Optimal extended warranty strategy: uniform or nonuniform pricing?

Bin, Zheng; Bian, Yiwen; Sun, Yanhong; Huang, Ding

doi:10.1111/itor.12611

Cited by 22 publications

(11 citation statements)

References 34 publications

(60 reference statements)

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“…Considering the impact of consumers' purchasing decisions of extended warranties on warranty costs, He et al [57] established a warranty cost model based on the product failure processes. Zheng et al [58] studied the best pricing decisions for flexible extended warranty periods and pointed out that EWSs can be sold at the end of product sales or the end of the basic warranty. Dan et al [59] considered a dual-channel supply chain in which both manufacturers and retailers can sell homogeneous products bundled with extended warranty services provided by manufacturers.…”

Section: Ews Strategymentioning

confidence: 99%

Extended Warranty Strategy and Its Environment Impact of Remanufactured Supply Chain

Zhang

Sun

et al. 2022

IJERPH

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To reduce environmental pollution, the government has issued relevant laws and regulations, and more and more enterprises engage in remanufacturing and recycling used products. Trade old for new and trade old for remanufactured have become marketing means to promote product recycling. The extended warranty service is used to promote the recycling of waste products. To design an optimal extended warranty service strategy and analyze its environment impact in a remanufactured supply chain, game theory is used to model the competitive relationship between a manufacturer and an E-commerce platform. Considering whether the E-commerce platform provides extended warranty service, four models are constructed, and the extended warranty service strategy and its environment impact can be analyzed. The results show that, when the level of substitutability between remanufactured and new products meets a certain rage, new or remanufactured products with extended warranty service strategy can increase the demand for new or remanufactured products, respectively. In the four models, the changing trends of manufacturer’s profit, E-commerce platform’s profit and supply chain’s profit, consumer surplus, environmental impact and social welfare are the same, but only the thresholds are different. From the perspectives of supply chain member, supply chain system, consumer, environment and society, the new and remanufactured products with extended warranty service strategy is the best choice.

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Section: Ews Strategymentioning

confidence: 99%

Extended Warranty Strategy and Its Environment Impact of Remanufactured Supply Chain

Zhang

Sun

et al. 2022

IJERPH

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“…Kong et al (2019) consider a service supply chain consisting of a manufacturer and a wind turbine supplier (module supplier), in which the wind turbine supplier act as the service provider. Zheng et al (2021) investigate that how the manufacturers should sell extended warranties, the traditional or flexible extended warranty, to achieve high profitability.…”

Section: Product Service Operation Managementmentioning

confidence: 99%

Competing product service in an OEM supply chain with upstream module suppliers as service providers

Liu

Zhao

Lee

2021

Int Trans Operational Res

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Modular production brings new opportunities for service provisions. We examine a supply chain consisting of two competing module suppliers and a common manufacturer, in which the manufacturer sources two differentiated modules from two suppliers and then produces two competing products for consumers. A delegation relationship is applied to explore the possibility of the module services offered by the suppliers. When the service commission fees are fixed, there exist optimal commission fees to maximize the manufacturer's profit. Service commission fees, service efficiencies, service sensitivity, and market types greatly affect the service levels, prices, and profitability of each member in the supply chain. The manufacturer should strategically adopt differentiated pricing strategies and service provisions from two suppliers rather than the best service abilities of the suppliers. In the service-level sensitivity market, the improved service levels are more attractive to consumers so that the manufacturer will charge high prices by investing more in services. Product services with "high quality, high price" are more suitable for high-end consumers. We also consider the variable service commission fees and find that there are still some robust results except that the effects of the service incentives and the commission fees will be enlarged.

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“…For durable consumer products, after-sale services play an important role in customers' purchase decisions (Kurata and Nam, 2010). The basic warranty as an after-sale service is available to product owners via offering a free repair and replacement, except for basic warranty, extended warranty service has become popular, Zheng et al (2018) examine a extended warranty under which an additional trade-in service is provided during the warranty coverage, and find that the new extended warranty does not be offered at a higher price than basic warranty, but when the handling cost for used products is relatively low, the extended warranty will outperform basic warranty. Tong et al (2014) consider a base warranty consisting of two-dimensional region of age and usage, and analyze a designing and pricing model of two-dimensional extended warranty contracts.…”

Section: Research Of Extended Warranty Servicementioning

confidence: 99%

How to Choose the Refueling of New Energy Vehicles under Swapping Vs. Charging Mode: From the Consumers’ Perspective

Liu

2021

Preprint

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Background: Battery charging mode is a prevalent method of transshipping power to new energy vehicles. Unfortunately, due to the limited capacity of batteries, typical new energy vehicles can only travel for approximate 350 miles on a single charge and require hours to be recharged. Battery swapping mode, as a novel alternative, can offer ideal solutions by depleted batteries being exchanged for recharged ones at swapping stations in the middle of long trips, thus will inevitably influence potential consumers’ purchase behaviors accordingly.Methods: To examine the impact of swapping mode and charging mode on consumers’ purchase intention, this paper examines a duopolistic market consisting of two new energy vehicle makers (i.e., new energy vehicle maker with swapping mode and one with charging mode), who adopting swapping mode and charging mode to service consumers, respectively. Considering swapping mode characterized with low initial investment and ease of use for consumers, the new energy vehicle makers with charging mode, capitalize on battery extended warranty service in response to rivals’ utilization of swapping mode, thereby non-cooperative game models are formulated, in which government subsidies are taken into account, both the optimal production decision for the new energy vehicle maker with swapping mode maker and one with charging mode are analyzed under three scenarios: without extended warranty service, with extended warranty service, and with extended warranty service and subsidy.Results: The results show that two makers’ market dominance relies on the ratio of the swapping station’s convenience to the extended warranty service and the valuation incremental rate. Additionally, we also find that the government subsidy can dramatically improve the performance of the new energy vehicle maker with swapping mode at the initial stage, but if the subsidy is insufficient size at the sequent stage, this will lead to policy failure and inefficiency in propelling the diffusion of swapping mode.Conclusions: The emerging swapping mode technology is a promising innovative one in boosting new energy vehicle diffusion, which will supplement to charging mode, thus reduce climate change dramatically

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Optimal extended warranty strategy: uniform or nonuniform pricing?

Cited by 22 publications

References 34 publications

Extended Warranty Strategy and Its Environment Impact of Remanufactured Supply Chain

Extended Warranty Strategy and Its Environment Impact of Remanufactured Supply Chain

Competing product service in an OEM supply chain with upstream module suppliers as service providers

How to Choose the Refueling of New Energy Vehicles under Swapping Vs. Charging Mode: From the Consumers’ Perspective

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