Pricing and branding for remanufactured fashion products
Journal
Journal of Cleaner Production
Journal Volume
165
Pages
1385-1394
Date Issued
2017
Author(s)
Abstract
In recent years, we have witnessed the start-up of many fashion companies which collect, recycle and sell remanufactured fashion products. This paper explores this particular business operation with respect to their optimal pricing and brand investment decisions. By exploring a stylized basic analytical model, we derive the closed form analytical optimal decisions and explore how they vary with different major model parameters. We uncover that compared to the centralized supply chain optimal decisions, the fashion retailer will over-price the remanufactured fashion product and under-invest on branding under the decentralized setting. A coordination mechanism is hence proposed to help. The situations under which the fashion retailer should set the remanufactured product's price higher than the new product's price are determined. Furthermore, we prove analytically that the presence of a government sponsor for remanufacturing is beneficial to the consumers. Finally, an alternative model with a multiplicative branding effect is investigated. It is interesting to note that the findings obtained under the basic model are still true under the alternative model. Managerial implications and future research are discussed. ? 2017 Elsevier Ltd
Subjects
Government sponsors; Pricing and branding; Remanufactured fashion products
Other Subjects
Economics; Investments; Sales; Supply chains; Business operation; Centralized supply chains; Coordination mechanisms; Government sponsors; Investment decisions; Managerial implications; Remanufactured fashion products; Remanufactured products; Costs
Publisher
Elsevier Ltd
Type
journal article