Jagmohan Raju - Faculty Research in Knowledge@Wharton

Best Buy vs. Wal-Mart: Is There Room for Both, and Others?

Wed, 01 Apr 2009 17:13:39 EST

With the demise of electronics retailer Circuit City in March, Best Buy and Wal-Mart Stores are ramping up their struggle to capture added share of the consumer electronics market. Best Buy is positioning itself as the provider of quality service and sales help; Wal-Mart is using its dominance across all retail categories to position itself as the low-price option in consumer electronics. Wharton faculty and industry analysts say instead of fighting to the death, both stores can coexist if they follow clearly defined strategies focusing on service and price.

Take Two Advil and ... What Ills Can the Pfizer-Wyeth Merger Cure?

Wed, 04 Feb 2009 17:07:39 EST

When the giant pharmaceutical company Pfizer announced on January 26 that it was acquiring Wyeth for $68 billion, analysts started questioning what benefits the deal would bring and for whom. Pfizer executives suggest the acquisition makes strategic sense by expanding the company into a range of new areas, and by helping make up for an expected loss of more than $12 billion in annual revenues once its Lipitor patent expires in 2011. But Wyeth also brings some liabilities -- notably, continuing lawsuits over its hormone replacement drugs and fen-phen diet pill. Knowledge@Wharton asked Wharton health care professor Patricia Danzon and marketing professor Jagmohan Raju to offer their views on the pros and cons of the deal.

Tuning in a Post-merger Strategy: Sirius XM Must Cut Costs and Build Its Case

Wed, 03 Sep 2008 17:03:03 EST

Now that the FCC has approved a merger of the two satellite radio companies, Sirius XM's big challenges are to stop the flow of red ink and settle on a strategy to compete with the myriad of other portable music providers. Says one Wharton professor: "They may have one more shot at a Hail Mary pass."

The New Global Middle Class: Potentially Profitable -- but Also Unpredictable

Wed, 09 Jul 2008 17:41:19 EST

A new global middle is rising up in emerging economies around the world, providing competition for labor and resources along with enormous promise for multinationals eager to sell to the burgeoning ranks of first-time consumers. But don't expect this new group to act in the same way -- and have the same preferences -- as prior generations of middle-class consumers, suggest Wharton faculty and analysts.

In the Game of Business, Playing Fair Can Actually Lead to Greater Profits

Thu, 13 Mar 2008 14:43:58 EST

Tune into "The Apprentice," and you get an all-too-common view of business. Every week, the contestants try to impress Donald Trump by preening, cajoling and conniving. In this world, toughness is the measure of every CEO, and the boss glories in firing people and squeezing every penny out of suppliers. Yet according to John Zhang and Jagmohan Raju, both Wharton marketing professors, and Tony Haitao Cui from the University of Minnesota, many people aren't purely mercenary in their business dealings. They care about fairness -- and they should, the researchers say, because doing so can maximize their profits.

Why Firing Your Worst Customers Isn't Such a Great Idea

Wed, 12 Dec 2007 14:42:26 EST

Fire your bad customers. That piece of advice has become widely accepted in recent years as companies have sought to manage their relationships with customers in more sophisticated ways. The rationale is clear-cut: Low-value customers end up costing more money than they provide. So why not jettison them and focus your customer-relationship efforts on more profitable individuals? Or, as an alternative, why not try to increase the worth of the low-value customers to your firm? Not so fast, suggests a new study by two Wharton marketing professors -- Jagmohan Raju and Z. John Zhang -- which concludes that firing low-value customers actually decreases firm profits and that trying to increase the value of these customers may be counterproductive.

The Price Is Right, but Maybe It's Not, and How Do You Know?

Wed, 03 Oct 2007 14:47:58 EST

When Apple dropped the price of its iPhone by a third after only two months on the market, even its most loyal buyers complained bitterly, forcing CEO Steve Jobs to apologize and offer a partial rebate. According to Wharton faculty and analysts, the iPhone episode reflects an evolving marketplace where innovation, fierce competition and globalization are changing strategic approaches to pricing. Meanwhile, pricing is gaining new interest as management looks for ways to increase revenues after years of focusing their attention on downsizing and cost-cutting.

Indian Companies Are on an Acquisition Spree: Their Target? U.S. Firms

Wed, 13 Dec 2006 15:19:43 EST

Reliance Gateway Net, VSNL, Scandent and GHCL aren't exactly household names in the U.S., but they may be signs of bigger things to come. These are only a few of the growing number of Indian businesses that have acquired U.S. firms in the past few years. And the U.S. merger-and-acquisition activity is just part of a bigger picture. Indian companies -- usually quietly, but sometimes with media fanfare -- have been on a buying spree in continental Europe, Great Britain and Asia in attempts to become key players in global markets.

