IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v61y2015i1p60-72.html
   My bibliography  Save this article

Remanufacturing, Third-Party Competition, and Consumers' Perceived Value of New Products

Author

Listed:
  • Vishal V. Agrawal

    (McDonough School of Business, Georgetown University, Washington, DC 20057)

  • Atalay Atasu

    (Scheller College of Business, Georgia Institute of Technology, Atlanta, Georgia 30332)

  • Koert van Ittersum

    (Faculty of Economics and Business, Department of Marketing, University of Groningen, 9747 AE Groningen, The Netherlands)

Abstract

In this paper, we investigate whether and how the presence of remanufactured products and the identity of the remanufacturer influence the perceived value of new products through a series of behavioral experiments. Our results demonstrate that the presence of products remanufactured and sold by the original equipment manufacturer (OEM) can reduce the perceived value of new products by up to 8%. However, the presence of third-party-remanufactured products can increase the perceived value of new products by up to 7%. These results suggest that deterring third-party competition via preemptive remanufacturing may reduce profits, whereas the presence of third-party competition may actually be beneficial for an OEM. This paper was accepted by Serguei Netessine, operations management.

Suggested Citation

  • Vishal V. Agrawal & Atalay Atasu & Koert van Ittersum, 2015. "Remanufacturing, Third-Party Competition, and Consumers' Perceived Value of New Products," Management Science, INFORMS, vol. 61(1), pages 60-72, January.
    • Handle: RePEc:inm:ormnsc:v:61:y:2015:i:1:p:60-72
    DOI: 10.1287/mnsc.2014.2099
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.2014.2099
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.2014.2099?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Lesley Chiou & Catherine Tucker, 2012. "How Does the Use of Trademarks by Third-Party Sellers Affect Online Search?," Marketing Science, INFORMS, vol. 31(5), pages 819-837, September.
    2. V. Daniel R. Guide & Luc Muyldermans & Luk N. Van Wassenhove, 2005. "Hewlett-Packard Company Unlocks the Value Potential from Time-Sensitive Returns," Interfaces, INFORMS, vol. 35(4), pages 281-293, August.
    3. Sezer Ülkü & Claudiu V. Dimofte & Glen M. Schmidt, 2012. "Consumer Valuation of Modularly Upgradeable Products," Management Science, INFORMS, vol. 58(9), pages 1761-1776, September.
    4. Jonah Berger & Michaela Draganska & Itamar Simonson, 2007. "The Influence of Product Variety on Brand Perception and Choice," Marketing Science, INFORMS, vol. 26(4), pages 460-472, 07-08.
    5. Geraldo Ferrer & Jayashankar M. Swaminathan, 2006. "Managing New and Remanufactured Products," Management Science, INFORMS, vol. 52(1), pages 15-26, January.
    6. Laurens G. Debo & L. Beril Toktay & Luk N. Van Wassenhove, 2005. "Market Segmentation and Product Technology Selection for Remanufacturable Products," Management Science, INFORMS, vol. 51(8), pages 1193-1205, August.
    7. Min Ding & Rajdeep Grewal & John Liechty, 2005. "Incentive-aligned conjoint analysis," Framed Field Experiments 00139, The Field Experiments Website.
    8. Nelson, Phillip, 1970. "Information and Consumer Behavior," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 311-329, March-Apr.
    9. repec:cup:judgdm:v:5:y:2010:i:5:p:411-419 is not listed on IDEAS
    10. Michael Waldman, 2003. "Durable Goods Theory for Real World Markets," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 131-154, Winter.
    11. Sanjiv Erat & Sreekumar R. Bhaskaran, 2012. "Consumer Mental Accounts and Implications to Selling Base Products and Add-ons," Marketing Science, INFORMS, vol. 31(5), pages 801-818, September.
    12. V. Daniel R. Guide & Luk N. Van Wassenhove, 2009. "OR FORUM---The Evolution of Closed-Loop Supply Chain Research," Operations Research, INFORMS, vol. 57(1), pages 10-18, February.
    13. repec:cup:judgdm:v:5:y:2010:i:3:p:159-163 is not listed on IDEAS
    14. Taylor Randall & Karl Ulrich & David Reibstein, 1998. "Brand Equity and Vertical Product Line Extent," Marketing Science, INFORMS, vol. 17(4), pages 356-379.
    15. Kim, Chung K. & Lavack, Anne M. & Smith, Margo, 2001. "Consumer evaluation of vertical brand extensions and core brands," Journal of Business Research, Elsevier, vol. 52(3), pages 211-222, June.
