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Article

Joint Advertisement and Trade-In Marketing Strategy in Closed-Loop Supply Chain

1
School of Management, Jilin University, Changchun 130000, China
2
Newcastle Business School, Northumbria University, Newcastle upon Tyne Ne8 3je, UK
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Authors to whom correspondence should be addressed.
Sustainability 2020, 12(6), 2188; https://doi.org/10.3390/su12062188
Received: 14 February 2020 / Revised: 8 March 2020 / Accepted: 9 March 2020 / Published: 12 March 2020
(This article belongs to the Section Economic and Business Aspects of Sustainability)
With environmental problems becoming severe, many firms, including HP, Huawei, and Apple are simultaneously implementing trade-in programs and advertising to stimulate market demand. Offering trade-in service by the manufacturer is a method of price discrimination by providing replacement consumers with a rebate when they purchase new products. With the recycled, used products, the manufacturer can benefit through a strict series—via a remanufacturing process. Although numerous literatures have investigated the pricing strategy and advertising decisions in the closed-loop supply chain (CLSC), to the best of our knowledge, there is little research that analyzes and compares the economic and social performance of these two marketing strategies. To fill this gap, we establish two supply chain models with two periods, namely, an advertisement model and a joint model, while the equilibrium purchasing behavior of the replacement consumers can be characterized under three conditions: (1) all of the replacement consumers purchasing new products (ATA); (2) partial replacement consumers purchasing (PTA); (3) no replacement consumers purchasing (NTA). These three conditions are decided by the numerous relationships of the parameters. Solving the optimal decisions of the manufacturer in both models, the critical value in the joint model is higher in the advertisement model, which indicates that developing the trade-in program can enhance the robustness of the business model. Furthermore, through numerical example, we find that the market demand in the joint model is higher than in the advertisement model, and the cost of marketing strategy in the joint model is lower in the advertisement model, which means that the efficiency of the marketing strategy is higher than the single marketing strategy. As a result, comparing the economic and social performance between the two models, we conclude that the advertisement elasticity of the market demand is the key factor of the manufacturer’s profits and total social welfare. View Full-Text
Keywords: advertisement; trade-in; closed-loop supply chain; social welfare; economic performance; marketing strategy advertisement; trade-in; closed-loop supply chain; social welfare; economic performance; marketing strategy
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MDPI and ACS Style

Chen, H.; Dong, Z.; Li, G.; Zhao, H. Joint Advertisement and Trade-In Marketing Strategy in Closed-Loop Supply Chain. Sustainability 2020, 12, 2188. https://doi.org/10.3390/su12062188

AMA Style

Chen H, Dong Z, Li G, Zhao H. Joint Advertisement and Trade-In Marketing Strategy in Closed-Loop Supply Chain. Sustainability. 2020; 12(6):2188. https://doi.org/10.3390/su12062188

Chicago/Turabian Style

Chen, Haitao, Zhaohui Dong, Gendao Li, and Hetian Zhao. 2020. "Joint Advertisement and Trade-In Marketing Strategy in Closed-Loop Supply Chain" Sustainability 12, no. 6: 2188. https://doi.org/10.3390/su12062188

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