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Chinese Journal of Management Science ›› 2021, Vol. 29 ›› Issue (1): 47-58.doi: 10.16381/j.cnki.issn1003-207x.2021.01.005

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The Influence of Consumer's Brand Loyalty on Brand Remanufacturing Market Strategy

GAO Peng1,2, DU Jian-guo2, NIE Jia-jia3, ZHU Bin-xin2   

  1. 1. School of Business, Jiangsu University of Technology, Changzhou 213001, China;
    2. School of Management, Jiangsu University, Zhenjiang 212013, China;
    3. School of Economics and Management, Southwest Jiaotong University, Chengdu 610031, China
  • Received:2018-04-02 Revised:2020-03-11 Published:2021-02-07

Abstract: The green effects and economic benefits of remanufacturing lead the entry of many independent remanufacturers (i.e. IRs), which brings a greater competitive threat to brand original equipment manufacturers (i.e. BOEMs). Due to the pressure of market competition and brand protection, BOEMs are facing a dilemma on whether to committed to remanufacturing by themselves, especially when more and more consumers have brand loyalty. Brand loyalty originates from consumers' trust and special emotion to a product brand and leads to the obvious tendency and exclusiveness in product selection. In this paper, a competitive remanufacturing supply chain system consisting of a BOEM (providing new products) and an IR (providing general remanufactured products) are considered, and a detailed study is made on whether the BOEM carries out remanufacturing and the supply chain performance caused by it when consumers have brand loyalty. Firstly, the market share of brand loyalty consumers is used to represent brand loyalty and the demand functions of three products under brand loyalty are derived based on utility analysis. Then, four market decision-making models are constructed, i.e. IR does not enter and BOEM no longer manufactures (n), IR does not enter and BOEM remanufactures (nR), IR enters and BOEM no longer manufactures (nr), IR enters and BOEM remanufactures (nrR), and the equilibrium solutions of various models are obtained by game theory. Next, the sensitivity analysis method is used to study the influence of consumer brand loyalty on the equilibrium price, the market demand and the profit of IR and BOEM. Besides, it reveals how the model preferences of IR and BOEMs change with brand loyalty by comparing the profits of different models. Finally, the consumer surplus and social welfare are discussed by numerical simulation. The results show that if the proportion of IR patent fees is low, the threshold of BOEM's remanufacturing will be lowered by the loyalty of consumers' brands, and vice versa. Besides, when the BOEM carries out remanufacturing, the consumers' brand loyalty of consumers will increase the prices of new products, general remanufactured products and brand remanufactured products simultaneously under the effect of butterfly effect. it will certainly increase the profits of brand manufacturers, but not necessarily reduce IR profits. The IR always prefers Nr mode when the brand loyalty is lower than a threshold; otherwise, IR will even prefer nrR in view of spillover profits. If the manufacturing cost of new products is high, the mode preference of the BOEM is always nR$\succ$nrR$\succ$n$\succ$nr while it may most prefer nrR mode or n mode on the contrary. Due to the influence of brand loyalty on product price, the brand consumer surplus under Nr and NrR models is not necessarily positively related to it and if the brand loyalty is not very high, consumers' model preference is always nrR$\succ$nr$\succ$nR$\succ$n. To our disappointment, we find that brand loyalty is not conducive to improving the overall social welfare in competitive markets (nr or nrR mode). The conclusion is helpful to expand the application of consumer brand theory and enrich the theory of remanufacturing competition. Furthermore, it provides a reference for local governments to formulate effective remanufacturing support policies when consumers have the emotion of brand loyalty.

Key words: brand loyalty, brand remanufactured product, market strategy, Stackelberg game

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