterogeneity (i.e., for the “parent brands” in our study), and endogeneity. Following Feng, Morgan, and
Rego (2015), we began by conducting several econometric tests to address these issues. Specifically, Wooldridge and
Breusch-Pagan tests indicated that serial correlation and heteroskedasticity are present in our data; while the results of
Breusch-Pagan Lagrange Multiplier test showed that unobserved unit-specific heterogeneity needed to be accounted for, in-
dicating that an error-component model should be used (Baltagi, 2001; Feng et al., 2015). Moreover, endogeneity can lead to
biased estimates. We used dynamic panel generalized method of moments (GMM) estimation (Arellano & Bover, 1995;
Blundell & Bond, 1998), which helped us address the estimation problems regarding endogeneity, brand-level fixed effects,
heteroskedasticity and serial correlation within parent brands (Feng et al., 2015; Roodman, 2009). We specified our model
in Eq. (1):
Salesiðtþ1Þ ¼ β0 þ β1 Salesit þ β2 Breadthit þ β3 Depthit þ β4 Innovativenessit þ β5 Scopeit þ β6 PerceivedQualityit

þ β7 Scopeit Breadthit þ β8 PerceivedQualityit Breadthit þ β9 Scopeit Depthit þ β10 PerceivedQualityit
Depthit þ β11 Scopeit Innovativenessit þ β12 PerceivedQualityit Innovativenessitit þ Β13 GDPt
þ β14 ConsumerSentimentt þ β15 GasPricet þ β16 CompetitorsSalesit þ β17 Priceit
þ β19 CustomerSatisfactionit þ β20 Advertisingit þ Quartert þ ηi þ εi ðt þ 1Þ ð1Þ
where i and t denote parent brand and time (i.e., quarter) respectively. Quarter(t) is the set of mutually exclusive dummies for each
quarter in our observation period, ηi represents the time-invariant unobservable brand-level fixed effects (e.g., supplier network),
and εi(t+1) captures the i.i.d. errors due to all unobserved effects on sales.
Including one-period lag of dependent variable (i.e., Salesit) helps control for serial correlation (Wooldridge, 2015) and
the potential omitted variable bias and its persistence and dependence on prior-period observations. Moreover, using quar-
ter dummies and time-invariant error component (i.e., ηi) can alleviate the concerns regarding heteroskedasticity and unob-
served heterogeneity. However, they do not address all possible sources of endogeneity (Rego, Morgan, & Fornell, 2013).
Dynamic panel GMM estimation resolves these concerns in two steps: i) first-differencing, which eliminates the brand-
specific fixed effects and ii) using two-period or earlier lagged values of endogenous variables and quarter dummies as in-
strument variables (IVs), which address simultaneity and dynamic endogeneity. Through first-differencing, our final model
is demonstrated in Eq. (2):
ΔSalesiðtþ1Þ ¼ β1 ΔSalesit þ β2 ΔBreadthit þ β3 ΔDepthit þ β4 ΔInnovativenessit þ β5 ΔScopeit þ β6 ΔPerceivedQualityit

