IDEAS home Printed from https://ideas.repec.org/a/jfr/rwe111/v5y2014i2p56-67.html
   My bibliography  Save this article

The Strategic Choice of the Firm with Customization Capability

Author

Listed:
  • Jue-Shyan Wang
  • Shu-Ning Chan

Abstract

The needs of customization are increasing gradually. It leads to various and customized products and service. The issue ¡°Mass Customization¡± also comes out for discussion. We use a game-theoretical model to discuss the competition between the firms with and without customization capability. We assume that the firm without customization capability can adjust the product characteristics by inputting advertising or selecting market location. We find that when the firm with customization capability chooses to customize products, the other firm that selects the market location as competition strategy would make itself more professional. Moreover, the firm with customization capability has the potential effect on decreasing other firms¡¯ profit. We also discuss how the relative size between the cost coefficient of market location and the cost coefficient of advertising input would affect the strategic choice of the two firms.

Suggested Citation

  • Jue-Shyan Wang & Shu-Ning Chan, 2014. "The Strategic Choice of the Firm with Customization Capability," Research in World Economy, Research in World Economy, Sciedu Press, vol. 5(2), pages 56-67, September.
    • Handle: RePEc:jfr:rwe111:v:5:y:2014:i:2:p:56-67
    as

    Download full text from publisher

    File URL: http://www.sciedu.ca/journal/index.php/rwe/article/view/5257/3088
    Download Restriction: no
    File URL: http://www.sciedu.ca/journal/index.php/rwe/article/view/5257
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Loginova Oksana, 2012. "Competitive Effects of Mass Customization," Review of Marketing Science, De Gruyter, vol. 10(1), pages 1-32, October.
    2. Irmen, Andreas & Thisse, Jacques-Francois, 1998. "Competition in Multi-characteristics Spaces: Hotelling Was Almost Right," Journal of Economic Theory, Elsevier, vol. 78(1), pages 76-102, January.
    3. Nan Xia & S. Rajagopalan, 2009. "Standard vs. Custom Products: Variety, Lead Time, and Price Competition," Marketing Science, INFORMS, vol. 28(5), pages 887-900, 09-10.
    4. Bloch, Francis & Manceau, Delphine, 1999. "Persuasive advertising in Hotelling's model of product differentiation," International Journal of Industrial Organization, Elsevier, vol. 17(4), pages 557-574, May.
    5. Oksana Loginova, 2010. "Competitive Effects of Mass Customization," Working Papers 1007, Department of Economics, University of Missouri.
    6. Justin P. Johnson, 2013. "Targeted advertising and advertising avoidance," RAND Journal of Economics, RAND Corporation, vol. 44(1), pages 128-144, March.
    7. Oksana Loginova, 2010. "Brand familiarity and product knowledge in customization," International Journal of Economic Theory, The International Society for Economic Theory, vol. 6(3), pages 297-309, September.
    8. Chong Ju Choi & Carla C. J. M. Millar & Caroline Y. L. Wong, 2005. "Knowledge and Competition," Palgrave Macmillan Books, in: Knowledge Entanglements, chapter 0, pages 97-117, Palgrave Macmillan.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yogesh V. Joshi & David J. Reibstein & Z. John Zhang, 2016. "Turf Wars: Product Line Strategies in Competitive Markets," Marketing Science, INFORMS, vol. 35(1), pages 128-141, January.
    2. Subhadip Chakrabarti & Hans Haller, 2011. "An Analysis Of Advertising Wars," Manchester School, University of Manchester, vol. 79(1), pages 100-124, January.
    3. Yan, Yingchen & Zhao, Qiuhong & Qin, Zhongfeng & Sun, Gaoji, 2022. "Integration of development and advertising strategies for multi-attribute products under competition," European Journal of Operational Research, Elsevier, vol. 300(2), pages 490-503.
    4. Takagoshi, Noritsugu & Matsubayashi, Nobuo, 2013. "Customization competition between branded firms: Continuous extension of product line from core product," European Journal of Operational Research, Elsevier, vol. 225(2), pages 337-352.
    5. Oksana Loginova, 2010. "Competitive Effects of Mass Customization," Working Papers 1007, Department of Economics, University of Missouri.
    6. Okura Mahito, 2010. "An Equilibrium Analysis of the Insurance Market with Horizontal Differentiation," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 4(2), pages 1-24, July.
    7. Ajay Bhaskarabhatla, 2016. "The Moderating Role of Submarket Dynamics on the Product Customization–Firm Survival Relationship," Organization Science, INFORMS, vol. 27(4), pages 1049-1064, August.
    8. Jorge Niosi & Majlinda Zhegu, 2010. "Multinational Corporations, Value Chains and Knowledge Spillovers in the Global Aircraft Industry," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 2(2), pages 109-141, October.
    9. Aurora García‐Gallego & Nikolaos Georgantzís, 2009. "Market Effects of Changes in Consumers' Social Responsibility," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(1), pages 235-262, March.
    10. Matthew G. Nagler, 2016. "Equilibrium with Consumer Adjustment to Choice," Working Papers 10, City University of New York Graduate Center, Ph.D. Program in Economics.
    11. Isabelle M. Nilsson & Oleg A. Smirnov, 2017. "Clustering vs. relative location: Measuring spatial interaction between retail outlets," Papers in Regional Science, Wiley Blackwell, vol. 96(4), pages 721-741, November.
    12. Armenia ANDRONICEANU & Simona SORA, "undated". "Diplomatic Training And Knowledge Management A New Challenge For The Human Resources Specialists In Diplomacy," Proceedings of the Fifth "Administration and Public Management" International Conference: "Public Institutions' Capacity to Implement the Administrative Reform Process", Bucharest, June 23-24, 2009 9, Research Centre in Public Administration and Public Services, Bucharest, Romania.
    13. Lutz, Stefan, 1998. "Can taxing foreign competition harm the domestic industry?," ZEI Working Papers B 15-1998, University of Bonn, ZEI - Center for European Integration Studies.
    14. Cohen-Zada, Danny & Justman, Moshe, 2012. "Affinity and tension between religious denominations: Evidence from private school enrolment," Regional Science and Urban Economics, Elsevier, vol. 42(6), pages 950-960.
    15. Maccarrone, Giovanni & Marini, Marco A. & Tarola, Ornella, 2023. "Shop Until You Drop: the Unexpected Effects of Anticonsumerism and Environmentalism," FEEM Working Papers 330384, Fondazione Eni Enrico Mattei (FEEM).
    16. Joan Crespo & Raphael Suire & Jerome Vicente, 2014. "Lock-in or lock-out? How structural properties of knowledge networks affect regional resilience," Journal of Economic Geography, Oxford University Press, vol. 14(1), pages 199-219, January.
    17. Jihui Chen & Qiang Fu, 2017. "Do exclusivity arrangements harm consumers?," Journal of Regulatory Economics, Springer, vol. 51(3), pages 311-339, June.
    18. Oksana Loginova & X. Hnery Wang, 2010. "Customization in an Endogenous-Timing Game with Vertical Differentiation," Working Papers 1008, Department of Economics, University of Missouri.
    19. Naixin Zhu, 2023. "Dissertation on Applied Microeconomics of Freemium Pricing Strategies in Mobile App Market," Papers 2305.09479, arXiv.org.
    20. Natalia Szozda & Artur Świerczek, 2022. "Upstream and downstream dyad governance within the network structures: Creating supply chain governance for the customized products," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(2), pages 873-898, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jfr:rwe111:v:5:y:2014:i:2:p:56-67. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gina Perry (email available below). General contact details of provider: http://rwe.sciedupress.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.