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Sustainability 2017, 9(10), 1712; doi:10.3390/su9101712

Investment Strategy in a Closed Loop Supply Chain: The Case of a Market with Competition between Two Retailers

Business School, Kwangwoon University, 26 Kwangwoon-gil (447-1, Wolgye-dong), Nowon-Gu, Seoul 139-701, Korea
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Received: 11 August 2017 / Revised: 18 September 2017 / Accepted: 21 September 2017 / Published: 25 September 2017
(This article belongs to the Special Issue Reverse Logistics: An Interdisciplinary Approach)
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Abstract

To survive in the ceaseless cycle of competition, businesses have developed strategies to become sustainable. These strategies include reusing products, which can lead not only to the creation of economic benefits but also to improvements in a corporation’s social and environmental responsibility. Product reuse can also increase the profit earned on new products by compensating customers who bring in old products to buy new ones, as the ensuing remanufacturing process allows for the reuse of materials and thus drives down costs. As businesses have come to recognize these values, the marketing competition to retrieve used products from customers has intensified. This research focuses on identifying effective compensation strategies to determine the appropriate advertising investment and trade-in value in a market where two homogeneous retailers compete. Retailers advertise to secure more customers to trade in their used products and to generate more trade-in sales than competitors do. A retailer’s results may vary according to its competitor’s investment strategy, which makes it useful to employ information on past competitor investment patterns to plan future investment strategies. However, as competitors using one another’s information may intensify the competition, better investment results could be obtained by ignoring competitor investment information. Therefore, this study suggests four competition strategies that determine the advertisement costs and trade-in allowance spent by retailers and discusses the difference in the profits obtained by the retailers under each of the four strategies. View Full-Text
Keywords: investment strategy; closed loop supply chain; competition; advertisement; trade-in value investment strategy; closed loop supply chain; competition; advertisement; trade-in value
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Yoon, S.; Jeong, S. Investment Strategy in a Closed Loop Supply Chain: The Case of a Market with Competition between Two Retailers. Sustainability 2017, 9, 1712.

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