The Choice Of Sale Channels And Pricing Strategies Of Extended Warranty

Extended warranty is a kind of insurance, which aims to extend the warranty for consumersafter the expiration of the basic warranty. Therefore consumers can get free or low-cost maintenance or replacement services for product, but consumers need to pay premiums in advance. There are three different direct sale channels in reality: manufacturers providingextended warranty to customers directly, retailers providingextended warranty directly to customers extended warranty, or manufacturers and retailers both providing extended warranty directly. So does the different sale channel make difference to the price of extended warranty? Which sale channel can provide customers with the highest cost-effective extended warranty? Therefore, the authorconsiders that both the manufacturer and the retailer can provide extended warranty to consumers, and summarizes three different sales strategies, two single-channels and one dual-channel. The first and second chapter mainly analyzes the research background and related research.In chapter 3, the Stackelberg game model is built. The authorregards product wholesale price, product retail price and extended warranty price as the decision variables, and analyze the pricing decisions and supply chain profits in different sale strategies to maximize the revenue of manufacturer and retailer, trying to answer the question that how does the different sale strategies influence the optimal price of extended warranty, and which sale strategy can bring the highest overall profit of the supply chain, and in each sale strategy, how does the total profit distribute between manufacturer and retailer?The author also considers the effect of two different game sequences on the optimal decisions when manufacturer decides the price of extended warranty.In chapter 4, the model is solved and the results are analyzed.Firstly, the author comparestwo kinds of single channel strategy, manufacturers directly providing extended warranty to customer, as well as the retailers directly providing extended warranty to customer.The author analyzes the optimal profit of the whole supply chain in two different strategies, and allocation problem of the whole profit.Next, the author analyzes dual channel strategy, and assumes that customer buy extended warranty from retailer by a fixed ratio. Finally, the author studiesthe influence of the proportion of the extended warranty purchased from retailer in dual channel through numerical analysis.In chapter 5, the author summarizes conclusions and gives further researchdirections. Through the research, the author finds that when the warranty period is fixed, consumers can get the cheapest extended warranty if the manufacturer decides the price of extended warranty. When manufacturer provides extended warranty in single-channel, different game sequences will make no difference on the optimal decisions. And when manufacturer and retailer have the same repair cost, the strategy by which retailer decides the price of extended warranty will bring the highest overall profit of the supply chain. Besides, the overall profit’s distribution of supply chain isclosely related to the maintenance costs.