A model of product line design and introduction sequence with reservation utility

► We investigate the impact of external options, represented by reservation utility, on product line design and introduction sequence. ► We find that heterogeneous reservation utility defines the relative attractiveness of segments and corresponding product line. ► Reservation utility makes it more favorable to introduce products sequentially rather than simultaneously. ► Aggregating segments is an effective way to mitigate cannibalization when it becomes too difficult to manage with different values of reservation utility across multiple segments. ► Introducing products in a non-monotone order of quality can improve profit from simultaneous introduction.