Green consumer behaviour: an experimental analysis of willingness to pay for remanufactured products

Products' end‐of‐life management has recently become a critical business issue. One of the possible end‐of‐life strategies is remanufacturing, which can provide competitive advantages through material and energy savings. Beyond industrial organization challenges, there is a question about the interest of developing a green marketing strategy for remanufactured products. Indeed, remanufactured products can be considered as green products since their industrial process has environmental benefits. Our paper asks whether consumers are willing to pay for remanufactured products, especially when they are informed that these products are ‘green’. We use experimental auctions to elicit consumers' WTP for specific characteristics of remanufactured products. Our study indicates that consumers tend to value the remanufactured product less than the conventional one unless they are informed about their respective environmental impacts. We find no evidence that consumers are willing to pay a premium for the green (i.e. remanufactured) product. However, providing environmental information to consumers has an effect on their WTP for the conventional product: they generally decrease significantly their WTP for the conventional (and thus most polluting) product. Copyright © 2010 John Wiley & Sons, Ltd and ERP Environment.     

The optimal disposition decision for product returns

We provide an analytic model for the optimal disposition decision for product returns. The manager decides which product returns to accept for processing at the remanufacturing facility, and which ones to sell immediately as-is at a salvage value. High congestion levels in the remanufacturing facility delay the sale of the remanufactured product at the secondary market, decreasing the value at which it can be sold; this may imply a more attractive salvaging option. This is particularly important for high-tech products with short life cycles, such as computers and printers. We propose a two-step policy. In the first step, the returned product’s random processing time is observed. In the second step, a disposition decision is made: if the processing time is larger than a threshold k* the product is salvaged; otherwise the product is remanufactured. We provide an approximate procedure to compute k* in industrial settings. Our numerical study demonstrates the superiority of our policy over the current industrial practice ignoring the time value of money.     

Optimal pricing for new and remanufactured products

This work investigates the optimal pricing of new and remanufactured products using a model of consumer preferences based on extensive experimentation. The experimental investigation reveals two distinct segments of consumers. One segment is relatively indifferent between new and remanufactured products and displays high sensitivity to price discounts. The second segment shows strong preferences for new products—with an accompanying aversion to remanufactured products—and realtively low sensitivity to price discounts. The pricing analysis examines several scenarios involving a new product manufacturer, ranging from a simple monopolist scenario to a more complex scenario involving competition with third-party remanufacturers. In contrast to the usual finding that new product prices should decrease when competitive remanufactured products enter the market, the introduction of market segments reveals a robust finding across all scenarios: when remanufactured products enter the market, the optimal price of the new product should increase. Through appropriate pricing of new products, the OEM can mitigate the effects of cannibalization and increase profitability.     

客户采购关注点对再制造产品购买意愿的影响研究——基于政府促进政策的调节效应研究

近年来,国家出台各种政策措施促进再制造产业发展,但是由于多方面原因,客户在产品选择上往往将再制造产品列为下策。本研究采用扎根理论分析客户采购关注点对再制造产品购买意愿的影响,并检验了政府促进政策的调节效应。研究发现,客户对品牌的信任、质量感知、成本控制意识对再制造产品购买意愿有正向影响,而客户的社会责任观对再制造产品购买意愿影响不显著。此外,政府的促进政策对客户的品牌信任、质量感知、社会责任观和再制造产品购买意愿之间的关系有正向调节效应,但是在政府的促进政策中,直接补贴对成本控制意识和再制造产品购买意愿之间的关系没有调节效应,而“以旧换再”对这两者有正向调节效应。该研究结论的理论意义在于从再制造这一特殊工业品角度研究了购买意愿的影响因素及其调节机制,有助于完善组织市场购买行为理论;实践意义为有助于再制造企业更好地吸引客户购买,有助于提高政府促进政策的有效性提供指导建议。     

Remanufacturing for the Circular Economy: An Examination of Consumer Switching Behavior

