Durable Good, Extended Warranty and Channel Coordination

Topics:
Direct and Indirect Sales Channels,
Strategic Partners
Tags:
Internet-Journals,
Manufacturing,
Marketing,
Marketing Research,
Warranty
Source:
Internet-Journals

Vendor Registration: required

Overview: This paper derives explicit demand functions for the durable good and extended warranty from a traditional model of consumer utility. This derivation explicitly captures the complementary goods flavor of extended warranty. It then investigates the impact of different distributional arrangements commonly observed in the marketplace for market outcomes and manufacturer profitability. The paper shows that two key forces drive the results-the complementary goods effect and the double marginalization effect. Different channel arrangements for marketing of extended warranty cause these effects occur at different levels within a distribution channel and these are shown to have significant implications for the optimal warranty policy.

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Format: PDF | Size: 392KB | Date: Apr 2005 | Pages: 25

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