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Durable good, extended warranty and channel coordination

Publication ,  Journal Article
Desai, PS; Padmanabhan, P
Published in: Review of Marketing Science
January 1, 2004

The marketing literature on product warranty and extended warranty has largely focused on their role as segmentation instruments in risk-averse consumer markets. Preserving this insurance rationale, we highlight the role of extended warranty in channel coordination. We derive explicit demand functions for the durable good and extended warranty from a traditional model of consumer utility. This derivation explicitly captures the complementary goods flavor of extended warranty. We then investigate the impact of different distributional arrangements commonly observed in the marketplace for market outcomes and manufacturer profitability. We show that two key forces drive the results-the complementary goods effect and the double marginalization effect. Different channel arrangements for marketing of extended warranty cause these effects occur at different levels within a distribution channel and these are shown to have significant implications for the optimal warranty policy. Copyright ©2004 the authors. All rights reserved.

Duke Scholars

Published In

Review of Marketing Science

DOI

EISSN

1546-5616

ISSN

1546-5616

Publication Date

January 1, 2004

Volume

2

Start / End Page

1 / 23

Related Subject Headings

  • 3506 Marketing
  • 1505 Marketing
 

Citation

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Chicago
ICMJE
MLA
NLM
Desai, P. S., & Padmanabhan, P. (2004). Durable good, extended warranty and channel coordination. Review of Marketing Science, 2, 1–23. https://doi.org/10.2202/1546-5616.1004
Desai, P. S., and P. Padmanabhan. “Durable good, extended warranty and channel coordination.” Review of Marketing Science 2 (January 1, 2004): 1–23. https://doi.org/10.2202/1546-5616.1004.
Desai PS, Padmanabhan P. Durable good, extended warranty and channel coordination. Review of Marketing Science. 2004 Jan 1;2:1–23.
Desai, P. S., and P. Padmanabhan. “Durable good, extended warranty and channel coordination.” Review of Marketing Science, vol. 2, Jan. 2004, pp. 1–23. Scopus, doi:10.2202/1546-5616.1004.
Desai PS, Padmanabhan P. Durable good, extended warranty and channel coordination. Review of Marketing Science. 2004 Jan 1;2:1–23.
Journal cover image

Published In

Review of Marketing Science

DOI

EISSN

1546-5616

ISSN

1546-5616

Publication Date

January 1, 2004

Volume

2

Start / End Page

1 / 23

Related Subject Headings

  • 3506 Marketing
  • 1505 Marketing