þ β7 ΔScopeit Breadthit þ β8 ΔPerceivedQualityit Breadthit þ β9 ΔScopeit Depthit
þ β10 ΔPerceivedQualityit Depthit þ β11 ΔScopeit Innovativenessit þ β12 ΔPerceivedQualityit
Innovativenessit þ Β13 ΔGDPt þ β14 ΔConsumerSentimentt þ β15 ΔGasPricet þ β16 ΔCompetitorsSalesit
þ β17 ΔPriceit þ β18 ΔCustomerSatisfactionit þ β19 ΔAdvertisingit þ Δεiðtþ1Þ ð2Þ
Eqs. (1) and (2) are jointly estimated via “system GMM,” where covariates in Eq. (2) were instrumented using two-period
lagged covariates, while the covariates in Eq. (1) were instrumented with their own first-differences (Roodman, 2009). Following
Rego et al. (2013), we reported the results of several tests to demonstrate the validity of our findings. We reported the statistics of
AR(1) and AR(2) tests, which are rejected for the former and not rejected for the latter, thereby establishing that first-order serial
correlation is present in the data, but second-order is not, an assumption of the dynamic panel GMM. Moreover, we presented the
2
An illustrative example: Brand X has two models, Models 1 and 2, in January 2010. In that month, assume that the company sells 1000 units of Model 1 with an
MSRP of $12,000 and 1500 units of Model 2 with an MSRP of $20,000. Then, the sales-weighted average price of Brand X in January 2010 is ((1000 ∗ 12,000)
+ (1500 ∗ 20,000)) / (1000 + 1500) = $16,800. Same calculation is made for February and March and then the average of the sales-weighted average price value
for three months is used as the Price for the first quarter of 2010.
Table 3
Variable operationalizations and sources.
Variables Operational measures Data sources
1 Sales Natural logarithm of the quarterly sales of parent brand i in quarter t Ward's Auto
2 Breadth Number of different automobile segments (e.g., small SUV and full-size car) targeted by Ward's Auto
parent brand i in quarter t.
3 Depth Total number of models that parent brand i sold in quarter t in the segment with the Ward's Auto
highest number of products for that same brand i.
4 Innovativeness Assessment of innovativeness of the models sold by parent brand i in quarter t using a J.D. Power and Associates' rating scale
5-point ordinal scale
5 Scope Total number of brands sold by the parent brand i in quarter t Ward's Auto
6 Perceived Quality Rating of parent brand i in quarter t in ALG Perceived Quality Study Automotive Lease Guide
7 GDP Natural logarithm of the real GDP adjusted for inflation in quarter t U.S Bureau of Economic Analysis
8 Consumer Sentiment Consumer Sentiment Index in quarter t University of Michigan Survey of Consumers
9 Gas Price Nationwide average of gas price per gallon for quarter t U.S. Energy Information Administration
10 Competitors' Sales Natural logarithm of the total sales of the competitors of parent brand i in quarter t Ward's Auto
11 Price Sales-weighted average prices of all models sold by parent brand i in quarter t Ward's Auto
12 Customer Satisfaction ACSI score of parent brand i in quarter t The American Customer Satisfaction Index
13 Advertising Natural logarithm of the advertising expenditure of parent brand i in quarter t Kantar TNS Media Intelligence
Hansen J-statistic, which tests for overidentification restrictions, and C-statistic, which tests the validity of instruments for Eq. (2)
specifications.
4. Results and discussion
Table 4 presents the descriptive statistics and Table 5 presents the pairwise Pearson correlation coefficients. The highest corre-
lation among variables (r = 0.57) is between Sales and Advertising. To assess the potential threats from multicollinearity, we
checked the average and maximum variance inflation factor (VIF) values to find that VIFs are well below the acceptable cutoff
of 10 (i.e., average VIF = 2.08 and maximum VIF = 4.41). Moreover, using the condition index method (Belsley, 1991), we
find the condition number to be 8.79, well below the cutoff of 30. Therefore, we concluded that multicollinearity and ill-
conditioning of variables are not a threat to the validity of our findings.
Table 6 presents the estimation results.3 We estimated three models using the system GMM approach with Model 3 demon-
strating the full model. All the instrument validity and identification tests supported the use of system dynamic panel GMM.
Therefore, we first review our results for the main effects of product and brand portfolio characteristics on market performance,
as presented in Model 2. We then discuss how the interaction of product and brand portfolio characteristics are related to
brand sales in Model 3. Finally, we examine the robustness of our findings.
4.1. The impact of product portfolio characteristics on automotive brand sales
Although the key relationships explored in this study are the interactions between product and brand portfolio characteristics,
we also estimated main effects for the technical correctness and completeness of the empirical model. Specifically, we first tested a
model in which we only introduced the control variables (Model 1). Then, we ran Model 2 that shows the main effects of product
and brand portfolio characteristics on parent brand-level sales over all 40 brands in 20 automotive companies. We observe that all
three product portfolio characteristics, breadth (β = 0.129, p b 0.05), depth (β = 0.812, p b 0.05), and product portfolio innova-
tiveness (β = 0.073, p b 0.05), are positively related to parent brand sales. Our finding that demonstrates a significant and positive
relationship between portfolio innovativeness and the market performance of a brand is in line with previous research (Rubera
et al., 2016; Schultz et al., 2013). Thus, firms with innovative product portfolios outperform their competitors because they sustain
their competitive advantages by offering a large portfolio of both incremental and radical innovations to satisfy various customer
needs and to keep pace with changing consumer preferences. This is exactly what the automakers strive to achieve by updating
their existing models on an annual basis while bringing newer models to the market every couple of years. Staying ahead of
the competition allows auto manufacturers to gain temporary quasi-monopoly position through offerings of superior performance,
idiosyncratic product features, greater esthetics and a desirable image (Talay & Townsend, 2015).
With regard to product portfolio diversification, our results indicate that breadth and depth of product portfolios affect parent
brand sales positively. These results are well supported in the literature, which strongly advocates that diversified product lines
help firms effectively meet and satisfy the needs of heterogeneous groups of customers. For instance, Kekre and Srinivasan
(1990) demonstrate that product breadth helps firms get a larger market share and increase profits. Our findings also support
that portfolio breadth improves performance by operating in multiple product categories and by developing competencies that en-
able them to effectively satisfy customer needs (cf. Bordley, 2003). Prior research also indicates that the depth of a product port-
folio allows firms to offer product bundles to induce sales via slightly differentiated products (Jacobs & Swink, 2011). A deep
3
The intraclass correlation coefficient (ρ), the proportion of within-study variance to the total study variance, was 0.19 indicating significant temporal variance
within brands. Fig. A in the Web Appendix provides model-free evidence for the degree of longitudinal variation. We thank the anonymous reviewer for the suggestion.
Table 4
Descriptive statistics (N = 1025).
Variable Mean SD Minimum Maximum Skewness Corr(xt,xt-1)
1 Sales 10.465 1.603 2.485 13.419 −0.726 0.985

