Z. John Zhang - Faculty Research in Knowledge@Wharton

How About Free? The Price Point That Is Turning Industries on Their Heads

Wed, 04 Mar 2009 14:25:43 EST

Giving products away -- think Adobe Reader or access to online news -- has become a legitimate business model on the Internet and even beyond. Once companies accept that price need not be tied to the cost of production and begin thinking creatively, new possibilities emerge -- even for offline products, according to Wharton faculty and others. Welcome to the world of "freeconomics."

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.

Who Owns You? Finding a Balance between Online Privacy and Targeted Advertising

Wed, 12 Dec 2007 14:42:26 EST

On November 6, Facebook outlined a strategy to integrate more targeted advertising into its popular social networking website. Facebook CEO Mark Zuckerberg saw the new initiative as an opportunity for users to refer products to each other and allow friends to share information as they shopped online and visited other websites. The system, called Beacon, was also intended to lead to more relevant -- and profitable -- advertising through precise targeting based on a user's buying habits, social circle and geography. But on December 5, after receiving numerous complaints, Zuckerberg issued an apology and changed the way Beacon operates. The whole incident, according to Wharton experts, raises questions about privacy, marketing tactics and what consumers can expect in the future.

Retail Price Maintenance Policies: A Bane for Retailers, but a Boon for Consumers?

Wed, 08 Aug 2007 15:43:21 EST

In June, a high-profile Supreme Court case held the attention of retailers and manufacturers alike. In a five-to-four ruling, the high court overturned a lower-court decision to award $1.2 million to a Dallas-area clothing store that was cut off by a supplier, Leegin Creative Leather Products, because the retailer refused to abide by the manufacturer's retail price maintenance (RPM), or no-discount policy. The decision means that manufacturers no longer face a blanket prohibition against implementing an RPM policy. The case has spurred concern among consumer groups, who claim it overturns a century of precedent and will lead to price fixing and unjustifiably higher prices. But Wharton faculty suggest that any changes will be gradual, and may ultimately benefit consumers.

Will the 2008 Olympics in Beijing Showcase Pollution as Well as World-class Athletes?

Wed, 10 Jan 2007 15:27:02 EST

For many, the 2008 Beijing Olympics are seen as a "coming-out" party for the world's most populous nation. China is investing billions of dollars in sports venues such as the Bird's Nest in Beijing, the modernist national stadium currently under construction; subway-line extensions, and other infrastructure improvements to make the games a world-class spectacle. But some wonder whether air pollution will crash China's Olympic party and focus world attention on deepening environmental problems that threaten the country's economic growth.

How and Why Chinese Firms Excel in 'The Art of Price War'

Wed, 13 Dec 2006 15:19:43 EST

When it comes to price wars, Wharton marketing professor Z. John Zhang can't help but notice that companies in the West and companies in China are quite literally worlds apart. In the West, Zhang says, the outbreak of a price war is viewed as the failure of managerial rationality. In China, the outbreak of a price war is considered a legitimate and effective business strategy. In a recent paper, Zhang and Dongsheng Zhou, a marketing professor at the China Europe International Business School in Shanghai, analyze two price wars that took place in China in the mid-1990s.

Navigating the Labyrinth: Sales and Distribution in Today's China

Mon, 16 Oct 2006 22:17:17 EST

Experts from Wharton and Boston Consulting Group say that firms should not underestimate the skills they will need to navigate the labyrinthine networks of state-owned distribution companies and small, private wholesalers in China -- particularly as they try to expand outside the country's largest 30 or 40 cities into its 500-plus other large markets.

One Billion, Three Hundred Million: The New Chinese Consumer

Mon, 16 Oct 2006 22:17:12 EST

Despite rapid urbanization and the emergence of a strong, status-conscious middle class, experts from Boston Consulting Group and Wharton point out that China is still "a country of extremes," where it pays to understand the differing habits and mindsets of the rich and poor, as well as the subtleties of consumer rationales for trading up and down when making purchases.

Chinese Firms: Taking a Gamble on Finding Customers Abroad

Wed, 10 Aug 2005 15:55:55 EST

In recent years, U.S-based companies have flocked to China to set up manufacturing and other operations, taking advantage of favorable labor rates that are often a fraction of those in America. Now, however, Chinese companies that previously only served their domestic market are beginning to expand to the U.S. and other countries. Witness Beijing-based Lenovo's acquisition in 2004 of IBM's personal computing division. Last week, 30 Chinese executives met with several Wharton faculty members and visited nine U.S. companies -- including a casino in Atlantic City, N.J. -- to learn more about how business is conducted in the U.S.

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."

Watch Out, Coke and Pepsi -- Here Comes Wahaha

Wed, 13 Jul 2005 15:36:49 EST

Wahaha, whose main products are milk drinks, bottled water and mixed congee, is the number one beverage company in China, with revenues of 11.4 billion yuan ($1.37 billion) and profits of 1.35 billion yuan ($162.7 million) in 2004. The company was started in 1987 by Zong Qinghou, its 60-year-old chairman and CEO. In an interview with Wharton marketing professor John Zhang, Zong talks about his first entrepreneurial ventures selling beverages and ice cream, the success of his first major product, "Wahaha nutritional liquid," his joint venture with the French giant Danone Group, and his rapid growth over the past eight years through the establishment of 40 subsidiaries in 16 Chinese provinces. In 1998, Wahaha launched its own brand, "Future Cola," to compete against Coke and Pepsi.

Sourcing From China: No Longer Just for Shoes, Toys and Clothes

Wed, 01 Jun 2005 16:48:32 EST

Twenty years ago it was widely believed that companies that wanted to source products from China were best off focusing on simple, labor intensive products such as shoes, toys and clothes. That was true - and it helped drive tremendous success for companies such as Perry Ellis, which targeted these product categories. Today, however, the sourcing landscape in China has changed. High-tech companies such as Dell, IBM, Philips, Samsung and Nokia are turning to China to source parts and products that demand sophisticated technology and considerable R&D. According to experts at The Boston Consulting Group and Wharton, companies that figure out how to take advantage of this trend can reap enormous rewards.

Attention Shoppers: Great Deals in Retail Mergers

Wed, 30 Mar 2005 10:07:57 EST

Federated Department Stores' acquisition of The May Department Stores will give the company added national scope and reduce costs, and may even result in some short-term savings for consumers. But Federated will still face the challenges of department store retailing, which has been in decline for decades, according to Wharton faculty and retail analysts. Some predict more consolidation in the industry and a greater effort by stores to better position themselves against both high- and low-end competitors.

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.

The Hidden Dangers - and Payoffs - of �Targeted Pricing�

Wed, 26 Mar 2003 00:00:00 EST

Should your firm target your competitors� customers with lower prices than the competition charges them? When might it make sense, instead, to offer discounts to your own customers? Under what conditions might this sort of approach � known as �targeted pricing� � backfire by driving everyone�s prices down too far? Recent research by Wharton marketing professor Z. John Zhang and several colleagues examines the complex dimensions of �targeted pricing� and suggests guidelines to help companies understand when �targeted pricing� might play an effective role in their marketing strategy.