    16. Preyas Desai & Devavrat Purohit, 1998. "Leasing and Selling: Optimal Marketing Strategies for a Durable Goods Firm," Management Science, INFORMS, vol. 44(11-Part-2), pages 19-34, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vishal Agrawal & Atalay Atasu & Sezer Ülkü, 2021. "Leasing, Modularity, and the Circular Economy," Management Science, INFORMS, vol. 67(11), pages 6782-6802, November.
    2. Tianqin Shi & Dilip Chhajed & Zhixi Wan & Yunchuan Liu, 2020. "Distribution Channel Choice and Divisional Conflict in Remanufacturing Operations," Production and Operations Management, Production and Operations Management Society, vol. 29(7), pages 1702-1719, July.
    3. Nektarios Oraiopoulos & Mark E. Ferguson & L. Beril Toktay, 2012. "Relicensing as a Secondary Market Strategy," Management Science, INFORMS, vol. 58(5), pages 1022-1037, May.
    4. Vishal V. Agrawal & Stylianos Kavadias & L. Beril Toktay, 2016. "The Limits of Planned Obsolescence for Conspicuous Durable Goods," Manufacturing & Service Operations Management, INFORMS, vol. 18(2), pages 216-226, May.
    5. Chang Fang & Zhuangzhuang You & Yudou Yang & Duomei Chen & Samar Mukhopadhyay, 2020. "Is third-party remanufacturing necessarily harmful to the original equipment manufacturer?," Annals of Operations Research, Springer, vol. 291(1), pages 317-338, August.
    6. Erzurumlu, S. Sinan, 2013. "The compatibility of durable goods with contingent generic consumables," Omega, Elsevier, vol. 41(3), pages 574-585.
    7. Chen Jin & Luyi Yang & Cungen Zhu, 2023. "Right to Repair: Pricing, Welfare, and Environmental Implications," Management Science, INFORMS, vol. 69(2), pages 1017-1036, February.
    8. Li, Gendao & Reimann, Marc & Zhang, Weihua, 2018. "When remanufacturing meets product quality improvement: The impact of production cost," European Journal of Operational Research, Elsevier, vol. 271(3), pages 913-925.
    9. Zhou, Qin & Meng, Chao & Yuen, Kum Fai, 2020. "The impact of secondary market competition on refurbishing authorization strategies," International Journal of Production Economics, Elsevier, vol. 228(C).
    10. Aras, Necati & Güllü, Refik & Yürülmez, Sevil, 2011. "Optimal inventory and pricing policies for remanufacturable leased products," International Journal of Production Economics, Elsevier, vol. 133(1), pages 262-271, September.
    11. Işıl & Vishal V. Agrawal & Atalay Atasu, 2020. "Extended Producer Responsibility for Durable Products," Manufacturing & Service Operations Management, INFORMS, vol. 22(2), pages 364-382, March.
    12. Pontes, Nicolas & Palmeira, Mauricio & Jevons, Colin, 2017. "Brand expertise and perceived consistency reversals on vertical line extensions: The moderating role of extension direction," Journal of Retailing and Consumer Services, Elsevier, vol. 34(C), pages 209-218.
    13. Liu, Zhuojun & Chen, Jing & Diallo, Claver, 2018. "Optimal production and pricing strategies for a remanufacturing firm," International Journal of Production Economics, Elsevier, vol. 204(C), pages 290-315.
    14. Lingfei Cai & Xuan Shi & Jingrong Zhu, 2019. "Quality Recovery or Low-End Recovery? Profitability and Environmental Impact of Durable Product Recovery," Sustainability, MDPI, vol. 11(6), pages 1-37, March.
    15. Fuqiang Zhang & Renyu Zhang, 2018. "Trade-in Remanufacturing, Customer Purchasing Behavior, and Government Policy," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 601-616, October.
    16. Ece G. Gülserliler & Joseph D. Blackburn & Luk N. Van Wassenhove, 2022. "Consumer acceptance of circular business models and potential effects on economic performance: The case of washing machines," Journal of Industrial Ecology, Yale University, vol. 26(2), pages 509-521, April.
    17. Qin Zhou & Kum Fai Yuen, 2020. "Analyzing the Effect of Government Subsidy on the Development of the Remanufacturing Industry," IJERPH, MDPI, vol. 17(10), pages 1-20, May.
    18. Xue, Dongmei & Teunter, Ruud H. & Zhu, Stuart X. & Zhou, Weihua, 2021. "Entering the high-end market by collecting and remanufacturing a competitor’s high-end cores," Omega, Elsevier, vol. 99(C).
    19. Genc, Talat S. & Giovanni, Pietro De, 2017. "Trade-in and save: A two-period closed-loop supply chain game with price and technology dependent returns," International Journal of Production Economics, Elsevier, vol. 183(PB), pages 514-527.
    20. Bhattacharya, Shantanu & Robotis, Andreas & Van Wassenhove, Luk N., 2019. "Installed base management versus selling in monopolistic and competitive environments," European Journal of Operational Research, Elsevier, vol. 273(2), pages 596-607.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:61:y:2015:i:1:p:60-72. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.