Product Line Design and Channel Configuration in Low-Carbon Supply Chains

Abstract

In low-carbon economy, governmental regulations and consumer eco-awareness significantly influence firms’ scheming of product architecture and channel mode as well as operations efficacy. Firms navigate these impacts by leveraging product line strategies to reconcile emission costs and market advantages in supply chains. This study delves into a low-carbon manufacturer–retailer supply chain, focusing on upstream emission reduction amid evolving consumer eco-awareness. Analyzing market segmentation and mass marketing product line approaches across varied channel setups, we uncover their distinct impacts on chain profitability and social welfare. Optimal pricing and strategic alignment criteria are identified for diverse product-line-channel blends. Manufacturer profit-prioritized decisions pivot on emission reduction, channel cost, consumer price sensitivity, and proportion of green consumers for self-interest optimization while social welfare oriented decisions depend on environmental awareness. We further conduct extension to analyze hybrid-channel scenarios, advising manufacturer's channel mode selection under either of two product line design strategies with managerial insights and implications. We show that it is substantial to pursue product line design through the lens of examining diverse channel configurations, which underlies the further pursuance of conditionally optimal matching between product line and channel mode. Our deployment of taking channel configuration as an endogenous dimension in attaining globally optimal product line design and its suited channel mode can enrich the understanding of product development and marketing intersection. Manufacturer can tailor strategies contingently on price competition intensity, emission-reduction-efficiency and consumer composition while policymakers may exploit our proposed analysis framework to scheme regulations for guiding firm behavior towards obtaining optimal social welfare.