For the circular economy to be tenable, consumers need to not only return products after use, but also purchase products that are remanufactured. However, research finds that consumers have a poor opinion of remanufactured products and are typically not prepared to adopt them. Thus, development of the circular economy is dependent upon deeper understanding of consumers’ attitudes and behaviors. Research typically considers either micro‐level or macro‐level factors when assessing consumer perceptions of remanufactured products. The current research incorporates macro‐level factors of price, government incentives and environmental benefits with the moderating influence of micro‐level consumer attitudes to examine consumers’ intention to switch from purchasing new products to remanufactured products. The findings suggest that a consumer's attitude toward remanufactured products is an important moderating factor predicting consumer switching behavior to remanufactured products. Copyright © 2016 John Wiley & Sons, Ltd and ERP Environment     

An analysis of decentralized collection and processing of end-of-life products

In this study, we analyze decentralized collection and processing operations for end-of-life products in durable goods industries. We consider a durable end-of-life product from which a particular part can be dismantled and remanufactured, and the remainder of the product can be further processed for part and/or material recovery. Both the quantity of end-of-life products available and the demand for remanufactured parts are price-sensitive. We develop models to determine the optimal acquisition price of the end-of-life products and the selling price of the remanufactured parts in centralized as well as remanufacturer- and collector-driven decentralized channels. We discuss how the decentralized channels can be coordinated to attain the end-of-life product collection rate that can be achieved in the centralized channel. In the presence of environmental regulations that require an original equipment manufacturer (OEM) of durable goods to collect and process its end-of-life products, we identify when and why the OEM would prefer a remanufacturer- or a collector-driven channel, i.e., outsource the processing or the collection activity, respectively. From a practical perspective, we show that the OEM should prefer a collector-driven channel to increase the collection rate, when end-of-life products are homogenous. However, we also show that the OEM would prefer a remanufacturer-driven channel under certain conditions. We also examine how the OEM can increase the quantity of used products collected, when the collection rate in the preferred channel setting falls short of the collection rate mandated by the environmental regulation. When end-of-life products are heterogeneous, we observe that the collection rate for all quality groups can be positive in a remanufacturer-driven channel, whereas the collection rate for some quality groups may be zero. This indicates that the OEM must pay more attention to its outsourcing decision in this case, if the environmental regulation in effect specifies target collection rates for individual quality groups.     

Analysing the roadblocks of circular economy adoption in the automobile sector: Reducing waste and environmental perspectives

The automobile industry is one of the most rapidly growing sectors in our society. The increase in demand for vehicles drives the growth of the automobile sector worldwide. Fabrication of vehicles consumes an enormous amount of water, energy and resources, thereby increasing carbon emissions. Nonbiodegradable and manufacturing waste after the end of life usage results in a significant contribution to incineration, landfills, air acidification and water eutrophication. The adoption of circular economy (CE) initiatives can play a significant role in dealing with increasing waste and environmental pollution. The main goal of CE is to recycle and reuse materials to reduce waste and also to minimise environmental impacts. This article strongly supports the adoption of CE in the Indian automobile industry. For the successful adoption of CE in the Indian automobile sector, first, it is important to analyse roadblocks to the adoption. Twenty potential roadblocks towards the adoption of CE have been identified from a literature review and in consultation with experts in the field. To capture the vagueness of the data and to carry out a robust analysis, a Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) method with Fuzzy theory is employed. The results reveal that roadblock ‘lacking ability to deliver high-quality remanufactured products’ is ranked first among all considered roadblocks. This study will help the Indian automobile industry, decision makers, research practitioners and government officials develop effective strategies for adopting CE in Indian automobile companies. A sensitivity analysis has been conducted to validate the stability of results.     

Developing breakthrough products: challenges and options for market assessment

Competitive pressures and market forces are augmenting the importance of product innovation as a source of competitive advantage. Key drivers underpinning market success have the capacity to develop the “right” products for the “right” customers, using the “right” channels, with a shorter development cycle than competitors. But when breakthrough products (BTPs) are involved, how do we sort out what is “right”? How do we identify customers' future requirements when the technology platforms are still unfolding, products are still in development and customers lack experience with the product? Traditional product development market research techniques are problematic since they assume the customer has historical experience with products similar to those being created. The objective of this paper is to raise the awareness of the OM community with the strengths and weaknesses of existing methodologies for developing and introducing innovative products to market. Further, it suggests promising future directions for both practice and research when BTPs are involved. This is important because of the central role OM plays in managing the success of the BTP development process.     

