In recent years, technological innovations have become more and more popular, and customers prefer the latest generation products to the old ones. The company has kept upgrading their products in order to meet customers’ demands. Therefore, multi- generation products are sold at the same time. The new generation products compete with the old ones. So, how does the company reduce competition between products of different versions?
In order to increase the product market share, many retailers offer the trade-in service, which means customers can sell old generation products as part payment for buying the new products. That service will promote the sale of new products effectively. Meanwhile, developing a new market is also an important strategy to increase company income.
In addition, the second-hand product is also an important issue in durable study. This research explores the pricing strategies of multi-generation products at the same time, which means that in the situation of the original models, the new, original and used products all exist in the product market. Considering that different prices of various products have different impacts on product sales and firm profits, the company has to develop pricing strategies to maximize corporate profits. In addition, this study also takes into consideration the trade-in services and new market. On that basis, this study builds model to assess the optimal prices of products in different scenarios, analyzing the optimal strategies in different economic conditions.
The results reveal that product quality, durability, trade-in service and the scale of new market will directly affect their product pricing and profits. Among them, if the quality of new products increases, the development cost of new products will increase. So, the manufacturer should decide the quality of the new products according to the ability of the development in order to achieve higher profits. Increasing the scale of the new market will also boost the profits of the total supply chain, which implies developing new market is an effective way to improve profits. Furthermore, the more the residual value of the used products, the higher the total profit. Also, if the extra cost for providing the trade-in service is simply offered by the retailer, the manufacturer will not get higher profits. Instead, if the manufacturer and retailer work together, both will get more benefits from the trade-in service.