www.sciedu.ca/bmr Business and Management Research Vol. 4, No. 1; 2015 Published by Sciedu Press 48 ISSN 1927-6001 E-ISSN 1927-601X Effects of Brand Portfolio and Product Line Strategy on Brand Market Share Evidence from Chinese Cellphone Market Xuenan Ju 1 , Zuohao Hu 1 & Xia Liu 1 1 Department of Marketing, School of Economics and Management, Tsinghua University, Beijing 100084, China Correspondence: Xuenan Ju, Department of Marketing, School of Economics and Management, Tsinghua University, Beijing 100084, China. E-mail: juxn.10@sem.tsinghua.edu.cn Received: January5, 2015 Accepted: January 22, 2015 Online Published: January23, 2015 doi:10.5430/bmr.v4n1p48 URL: http://dx.doi.org/10.5430/bmr.v4n1p48 Abstract This paper investigates the effects of brand portfolio and product line strategy of cellphone brands’ market share in China. Based on the 15-month data of Chinese cellphone markets, the authors conducted the empirical analysis using a two-way fixed effect model. The results show that foreign cellphone brands and Chinese local cellphone brands market share response differently to price level, product line level, and geographic level variables. Increasing segment coverage and widening product line enhances both foreign and local brands’ market share. However, price-level factors have opposite influence on foreign and local brands in that price negatively relates to foreign brands’ market share but positively relates to local brands’ market share. Similarly, price concentration shows a negative impact on foreign brands but positive impact on local brands’ market share. Finally, longer brand history positively relates to foreign brands’ market share but negatively relates to local brands’ market share. This research provides useful guidelines and managerial implications in the context of Chinese market. Keywords: Product line strategy, Cellphone markets, Market share, Brand portfolio, Herfindahl-Hirschman-Index (HHI) Acknowledgement The authors appreciate the generous financial support from the National Science Foundation of China for Projects No. 71372046 and 7107201. 1. Introduction Cellphone market has been increasingly gaining attention from marketing researchers with the prevalence of mobile and information technology in recent years. Chinese cellphone market, while sharing the similar characteristics of typical cellphone markets, also embraces many unique features that influenced by both micro- and macro-economic environments in China. The huge market potential attracts many cellphone brands from both home and abroad, hence lead to severe competition. The launch of iPhone in 2007 changed the design and function style of the whole industry. Apple overturned the conception of smart phones in terms of user experiences as well as marketing strategy. As a matter of fact, the focuses of competition in cell phone industry were reshaped from focusing on hardware competition to operating system. In addition, it is iPhone’s success catalyzed the new era of branding in cell phone industry. Manufacturers began to realize that purely compete on hardware would not lead them into continuously increasing market share. In contrary, the power of brand could play a critical role in helping cellphone manufactures survive the fierce competition (Iimi, 2005). While analyzing cellphone market share from brand perspective could provide a helpful way that could lead to market success, several problems remain to be solved before we can put them into marketing practice (Child, Chung, & Davies, 2003). Especially in Chinese cellphone market, in which complexity and diversity of competition are almost constant to its players, the relationship between branding and market share needs to be articulated properly. Therefore, our research questions can be stated as: what are the key determinants and mechanisms influencing the