Warranty as an Effective Strategy for Remanufactured Product

Author:

Liao Bifeng1,Li Bangyi2

Affiliation:

1. School of Economics and Management, Nanjing University of Aeronautics and Astronautics, Nanjing, China & School of Mathematics and Information Science, Yantai University, Yantai, China

2. School of Economics and Management, Nanjing University of Aeronautics and Astronautics, Nanjing, China

Abstract

Consumers cannot fully evaluate the product quality before purchase. To reduce consumer risk, some manufacturers offer consumer warranty. Up to now, there are many studies investigating this role, but they seldom consider from the perspective of consumer utility. Consumers view remanufactured products as being of lower quality and are less willing to pay for them. It is important to incorporate the manufacturer's service and consumer heterogeneity in the model. Those employed in the remanufacturing industry are advised to increase the level of warranty associated with their remanufacturing products in order to command higher prices for their products in the marketplace. This paper firstly considers consumer utility, then develops three marketing settings to examine the impact of warranty services, and finally compares the optimal prices and profits among them. The results show that the manufacturer's warranty policy can enhance profit, and the profit is highest when both new and remanufactured products provided differentiated warranty.

Publisher

IGI Global

Subject

Information Systems,Management Information Systems

Cited by 1 articles. 订阅此论文施引文献 订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献

1. Enhancing Closed-Loop Supply Chain in Global Supply Chain;Supply Chain Management Strategies and Risk Assessment in Retail Environments;2018

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