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Article
Manufacturer’s product line selling strategy and add-on policy in product sharing
Information Systems and Analytics
  • Yu Zhang
  • Min Huang
  • Lin Tian
  • Gangshu (George) Cai, Santa Clara University
  • Delong Jin
  • Zhiping Fan
Document Type
Article
Publication Date
8-1-2023
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.

Comments

© 2023. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/

Citation Information
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