Remanufacturing as a Marketing Strategy

Atalay Atasu (), Miklos Sarvary () and Luk N. Van Wassenhove ()
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Atalay Atasu: College of Management, Georgia Institute of Technology, Atlanta, Georgia 30308
Miklos Sarvary: Marketing, INSEAD, 77300 Fontainebleau, France
Luk N. Van Wassenhove: Technology Management Area, INSEAD, 77300 Fontainebleau, France

Management Science, 2008, vol. 54, issue 10, 1731-1746

Abstract: The profitability of remanufacturing systems for different cost, technology, and logistics structures has been extensively investigated in the literature. We provide an alternative and somewhat complementary approach that considers demand-related issues, such as the existence of green segments, original equipment manufacturer competition, and product life-cycle effects. The profitability of a remanufacturing system strongly depends on these issues as well as on their interactions. For a monopolist, we show that there exist thresholds on the remanufacturing cost savings, the green segment size, market growth rate, and consumer valuations for the remanufactured products, above which remanufacturing is profitable. More important, we show that under competition remanufacturing can become an effective marketing strategy, which allows the manufacturer to defend its market share via price discrimination.

Keywords: remanufacturing; product returns; price discrimination; competition (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (236)

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