Study On Informative Differentiation Models And Their Formation Mechanism

In a competitive market, enterprises apply differentiation strategies to mitigate rare conditions and keep profits. However, this differentiation is by no means free and it springs from the sunk costs converted from the large amount of capital investment. In order to reduce the cost of differentiation, modern marketing has begun to focus on the differences in non-trait of products, so informative differentiation is one of the current popular means in this regard.Informative differentiation originates from the information asymmetry between consumers and enterprises. So advertisements emerge to help convey information bilaterally, and furthermore informative differentiation study mainly deals with the effect of advertisements on consumers'demand and product differentiation. Advertisements succeed in establishing differentiation by building brands for almost the same products through mass communication in information. The nature of informative differentiation is cognitive differences of consumers, that is, the subjective cognitive differences to products that advertisements impose on consumers. The role of advertisements in forming differentiation lies in establishing consumers'cognitive differences and their high brand loyalty to maintain their consumption choices. This brand loyalty in common sense changes the market condition of competition in reducing consumers'sensitivity to price competition and limiting the change of consumers'product preference. Therefore, informative differentiation becomes the hot issue in the study on product differentiation theory. However, there were no systematic results about the following aspects such as the relationationship between informative differentiation and horizontal and vertical differentiation, the influence to the consumer search, and informative differentiation formation mechanism. So, this dissertation made the research to the manufacturer dominant, consumer search and consumer dominant step by step on the nformative differentiation models and their formation mechanism.The main research work of the dissertation included:1. Builds the competitive model of duopoly in horizontal and vertical differentiation for both informative advertisements and persuasive advertisements which discuss product price, advertising level and profit of enterprises in equilibrium condition and conduct a comparative study on horizontal and vertical differentiation through Matlab software calculation. the conclusions are: (1) in equilibrium, the firm with higher quality gets higher price, advertising and profit; (2) in equilibrium, the p rice, advertising and profit will increase with the increasing of vertical differentiation; (3) in equilibrium, the advertising will decrease, but the price and profit will increase if the cost of advertising increases.Lastly three-stage informative advertising model is put forward to combine orientation strategy, advertising strategy and product pricing strategy. Based on the informative differentiation, the two enterprises will choose the strategy of maximal product differentiation to weaken the competition in symmetry equilibrium2. Presents the informative advertising model of duopoly allowing consumer information seeking. The informative differentiation model in chapter three is based on the assumption that advertisements are the only way consumers obtain product information. But this assumption is not tenable. Theoretically speaking, information asymmetry can be corrected either by the effort of the inferior party or by the information transmission of the superior party. So consumers can pay the costs in information seeking to obtain relevant information, or enterprises convey information about products through advertisements. In addition to the passive acceptance of advertisements, consumers can actively seek information about product and preference demand to make the final purchasing decision. Thus this chapter puts forward the informative advertising model based on consumers'information seeking in which consumers have heterogeneous preferences, and consumers'costs of information seeking can influence the product price and advertising level of enterprises. First, this chapter provides the basic assumptions. Consumers can be classified into three types according to how much information is obtained before seeking: complete information consumers, part information consumers and zero information consumers. Based on the analysis of different information seeking strategies of three types of consumers, the demand of enterprises is studied to arrive at the profit function of enterprises. In the discussion of model equilibrium, Matlab simulation provides the advertising level, product price and profit of enterprises. and the conclusions are: (1) in equilibrium, the price and profit will decrease but the advertising will increase with the increasing of searching costs; (3) in equilibrium, the price and profit will decrease but the advertising will increase if the reservation value increases.High consumers'discovery cost results in non-seeking action of zero information consumers, that is, non-purchasing behavior. Lastly, the informative adverting model when high consumers'discovery cost appears is studied including the product price, adverting level and profit of enterprises in equilibrium condition.3. Presents the formation mechanism of information differentiation. The previous two chapters take the perspective of economics mainly studying consumer surplus, adverting costs, profit maximization. In order to make up the lack of informative differentiation in nature, it provides the analysis of informative differentiation in forming mechanism through the approach of cognitive psychology. Advertisements cause consumers'cognition differences even for similar or homogeneous products which lead to differentiation effect in information convey. The nature of information lies in cognitive differences of consumers. First consumers'cognition of advertisements information is discussed to analyze their subjective cognitive level about the advertisements; Means-End Chain Theory of cognition and its establishment are presented according to subjective informative cognition, and the hierarchy effect of advertisements information conveying is discussed. Finally, the forming mechanism model of information differentiation is put forward consisting of two independent variables (information and information receiver) and three dependent variables (subjective cognition of advertisement information, emotion attitude and purchase intension. The existence of two independent variables causes the differences in subjective cognition of advertisement information, emotion attitude and purchase intension, and informative differentiation is finally established.4. Provides the empirical study on forming mechanism of informative differentiation applying the sample survey done in Shanghai Maritime University to explore the influence of different advertisements and various degrees of consumers'information seeking effort on subjective cognition of advertisement information, emotion attitude and purchase intension of consumers. First assumptions, research design and data collection are introduced according to the built models. Questionnaires are done and data are processed through SPSS11.0 and Lisre 18.7 software. The empirical study includes the descriptive analysis of consumers'information seeking effort degree, and the validation of understanding level of information cognition in"Means-End Chain". Then advertising informative cognition, advertising emotion attitudes and purchase intention are discussed in detail adding various degree of consumers'information seeking effort. Finally, it conducts the relationship verification in"advertising hierarchy effect", namely advertising cognition-adverting attitude-advertising purchase intention.The innovations of this dissertation include:1. In the aspect of research basis, the whole framework for analyzing the informative differentiation was set up.2. Making comparative study of informative advertising model in both horizontal and vertical differentiation applying Matlab simulation method and providing possible explanation about the conclusion consistency.3. Establishing three-stage informative advertising model to comprehensively consider orientation strategy, advertising strategy and product pricing strategy.4. Establishing a new informative advertising model allowing information seeking of consumers to perfect the current study.5. Pioneering the study on forming mechanism of information differentiation though the approach of cognition psychology.6. Applying the sample data to verify the assumptions of the forming mechanism theory model.