In many markets, consumers use detailed attribute information to assess the value they expect
from purchasing a product or service. Markets that Öt this description include LED monitors,
wine, some OTC healthcare products, mattresses and automobile tires. In these markets, quality
di§erences exist yet many di§erences are horizontal in nature: the consumer is interested in Önding a product that meets her unique tastes. Beyond ensuring that consumers know the brand,
the category and the price; in these markets, it seems advertising should provide consumers with
detailed attribute information. However, a signiÖcant proportion of advertising does not provide
it. In fact, within the same category, competitors respond to messages that emphasize detailed
attribute information with messages that are devoid of attribute information. These messags are
uniformative about product attributes. We explore how competition in a di§erentiated market
is a§ected by the ability of a Örm has to choose uninformative messages. We construct a model
to investigate the factors that a§ect a Örmís decision to use advertising with detailed attribute
information or advertising that does not provide attribute information. The model demonstrates
that content decisions about advertising are a§ected by the di§erences between products, the
range of heterogeneity in consumer tastes and the degree to which costs increase as a function of
the quantity of information in advertising. Surprisingly, even when the cost to increase the quantity of information in advertising is low, uninformative campaigns can be more proÖtable than
campaigns with detailed attribute information. The analysis also demonstrates that Örms may
be more likely to provide detailed attribute information when there are less consumers that are
attribute-sensitive. Finally, the model shows that uninformative messages can create "artiÖcial
di§erentiation" in some conditions.
We study the incentive of a firm to provide deceptive information on the value of its product.
Consumers take into account the possibility of certain exaggeration or deception in firm’s claims.
Therefore they may discount such claims and search for extra information to verify the messages.
Such reactions from the consumers would in turn influence the firm’s incentives to conduct deceptive advertising. Based on a simple model we find that a monopoly firm with a low quality
product has a stronger incentive to send out a deceptive message when the consumers’ prior belief
is favorable to the product. We also investigate the firm’s choice on the format of the message
when delivering false claims, i.e., explicit claims or subtle messages. Our result indicates that the
direct claims are more persuasive than the subtle claims in a wide range of the parameter space.
However, when both formats are effective, deceptions with subtle claims are more profitable to
the firm because consumers will have less incentive to conduct the verification. Finally, we found
that the presence of an independent information source does reduce the firm’s incentive to make
deceptive claims, but it is most influential when the firm has a moderate reputation.
“When others talk about quality, they see it as the life of a company, while at Yuwell, we view it as the life of the people who use our products.”—Guangming Wu, Chairman, Yuwell Medical Equipment Inc.
The company name “Yuyue” refers to a jumping fish, conveying a vivid image of vigorous growth. In April 2008, Yuwell went public in Shenzhen — it had taken only ten years for Yuyue to transform from a Township & Village Enterprise (TVE) into a well-known, publically listed company. Today, it has become the leader in the Chinese medical equipment market and a world champion in the sale of oxygen generators. This case investigates Yuyue’s core competencies, strategies to generate capital and the institutional context, all of which contributed to its success and transformation from a small TVE into a renowned public company.
Manufacturing and medical services
2013: five years since Yuwell went public in 2008. Over a decade, Yuwell had experienced remarkable expansion, seeing its revenue quadruple and achieving a six-fold increase in net profits. Yuwell has filed almost 100 product patents to date, and its systematic innovations streamlined 273 complicated manufacturing processes into just 69 simplified processes, which facilitated the creation of the fastest production line in the world for making desktop sphygmomanometers. Using this production line, it now takes Yuwell only 3.3 seconds to produce a sphygmomanometer. And by relying a combination of manual labor and automation, Yuwell developed the world’s longest production line for live line testing of oxygen generators. This case mainly focuses on the following questions: How were these innovations developed? What were the characteristics of the strategy for promoting innovation at Yuwell? And what would be the possible roles of innovation in the future development of the company?
Manufacturing and medical services
The objective of this paper is to better understand the factors that competitive news providers consider to design or deliver news programmes. The focus is broadcast news where, in any programming time period, a viewer watches (or consumes) one programme. We assume that each viewer is interested in a limited set of topics and that her utility only comes from the “most interesting” news she observes. The key questions we address are as follows: (a) Should firms adopt designs that facilitate the delivery of more information in their news programmes? (b) Does the decision of firms to implement such strategies depend on the complexity of the news programme (i.e., the number of news stories covered in the news product)? (c) How do such strategies influence competition? We show that firms may or may not benefit by providing better-designed news. The incentive to do this is strongly affected by the complexity of the news product and the intensity of competition between news providers.