THE THEORY OF WARRANTY CONTRACTS

Abstract. This paper surveys theories of the existence and design of warranty contracts. Insurance, signalling, and incentive motives are used to explain the existence of warranties. The incorporation of imperfections that prevent warranties from serving their basic purposes in a first-best way describes actual warranty practices.     

Overcoming the Negative Product Quality Image of Manufacturers in Emerging Economies

Abstract

Companies from emerging economies often suffer from perceptions of negative quality for their products. This study investigates, using an experimental design, how manufacturers in emerging countries can make use of warranty strategies to overcome their negative product quality image. Contrary to what is proposed in the warranty literature, our study shows that the use of better warranties for products designed and manufactured by firms in the emerging countries does not improve their product quality image. This is because of the “too good to be true” suspicion by consumers. Strategic alliances with firms in developed countries to produce hybrid products also may not be effective in overcoming the poor quality image for firms in emerging countries. A comprehensive warranty package such as providing full repair and replacement of parts is also effective in altering consumers' trepidation of hybrid products originating from countries of low repute. Implications for strategic alliances between firms in the developed and emerging economies are discussed.     

美国联邦质量责任担保法规

文章通过简要介绍美国联邦质量责任担保法规体系中的3种法律,希望对我国的产品质量安全法律法规体系的建立提供参考借鉴意义。其中迈哥努森-莫斯担保法是管理消费者产品担保的联邦法律,其目的是阻止制造商制定不公平的消费者担保,而且通过裁定律师费用来使得消费者提起担保诉讼在经济上成为可行;统一商业法是管理产品销售合同的主要法律来源,向消费者提供关于柠檬问题的一种可供选择的法律措施;1995年及以后生产的轿车和卡车排放担保是联邦要求排放控制担保可以保护车主以免承担因为与排放有关的某些诸如由材料或工艺上的制造缺陷造成的,或引起汽车超过联邦排放标准故障的修理成本。     

Contractual structures and consumer misperceptions

We analyze how firms can design contracts to strategically induce consumer misperceptions. A fraction of consumers is naive and underestimates the costs of claiming a warranty payment in the event of product breakdown. This leads to an inference error that makes consumers prone to overpredict product quality, which a firm can profitably exploit. The channel persists under different market structures and can reduce the quality provision to sophisticated consumers. We argue that our results apply more generally to cases in which consumers are inattentive or illiterate with respect to contract fine print, and provide supporting evidence from TV infomercials.     

Which factors distinguish the different consumer segments of green fast-moving consumer goods in Germany?

Consumer segmentation is an important tool for dealing with the often strongly differing consumer preferences in many markets for fast-moving consumer goods. Therefore, this study analyses the factors that can distinguish the different consumer segments for green all-purpose adhesives in Germany. On the basis of an online survey with 709 respondents, we performed a choice experiment and segmented consumers based on their preferences for this product. We identified six consumer segments of which in particular Green Consumer Value, Perceived Consumer Effectiveness and Trust separate eco-friendly consumers from the other groups. Our results give a deeper insight into the different consumer segments for green fast-moving consumer goods and facilitate the development of business and marketing strategies in a more targeted way.     

保修产品最优预防维修策略

保修期内进行预防性维修可以降低厂家保修费用,提高产品的可用度,延长产品使用寿命。老化产品的维修通常是不完全维修:产品维修后不能达到修复如新状态,但是故障率降低。假设产品经预防性维修后故障率恢复到某一特定值,以保修费用为目标建立基于改善因子的不完全预防性维修模型,并通过实例确定保修费用最低时的最佳维修间隔期。     

Luxury products for the circular economy? A case study of Bang & Olufsen

This paper examines whether luxury products can support a circular economy. This is done through a literature review of luxury products and the links to circular economy, as well as a case study of Bang & Olufsen (B&O). The literature review revealed links between some of the core characteristics of luxury products and the circular economy. This included aspects such as the high quality, durability, service schemes, extended warranties, and large aftermarkets. The case study supports the links between the inner circles in the circular economy (maintenance, repair, and reuse) and some of the core characteristics of luxury products. B&O produces products with a long lifespan, has extended warranties, repair and service schemes, spare part availability for 8 years, an aftermarket, and leasing schemes. B&O also does reconditioning of components for its repair loop, conducts dismantling tests, marks plastic parts, and has a negative list that excludes certain hazardous components.     

