Abstract
Due to the rising awareness of environmental protection and stringent regulations, the ability to manage environmental friendly or so called green product become an important and competitive advantage. In this paper, we develop the mathematical models to decide the optimal price and functional quality to maximize profit. The closed form solutions are found, and we derive the conditions under which manufacturers are willing to offer durable products which can last for two periods. We also study how two technologies, Zero-Sum and Synergy, impact the green product strategy such as how the green product is positioned, the impact of government regulation, and the timing of introductions. Zero-sum means that the improvement of environmental quality comes at a cost of decreasing traditional quality. On the other hand, Synergy indicates the technology which can improve environmental and traditional quality at the same time. We develop mathematical models to decide the optimal price, traditional quality, and environmental quality to maximize profit. IWe explore the conditions when the company adopts Market Segmentation strategy which two products are offered to two different market segments, or Mass Marketing strategy in which only one product is offered. We also discuss the effects of government regulations on the strategies and whether the government should subsidize the development of Synergy technology. We also study how technology impacts the strategy of green product introduction. If two products are offered, should company adopt simultaneous introduction strategy in which two products are introduced at the same time, or sequential introduction strategy where the two products are introduced sequentially.