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Market Segmentation and Product Technology Selection for Remanufacturable Products

Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213
College of Management, Georgia Institute of Technology, Atlanta, Georgia 30308
Technology and Operations Management, INSEAD, 77305 Fontainebleau, France
laurdebo{at}andrew.cmu.edu
beril.toktay{at}mgt.gatech.edu
luk.van-wassenhove{at}insead.edu

Remanufacturing is a production strategy whose goal is to recover the residual value of used products. Used products can be remanufactured at a lower cost than the initial production cost, but consumers value remanufactured products less than new products. The choice of production technology influences the value that can be recovered from a used product. In this paper, we solve the joint pricing and production technology selection problem faced by a manufacturer that considers introducing a remanufacturable product in a market that consists of heterogeneous consumers. Our analysis discusses the market and technology drivers of product remanufacturability and identifies some phenomena of managerial importance that are typical of a remanufacturing environment.

Key Words: product remanufacturing; market segmentation; technology management
History: Received: July 1, 2001;

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