Price and service competition with maintenance service bundling

Wang, Yi; Sun, Linyan; Qu, Rong; Li, Gang

Abstract

In many equipment manufacturing industries, firms compete with each other not only on products price, but also on maintenance service. More and more traditional products oriented firms are offering their customers products bundled with maintenance service (P&S bundles). In this study, we examine firms’ incentive to offer customers products bundling with long-term maintenance or repair support service in a duopoly competitive environment. When providing P&S bundles, a firm need to determine the service level (in terms of average response time guarantee for the service in this paper) to offer and needs to build a service facility to handle the maintenance service requirements. Based on the analysis of three sub-game models, we characterize the market conditions in which only one firm, both firms or neither firm will offer P&S bundles. Finally, we analyze the affects of several market factors on firms’ strategy choices.

Citation

Wang, Y., Sun, L., Qu, R., & Li, G. (2015). Price and service competition with maintenance service bundling. Journal of Systems Science and Systems Engineering, 24(2), https://doi.org/10.1007/s11518-015-5267-z

• Journal Article Type: Article
• Acceptance Date: Mar 1, 2015
• Online Publication Date: Mar 2, 2015
• Publication Date: Jun 1, 2015
• Deposit Date: Dec 14, 2015
• Publicly Available Date: Jun 10, 2016
• Journal: Journal of Systems Science and Systems Engineering
• Print ISSN: 1004-3756
• Electronic ISSN: 1861-9576
• Publisher: Springer Verlag
• Peer Reviewed: Peer Reviewed
• Volume: 24
• Issue: 2
• DOI: https://doi.org/10.1007/s11518-015-5267-z
• Keywords: Service Competition, Queues, Products and service bundles, Product differentiation
• Public URL: https://nottingham-repository.worktribe.com/output/750844
• Publisher URL: http://link.springer.com/article/10.1007/s11518-015-5267-z
• Additional Information: The final publication is available at Springer via http://dx.doi.org/10.1007/s11518-015-5267-z