2 Breadth 5.679 2.924 1.000 13.000 0.071 0.994
3 Depth 2.390 1.147 1.000 6.000 0.492 0.981
4 Innovativeness 0.000a 1.138 0.000 5.000 0.913 0.882
5 Scope 3.054 2.026 1.000 8.000 0.410 0.980
6 Perceived Quality 62.764 12.660 39.159 86.875 0.160 0.997
7 GDP 30.354 0.052 30.286 30.464 0.572 0.989
8 Consumer Sentiment 73.004 7.988 56.400 88.400 0.116 0.554
9 Gas Price 3.117 0.568 1.613 4.095 −0.316 0.562
10 Competitors' Sales 14.092 1.023 12.246 15.172 −0.566 0.993
11 Price 10.520 0.412 9.684 11.617 0.405 0.996
12 Customer Satisfaction 80.505 5.299 63.000 90.000 −0.603 0.987
13 Advertising 18.185 1.939 13.915 20.844 −0.655 0.984
a
Instead of the mean, we report the median for Innovativeness since it is an ordinal variable.
product portfolio with a sizeable number of products in the same category also enables a firm to have a lean cost structure that
leads to a higher return on investment by effectively utilizing the existing resources and competencies (Stern & Henderson, 2004).
In general, the economies of scope are expected to increase at an increasing rate as the firm diversifies into a range of related
products (Zahavi & Lavie, 2013). Although product line extensions can be costly investments that lead to cannibalization and cus-
tomer confusion, prior research suggests that they result in a net gain in overall demand (Caldieraro et al., 2015).
4.2. The impact of brand portfolio characteristics on automotive brand sales
Our findings indicate that the brand portfolio scope (β = 0.148, p b 0.05) is positively related to brand sales whereas the re-
lationship between perceived quality and brand sales (β = 0.458, p N 0.10) is not significant. The finding that larger brand port-
folios are more beneficial than smaller portfolios provides further support for the argument that the size of a brand portfolio
allows firms to exert greater power over other channel members. This finding also suggest that these firms dominate the market
by increasing the entry barriers for competitors while meeting the heterogeneous needs of the customers (Bordley, 2003; Morgan
& Rego, 2009; Shocker, Srivastava, & Ruekert, 1994). Additionally, having a larger scope relates positively to market performance if
a company operates in product categories that are complementary to one another (Aaker and Joachimsthaler, 2000), such as the
case in the auto industry where a majority of the products are different types of passenger cars and trucks (i.e., complementary
categories). This allows for better positioning of brands in the consumer's mind while contributing to an efficient use of advertising
and administrative resources (e.g., Bayus & Putsis, 1999; Kumar, 2003).
In addition, we observe that a higher perceived quality does not have a significant positive impact on brand sales. Although it
might seem counterintuitive at first, we believe that this finding is interesting and insightful because it provides support for the
exclusivity arguments (Hellofs & Jacobson, 1999), which indicates that brand quality image is usually associated with limited ac-
cessibility and smaller quantities, resulting in lower sales. This is in contrast to previous research that has generally assumed a pos-
itive relationship between perceived quality and market performance of a brand due to the fact that brands with higher quality
perceptions can reduce risk, generate greater financial returns, and increase the overall value of the brand (Aaker & Jacobson,
1994; Erdem & Swait, 1998; Morgan & Rego, 2009; Randall, Ulrich, & Reibstein, 1998). Nevertheless, our findings lends support
to the theoretical arguments proposed by Fornell (1995) and Rego et al. (2013) in that perceived quality of a brand might typically
be associated with customers' positive attitudes, preference, or even purchase behaviors. Yet, perceived quality may not lead to
higher brand sales because a high-quality brand image leads to a more distinct positioning and thus makes it more difficult to
meet the heterogeneous preferences of the customer base, limiting the sales potential of the brand.
4.3. Interactive effects of product and brand portfolio characteristics on sales
In Table 6, the full model adds the interaction effects to our set of control and main variables. First, our findings indicate that
broad (β = 0.131, p b 0.01), deep (β = 0.286, p b 0.05), and innovative (β = 0.240, p b 0.05) product portfolios are related to
higher sales in the automotive industry when coupled with brands with higher perceived quality. The positive impact of both
larger and deeper product portfolios on market performance of a parent brand is high if the brand has a higher perceived quality.
This finding implies that high perceived quality can serve as a credible signal of a brand in the marketplace and it is likely to create
a bond between the brand and customers especially when presented within a broad and deep product portfolio. In other words, a
rational consumer expects a car brand to adhere to the implicit commitment behind the signals and to deliver its quality claims,
whereas a brand's false claims or failure to keep its promise can result in a damaged reputation for products in larger and deeper
product portfolios (Boulding & Kirmani, 1993). Therefore, perceived quality contributes to a car brand's larger presence across and
within different product categories and therefore, impacts customers' purchase intentions and unit sales more positively. Similarly,
with a highly innovative product portfolio comes higher levels of novelty, unfamiliarity, and fewer reliable benchmarks for the
new car models. A car brand with a high perceived quality may be able to alleviate some of these concerns and help consumers
12
A.H. Kirca et al. / International Journal of Research in Marketing xxx (xxxx) xxx
Table 5
Correlations (N = 1025).
Variable 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
1 Sales 1
2 Breadth 0.48⁎ 1
3 Depth 0.44⁎ 0.46⁎ 1
4 Innovativeness 0.01 0.01 −0.01 1
5 Scope 0.07⁎ 0.10⁎ 0.07⁎ 0.09⁎ 1
6 Perceived Quality 0.28⁎ 0.27⁎ 0.13⁎ −0.02 −0.17⁎ 1
7 Scope ∗ Breadth −0.02 0.00 0.11⁎ −0.02 0.01 −0.20⁎ 1
8 Perceived Quality ∗ Breadth −0.15⁎ −0.20⁎ −0.14⁎ −0.04 −0.20⁎ 0.02 −0.19⁎ 1
9 Scope ∗ Depth 0.12⁎ 0.12⁎ 0.10⁎ −0.01 −0.24⁎ −0.05 0.48⁎ −0.17⁎ 1
10 Perceived Quality ∗ Depth −0.23⁎ −0.16⁎ 0.01 −0.04 −0.05 −0.07⁎ −0.17⁎ 0.44⁎ −0.15⁎ 1
11 Scope ∗ Innovativeness −0.01 −0.02 −0.01 0.08⁎ 0.15⁎ −0.04 0.00 −0.01 −0.01 0.02 1
12 Perceived Quality ∗ Innovativeness −0.03 −0.03 −0.03 −0.02 −0.04 0.02 0.01 0.02 0.03 0.01 −0.19⁎ 1