Companies That Use Combative Advertising May End Up with a Black Eye

Wed, 14 Jun 2006 15:41:34 EST

John Zhang has a message for Cingular Wireless and Verizon Wireless or, for that matter, any company that uses its ads to attack a competitor. Instead of luring away your competitor's customers, you may just be hurting yourself. Zhang, a Wharton marketing professor, has found that combative ads -- the sort of comparative spots that beer makers, particularly Anheuser-Busch and Miller, are famed for -- may backfire. Instead of pulling consumers to an advertiser, they may just make people indifferent to all offerings in a product category. "Combative advertising, a characteristic of mature markets, is defined as advertising that shifts consumer preferences toward the advertising firm but does not expand the category demand," Zhang says in his research paper titled, "A Theory of Combative Advertising."

Will Microsoft's New 'Ultra-Mobile' Computer Fly or Flop? Past Experience Offers Some Clues

Wed, 22 Mar 2006 15:54:43 EST

Although Microsoft recently unveiled an 'ultra-mobile personal computer,' or UMPC, in a move to fill a market niche between laptops and handheld computers, it remains to be seen whether this latest innovation from the software giant will be a hit or flop. While Microsoft is following a "build-it-and-it-will-sell" strategy with the UMPC, technology history is littered with innovative products that never found a market, say experts at Wharton. As Wharton professor of operations and information management Eric K. Clemons puts it: "Build-it-and-it-will-sell strategies are a mixed bag."

Sirius Satellite Radio and Howard Stern Go Ear to Ear with XM

Wed, 22 Feb 2006 16:56:24 EST

Since announcing on October 6, 2004, that it had signed Howard Stern to a five-year deal, Sirius Satellite Radio has added approximately 2.7 million subscribers and become a household name in the satellite radio world. The tab: Close to $700 million. Is Stern worth it? Can the popular and raunchy talk show host catapult Sirius ahead of rival XM Satellite Radio, or are there other issues to consider, such as the threat of new technologies, the need to provide good content, and the continuing popularity of conventional radio? Wharton faculty and others debate the different strategies of Sirius and XM and the challenges that both face.

What Consumers -- and Retailers -- Should Know about Dynamic Pricing

Wed, 27 Jul 2005 16:50:59 EST

According to a recent study, 64% of consumers who shop on the Internet do not know that "it is legal for an online store to charge different people different prices at the same time of day." Yet dynamic pricing is not new. Retailers have been using it for years in ways that benefit not just themselves but also their customers. The challenge is to establish dynamic pricing in ways that lead to profitability rather than price wars. As one expert noted, companies should "engage in flexible pricing practices in order to honor their responsibilities to their shareholders. If retailers charge a flat, low price to make everyone happy, they're leaving a lot of money on the table."

SAP, Microsoft and the Coming Consolidation in Software

Wed, 14 Jul 2004 17:19:54 EST

Even the most jaded journalists ‑ who scorn press releases ‑ knew there was a hot story in the separate handouts issued June 7 by Microsoft and SAP. Microsoft, the world’s largest maker of software for personal computers, last year had approached Germany’s SAP, a leading enterprise software company, about a potential merger, but the preliminary talks were discontinued this spring, said the dry-as-dust announcements. The news sparked a buzz throughout the technology world, and for good reason. Wharton faculty members and other academics say that it was as good an indication as any that the software industry is ripe for consolidation. They differ, however, on whether SAP needs to link up with a major partner in order to thrive. And some suggest that a SAP-Microsoft merger may not be a dead issue.

Choosing the Wrong Pricing Strategy Can Be a Costly Mistake

Wed, 04 Jun 2003 00:00:00 EST

Prices have been at the center of human interaction ever since traders in ancient Mesopotamia began keeping records. Who doesn�t love to guess what something costs � or argue about what something ought to cost? So it should come as no surprise that companies spend a lot of time figuring out how to price their products and services. But two professors in Wharton�s marketing department, Jagmohan S. Raju and Z. John Zhang, say firms do not always go about pricing the right way despite the huge impact that pricing strategy can have on a company�s profits.

India: Going for Growth

Fri, 10 Dec 1999 09:13:00 EST

On the eve of the new millennium, India appears to be poised for phenomenal growth. A strong education system, policy reforms and well-defined governmental checks and balances make the world�s most populous democracy a promising place for overseas investors. Nonetheless, to date India has not been the darling of the foreign investment world. Several speakers and panelists at the annual Wharton India Economic Forum, held in Philadelphia on December 3, discussed the current situation and addressed both challenges and potential opportunities.