Analyzing the strategic interactions between firms and consumers with cooperative or non-cooperative behaviors is always a hot research area. On the one hand, facing with different types of customers, a profit driven film handles tough operation problem on optimally adjusting pricing strategy, product quality strategy and advertising strategy. On the other hand, customers are not only influenced by the true intrinsic value of the products, yet they embody various personal preferences. For example, some enjoy distinctive consumption behavior due to conspicuous effect, while others are willing to pursue the popular trend. In this thesis, we study the marketing strategies from the view of the film in two Chapters.

Initially, it has been well-established in customer psychology that...[ Read more ]

Analyzing the strategic interactions between firms and consumers with cooperative or non-cooperative behaviors is always a hot research area. On the one hand, facing with different types of customers, a profit driven film handles tough operation problem on optimally adjusting pricing strategy, product quality strategy and advertising strategy. On the other hand, customers are not only influenced by the true intrinsic value of the products, yet they embody various personal preferences. For example, some enjoy distinctive consumption behavior due to conspicuous effect, while others are willing to pursue the popular trend. In this thesis, we study the marketing strategies from the view of the film in two Chapters.

Initially, it has been well-established in customer psychology that the attractiveness of products derives not only from intrinsic value, but also an external value such as conspicuous utility. To satisfy the needs of demonstrating social prestige and wealth level, how should manufacturers carefully adjust the product quality and provide suitable price to customers heterogeneous in wealth level? In this paper, we analyze the effects of conspicuous consumption on the production design when there is only a monopoly manufacturer in the market. We emphasize that a stronger conspicuous effect undercuts the quality level and price which leads to the increase of demand. Typically, the total profit of the manufacturer will decrease and then increase with the progressively stronger conspicuous effect, which distinguishes with some existing marketing strategies and research results. Moreover, the total customer surplus is non-monotone with the degree of conspicuous effect. In extension, we perturb the model by adding a retailer in the distribution channel and surprisingly discover that the manufacturer adopts exactly the same quality strategies as in a direct channel. Finally, the influence of double marginalization is mitigated when the conspicuous consumption effect is relatively stronger.

In the second part, we still capture the exclusive characteristic of the customers, but focus on a strategical signalling game between the firm and the customers. More specifically, new products like iPhone usually go through launching period and uncertain production period before releasing to the market. In releasing period, a retailer, who witnesses the true quality of products after production, distributes attractive advertisement to lure customers to purchase. However, the retailer has to bear a cost of lying if he manipulates the signal. Customers do not exactly know the products' quality and sometimes they are willing to buy unique products different from others. When they make purchasing decisions, on the one hand, they update the belief about the true quality of products based on the advertisement. On the other hand, as exclusive type of customers, they always prefer distinctive behaviours. Considering the optimal reactions of customers, we point out a reasonable full structure equilibrium and finally provide the simple signalling strategies: When facing with relatively small number of customers with strong exclusive preference, the retailer should adopt the strategy mixed with pooling in high quality and separation in low quality. While if the number of customers is large, pure pooling at the highest quality level is optimal. We surprisingly find that although the retailer suffers a loss due to the lying cost, the expected total welfare of the customers will not be influenced. Basis on the analysis after production, we also provide the optimal pricing strategy for the retailer. In addition, we extend our study to conformity customers who prefer to follow the popularity. We propose that customers should adopt the switching strategy while the retailer follows a pooling signalling strategy.