13 GDP 0.04 −0.01 0.01 0.16⁎ −0.09⁎ 0.03 0.00 0.05 0.03 0.03 0.01 0.01 1
14 Consumer Sentiment 0.08⁎ 0.00 0.03 0.19⁎ −0.01 0.03 −0.02 0.02 0.00 0.01 0.11⁎ −0.03 0.54⁎ 1
15 Gas Price −0.01 0.00 0.01 0.03 0.03 −0.01 0.00 0.00 −0.01 −0.01 0.04 −0.01 0.27⁎ 0.06⁎ 1
16 Competitors' Sales 0.29⁎ 0.16⁎ 0.10⁎ 0.01 0.03⁎ −0.39 0.05⁎ 0.16⁎ 0.06⁎ 0.11⁎ 0.01 −0.02⁎ 0.08⁎ 0.09⁎ 0.01 1
17 Price −0.19⁎ −0.04 0.01 −0.02 0.06 0.40⁎ −0.05 −0.13⁎ −0.05 −0.04 0.00 0.00 0.02 0.01 0.00 0.12⁎ 1
18 Customer Satisfaction 0.49⁎ 0.38⁎ 0.12⁎ −0.04 0.00 0.52⁎ −0.03 −0.21⁎ 0.04 −0.15⁎ −0.03 0.01 0.06⁎ 0.04 −0.01 0.08⁎ 0.20⁎ 1
19 Advertising 0.57⁎ 0.50⁎ 0.30⁎ 0.02 0.08⁎ 0.26⁎ 0.04 −0.04 0.11⁎ −0.22⁎ −0.04 −0.03 0.04 0.06⁎ −0.01 −0.01 0.01 0.00
⁎ Indicates a significance level of 0.05.
Table 6
Estimation of brand Salesit+1 with the system GMM approach.
Variables Model 1 Model 2 Model 3
Coefficient Standard error Coefficient Standard error Coefficient Standard error
Main effects
Salesit 0.369⁎⁎ 0.177 0.368⁎⁎ 0.171 0.361⁎⁎ 0.173
Breadthit 0.129⁎⁎ 0.055 0.131⁎⁎ 0.047
Depthit 0.812⁎⁎ 0.338 0.797⁎⁎ 0.331
Innovativenessit 0.073⁎⁎ 0.033 0.068⁎⁎ 0.030
Scopeit 0.148⁎⁎ 0.074 0.146⁎⁎ 0.065
Perceived Qualityit 0.458 0.349 0.452 0.304
Interaction effects
Scopeit ∗ Breadthit −0.348⁎⁎ 0.162
Perceived Qualityit ∗ Breadthit 0.131⁎⁎⁎ 0.050
Scopeit ∗ Depthit 0.154⁎⁎ 0.063
Perceived Qualityit ∗ Depthit 0.286⁎⁎ 0.127
Scopeit ∗ Innovativenessit 0.338⁎⁎ 0.152
Perceived Qualityit ∗ Innovativenessit 0.240⁎⁎ 0.102
Controls
GDPt 0.064⁎⁎ 0.033 0.199⁎⁎ 0.087 0.059⁎ 0.030
Consumer Sentimentit 0.093⁎⁎ 0.041 −0.014 0.009 0.008 0.007
Gas Pricet −0.076⁎ 0.042 0.048⁎⁎ 0.021 0.049⁎⁎ 0.023
Competitors' Salesit 0.056 0.038 −0.059 0.039 −0.074 0.053
Priceit 0.182⁎⁎ 0.077 −0.420⁎⁎ 0.188 −0.195⁎⁎ 0.082
Customer Satisfactionit 0.042⁎⁎ 0.020 0.054⁎⁎ 0.027 0.042⁎⁎ 0.020
Advertisingit 0.310⁎⁎ 0.131 0.199 0.124 0.059 0.054
Model details
Wald χ2 8567.2⁎⁎⁎ 6701.1⁎⁎⁎ 1558.3⁎⁎⁎
AR(1) 2.015⁎⁎ 2.804⁎⁎⁎ 2.520⁎⁎
AR(2) 0.976 0.443 0.571
Hansen J 876.6 411.6 558.7
Hansen C 9.9 27.2 46.5
⁎ Indicates a significance level of 0.10.
⁎⁎ Indicates a significance level of 0.05.
⁎⁎⁎ Indicates a significance level of 0.01.
familiarize themselves with the new car model introduction. This in turn enhances the positive impact of innovative product port-
folios on unit sales.
Interestingly, our results indicate that a large product portfolio coupled with a large brand portfolio scope weakens unit sales
(β = −0.348, p b 0.05) in Model 3. This dampening effect of scope on the product portfolio breadth-parent brand sales relation-
ship is most likely to be driven by the brand dilution effect that is well established in marketing. As such, this finding indicates that
brand dilution is a major threat for larger brand portfolios managed across multiple segments, consistent with prior research that
shows that brand dilution negatively impacts customer loyalty and market share due to customer brand switching, lower price
premiums (Hsu et al., 2016; Morgan & Rego, 2009), and diseconomies of scale (Kumar, 2003). Reflecting on this result, we also
note that large product portfolios with large numbers of brands often backfire in practice, as illustrated by several high-profile ex-
amples. For instance, auto firms such as GM, which operates in multiple product segments while managing a large brand portfolio
scope, are hard pressed to prune their brands and their product offerings. At the same time, Ford Motors also decided to refocus
their attention on key product offers such as high-margin pickup trucks, improved fuel economy cars and forgoing investments in
large SUVs, small trucks and the Lincoln brand.
In addition, our empirical results also demonstrate that deep product portfolios with a large brand portfolio size are associated
with enhanced market performance (β = 0.154, p b 0.05). This result is interesting because prior literature indicates that a larger
brand portfolio scope and deep product portfolios can lead to dilution of marketing expenditures and weakened brand loyalty
(Brexendorf et al., 2015; Kumar, 2003; Morgan & Rego, 2009). Moreover, a larger scope with too many products in the same cat-
egory may increase manufacturing and distribution efficiencies, weaken brand loyalty, cause price wars as well as brand dilution
(e.g., Hill et al., 2005; Morgan & Rego, 2009; Quelch & Kenny, 1994). Nevertheless, our results suggest that, despite its negative
effects on the cost component of marketing operations, a large brand portfolio scope in a deep product portfolio allows firms to
meet fragmented customer needs and increase brand sales substantially.
Finally, we find that innovative product portfolios that have a large brand portfolio scope perform better in the marketplace
(β = 0.338, p b 0.05), as shown in Table 6. This is one of the more intuitive findings of this study as previous research also sup-
ports the notion that brand portfolio strategy and product innovativeness are closely related concepts because strong brands sup-
port the launch of successful product innovations, which in turn help build stronger brands (Brexendorf et al., 2015). Specifically,
for firms with a larger brand portfolio, product portfolio innovativeness should further create greater market performance by bet-
ter meeting heterogeneous consumer needs in multiple product categories (Kekre & Srinivasan, 1990; Morgan & Rego, 2009) and
deterring new market entrants (e.g., Bordley, 2003).
4.4. Robustness checks
We assessed the robustness of our findings in various ways: we 1) re-estimated our models with Market Share (based on unit
sales) as the dependent variable (Table A1 in the Web Appendix); 2) used a different observation period (i.e., 2010–2013)
(Table A2 in the Web Appendix); 3) estimated first difference only model (without including levels models) to focus on the tem-
poral variation of the variables (Table A3 in the Web Appendix); and 4) estimated system GMM with a “collapsed” instrument
approach to address instrument proliferation concern (Table A4 in the Web Appendix). Overall, the results of these additional
analyses support our empirical findings presented in Table 6. Consistent with our findings based on parent brand unit sales, the
main effects of product and brand portfolio characteristics on market share are positive for product portfolio breadth (β =
0.238, p b 0.05), depth (β = 0.849, p b 0.05), and innovativeness (β = 0.405, p b 0.05). In addition, our robustness tests with
