The Strategy of New Product Introduction in Durable Goods with Secondary Market: Application of the Optimization Method to Supply Chain Problem

The Strategy of New Product Introduction in Durable Goods with Secondary Market: Application of the Optimization Method to Supply Chain Problem

The aim of this paper is to address how the secondary market affects the strategy of the manufacturer’s new product introduction by using the optimization method. To do so, we develop a two-period model in which a monopolistic manufacturer sells its new durable products directly to end consumers in...

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Main Authors: Pei Zhao, Zhongkai Xiong
Format: Article
Language:English
Published: Hindawi Limited 2014-01-01
Series:Journal of Applied Mathematics
Online Access:http://dx.doi.org/10.1155/2014/543092
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spelling doaj-539091580c2c4ef986c8296139026d862020-11-24T22:32:07ZengHindawi LimitedJournal of Applied Mathematics1110-757X1687-00422014-01-01201410.1155/2014/543092543092The Strategy of New Product Introduction in Durable Goods with Secondary Market: Application of the Optimization Method to Supply Chain ProblemPei Zhao0Zhongkai Xiong1School of Economics and Business Administration, Chongqing University, Chongqing 400044, ChinaSchool of Economics and Business Administration, Chongqing University, Chongqing 400044, ChinaThe aim of this paper is to address how the secondary market affects the strategy of the manufacturer’s new product introduction by using the optimization method. To do so, we develop a two-period model in which a monopolistic manufacturer sells its new durable products directly to end consumers in both periods, while an entrant operates a reverse channel selling used products in the secondary market. We assume that the manufacturer launches a higher quality product in the second period for the technological innovation. We find that the secondary market can actually increase the manufacturer’s profitability and drives the new product introduction in the second period. We also derive the effect of the durability and the degree of quality improvement on the pricing of supply chain partners.http://dx.doi.org/10.1155/2014/543092
collection DOAJ
language English
format Article
sources DOAJ
author Pei Zhao
Zhongkai Xiong
spellingShingle Pei Zhao
Zhongkai Xiong
The Strategy of New Product Introduction in Durable Goods with Secondary Market: Application of the Optimization Method to Supply Chain Problem
Journal of Applied Mathematics
author_facet Pei Zhao
Zhongkai Xiong
author_sort Pei Zhao
title The Strategy of New Product Introduction in Durable Goods with Secondary Market: Application of the Optimization Method to Supply Chain Problem
title_short The Strategy of New Product Introduction in Durable Goods with Secondary Market: Application of the Optimization Method to Supply Chain Problem
title_full The Strategy of New Product Introduction in Durable Goods with Secondary Market: Application of the Optimization Method to Supply Chain Problem
title_fullStr The Strategy of New Product Introduction in Durable Goods with Secondary Market: Application of the Optimization Method to Supply Chain Problem
title_full_unstemmed The Strategy of New Product Introduction in Durable Goods with Secondary Market: Application of the Optimization Method to Supply Chain Problem
title_sort strategy of new product introduction in durable goods with secondary market: application of the optimization method to supply chain problem
publisher Hindawi Limited
series Journal of Applied Mathematics
issn 1110-757X
1687-0042
publishDate 2014-01-01
description The aim of this paper is to address how the secondary market affects the strategy of the manufacturer’s new product introduction by using the optimization method. To do so, we develop a two-period model in which a monopolistic manufacturer sells its new durable products directly to end consumers in both periods, while an entrant operates a reverse channel selling used products in the secondary market. We assume that the manufacturer launches a higher quality product in the second period for the technological innovation. We find that the secondary market can actually increase the manufacturer’s profitability and drives the new product introduction in the second period. We also derive the effect of the durability and the degree of quality improvement on the pricing of supply chain partners.
url http://dx.doi.org/10.1155/2014/543092
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AT zhongkaixiong thestrategyofnewproductintroductionindurablegoodswithsecondarymarketapplicationoftheoptimizationmethodtosupplychainproblem
AT peizhao strategyofnewproductintroductionindurablegoodswithsecondarymarketapplicationoftheoptimizationmethodtosupplychainproblem
AT zhongkaixiong strategyofnewproductintroductionindurablegoodswithsecondarymarketapplicationoftheoptimizationmethodtosupplychainproblem
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