2014 Winter Marketing Educators Conference, Poster Session, February 2014, Orlando, FL
Shan Lin, Co-authors: Bill Ross, Hongju Liu
This article provides an empirical investigation of the effects of six product line positioning strategies (high, medium, low, high–medium, medium–low, and high–medium–low) and three primary branding strategies (corporate branding, house-of-brands, and mixed-branding) on firms’ financial performance—cash flow and idiosyncratic risk—after controlling for firm size, leverage, profitability, profits volatility, market-to-book ratio, current liabilities, acquisitions, and advertising spending. This research illustrates that as one of the marketing instruments, product line positioning strategy matters. Narrower product line positioning strategies are associated with higher cash flow and lower firm idiosyncratic risk, while broader product line positioning strategies are associated with lower cash flow and higher firm idiosyncratic risk. In addition, branding strategies have a significant impact on firms’ cash flow but not idiosyncratic risk. In addition, product line positioning strategy moderates the relationship between branding strategies and cash flow but not the relationship between branding strategies and firm idiosyncratic risk.