Extended Warranty In Monopoly Manufacturer Channel Considering The Cost

Nowadays, along with the remarkable development of big data and electronic commerce, the competition in product level becomes increasingly fiercer. The product providers including manufacturers and retailers put an emphasis on service market, such as extended warranty. This paper analyzes and discusses the pricing, the designing of extended warranty and channel profit of supply chain in monopoly manufacturer channel using the game theory, with an eye on different extended warranty strategies. The supply chain investigated in this paper consists of one manufacturer that acts as the game leader and two competing retailers. This paper reveals that:in the model MRR, the strategy that the two competing retailers provide extended warranty is conducive to the manufacturer, when it comes to the two competing retailers or the whole system, the parameters including market scale and channel substitutability influence the effect of different extended warranty strategies. In the model RR, for the retailer that owns relatively smaller market share, the way to improve the competitiveness is providing extended warranty when total cost coefficient is lower than certain threshold value. In the model 3T, the strategy that the two competing retailers resell extended warranty is beneficial for the manufacturer and the specialized third party. Also, for the two competing retailers, the effect of different extended warranty strategies depends on the parameters including market scale and channel substitutability. Comparing between model MRR and 3T, being a provider of extended warranty, instead of a reseller, makes the manufacturer profitable.