market share as the dependent variable are consistent with our main results as we observe that while the brand portfolio
scope is positively related to market share(β = 0.314, p b 0.10), perceived brand quality-market share is not significant (β =
−0.131, p N 0.10). Most importantly, our robustness tests provide additional support for the interactive effects of brand and prod-
uct portfolio characteristics on market share. Our findings indicate that broad (β = 0.034, p b 0.05), deep (β = 0.422, p b 0.05),
and innovative (β = 0.334, p b 0.05) product portfolios are related to enhanced market share of the parent brand in the automo-
tive industry when coupled with brands with higher perceived quality. Also, our robustness test results suggest that a deep and
innovative product portfolio coupled with a large brand portfolio are associated with enhanced market share (β = 0.377,
p b 0.05; β = 0.480, p b 0.05, respectively). Additionally, we also estimated the quadratic effects of breadth and depth on market
share (Table A5 in the Web Appendix). We found that the quadratic effects of both breadth and depth are statistically significant
(β = 0.029, p b 0.05; β = 0.042, p b 0.10, respectively) and that the effects of the main and interaction effects of the focal vari-
ables are similar to those presented in Table 6.
4.5. Marginal effects analysis
To better understand how the effects of product portfolio breadth, depth, and innovativeness on parent brand sales depend on
brand portfolio characteristics, we compute the marginal effects (e.g., the marginal effects of product portfolio innovativeness on
brand sales for brand portfolios with different scopes and quality positioning in the marketplace). As presented in Fig. 2, these
marginal effects indicate the amount of change in the sales of a parent brand caused by a change in the breadth, depth, and in-
novativeness of a product portfolio for brands firms with various scope or positioning characteristics (cf. Rubera & Kirca, 2017).
Our findings suggest that for the marginal effects of breadth, depth, and innovativeness at different levels of brand portfolio
scope (i.e., number of brands) are significant only for parent brands that own more than six4 different brands. In our dataset,
77% of the parent brands own less than six brands, suggesting that the positive impact of depth and innovativeness is only ampli-
fied for parent brands with a large brand portfolio scope. It should be noted that the marginal effect of breadth is also negative for
parent brands with more than six brands. Similarly, Fig. 2 also displays the marginal effects of product portfolio characteristics at
different levels of brand portfolio positioning (i.e., perceived quality). Fig. 2(d)–(f) show that the marginal effects of breadth,
depth, and innovativeness are positive and significant for parent brands with a perceived quality score of higher than sixty-
eight based on a scale of one to 100, and this is the case for about 40% of parent brands in our dataset.
5. Implications
Our study provides several important implications for research and practice. First, we provide fresh insights by providing a de-
tailed analysis of a more comprehensive set of product and brand portfolio characteristics and their effects on brand performance
than prior research in marketing. Specifically, we examine three key characteristics of a firm's product portfolio strategy (portfolio
breadth, depth and innovativeness) and two key characteristics of a firm's brand portfolio strategy (portfolio scope and position-
ing). Our findings show that an increase in the portfolio breadth, depth and innovativeness is associated with stronger market per-
formance. Thus, our findings suggest that i) a larger portfolio breadth is likely to allow firms to meet customers' heterogeneous
needs while keeping the competition at bay by increasing sales, ii) a deeper product portfolio can help firms to dominate the mar-
ket in specific product categories and enhance their market performance by offering ample variety within the categories they focus
on, and iii) higher levels of portfolio innovativeness allow firms to stay ahead of competition by shaping customer expectations
and needs proactively.
As far as the brand portfolio characteristics are concerned, our results reveal that i) a larger brand scope is associated with bet-
ter market performance because a larger brand scope allows firms to meet customers' heterogeneous needs while increasing the
barriers to entry for competitors and gaining better negotiating power over other channel members; and ii) a higher quality brand
positioning in itself does very little in terms of improving brand performance. This latter counterintuitive finding provides support
for the exclusivity arguments (Hellofs & Jacobson, 1999; Morgan & Rego, 2009). We demonstrate that brand quality image is usu-
ally associated with limited accessibility and smaller quantities (e.g., premium pricing and limited distribution), which are likely to
hinder a company's abilities to meet consumers' heterogeneous preferences.
4
We used the mean-centered values of the variables in their interactions; hence the negative values on the x-axes of the graphs in Fig. 2. Our interpretations of the
graphs are based on the actual corresponding values. Specifically, the value of 1 in scope corresponds to 1 + 5.67 = 6.67; whereas while the value of 5 in positioning
corresponds to 5 + 62.7 = 67.7.
Fig. 2. The marginal effects of breadth, depth, and innovativeness on parent brand performance (with confidence interval).
Second, we provide several interesting insights by examining the interactive effects of product and brand portfolio character-
istics on parent brands' market performance. Our research adds an important dimension to the existing body of knowledge on
product/brand portfolio strategy by shedding light onto how these interdependent decisions affect market performance in
multi-product and multi-brand companies. To begin, the conceptual tool that we call BPP Matrix (Brand-Product Portfolio Matrix)
provides managers with a framework that demonstrates the potential interactions between product and brand portfolio character-
istics. Coupled with our findings, this tool can potentially serve as a guideline for managers in their product- and brand-related
decisions. For instance, an important implication of our findings is that the market performance of parent brands with a deep