基于不同类型消费者的再制造策略研究

本文对一个垄断制造商的再制造策略进行了研究。首先根据消费者对于再制造产品的接受程度把消费者分为两类，然后根据不同类型消费者的特点，给出了在不同的价格策略下，再制造产品和新产品的需求函数。据此本文建立了制造商的最优决策模型，并分别给出了制造商的最优价格策略。最后通过数值分析对结果进行了进一步的验证。     

Circular Business Model Innovation: Inherent Uncertainties

Circular business models based on remanufacturing and reuse promise significant cost savings as well as radical reductions in environmental impact. Variants of such business models have been suggested for decades, and there are notable success stories such as the Xerox product–service offering based on photocopiers that are remanufactured. Still, we are not seeing widespread adoption in industry. This paper examines causes for reluctance. Drawing on a hypothesis‐testing framework of business model innovation, we show that circular business models imply significant challenges to proactive uncertainty reduction for the entrepreneur. Moreover, we show that many product–service system variants that facilitate return flow control in circular business models further aggravate the potential negative effects of failed uncertainty reduction because of increased capital commitments. Through a longitudinal action research study we also provide a counterexample to many of the challenges identified in previous studies, which could be overcome in the studied case. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment     

Progressive stress accelerated life tests under finite mixture models

In this paper, progressive stress accelerated life tests are considered when the lifetime of a product under use condition follows a finite mixture of distributions. The experiment is performed when each of the components in the mixture follows a general class of distributions which includes, among others, the Weibull, compound Weibull, power function, Gompertz and compound Gompertz distributions. It is assumed that the scale parameter of each component satisfies the inverse power low, the progressive stress is directly proportional to time and the cumulative exposure model for the effect of changing stress holds. Based on type-I censoring, the maximum likelihood estimates (MLEs) of the parameters under consideration are obtained. A special attention is paid to a mixture of two Rayleigh components. Simulation results are carried out to study the precision of the MLEs and to obtain confidence intervals for the parameters involved.     

Determinants of consumer demand for circular economy products. A case for reuse and remanufacturing for sustainable development

We investigate determinants of consumer demand for circular (reused and remanufactured) products. Based on exploratory choice-based conjoint experiments with a sample of 800 adults in the United Kingdom, we examine two types of premium segment electronic appliances: a mobile phone and a robot vacuum cleaner. We find that consumers prefer partly circulated products over fully or not at all circulated products and that circular products can likely successfully enter the existing market at the retail price of a new product. Interestingly, circular products compete for market share primarily with new products, leaving the market share of second-hand options less affected. The results show a promising path for firms considering a transition to circular business models.     

Two state capital accumulation with heterogenous products: Disruptive vs. non-disruptive goods

The paper considers the problem of a firm that, while producing a standard product, has the option to introduce an innovative product. The innovative product competes with the standard product and will therefore reduce revenues of the standard product. A distinction is made between innovative products that do or do not become even more relatively appealing as their market share grows (e.g., because of network externalities). It is shown that in the former case, which we call a “disruptive” good, history dependent long run equilibria can occur, which are in line with recent real life economic examples.     

农产品物流金融的信用风险评价研究

农产品物流的资金短缺问题成为农产品物流发展的瓶颈,为此农产品物流金融的快速发展也给农产品物流的发展带来了巨大的运营风险。为了评估农产品物流金融的信用风险,文中首先研究农产品生产加工企业参与物流金融业务的必要性及信用风险评价要素,在此基础上建立了农产品物流金融信用风险评价指标体系,并利用层次分析法及模糊综合评价法构建了农产品物流金融信用风险评价模型,最后把理论模型应用于某公司的农产品物流金融信用风险评价,对于实施农产品物流金融业务具有一定的参考价值。     

