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| The Impact of Money-Back Guarantees on Brand Differentiated Competitive Supply Chain |
| JIN Liang，ZHU Li，ZHENG Benrong |
| 1.Nanchang University, Nanchang, China; 2. Huazhong Agriculture University, Wuhan, China |
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Abstract In the supply chain consisting of two heterogeneous manufacturers with brand differentiation and an online retailers, the consumers’preference for brand-differentiated products and the possible behavior of consumer returns are considered in this study. Two benchmark models with or without a money-back guarantee are established, respectively. Moreover, the impacts of money-back guarantee and brand differentiation competition on supply chain equilibria are analyzed. The results show that, the existence of a money-back guarantee induces the adjustment of pricing strategies of both manufacturers and the retailer. The money-back guarantee benefits both manufacturers and the online retailer only if the satisfaction degree of consumers and the cost of returning products meet certain conditions. Under the brand differentiation strategy, according to the net residual value of returned products, high-end brand manufacturers and online retailers strategically adjust their pricing strategies. However, the competition of brand differentiation is always beneficial to online retailer, while uncertainty exists in its influence on the profit of a manufacturer with a high-end brand.
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Received: 20 June 2019
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