and innovative product portfolio is accentuated when they have a larger brand scope and high-quality brand positioning. However,
the very same branding strategy has opposite implications for companies looking to enlarge their product portfolio breadth. Spe-
cifically, the positive product portfolio breadth-market performance relationship is dampened when the parent brand owns a
larger number of brands and amplified when it has a higher perceived quality positioning. Therefore, managers need to pay
close attention to growth strategies at the product and brand portfolio fronts simultaneously.
In a similar vein, our findings suggest that firms that aim to expand the number of product categories while managing a high
number of brands or looking into growing their brand portfolio scope at the same time can be vulnerable in terms of market per-
formance. This means that pursuing growth in product breadth with a high number of brands would require a firm to compete for
customer attention through heavy promotions, which may increase a company's marketing expenditures while taking the focus
away from building stronger brands and potentially causing brand dilution (Kay, 2006). On the other hand, our findings offer
an encouraging solution to managers who wish to expand the breadth of their product portfolio by empirically demonstrating
that investing in a higher quality brand positioning in the marketplace helps grow a broader product portfolio. Even though a
high-quality positioning in isolation matters very little for brand performance, it does accentuate the positive portfolio breadth-
performance relationship. It is likely that a high-quality positioning sends a credible marketing signal to consumers about a parent
brand's abilities to expand into new product categories and compete with existing brands in the new product category.5
We find that a deep product portfolio seems to be most beneficial when it is either managed under multiple brands or when
the portfolio has a high-quality brand positioning. A firm with a deep product portfolio benefits more from a larger brand scope
and higher quality positioning as these brand portfolios help generate higher cash flows. This effect is arguably driven by the level
of product focus and expertise developed over the years. A deep product portfolio has a limited product focus that often targets a
specific market segment rather than catering to a broader market base. This allows the firm to understand the customer better and
help in building production and promotion efficiencies that allow to successfully manage multiple brands. Therefore, another key
suggestion for managers is to focus on a deep product portfolio, since it can effectively cater to the changing needs of existing cus-
tomers and increase market share by offering multiple brands with different benefits and price points.
With regard to interactive effects, our results reveal that the positive effect of portfolio innovativeness on parent brand perfor-
mance is amplified with a larger brand scope as it reduces the level of risk while catering to customers' ever-evolving needs. The
same is true under a higher perceived quality positioning as high perceived quality brands are likely to have a better reputation
and competitive advantage to reap the benefits of their innovative efforts in the market. For instance, Fastcompany.com has
named General Motors (GM) as one of the most innovative companies in 2018 in the transportation sector. They attribute GM's
success to learning from its failures to envisioning the future of auto industry by undertaking befitting innovations such as electric
autonomous vehicles; launching a car rental program called Maven, where drivers can rent a car by the hour through an app and
working with Lyft to test out its technology with customers.
Third, with our marginal effects analyses we take a step further to better understand the nature of the interaction effects be-
tween product and brand portfolio strategies. Our results highlight that the interaction effects are critical when a parent brand
owns more than six brands in its portfolio. In these cases, the positive depth-performance and innovativeness-performance rela-
tionships are likely to be amplified whereas the positive breadth-performance relationship is diminished. On the other hand, based
on a 100-point scale of perceived quality scores in our dataset, we find that when a parent brand scores higher than 68, the pos-
itive associations between breadth, depth, and innovativeness and parent brand sales are significantly amplified.
To summarize, Table 7 provides an overview of how our study offers unique managerial insights because we examine the in-
teractive effects of product and brand portfolios on market performance rather than the main effects of product and brand port-
folio decisions in isolation.
As presented in Table 7, our findings have unique meaningful implications for managers in the auto industry. In brief, our find-
ings show that brand portfolio decisions in auto industry enhances brand performance only when considered jointly with product
portfolio breadth, depth, and innovativeness. Most auto firms own and market a portfolio of products and brands, and make im-
portant strategic decisions related to the portfolios continuously. However, despite the vast marketing and new products literature
on product and brand portfolio management that showcase their individual importance for firm performance in isolation, the lit-
erature largely remains silent regarding how these two strategies operate together to impact a parent brand's market performance
(Brexendorf et al., 2015; Cao & Sorescu, 2013; Varadarajan et al., 2006). To the best of our knowledge, this study provides the most
comprehensive empirical evidence to date linking specific characteristics of product and brand portfolio strategies and demonstrat-
ing their interactive and marginal effects on market performance. Our study demonstrates that managing product portfolios is a
complex task because it requires a continuous assessment of new and existing product portfolio, as well as the branding portfolio
of the firm (cf. Barroso & Giarratana, 2013; Fernhaber & Patel, 2012). Our findings suggest that as consumers make their choices
based on both product and brand characteristics, managers should as well consider both together. In this regard, interactive effects
of product and brand portfolio strategies on unit sales provide very critical additional insights.
6. Limitations and future research
