Research On After-Sales Service Strategy Of Supply Chain In A Gray Market Setting

Gray market,also known as parallel import,generally refers to the channel through which goods legally produced in one country and protected by patents,copyrights or trademark rights are legally introduced for sale in another country without the authorization of the original manufacturer.The existence of gray market has both negative and positive effects,which makes enterprises tend to take measures to deal with it cautiously.As a non-price mechanism,Service strategy has been widely studied and proved to be an effective competitive strategy.In reality,manufacturers can adopt after-sales service strategies to stimulate consumers’ desire to purchase,and their downstream mature retailers may also be delegated by manufacturers to independently undertake after-sales services,such as providing technical Q&As,maintaining the supply of supporting spare parts,and guaranteeing repair,replacement and return.Therefore,retailers can also adopt the strategy of providing after-sales service to consumers of gray market products to enhance market competitiveness and seize market share.Although there is abundant research literature on the influence of after-sales service strategy on supply chain decision-making in the gray market setting,there is still a lack of consideration of the situation that multiple agents(leading manufacturers and retailers)have the ability to provide after-sales service at the same time,and relatively lack of consideration of the situation that there is competition in the high-price market to produce substitutes with manufacturers.Therefore,in the gray market setting formed by retailers’ participation in gray market speculation,this paper considers the quantity competition of substitutes in the highprice market,introduces the valuation difference factor of consumers for different products,constructs the supply chain structure model of no after-sales service,single after-sales service(leading manufacturer or retailer)service and double after-sales service respectively,and uses game theory and optimization theory.Under the premise of decentralized decision-making,this paper discusses the influence of the game of leading manufacturers and retailers to adopt aftersales service strategies on supply chain operation decisions,the conditions for each of them to adopt after-sales service strategies,and the after-sales service level and influencing factors of decision-making.(1)In the gray market setting,no matter whether other following competitors in the highprice market provide after-sales service or not,the strategy of leading manufacturers to provide after-sales service for their direct selling products in the high-price market is always effective.When consumers’ willingness to pay is large,the leading manufacturer needs to reduce the level of after-sales service to save costs,regardless of the single after-sales service model or the double after-sales service model.When it is observed that consumers in the high-price market have a large valuation of competing products(gray market products or substitutes),it is necessary for the leading manufacturer to increase the level of after-sales service to increase consumer utility and stabilize market share.(2)It is not blind for retailers involved in gray market speculation to choose whether to adopt after-sales service strategy to participate in the competition.When observing that the manufacturer does not adopt after-sales service strategy,the retailer chooses to adopt after-sales service is always effective;When it is observed that the manufacturer adopts the after-sales service strategy,and the willingness to pay of consumers in the high-price market is relatively small or large enough,the retailer chooses to provide after-sales service to consumers of gray market products,which can increase the sales volume and price of gray market products and effectively inhibit competition.However,when consumers’ willingness to pay is within a certain threshold in the middle,it is the optimal choice for retailers not to adopt after-sales service strategy and to attract consumers by relying on low price advantage.The service level of retailers in providing after-sales service for gray market products is positively correlated with consumers’ sensitivity to after-sales service,and when consumers value gray market products more than substitutes,retailers also tend to improve the level of after-sales service.However,in the model where retailers provide after-sales service alone,when consumers in the high-price market have a strong willingness to pay and have a higher valuation of substitutes,the level of after-sales service decided by them will decline.Under the dual after-sales service model,when the consumer’s willingness to pay satisfies certain conditions and is large enough,the retailer’s decision on the after-sales service level is always lower than its service level under the single after-sales service model.