Z. John Zhang

Yunchuan Liu and Z. John Zhang (Working), The Benefit of Targeted Pricing in a Channel.

Yuxin Chen, Yogesh Joshi, Jagmohan Raju, Z. John Zhang (Forthcoming), A Theory of Combative Advertising, Marketing Science, 2006.

Vibhanshu Abhishek, Kinshuk Jerath, Z. John Zhang (Forthcoming), Platform or Wholesale: Channel Structures in Electronic Retailing, CIST 2011.

Yuxin Chen, Sridhar Moorthy, Z. John Zhang (Working), A Non-Price-Discrimination Theory of Rebates.

Upender Subramanian, Jagmohan Raju, Z. John Zhang (Working), Customer Value Based Management: Competitive Implications.

Abstract: Many ?firms today quantify the value of individual customers and serve them differentially; providing better service, prices and other inducements to high value customers. We refer to this practice as Customer Value-based Management (CVM). While previous research and popular press has strongly advocated CVM, ?firms have often met with mixed results. One possible reason why actual outcomes differ from anticipated results could be that ?firms often implement CVM in a competitive environment. Our objective is to study CVM explicitly in a competitive setting. We find that while some recommendations and prescriptions from past research continue to apply in a competitive environment, some others do not. For example, we find that one of the benefits of CVM in a competitive setting is that it can discourage the rival from competing intensely, by increasing the rival’s chances of acquiring unprofitable customers. In this context, low-value customers can play an important strategic role by limiting the intensity of rival’s poaching. Consequently, ?firing low value customers or even increasing their value may prove counter-productive.

Z. John Zhang (Working), Dominant Retailer and Channel Coordination.

Z. John Zhang and Gila E. Fruchter (Working), Dynamic Targeted Promotions: A Customer Retention and Acquisition Perspective.

Abstract: This research analyzes the strategic use of targeted promotions for customer retention and acquisition in a dynamic and competitive environment. We develop suitable differential games for both finite- and infinite-time problems and provide analytical solutions in each case for defensive and offensive Nash equilibrium closed-loop strategies. Our analysis shows that a firm's optimal targeting strategies, both offensive and defensive, in a dynamic setting depend on its actual market share, the relevant redemption rate of its targeted promotions, the value of its market share increase, and the effectiveness of its targeted promotions. Optimal targeting strategies call for a firm to increase its expenditure on defensive (offensive) targeting relative to offensive (defensive) targeting, thus focusing more on customer retention (customer switching), when its market share becomes larger (smaller). These optimal strategies have the attractive feature of being an adaptive control rule. A firm can operationalize these strategies by adjusting its planned promotional incentives on the basis of the observed differences between actual and planned market shares and between actual and planned redemption rates. In the long run, a focus on customer retention is not an optimal strategy for all firms. A firm with a sufficiently large market share should stress customer retention, whereas a firm with a small market share should stress customer acquisition. When market shares are more evenly divided in a market, firms are better off in the long run if they all focus on customer acquisition. Our analysis also suggests that to build a long-run market share advantage in the age of information-intensive marketing, a firm must strive to improve its targeting effectiveness and increase its unit profit margin. We illustrate the results through a numerical example and show the trajectories of a firm's market share, promotional expenditures, and profits as competing firms use targeted promotions optimally over time.

Vibhanshu Abhishek, Kinshuk Jerath, Z. John Zhang (Under Review), Platform Selling or Reselling? Channel Structures in Electronic Retailing (under review).

Yuxin Chen and Z. John Zhang (Working), Price-for-Information Effect and Benefit of Behavior-Based Targeted Pricing.

Yunchuan Liu and Z. John Zhang (Working), Pricing Implications of ‘Click-and-Mortar’ Combo.