While our study makes important contributions to the marketing and product innovation and management fields, it also has
some limitations, which can provide opportunities for future research. First, our empirical context is a single industry with its
5
As an example, Mercedes recently launched its newest entry level luxury sedan, A-Class, at a price below $35,000 as the least expensive Mercedes model in the U.S.
Table 7
Managerial insights from previous versus current research.
Focal relationship Managerial insights from previous research Managerial insights from current research
Product portfolio • Firms with broader product lines gain larger market share and prof- • Managers need to closely monitor the growth strategies in their
breadth — itability and maintain healthy firm performance (Kang & Montoya, product and brand portfolios as the positive portfolio breadth–unit
performance 2014; Kekre & Srinivasan, 1990). sales relationship weakens when the parent brand owns a larger
• Firms, which widen their portfolio breadth get a big performance brand portfolio scope.
boost initially and but to sustain this market position, managers • Managers should invest in a high-quality brand positioning among
must build up competences and routine to exploit economies of competition if they look to grow their product portfolio breadth as a
scale and scope (Barroso & Giarratana, 2013; Caldieraro et al., 2015). high-quality brand strengthens the positive portfolio breadth–unit
sales relationship.
Product portfolio • Managers should consider both the benefits and costs of increasing • Firms with a deep product portfolio benefits more from a higher
depth — their portfolio depth as there is an inverted U-shaped relationship quality brand positioning as these types of brands help generate
performance between depth and firm performance (Barroso & Giarratana, 2013). higher cash flows.
• Firms extending their product lines aiming at matching competitor • Managers can focus on deepening their product portfolio and
product features do not enjoy market position benefits for long increase market share by offering a large scope of brands with dif-
(Caldieraro et al., 2015). ferent benefits and price points.
Product portfolio • New products in later stages of development gain greater attention • Firms that introduce highly innovative products to the market can
innovativeness — from investors and do better in the market (Grewal et al., 2008). increase the sales of these products through maintaining a large
performance • Innovative product portfolio helps firms outperform their competi- brand scope and high-quality positioning in the marketplace.
tors in terms of sales, market share and profitability (Rubera et al.,
2016; Schultz et al., 2013).
Brand portfolio • Managers are recommended to prune the brands that overlap with • Managers of parent brands owning more than six brands in the
scope — other brands to enhance brand profits (Aribarg and Arora, 2008). portfolio are more likely to see the amplified effects of the positive
performance • The best brand portfolio strategy for customer loyalty is one where a portfolio depth-performance and innovativeness-performance
greater number of brands are marketed across a smaller segment relationships.
that have low level of intra-portfolio competition and strong quality
perceptions whereas the opposite is true for market share (Morgan
& Rego, 2009).
Brand portfolio • There are substantial risks associated with sub-branding strategy • A high-quality positioning in isolation matters very little for parent
positioning — against overextension, dilution and cannibalization. Investors are brand performance but it accentuates the positive portfolio breadth-,
performance sensitive to risks associated with corporate brand connections. Man- depth-, and innovativeness-performance relationships.
agers tend to underestimate the cost of brand building while • Managers should consider investing in high-quality positioning
overestimating the returns (Hsu et al., 2016). brand portfolios aligning with the growth strategy in product
• Changes in brand quality impacts brand quality. Investors don't care portfolios.
much about the brand quality unless it impacts current-period
earnings. Given that changes in barnd quality impacts shareholder
wealth, it must bee measured and reported regularly to the investors
(Bharadwaj et al., 2011).
own unique context in terms of product and brand portfolios, and our findings are thus specific to this industry. We believe that
future research in other industries such as pharmaceuticals, high-technology, and consumer packaged goods, where the varying
innovation cycles require different product and brand portfolio strategies, should provide additional insights for managers and re-
searchers. Second, in addition to the brand sales as the performance variable, future research should examine how the change in
product and brand portfolios impacts other financial metrics that account for the cost component of marketing operations
(e.g., profits, ROS, and ROA), firm value and customer metrics (e.g., customer loyalty, satisfaction, and customer lifetime value).
Adding these types of DV's allow researchers to examine more closely the “effectiveness/efficiency” or “cost/benefit” trade-off
that we uncover in our study. Also, given the recent interest in risk and stock volatility as measures of investor response in the
marketing literature (e.g., Sorescu & Spanjol, 2008), future research should examine how product and branding decisions collec-
tively impact firm risk.
Third, future research should also investigate how product and brand portfolios emerge and develop further as a function of
heterogeneous customer preferences or competitive industry dynamics. Additional research seems to be warranted to investigate
how the interactions of product and brand portfolios from a more customer strategy perspective. Finally, our study exclusively fo-
cuses on the interactive role of brand portfolio strategy with the product portfolio strategy influencing sales. Future research can
examine the interactive effects of other marketing mix variables such as pricing, distribution management, and marketing commu-
nication with the product portfolio characteristics on sales.
Appendix A. Supplementary data
Supplementary data to this article can be found online at https://doi.org/10.1016/j.ijresmar.2019.09.003.
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IJRM-01323; No of Pages 19

