One important reason for offering customized products is to satisfy consumers’ need for product uniqueness. In this paper, we take consumers’ unique preferences into account to examine how firms make decisions on vertical line extensions with introducing a customized product. This study develops the consumer’s utility function, which captures consumers’ behavioural and emotional factors, and the results show that the high-quality firm always introduces an upward extension without uniqueness sensitivity. However, introducing a downward extension may be more profitable especially when consumers have the high unique ness sensitivity. We also find that the upward extension of the high-quality firm does not intensify competition with the low-quality firm, but its downward extension will intensify the competition between two firms, whether with or without unique preferences. We also analyse the low-quality firm’s extension decisions when it faces a high-end competitor and find that the low-quality firm may change from introducing a downward extension to introducing an upward extension when intrafirm quality differentiation is small.

中文翻译：

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竞争激烈的市场中满足消费者对产品独特性需求的垂直线延伸决策

提供定制产品的重要原因之一是满足消费者对产品独特性的需求。在本文中，我们考虑了消费者的独特偏好，以研究企业如何通过引入定制产品来做出垂直线延伸方面的决策。这项研究开发了消费者的效用函数，该函数捕获了消费者的行为和情感因素，结果表明，高质量的公司总是引入向上延伸而没有唯一性敏感性。但是，引入向下延伸可能会更有利可图，特别是当消费者具有很高的独特感度时。我们还发现，高素质企业的向上扩张并不会加剧与低素质企业的竞争，但是其向下扩张会加剧两家企业之间的竞争，无论有没有独特的偏好。我们还分析了低质量公司面对高端竞争者时的扩展决策，发现当公司内部质量差异较小时，低质量公司可能会从引入向下扩展变为引入向上扩展。