Quelch and Kenny provide a timely summary of the reasons and rationalizations for product proliferation. My own shelf-space research, in fact, leads me to support their analysis of Snackco. I do, however, see a role for extensions as a method of continually improving the core brand.
Shelf-allocation models that two colleagues and I built confirm that selecting the right products and giving them enough space to keep them in stock are far more important than adding space for marginal items. Shelf-management systems that do not consider how consumers behave when products are out of stock mislead marketers and retailers into adding more product lines than they really need.
The problem Snackco faces can become an even tougher battle in the majority of companies. First, other companies generally depend on secondary market-research suppliers for shelf data. Second, other companies have only indirect influence on the shelf, mainly through retail buyers and merchandisers. Snackco’s direct-delivery system supplies good data and greater influence over how products are placed. Third, because Snackco delivers directly to stores, it may economically place lower quantities on the shelf. Other companies have to deal with the minimum-order quantities dictated by more cumbersome delivery systems, further reducing the flexibility of shelf designs. These factors argue for other companies to stick even closer to their core products.