International Journal of Research in Marketing xxx (xxxx) xxx

Contents lists available at ScienceDirect

Full Length Article

The interactive effects of product and brand portfolio strategies

☆ The authors have contributed equally to this research.

Study Key Findings Focal construct(s) Performance metric(s) Interaction Effect

Product portfolio Brand Market-based Financial Main

(continued on next page)

Study Key Findings Focal construct(s) Performance metric(s) Interaction Effect

Product portfolio Brand Market-based Financial Main

2.2. Key characteristics of a product portfolio

2.2.1. Portfolio breadth

2.2.2. Portfolio depth

2.2.3. Portfolio innovativeness

2.3. Key characteristics of a brand portfolio

2.3.1. Brand portfolio scope

2.3.2. Brand portfolio positioning

2.4. Interactive effects of product and brand portfolio strategies

3.2.1. Dependent variable

3.2.2. Independent variables

3.2.3. Control variables

3.3. Empirical model

Salesiðtþ1Þ ¼ β0 þ β1 Salesit þ β2 Breadthit þ β3 Depthit þ β4 Innovativenessit þ β5 Scopeit þ β6 PerceivedQualityit

ΔSalesiðtþ1Þ ¼ β1 ΔSalesit þ β2 ΔBreadthit þ β3 ΔDepthit þ β4 ΔInnovativenessit þ β5 ΔScopeit þ β6 ΔPerceivedQualityit

Variables Operational measures Data sources

4. Results and discussion

4.1. The impact of product portfolio characteristics on automotive brand sales

Variable Mean SD Minimum Maximum Skewness Corr(xt,xt-1)

1 Sales 10.465 1.603 2.485 13.419 −0.726 0.985

4.2. The impact of brand portfolio characteristics on automotive brand sales

4.3. Interactive effects of product and brand portfolio characteristics on sales

Variables Model 1 Model 2 Model 3

Coefficient Standard error Coefficient Standard error Coefficient Standard error

4.4. Robustness checks

4.5. Marginal effects analysis

6. Limitations and future research

Appendix A. Supplementary data

Supplementary data to this article can be found online at https://doi.org/10.1016/j.ijresmar.2019.09.003.

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