Diffstrat: An analytical procedure for generating optimal new product concepts for a differentiated-type strategy

Abstract Firms are likely to consider employing multiple products in markets where competition and heterogeneity of consumer preferences suggest the use of market segmentation. The problem of identifying the optimal multiple new product concepts for such a market may be considered in either a sequential (one product at a time) or a simultaneous fashion. We show that the ‘optimal’ new product concepts generated sequentially are different from, and generality inferior to, those generated simultaneously. In this paper we present a new procedure, Diffstrat , which solves this problem of generating simultaneously optimal multiple new products for a wide range of consumer preference models. This procedure utilizes a fundamental insight called the augmented space approach to solve this problem.

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