Focusing on the horizontal and vertical product line extension strategies in different di-mensions,this study constructs a dynamic game model between manufacturer and retailer in the con-text of traditional channel and dual-channel,analyzes the conditions for manufacturer to carry out the two-dimensional product line extension,and examines the impact of manufacturer's channel invasion on system equilibrium.The results show that manufacturer will carry out two-dimensional product line extension when the horizontal design cost of the product is small and the production cost is moder-ate,and the product line extension strategy is affected by both product competition and cost efficien-cy.The manufacturer's channel invasion increases the possibility of two-dimensional extension of product line,but the use of dual-channel for product line extension is not always optimal,which is de-termined by consumers'acceptance of direct sales channel and production cost.In addition,under the two-dimensional product line extension strategy,the manufacturer who engages in channel invasion may result in a lose-lose situation.
dual-channelbidimensional product line extensionpricing strategyvertical quality level