A feature fatigue supply chain game with cooperative programs and ad-hoc facilitators

Pietro De Giovanni

International Journal of Production Research, 2019, vol. 57, issue 13, 4166-4186

Abstract: In this paper, we analyze a manufacturer's decisions to invest in technology to increase the number of product features and make its business more economically appealing. High number of features can lead to an overspecified product that entails a feature fatigue effect. More specifically, consumers show a decreasing willingness to purchase a good, due to its complexity. The manufacturer sells through a retailer, which in turn invests in some store facilitators efforts. The manufacturer can decrease the feature fatigue effect by implementing either a cooperative program or an ad-hoc facilitator. Our results reveal that the manufacturer, as the chain leader, makes decisions according to the program's efficiency, while considering the revenue sharing rule. When the share is low, the manufacturer's decision is always based on efficiency; otherwise, high sharing parameters sponsor the implementation of an ad-hoc facilitator. We identify a region of parameters in which firms have divergent preferences, resulting that the feature fatigue mitigation is a short term objective. The results also reveal a trade-off between profits and feature fatigue. An ad-hoc facilitator guarantees large profits, even without fully solving the feature fatigue issue. Instead, a support program increases mitigates the feature fatigue effect, while worsening the firms' profits.

Date: 2019
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Citations: View citations in EconPapers (3)

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DOI: 10.1080/00207543.2018.1519264

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