Abstract: This paper analyzes the impact of after-sales service on differentiated brands competing manufacturer's encroachment in a supply chain that consists of an incumbent manufacturer, an entrant manufacturer and a retailer, with the retailer supplied by two manufacturers with differentiated brands:a good brand and an average brand. Based on the incumbent manufacturer's leadership, with brand differentiation taken into consideration, two Stackelberg game models are constructed. The results show that, the entrant manufacturer has access to markets under certain conditions. Furthermore, the after-sales service is favorable for the incumbent manufacturer and the retailer under certain conditions, but not for the entrant manufacturer. Faced with the entrant manufacturer's entry, the incumbent manufacturer's power advantage may not lead to higher optimal wholesale price and a higher after-sales service level. This implies that the differentiated brands competing manufacturer's encroachment decreases the profit of the incumbent manufacturer, and increases the profit of the retailer and the whole supply chain.

Key words: brand differentiation, market encroachment, after-sales service, pricing