The optimization of pricing strategy for the wind power equipment aftermarket service. Issue 3 (26th October 2018)

• Record Type: Journal Article
• Authors: Kong, Lingcheng; Liang, Ling; Xu, Jianhong; Zhang, Weisi; Zhu, Weijun
• Is Part Of: Industrial management & data systems. Volume 119:Issue 3(2019)
• Page Start: 521
• Page End: 546
• Publication Date: 2018-10-26
• Subjects: Pricing strategy -- Channel effort level -- Wind turbine aftermarket service; Industrial management -- Periodicals; Electronic data processing -- Periodicals; Business -- Periodicals; Industrial management -- Great Britain -- Periodicals; 658.05
• DOI: 10.1108/IMDS-01-2018-0032
• Languages: English
• ISSNs: 0263-5577

Abstract

Abstract : Purpose: Although the wind power industry has been booming in China during the last decade, the development of wind turbine aftermarket service is still lagging behind, which seriously affects the operational efficiency of wind farms. If wind turbine manufacturers get involved in the aftermarket, the service pricing policy will impact the profits of both the manufacturer and the wind farm. Therefore, it is necessary to discuss an optimal service pricing strategy in the wind turbine aftermarket and design a method to improve electricity generation efficiency through service contract design. The paper aims to discuss these issues. Design/methodology/approach: In order to decide the maintenance quantity and channel effort level, the authors design a normal Stackelberg game and an efficiency value-added revenue-sharing contract and discuss two kinds of revenue increment sharing models under situations, in which the supply chain's leaders are the wind farm and the wind turbine manufacturer, respectively. Findings: The results show that in either case, there exist optimal power generation revenue-sharing ratios that can maximize profit. At the same time, the authors outline an optimal service pricing policy, maintenance demand policy and channel service effort-level policy. The results summarize the influences of wind aftermarket services on wind farms' and wind turbine manufacturers' profit, which provides managerial insights into the process of manufacturing servitization. Practical implications: The manufacturer's channel effort level will influence the power generation increments very much, so the authors have developed a mechanism to stimulate the manufacturer improving the efficiency of aftermarket services. Originality/value: Taking the power generation increment revenue as the profit increment function, the authors discuss the influence of service price on the profit increment of the wind farm and the wind turbine manufacturer and also consider the influence of service price on the wind farms maintenance quantity and wind turbine manufacturers channel effort level.