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Effect of manufacturer's flexible returns policy in a duopolistic competition

S. Yamini (Department of Management Studies, National Institute of Technology Tiruchirappalli, Tiruchirappalli, India)
M.S. Gajanand (Faculty of Operations Management and Decision Sciences, Indian Institute of Management Tiruchirappalli, Tiruchirappalli, India)

Benchmarking: An International Journal

ISSN: 1463-5771

Article publication date: 8 March 2022

Issue publication date: 11 January 2023

236

Abstract

Purpose

Flexible return policies are offered by the manufacturers to encourage the retailers announcing a lenient returns scheme to their customers.

Design/methodology/approach

This study considers the distribution of durable products in a supply chain where the demand is sensitive to sales effort and retail price. Using a game theoretic framework, the paper presents an assessment of the strategic effect of flexible returns policy announced by the manufacturer under retail competition and highlights its implications on profitability.

Findings

Comparative analysis of monopolistic and duopolistic competition provides a better understanding about the repercussions and related facts on offering a flexible returns policy in these environments. It is profitable for the manufacturer to offer a flexible returns policy when there is retail competition than under monopolistic condition.

Practical implications

Practitioners view returns policy offered as an insurance given to the buyers and they infer it to be a better mechanism for doing business. Lenient returns policy promotes the sales by increasing the trust on the retailer and boosts up the perception of quality about the product by lowering the perceived risk for customers.

Originality/value

Effective product return strategies such as being lenient in terms of time, money, effort, scope and exchange can result in increased revenues, lower cost and improved profitability to the manufacturer and retailer, at the same time offering an enhanced level of customer service.

Keywords

Citation

Yamini, S. and Gajanand, M.S. (2023), "Effect of manufacturer's flexible returns policy in a duopolistic competition", Benchmarking: An International Journal, Vol. 30 No. 1, pp. 256-280. https://doi.org/10.1108/BIJ-06-2021-0345

Publisher

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Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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