The retailer’s trade-in activity under the manufacturer’s upgrading strategy
Journal of Modelling in Management
ISSN: 1746-5664
Article publication date: 10 June 2022
Issue publication date: 7 September 2023
Abstract
Purpose
This paper aims to study the impact of manufacturer’s upgrading strategy of durable products on the retailer’s decision on trade-in program and her decision on the secondary market.
Design/methodology/approach
This paper develops a channel that consists of a manufacturer and a retailer, where the manufacturer releases an upgraded product, and the retailer introduces a trade-in program for consumers, simultaneously, decides whether to enter the secondary market. These approaches are modeled through Stackelberg game.
Findings
This paper reveals that the optimal conditions for manufacturer to release upgraded products and retailer to resell used products in the secondary market, and it reveals that under what conditions it is profitable for retailer to enter the secondary market under product upgrade levels.
Practical implications
If the manufacturer’s upgrade level is low, it is profitable for the retailer to enter the secondary market. However, if the manufacturer’s upgrade level is high, it is unprofitable for the retailer to enter the secondary market.
Originality/value
In this paper, the active secondary market, upgrading of new products, consumer market segmentation and especially, the upgrade degree of new products as a function of consumer demand are considered simultaneously.
Keywords
Acknowledgements
Financial support from the National Natural Science Foundation of China (71991464, 71921001), Major Project of the National Social Science Fund of China (18ZDA064) and the Fundamental Research Funds for the Central Universities (WK2040000027) are gratefully acknowledged.
Citation
Yang, F., Wu, X. and Shan, F. (2023), "The retailer’s trade-in activity under the manufacturer’s upgrading strategy", Journal of Modelling in Management, Vol. 18 No. 5, pp. 1420-1453. https://doi.org/10.1108/JM2-01-2022-0003
Publisher
:Emerald Publishing Limited
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