In this collection from our archives, Harvard Business School faculty discuss the latest research on online marketing techniques, including consumer reviews, video ads, loyalty programs, and coupon offerings.
In their new book, Uncommon Service, coauthors Frances Frei and Anne Morriss show it is possible for organizations to reduce costs while dramatically enhancing customer service. The key? Don't try to be good at everything. Interview and book excerpt from HBS Alumni Bulletin.
Published in 2011
There had not been an innovative breakthrough in alarm clock design since the snooze button until entrepreneur Gauri Nanda created Clocky. Her runaway hit has been the inspiration for several cases written by Professor Elie Ofek.
In a new study, Assistant Professor Michael Luca shows just how much restaurant reviews on Yelp affect companies' bottom lines. The more difficult question: Are these ratings reliable as a measure of product quality?
Mass-market retailers, particularly big-box "category killers," are under critical pressure from online competitors. For retailers that can react quickly enough, this upheaval is survivable. But those slow to see the tsunami wave on the horizon stand to be swept away, according to professors Rajiv Lal and José B. Alvarez.
Two-sided platforms face a challenging coordination problem that consists of attracting both buyers and sellers. Participation by both depends on their expectations of participation on the other side of the market. To improve such coordination, many platforms provide "first-party content," such as games (e.g. Microsoft's Halo on Xbox), objective search results (Google and Bing) or, in the case of Amazon and eBay, product information and payment systems. First-party content makes participation more attractive to one side (typically, users), independently of the presence of sellers. Importantly, first-party content may be either a complement or a substitute for third-party sellers' products. For instance, Halo is a substitute for games provided by Electronic Arts on the Xbox; on the other hand, the Xbox Live online playing system is a complement. Similarly, Amazon's shipping services complements its third-party sellers' offerings, but the products Amazon sells under its own name compete with them. Professors Hagiu and Spulber examine the incentives that two-sided platforms have to invest in first-party content in order to coordinate adoption by both sides. The authors show that the incentives for firms to use first-party content depend crucially on the nature of buyers' and sellers' expectations and the relationship between first-party content and third-party seller participation (complements or substitutes).
Looking for a new model to think about business? Look no further than your local art museum, says Assistant Professor Ray Weaver. Some of the most profitable Web businesses and retailers such as Apple succeed by acting like museum curators: providing a very limited amount of choices at a time; offering a brief, engaging description of each choice; and classifying products honestly.
For consumers, online discount vouchers (like those offered by Groupon.com) have obvious appeal: discounts as large as 90 percent. But for retailers offering the deals through the site, does the publicity compensate for the deep hit to profit margins? This paper sets out to help small businesses decide whether it makes sense to offer discount vouchers. Research was conducted by Harvard Business School professor Ben Edelman, Business Economics PhD candidate Scott Duke Kominers, and by Sonia Jaffe of the Harvard University Department of Economics.
A billion people in developing countries have no need for a savings account–but they do need a financial service that banks compete to provide. The new HBS case Mobile Banking for the Unbanked, written by professor Kash Rangan, is a lesson in understanding the real need of customers.
About 95 percent of new products fail. The problem often is that their creators are using an ineffective market segmentation mechanism, according to HBS professor Clayton Christensen. It's time for companies to look at products the way customers do: as a way to get a job done.
Published in 2010
In processing a search for a particular phrase, Internet search engines generally offer two types of results: the algorithmic results, which a search engine selects based on relevance, and the "sponsored links," for which advertisers pay. The latter often occupy prominent screen space. But does the average web surfer realize that they are advertisements? In an online experiment, Harvard Business School professor Benjamin Edelman and doctoral candidate Duncan S. Gilchrist show that "sponsored link" is too vague a term for some users to understand, and that "paid advertisement" is a label that better clarifies the nature of the link. They call on the FTC to compel search engines to improve their disclosures.
A new case coauthored by HBS marketing professor John Deighton and research associate Leora Kornfeld offers an object lesson in the dangers social media can bring for big, recognizable companies and their brands. From the HBS Alumni Bulletin.
In some respects, developing strategy is the easy part. Executing that strategy in alignment with strategic priorities is where real mastery of management takes place. Harvard Business School senior lecturer Frank V. Cespedes shows how it is done.
UK retailer Tesco was very successful penetrating foreign markets—until it set its sights on the United States. Its series of mistakes and some bad luck are captured in a new case by Harvard Business School marketing professor John A. Quelch.
The tools can help managers inform decisions on market analysis, breakeven analysis, customer lifetime value, profit and pricing, and analyzing the competitive environment. Interview with Tom Steenburgh.
Summing Up: Are customer wishes irrelevant when creating a new product? Jim Heskett's readers say it depends on the product, on market goals, and where you are in the development cycle. (Online forum has closed; next forum opens September 2.)
Before 1995, there was little market for 20th-century Indian fine art. That's when artists, auction houses, critics, and others defined a new product category—modern Indian fine art—resulting in worldwide demand and soaring prices. Professor Mukti Khaire explains the dynamics behind new market categories.
Eye-catching colors and gee-whiz features aren't enough for successful products and services today. To rise above the "sea of sameness," companies need to be different in a way that is elemental—and game-changing. HBS professor Youngme Moon shares highlights and insights from her new book, Different: Escaping the Competitive Herd.
Published in 2009
Record labels have depended on album sales to boost profits. But in the digital music era, consumers prefer single songs over music "bundles." The result? Harvard Business School professor Anita Elberse says it is time for the industry to rethink its products and prices.
Just as bread and milk are often found at far-away ends of the supermarket, Web sites that match consumers with certain products have an incentive to steer users to products that yield the highest margins. The result: a compromise between what users want and what produces the most revenues, say HBS professor Andrei Hagiu and Toulouse School of Economics researcher Bruno Jullien. A look inside the world of search.
