Study On Recycle Market And Firm's Pricing Strategies For Returned Products

With the rapid development of high technology, Second-hand market has been a significant part of our life because of the presence of E-business and Internet. At the mean time, the enterprise would establish a recycle bin in the market due to the consideration of economy, society or ecology, in order to supply recycling and trading service. Therefore, the enterprise with multi-generation product will have to face more and more complex marketing environment, because the presence of the second-hand market and recycle bin will affect the profit and pricing strategy of the enterprise. On the base of this background, this paper analyze different marketing background, in order to analyze what effects dose the second-hand market and recycle bin have on the enterprise's profit and pricing strategy.This paper examines the effect of second-hand market for durable goods on the firm's pricing and new product introduction strategies. Our model differs from previous literature, because we simultaneously consider four marketing background:No second-hand market no recycle bin; Second-hand market exist no recycle bin; Recycle bin exist no second-hand market; Second-hand market exist and recycle bin exist. Moreover we further examine the following economic problem with the analysis of model and example:(1) Get the conclusion that the effect of secondhand-market on the firm's pricing strategy depends on the innovation of product:For industries where innovations are major, the firm should not sell the first-generation product; For industries where innovations are moderate, the firm should low the price of the first-generation product; For industries where innovations are minor, the firm should raise the price of the first-generation product.(2) Examine the upgrade price with the analysis of sensitivity, and improve that when the condition of recycling price is satisfied the firm should use a uniform price strategy, or else use price discrimination strategy. (3) Get the conclusion that the way of the recycling product treatment depend on the remanufacturing cost; When this cost is low enough, the firm should remanufacture the recycling product, or else sell it to the second-hand market straightly.(4) Examine that when a second-hand market exist, Whether the firm should establish a recycle bin or not depend on the remanufacturing cost and fix cost.In the end, our paper mentions several future research possibilities.