Title
Manufacturer’s product line selling strategy and add-on policy in product sharing
Document Type
Article
Publication Date
8-2023
Publisher
Elsevier
Abstract
During the sharing boom, product lines and add-ons are significant for manufacturers who have established sharing platforms to provide sharing and rental services. In this paper, we consider a manufacturer that provides two products of different quality in the rental channel (i.e., the B2C sharing platform) and the sales channel. We investigate the manufacturer’s product-line selling strategies: either the manufacturer sells low-quality products and rents high-quality products (i.e., the LH product line), or the manufacturer sells high-quality products and rents low-quality products (i.e., the HL product line). We also examine whether to offer the add-on for rental products. The results show that the manufacturer will always offer the add-on. When the add-on value and the degree of quality differentiation are low, the manufacturer will offer the add-on and choose the HL product line; otherwise, the manufacturer will offer the add-on and choose the LH product line. Furthermore, reducing the add-on cost will not always increase the manufacturer’s profit. However, as the add-on cost decreases, the manufacturer will be more likely to offer the add-on and choose the HL product line. Finally, we extend the main model in several ways and verify the robustness of the results.
Recommended Citation
Zhang, Y., Huang, M., Tian, L., Cai, G. G., Jin, D., & Fan, Z. (2023). Manufacturer’s product line selling strategy and add-on policy in product sharing. European Journal of Operational Research, 308(3), 1332–1343. https://doi.org/10.1016/j.ejor.2023.01.012