可靠性预计的理论依据及其软件实现

可靠性预计是可靠性工程的一个重要分支,国家相关军用标准明确要求军工产品在预研、研制阶段要进行可靠性预计。针对可靠性预计的统计理论与数据,文章提出了一种基于GJB/Z 299C的软件实现方法,并成功应用于某军工产品的研制中。     

面向高可靠性产品的应用验证类项目流程设计及优化研究

面向高可靠性产品的应用验证项类项目的实施可保证产品可靠性和应用成熟度,但目前针对应用验证类项目流程的设计和优化缺乏系统研究,导致应用验证类项目效率低下。文章以高可靠性产品的应用验证类项目为背景,分析应用验证流程与产品研制流程、产品的应用流程共同构成的项目流程的概念和特点,并据此构建项目流程模型结构;采用单代号网络图作为项目流程的描述方式,并在网络图的基础上结合项目流程的特点,采用关键路径法开发面向用户工期的优化方法。最终形成不影响用户工期的应用验证类项目流程。文章最后给出了优化算例。     

The influence of modularity and industry clockspeed on reverse logistics strategy: Implications for the purchasing function

Environmental policies and recent take-back legislation pose new management challenges and require many companies to come up with new strategies and corresponding processes for recovering their products. Some leading firms have already succeeded in a field marked by ever-greater levels of uncertainty and material flows. However, simply mimicking the example of these leading companies does not seem to be suitable for all companies. A configurational approach is needed to understand why this is the case. This paper therefore considers two case studies to analyze the effects of industry clockspeed and product architecture on recovery options involving repair, refurbishing, or reuse. Its findings suggest that the recovery and reuse of key components is an economically viable reverse logistics strategy in a high-modularity case; in contrast, scrapping or recycling of materials is often the most viable strategy for integrated architectures. Different strategies must also be employed for high and low clockspeed situations. The demands that recovery activities place on a company's purchasing function is also illustrated in the second part of the paper.     

Industrial awards as manifests of business performance: An empirical assessment

Although suppliers receive awards for various reasons, research on awards has mainly focused on those related to quality. We focus on other types of awards and enquire as to whether they relate to the supplier's financial performance. We investigate the relationship of operational awards by industrial customers and new product awards by industry forums on financial performance. We use long-term financial data for a large sample of suppliers to assess the relationships across product life cycle stages. Results indicate that during the growth stage, operational awards are associated with return on equity, whereas new product awards are associated with growth. As products mature, supplier and product awards both show an association with return on equity. A series of managerial implications are set forth and discussed.     

Differential pricing and production strategies for heterogeneous products under cannibalization and promotional effects

This study examines the optimal pricing and production strategy of a closed-loop supply chain consisting of a manufacturer, a recycler, and consumers. Considering the cannibalization and promotion effects of remanufactured products on new and secondhand products, we constructed Stackelberg game models under different scenarios. We analyze the impact of the changes in the two effects on the optimal prices and production strategies of the manufacturer and recycler, as well as their countermeasures. We find that (i) how the cannibalization and promotional effects influence the manufacturer and the recycler's pricing and production strategies differ under different scenarios; (ii) when the two effects exceed a threshold, the manufacturer abandons new or remanufactured products, and the recycler prefers to stop production on its new products or continue to remanufacture products; and (iii) the two effects always reduce the profits of the manufacturer and increase the profits of the recycler.     

产品服务系统下的机电产品再制造模式——基于BT公司的案例分析

再制造技术作为解决我国废旧机电产品总量激增的一种有效途径,由于人们对其认知程度较低,使企业不愿积极开展再制造活动。针对这一问题,本文在理论回顾的基础上,以当前再制造实施难点为切入点,首先设计了研究框架,提出了研究假设,在此基础上以BT公司为研究对象进行了案例分析。通过研究发现：（1）产品服务系统这一新型商业模式能够推动企业开展再制造活动,其积极作用主要体现在三个方面,即对再制造原料获得、再制造相关信息获取、再制造产品销售的有益影响;（2）提出了产品服务系统下的再制造主体、必要基础和再制造一般流程。