Product variety and recovery strategies for a manufacturer in a personalised and sustainable consumption era

Personalised consumption and sustainable development are increasingly gaining people’s attention. To meet consumers’ individualised needs and achieve sustainable development, it is very important and urgent for manufacturers to make operations decisions on whether to implement a product variety and/or a product recovery programme. To explore some management implications for firms making those decisions, we develop three analytical game-theoretical models: (1) Model V where the manufacturer only adopts a product variety strategy; (2) Model R where he only adopts a product recovery strategy; (3) Model VR where both the product variety and recovery strategies are implemented. By comparing the equilibrium outcomes of these three models, we find that the manufacturer’s optimal operations strategy largely depends on the market recoverable rate, the cost spillover effect, and the manufacturer’s product variety efficiency. Through numerical examples and sensitivity analyses, we further examine the impacts of some key factors on the manufacturer’s optimal operations strategy choice. With two model extensions, we find that the manufacturer’s environmental preference and the government’s tax and subsidy policy could motivate the manufacturer to adopt Strategy R or VR instead of Strategy V.