Food Manufacturers' Sustainable Product Launch Strategy: Game Theory Approach

摘要

This article constructs a manufacturers' sustainable food product launch game theory based model to understand the decision-making. The results based on derivations and simulations of the egg industry show that the lead manufacturer and the follower manufacturer have different launch criteria for sustainable products. The lead manufacturer decides to launch a sustainable product when the relative maximum willingness to pay for the sustainable product is higher than the relative cost and/or the absolute value of the maximum willingness to pay for the sustainable product is sufficiently higher than the absolute value of the cost of the sustainable product. The follower launches primarily based on the degree of substitution. When consumers perceive that the sustainable product is differentiated and distinguishable enough from the conventional product, the follower is more likely to launch a sustainable product. The simulation results show that egg manufacturers, both the leader and the follower, underboth the worst and best case scenarios will launch sustainable egg products to increase their profit. Our results are supported by industry data, which shows that both national and store brand manufacturers have increasingly marketed sustainable eggs over the past few years.