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dc.contributor.authorAgrawal, VVen
dc.contributor.authorKavadias, Stylianosen
dc.contributor.authorToktay, LBen
dc.date.accessioned2015-09-29T12:25:45Z
dc.date.available2015-09-29T12:25:45Z
dc.date.issued2016-04en
dc.identifier.citationM&SOM-Manufacturing & Service Operations Management 2015. doi:10.1287/msom.2015.0554en
dc.identifier.issn1523-4614
dc.identifier.urihttps://www.repository.cam.ac.uk/handle/1810/251210
dc.description.abstractAn extensive body of literature argues for the benefits of planned obsolescence, the strategy of designing products with low durability to induce repeat purchases from the consumers and allow the firm to sell a larger volume. Yet, several firms avoid planned obsolescence and instead offer products with high durability. In this paper, we offer a demand-side rationale for a high-durability product design strategy: the exclusivity seeking consumer behavior associated with conspicuous consumption. In the presence of consumers who value exclusivity, we find that firms benefit from designing products with higher durability in conjunction with a high-price, low-volume introduction strategy. A higher durability in such a context leads to greater resale value, allowing the firm to charge a higher price and lower the sales volume to achieve the product exclusivity valued by the consumers. This contrasts with the planned obsolescence strategy that capitalizes on the high sales volume achieved by setting a low new product price. We also show that offering higher durability and charging a higher price are complementary levers to respond to consumers who value exclusivity. Our analysis unearths insights regarding the effect of exclusivity-seeking behavior on a firm’s demand and pricing. We show that firms’ durability choice may explain the joint increase in price and demand for conspicuous goods.
dc.language.isoenen
dc.titleThe limits of planned obsolescence for conspicuous durable goodsen
dc.typeArticle
prism.endingPage226
prism.issueIdentifier2en
prism.publicationDate2016en
prism.publicationNameManufacturing and Service Operations Managementen
prism.startingPage216
prism.volume18en
dcterms.dateAccepted2015-06-19en
rioxxterms.versionofrecord10.1287/msom.2015.0554en
rioxxterms.versionAM
rioxxterms.licenseref.urihttp://www.rioxx.net/licenses/all-rights-reserveden
rioxxterms.licenseref.startdate2016-04en
dc.contributor.orcidKavadias, Stylianos [0000-0002-9769-2642]
dc.identifier.eissn1526-5498
rioxxterms.typeJournal Article/Reviewen
cam.issuedOnline2015-10-12en
rioxxterms.freetoread.startdate2016-10-12


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