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| Manufacturer’s Selection under the Conflict between
Product Improvement and ValueAdded Service |
| ZHANG Xumei,HAN Xiaopeng,XU Guangye,LIU Xiangyu |
| 1. Chongqing University, Chongqing, China;
2. Southwest University of Political & Law, Chongqing, China |
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Abstract Considering the potential conflict between product improvement and valueadded service, a demand function regarding the product improvement and the valueadded service is built based on consumer utility theory. The selection between the product improvement and the valueadded service or of both for the manufacturer is studied. The result indicates that the manufacturer chooses to improve products and provide valueadded service at the same time when the valueadded service utility is relatively high. The result also shows that there are four cases when the valueadded service utility is low: when the product improvement cost coefficient is relatively low, the manufacturer chooses only to improve products; when the product improvement cost coefficient is relatively high and the conflict coefficient is relatively low, the manufacturer chooses to improve products and provide valueadded service simultaneously; when both the product improvement cost coefficient and the conflict coefficient are relatively high, the manufacturer only makes product improvement; however, the manufacturer only provides valueadded service but gives up improving products when the product improvement cost coefficient is sufficiently high.
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Received: 08 September 2013
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2015, Vol. 12 