Warranties as a device to extract rent from low‐risk users of a product

We develop a simple model that provides a new rationale for why a monopolist should bundle its product with a warranty even when all parties are risk neutral. In our model, a risk‐neutral monopolist faces two types of risk‐neutral consumers—low‐risk users that are unlikely to cause product failure and high‐risk users that are more likely to cause product failure. We find that when the firm fails to provide a warranty, a low‐risk user acquires a strictly positive rent by pretending to be a high‐risk user and receiving a price discount. By imposing a warranty, however, the monopolist can increase the price to high‐risk users, which in turn removes the incentive for a low‐risk user to pretend to be a high‐risk user, and the firm successfully extracts rent from the low‐risk user. Copyright © 2007 John Wiley & Sons, Ltd.     

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.     

服务保证设计要素研究

服务保证是产品保证在服务领域内的扩展与延伸。自上世纪80年代以来,学者们对服务保证的概念、设计要素、基本类型等进行了深入研究。本文回顾了国内外学者对服务保证概念的界定,并对服务保证类型和服务保证设计要素进行了系统的梳理,结果发现:服务保证的概念基本趋于一致;服务保证的基本类型及保证范围获得了学者们的基本认可,但对不同类型服务保证设计要素研究不足,对补偿措施及调用过程也缺乏深入分析。本文对未来的研究趋势进行了展望。     

母品牌与延伸产品间个性一致性对延伸评价的影响

品牌个性和消费者个性之间的关系是近些年品牌延伸的一个研究热点,然而目前缺少对母品牌与延伸产品间个性一致性的研究。为了考察个性一致性对品牌延伸评价的影响,首先分别测出品牌个性和延伸产品个性,并分为主要个性和次要个性两个级别,然后通过实证分析,探讨了母品牌个性与延伸产品个性的一致性与延伸评价之间的关系,同时考察了个性暗示对延伸评价的影响。研究发现,在延伸评价中,主要个性作用显著,而次要个性则对延伸评价无显著影响;延伸评价与母品牌和延伸产品之间的个性一致性程度呈正相关;个性暗示有助于消费者建立延伸产品与品牌的关系,从而提高延伸评价。     

The generality/specificity issue in consumer innovativeness research

The purpose of the present study was to explore the role of personality in shaping consumer innovativeness by testing a model of the hierarchical relationships between a global (broad or abstract) personality trait, its domain-specific manifestation in a consumer context, and overt consumer behavior. A survey of 465 adult consumers measured global innovativeness, domain-specific innovativeness for two product categories (clothing and electronics) and self-reported purchase of new clothing and electronic items. Three hypotheses were tested. First, global innovativeness is more highly correlated with domain-specific innovativeness than it is with the purchase of new items. Second, domain-specific innovativeness is more highly correlated with the purchase of new items than is global innovativeness. Finally, the association between global innovativeness and new product purchase is mediated by domain-specific innovativeness. All three hypotheses were supported for both product categories.     

基于商品品类的网络购买决策关键影响因素研究

网络消费行为的研究成果众多,但影响消费者网络购买决策的关键因素仍不明确。本文从商品品类视角来研究消费者网络购买决策的关键影响因素。首先根据消费行为理论和前人相关研究成果构建了本文的研究假设模型,然后利用基于淘宝网和问卷星调研平台的全国性调查数据进行相关性分析和回归分析。通过对logit模型的分析,验证了假设模型,得到了在线商品网络购买决策关键影响因素,且发现针对不同商品品类其影响因素存在着差异性。     

Reference Dependence and Market Competition

This paper examines the implications of consumer reference dependence for market competition. If consumers take some product (e.g., the first product they consider) as the reference point when evaluating others and they exhibit loss aversion, then the more “prominent” firm whose product is taken as the reference point by more consumers will randomize between a high and a low price. We also find that consumer loss aversion in the price dimension intensifies competition while that in the product dimension softens competition. With consumer reference dependence, asymmetric prominence can arise as an equilibrium outcome when firms advertise before engaging in price competition.     

