Should short warranty always be interpreted as low quality: the effect of brand advantages on warranty’s signalization

Lou, Yaqi; He, Zhen; Liu, Yanrong; He, Shiwei

doi:10.1080/00207543.2018.1436791

Cited by 16 publications

(9 citation statements)

References 31 publications

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“…Sarmah et al (2015) investigated coordination with two price and warranty competition rational agents. Lou et al (2019) studied two manufacturers competing on brand and warranty period.…”

Section: Literature Reviewmentioning

confidence: 99%

Manufacturer warranty service outsourcing strategies in a dual‐channel supply chain

Zhang

et al. 2020

Int Trans Operational Res

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Warranty management for durable products has received increasing attention in recent years. In addition to conventionally keeping warranty in‐house, more manufacturers choose to outsource warranty service to agents. This paper explores outsourcing strategies for manufacturer warranty services in a dual‐channel supply chain by which the demand‐enhancing service can be undertaken by different supply chain parties. We show the results of three alternative outsourcing strategies for manufacturers whereby (a) the retailer undertakes the service, (b) a third party undertakes the service, and (c) both the retailer and a third party undertake the service simultaneously. According to Stackelberg game theory, we build a two‐echelon supply chain model and discuss the corresponding expressions for supply chain members' equilibrium decisions. Additionally, we compare the profits of each supply chain member and derive interesting managerial insights. When the base market size is relatively large, Scenario R helps the manufacturer and the retailer reach a “win‐win” situation.

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“…Sarmah et al (2015) investigated coordination with two price and warranty competition rational agents. Lou et al (2019) studied two manufacturers competing on brand and warranty period.…”

Section: Literature Reviewmentioning

confidence: 99%

Manufacturer warranty service outsourcing strategies in a dual‐channel supply chain

Zhang

et al. 2020

Int Trans Operational Res

Self Cite

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“…But we only give a brief overview of three streams that is related to our paper: the role of the EW, the channel choice of the EW, and the EW strategy considering maintenance service. The major role of the EW is presented as follows: the first one is that it can protect consumers from product failures (Chen et al, 2009; Day & Fox, 1985); the second is that it can improve product perceived quality (Lou et al, 2019; Mai et al, 2017; Shang et al, 2019), and the last one is that it can bring additional profits to the enterprise (Cao & Choi, 2022; Cohen et al, 2006; Kelley & Conant, 1991; Soberman, 2003). The literature can provide important support for the model assumptions proposed in our paper.…”

Section: Literature Reviewmentioning

confidence: 99%

Optimal maintenance service outsourcing strategy considering extended warranty service

Cao

Han

et al. 2022

Manage Decis Econ

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In recent years, extended warranty (EW) services are widely provided by brand firms.Given that third-party maintenance service providers have more maintenance cost advantages than brand firms, brand firms face the challenge of whether to enter the maintenance service market. To address the above challenge and issue, we develop theoretical models. The research shows that the cost coefficient of developing maintenance service plays a critical role in the optimal maintenance service operation strategy. And the base market sizes of the EW and the charged maintenance service have significant influences on the results. Moreover, we propose conditions for a win-win outcome. | INTRODUCTIONWith the increasing price competition of products, the profit space of firms has declined. To promote product competitiveness and help consumers to avoid risk, more and more firms have begun to provide extended warranty (EW) services that can bring considerable profits (Hsiao et al., 2010;Lam & Lam, 2001). Though the handsome profit brought by EWs, firms should bear the heavy cost of operating that bothers some firms. It is noteworthy that the warranty services cost of Tesla is $123 million in 2017 (Guajardo et al., 2016). In this context, though there are still many brand firms providing after-sales services by themselves, like Huawei, OPPO, and DJI (DJI, 2021;Huawei, 2021;OPPO, 2021), an increasing number of brand firms select a low investment and low responsibility way, that is, outsourcing.Outsourcing, as an efficient strategy, is widely used by majority brand firms and helps firms to avoid the heavy operating cost and to focus on their core competencies, such as Nike and Apple who outsource their production line. Besides production outsourcing, service outsourcing is particularly common nowadays, such as logistics service, pre-sale service, and after-sales service. Outsourcing aftersale services to the third-party service providers lowers the barrier of entering into the great potential EW market for some firms without enough resources and contributes to focusing on the core businesses for some giant firms by avoiding the huge costs of establishing and operating service networks and wasting limited resources (Kurvinen et al., 2016;Yoo et al., 2021). For instance, BMW outsources its warranty services to a third-party service provider (Esmaeili et al., 2014).And JD outsources the after-sales maintenance service of their brand "JD Manufacture" to a third-party service provider, Baixiubao (ITS, 2017). It also plays an important role in avoiding competition and improving the performance of the entire supply chain by allowing professionals to handle professional issues. On a whole, there is no doubt that the outsourcing after-sale services strategy is an efficient way to reduce the operating cost for firms. Besides, it is also a good way to improve service convenience.

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“…Ng et al (2014) reveal how and to what extent total quality management and brand building jointly affect three business performance indicators, finding that both TQM and brand building are indispensable. Our previous paper (Lou et al, 2019) investigates the effect of brand advantages on warranty's signalization in the supply chain of two competing manufacturers and one common retailer and find that the reputable brand manufacturer makes a shorter optimal warranty decision under certain condition. The study of Li et al (2011) is the most relevant research to our work in the extant literature.…”

Section: The Research Simultaneously Encompassing Brand Factor and Warranty Factormentioning

confidence: 99%

“…However, the warranty policy would significantly improve the purchase intention when the brand is reputable. To focus on these characteristics and consider mathematical tractability, we use a product form r i • w i to model the joint promotion of brand and warranty bringing to the demand following our previous work (Lou et al, 2019). In fact, we can also employ a completed form r i + w i + r i • w i , which is accordance to the result of Price and Dawar (2002).…”

Section: Model Descriptionmentioning

confidence: 99%

Original design manufacturer's warranty strategy when considering retailers' brand power under different power structures

Lou

Feng

et al. 2020

Int Trans Operational Res

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In recent years, the original design manufacturer (ODM) has increasing interests in multichannel cooperation with different retailers. This paper considers the problem in which the ODM cooperates with two competing retailers. The manufacturer produces two substitute products and markets them through two competing retailers. For both products, the manufacturer bundles them with basic warranties and the retailers brand them with their own branding. We quantitatively model the product demands and derive the optimal decisions under two common supply chain power structures: manufacturer Stackelberg and retailer Stackelberg. We observe that when the competition between the two retailers becomes fiercer, the manufacturer charges more for both products, the product substitutability and supply chain power structures do not affect the products' price and warranty decisions, and there does exist a brand ratio interval in which the product branded by the high-reputation retailer will not get a better warranty from the manufacturer, violating the signalization of the warranty. The leader gets the power to get higher profit while the total profit of the whole supply chain remains the same under both power structures.

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Should short warranty always be interpreted as low quality: the effect of brand advantages on warranty’s signalization

Cited by 16 publications

References 31 publications

Manufacturer warranty service outsourcing strategies in a dual‐channel supply chain

Manufacturer warranty service outsourcing strategies in a dual‐channel supply chain

Optimal maintenance service outsourcing strategy considering extended warranty service

Original design manufacturer's warranty strategy when considering retailers' brand power under different power structures

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