Effects of a secondary market on original equipment manufactures’ pricing, trade-in remanufacturing, and entry decisions

Li, Yongjian; Feng, Lipan; Govindan, Kannan; Xu, Fangchao

doi:10.1016/j.ejor.2019.03.039

Cited by 107 publications

(43 citation statements)

References 35 publications

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“…From Proposition 1, relying on the relationship among parameters, the discount coefficient of the consumer's perception of old products, the advertisement effect of the market demand, the residual advertisement effect, the cost of manufacturing with new material, and the cost of remanufacturing with used products, there exists three types of conditions (namely JATA, JPTA and JNTA). The formulation is similar to Li et al [15] and Miao et al [14].…”

Section: Propositionmentioning

confidence: 92%

“…Moreover, they found that the residual value of used products is one of the key factors to the trade-in strategy pricing decisions, and profits of the whole supply chain system. Based on their research, Li et al [15] developed a two-period closed-loop supply chain model, considering the influence of a secondary market, where the OEM can sell its remanufactured products. The literature about the trade-in program mainly discuss the role of a trade-in strategy stimulating market demand, reducing resource waste, and improving the total social welfare [16][17][18][19][20].…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Joint Advertisement and Trade-In Marketing Strategy in Closed-Loop Supply Chain

Chen

Dong

et al. 2020

Sustainability

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With environmental problems becoming severe, many firms, including HP, Huawei, and Apple are simultaneously implementing trade-in programs and advertising to stimulate market demand. Offering trade-in service by the manufacturer is a method of price discrimination by providing replacement consumers with a rebate when they purchase new products. With the recycled, used products, the manufacturer can benefit through a strict series—via a remanufacturing process. Although numerous literatures have investigated the pricing strategy and advertising decisions in the closed-loop supply chain (CLSC), to the best of our knowledge, there is little research that analyzes and compares the economic and social performance of these two marketing strategies. To fill this gap, we establish two supply chain models with two periods, namely, an advertisement model and a joint model, while the equilibrium purchasing behavior of the replacement consumers can be characterized under three conditions: (1) all of the replacement consumers purchasing new products (ATA); (2) partial replacement consumers purchasing (PTA); (3) no replacement consumers purchasing (NTA). These three conditions are decided by the numerous relationships of the parameters. Solving the optimal decisions of the manufacturer in both models, the critical value in the joint model is higher in the advertisement model, which indicates that developing the trade-in program can enhance the robustness of the business model. Furthermore, through numerical example, we find that the market demand in the joint model is higher than in the advertisement model, and the cost of marketing strategy in the joint model is lower in the advertisement model, which means that the efficiency of the marketing strategy is higher than the single marketing strategy. As a result, comparing the economic and social performance between the two models, we conclude that the advertisement elasticity of the market demand is the key factor of the manufacturer’s profits and total social welfare.

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Section: Propositionmentioning

confidence: 92%

Section: Introductionmentioning

confidence: 99%

Joint Advertisement and Trade-In Marketing Strategy in Closed-Loop Supply Chain

Chen

Dong

et al. 2020

Sustainability

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show abstract

“…Rao et al [31] develop an analytical model that incorporates key features of realworld durable goods markets and study a trade-in strategy amounts to an intervention by the firm in the used goods market. A handful of researchers have compared the "trade-oldfor-remanufactured" strategy with the "trade-old-for-new" strategy [33,34]. Ma et al [33], for example, consider the coexistence of these two strategies, and identify the thresholds that determine whether the firm should offer both simultaneously.…”

Section: Trade-in Strategymentioning

confidence: 99%

Trade-in Strategy and Competition between Two Independent Remanufacturers

Feng

Luo

Liu

2021

IJERPH

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Trade-in strategy is a common mode of promotion for firms taking part in the circular economy because it encourages consumers to buy remanufactured products, via a “trade-old-for-remanufactured” framework. This paper studies trade-in strategy by developing game models for a closed-loop supply chain with one manufacturer and two independent remanufacturers. The former is responsible for producing and selling new products and the latter two compete with each other for the collection of used products and the sales of remanufactured products. Unlike the extant literature, this paper focuses on the competition between two independent remanufacturers (IRs) and studies on how holder segment (whether or not to own used products) and competition affects the trade-in strategy. It finds that the proportion of holders on the remanufactured product prices of the IR1 and IR2 have a negative correlation. Conversely, the impact of the proportion of holders on the IR1’s and IR2’s demands (and on their profits) is the opposite. The trade-in strategy generates more benefits for the IR1 only when the proportion of holders is sufficiently high. In addition, when consumers experience a greater difference in durability between remanufactured products and original new products, trade-in strategy is more welcomed by consumers, which in turn, generates more benefits for the IR1.

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“…In this case, consumers can choose to buy the competing product as a substitute for the manufacturer's product. Here,

ξ

is introduced to reflect the difference between the two products and consumers obtain

ξ v

from buying the competing product if it fits (Ru et al., 2015; Li et al., 2019). More specifically,

0 < ξ < 1

represents the manufacturer's product bringing more value while

ξ > 1

represents that the competing retailer's product brings more value for consumers.…”

Section: Modelmentioning

confidence: 99%

Should an online manufacturer partner with a competing or noncompeting retailer for physical showrooms?

Bin

Zhang

Guan

et al. 2020

Int Trans Operational Res

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More and more online manufacturers collaborate with offline retailers who provide retail services to showcase products in offline retailers’ stores and feature the stores as physical showrooms. Since offline retailers may be noncompeting or competing depending on the product they sell, we investigate two collaboration strategies. Our results show that product competition causes the decreased demand that is realized through physical showroom (negative competition effect) and the increased demand to buy online directly (positive spillover effect) for the online manufacturer. When the positive spillover effect dominates the negative competition effect, the online manufacturer prefers to partner with the competing retailer and strategically sets a high price. Interestingly, the online manufacturer's willingness to partner with the competing retailer may increase with competing product value. Besides, the online manufacturer may benefit from the increased value of the competing product and the increased commission that is paid to the retailer under product competition.

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Effects of a secondary market on original equipment manufactures’ pricing, trade-in remanufacturing, and entry decisions

Cited by 107 publications

References 35 publications

Joint Advertisement and Trade-In Marketing Strategy in Closed-Loop Supply Chain

Joint Advertisement and Trade-In Marketing Strategy in Closed-Loop Supply Chain

Trade-in Strategy and Competition between Two Independent Remanufacturers

Should an online manufacturer partner with a competing or noncompeting retailer for physical showrooms?

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