The Impact of Consumption Hassle on Pricing Schedules

A curious phenomenon in the retail pricing of many product categories (e.g., tuna, frozen orange juice, and tomato paste) is the existence of quantity surcharges. A related curiosity is the existence of both discounts and surcharges within the same product category. To explain the former phenomenon, extant research invokes heterogeneity in consumption parameters, heterogeneity in search costs, or concern for retail price image. To the best of our knowledge, there is no received explanation for the latter phenomenon. We add to this rich stream of work by proposing a novel explanation for quantity surcharges. Our explanation is based on the notion of consumption hassle. We analyze a market that is heterogeneous in a hedonic parameter that influences valuations as well as the effective cost of the consumption hassle. We then derive consumer choices (small pack, large pack, or two small packs) taking into account Individual Rationality (IR) and Incentive Compatibility (IC) constraints. In the absence of consumption hassle, we obtain two segments with one purchasing the small pack and the other purchasing the large pack. Moreover, the optimal pricing for the seller involves quantity discounts. However, with the introduction of consumption hassle, the market potentially splits into three segments: one purchasing the small pack, another purchasing two small packs, and the third purchasing the large pack. Moreover, the optimal pricing for the seller involves quantity surcharges. Overall, our analytical findings offer an additional explanation for the phenomenon of quantity surcharges. More importantly, they offer a rationale for the existence of multiple pricing schedules within the same product category by explicitly recognizing variations in consumption hassle. Copyright © 2012 John Wiley & Sons, Ltd.     

The impact of ISO 14000 environmental management standards on small and medium sized enterprises

Environmental performance is fast becoming a selection criterion both in the consumer and industrial markets. Some consumer market segments use environmental criteria when selecting one brand over another. In the industrial market, supplier selection by multinational firms may soon be conditioned on vendor environmental performance. This paper attempts to explore the impact of ISO 14000 on SMEs and offers suggestions for future research.     

视频形式的网购展示界面对点击意愿的影响研究

主要研究消费者进行网络购物时,在有明确购物意图的前提下,视频形式的展示界面对点击意愿的影响。通过两组实验表明,相比于传统静态图片展示界面,视频形式的展示界面对消费者的点击意愿具有正向促进作用,而且认知系统响应水平在其中起到中介作用。从产品属性和消费者特征角度进一步展开研究,最终发现产品类型和消费者说服知识水平在其中起到调节作用。研究既丰富了视频展示界面相关理论研究的内容,也对实践中的商家采取何种展示策略提供了参考依据,同时探讨了未来进一步开展研究的方向。     

Information provision and consumer search behavior for products with asymmetric uncertainty

When selling multiple products with asymmetric uncertainty, should the seller disclose product information so that customers do not have to incur any cost to resolve their uncertainties; if so, which product should the seller choose? To address these questions, we consider a monopolist selling two substitutable products to a group of consumers. Each consumer has asymmetric uncertainty regarding the two products. A total of four different information provision structures are considered based on whether the seller discloses information about each product with the aim of determining which strategy provides the seller with the greatest revenue. We derive several interesting results. First, the optimal information provision strategy depends on the magnitude of uncertainty in relation to the product with lower uncertainty. Specifically, if the uncertainty regarding the product with lower uncertainty is sufficiently small, it is optimal for the seller to provide information about the product with higher uncertainty, otherwise, the seller should provide information about both products. Second, when only one product's information should be revealed, it is optimal for the seller to choose the product with higher uncertainty and charge a higher price. Third, withholding information on both products is never optimal for the seller. Finally, our main model is extended by examining the Mean-Preserving Spread setting, and the robustness of our main results is confirmed. Furthermore, we examine the situation in which a monopolist sells a single product with two main attributes. We find that each of the four information provision strategies can be optimal under various scenarios.     

Product Switching Cost and Strategic Flexibility

This paper examines the equilibrium degree of flexibility adopted by firms competing in oligopolistic product markets in which the value of flexibility arises from the initial presence of uncertainty over consumer preferences and its eventual resolution. The equilibrium choice of flexible mode depends on the following factors: (1) the cost of switching product design in response to revealed consumer preferences, (2) the difference in the acquisition costs of the flexible and dedicated modes, and (3) the precision of the ex ante information held by the firms regarding consumer preferences. The relationship between these factors and the equilibrium choice of modes is fully characterized.     

Product-Line Length as a Competitive Tool

The increasing number of consumer goods and services offered in recent years suggests that product-line extensions have become a favored strategy of product managers. A larger assortment, it is often argued, keeps customers loyal and allows firms to charge higher prices. There is disagreement, however, about the extent to which a longer product line translates into higher profits. We develop an econometric model derived from a game-theoretic perspective that explicitly considers firms' use of product-line length as a competitive tool. On the demand side, we analytically establish the link between consumer choice and the length of the product line. Based on our derivations, we include a measure of line length in the utility function to investigate consumer preference for variety using a brand-level discrete-choice model. The supply side is characterized by price and line length competition between oligopolistic firms. For the empirical analysis we use market-level data for the yogurt category. We find that there are decreasing returns to product-line length. Based on a series of "what-if" experiments, we derive recommendations for effective product line decisions in a competitive environment.