Trade-in operations under retail competition: Effects of brand loyalty
研究了品牌忠诚度如何影响竞争零售商选择排他性或非排他性以旧换新计划，发现排他性计划在忠诚度弱时有效防御，非排他性计划在忠诚度强时更优。
Trade-in promotions are increasingly recognized as an effective strategy in retail operations to boost sales. Retail firms can restrict their trade-in programs to current consumers through an exclusive trade-in program or accept trade-ins from competitors’ consumers through a nonexclusive trade-in program. Moreover, consumers may build brand loyalty towards the products they have used and thus affect their future trade-in choices. However, the effects of brand loyalty on trade-in strategies in a competitive market remain underexplored. To bridge this gap, this study analytically examines the impact of brand loyalty on exclusive and nonexclusive trade-in programs by developing a stylized duopoly model. The results show that as a defensive strategy, an exclusive trade-in program effectively retains consumers when brand loyalty is sufficiently weak. Conversely, as an offensive strategy, a nonexclusive trade-in program is more likely to attract competitors’ consumers. An exclusive trade-in program is always the dominant strategy for both firms compared with the no trade-in benchmark. However, a nonexclusive trade-in program is better for both firms when brand loyalty is sufficiently strong. Moreover, an exclusive trade-in program benefits firms with a high proportion of trade-in-sensitive consumers. In contrast, firms with a high proportion of the overall consumer base benefit from a nonexclusive trade-in program. The results not only support trade-in practices but also provide important practical implications related to trade-in competition for policymakers.