The Architecture of Product Offerings: A Rational Framework for Designing Profitable Product Offerings; Helping Executives and Entrepreneurs Answer The Question: When is Customer Choice Too Costly?

Business Wire, Feb 15, 2006

CAMBRIDGE, Mass. -- What choices should you offer your customers and which ones shouldn't you? The answer to this question has profound consequences for business strategy, product design, marketing, and pricing, not to mention product adoption. A new paper published by Market Platform Dynamics introduces the concept of Product Offering Architecture (POA) - a rational framework for determining the cost of choice to both consumers and companies. POA supports decision-making related to the design of product offerings, with an emphasis on the cost to both companies and consumers of providing multiple options, features, and choices.

POA is based on extensive field research on product offerings, business models, and pricing in diverse industries and draws on theoretical work on bundling, versioning, and other aspects of product architecture. Although related to the literature on product bundling, it differs dramatically from previous thinking. POA sheds new light on how the total costs of making alternative product offerings, including the costs to consumers of added choice, impact the overall profitability of the product offer. POA principles, therefore, enable companies to increase long-run profits, identify viable product innovations, and avoid disruptive competition.

The paper outlines 4 basic POA strategies and illustrates how POA was applied to product design decisions for digital music.

Those interested in receiving a copy of the report should visit www.marketplatforms.com or send an e-mail to info@marketplatforms.com.

About Market Platform Dynamics:

Market Platform Dynamics (MPD) is a management consulting firm that designs smart strategies for platform-based businesses. MPD is led by Founder David S. Evans, Visiting Professor, University College London and Chairman Richard Schmalensee, Dean of the MIT Sloan School. They are the co-authors of several books, including Invisible Engines (forthcoming MIT Press, Fall 2006), The Catalyst Code (forthcoming Harvard Business School Press, Winter 2007,) and Paying with Plastic, 2nd Ed. (MIT Press, 2005). The MPD team of economists, business strategists, and marketing and product development experts use their quantitative expertise, methods, and tools to help companies effectively unleash profits, create value, and stimulate innovation.