School News

Marketing as an ever-evolving subject

Although Dr. Du majored in economics and finance, a string of fortuitous occurrences has eventually brought him to marketing. Through a chronic process of attending marketing seminars and experiencing the joy of using economics theory in his marketing electives, Dr. Du started to believe that he has a perfect fit with marketing. Dr. Du believes that marketing is a very lively subject to study. The market changes quickly, that the best sales strategy today would be obsolete next year. This has not only supplied an endless stream of questions to research but also encourages collaboration between scholars and industry practitioners. Therefore, Dr. Du believes that studying marketing could allow one keeping pace with the world.

Although the private sector also has its research teams, Dr. Du believes that tight deadlines and hectic work pace are unconducive to knowledge creation. Dr. Du enjoys being intellectually challenged, he wanted to focus on a specific topic deeply. In addition, he observes that the private sector rarely provide opportunities for researchers to revise and improve unsatisfactory projects. Dr. Du believes that failure is not necessarily the end of a program. It may offer researchers a deeper understanding of the subject matter and allow researchers to investigate them from a different perspective on their next try. Given these concerns, Dr. Du had chosen to develop his career in academia.

To beat the postgrad game

For students interested in becoming a scholar, Dr. Du recommends them to attend more seminars for research insights and seize every research assistant opportunity in order to experience the researcher’s life. Dr. Du observes that students often choose research topics in order to follow the footsteps of their idol scholars. But what your idol is working on may not necessarily be your interests. Dr. Du argues that being passionate about your research topic is very important to keep you moving on amidst repeated failures. As failure in research is common, Dr. Du recommends students should work on several projects in tandem. In case one of your projects has met a dead end, you can immediately hop onto another one.

To provide more background information to students, academia is a very generous place for knowledge creation. It encourages scholars to keep polishing and adding on their existing research for an unlimited time until it is published. This explains why some scholars could keep on working their PhD papers years after they have finished their postgraduate programme.

During the interview, Dr. Du had also debunked the misconception that scholars do not need people skills. Dr. Du points out that as the focus questions in marketing are not clearly identified, scholars have to pay extra effort in persuading industry practitioners and other scholars why their research matters. Moreover, good communication skills are important in the creation of readable papers and to deliver your message clearly on different occasions.

A remarkable experience – Why hiding information is conducive

One of the most remarkable experiences for Dr. Du is his sharing in a Boston symposium. As a short summary, Dr. Du concludes that platforms that seek to match two sides of users need not provide perfect information to its users in order to minimize competition. For example, users of lodging platforms are exposed to both vertical and horizontal information. Vertical information is very general and would usually be goods preferred by most users, such as Wi-Fi and air-con. Horizontal information, on the other hand, is very specific and stringent, referring to location, interior design, and transportation network. While everyone wants Wi-Fi, not everyone wants to live in Kings Road.

While everyone wants the perfect house, the sad reality is that the supply for the perfect good is scarce no matter how many vendors a platform has. Providing too much vertical information for users will also create a false competition that everyone is competing for that particular house with Wi-Fi in Kings Road. As users expect platforms can deliver services instantly, competition among users is undesirable. Therefore, Dr. Du suggests that platforms should let the horizontal information guide the selection.

This research finding has drawn the attention of a representative of a venture fund specializing in investing lodging platforms. Receiving recognition from cross-sectoral talents is rewarding, as it implies that his research has its value in real life.

Coaching doctoral students – Reverse engineering

Communicating with industry practitioners is important for scholars as it allows them to attain firsthand information and keep themselves researching on matters relevant to the world. Dr. Du is honored that he has the opportunity to coach two leading executive figures in their doctoral degree in business administration.

Dr. Du believes that experience is a reverse engineering process. On one hand, Dr. Du is teaching them how to utilize different economic models to calculate the rate of return of digital marketing under a given set of variables and assumptions. On the other hand, he is also learning a lot of industrial insights from them. This is particularly useful to Dr. Du as he is currently researching on how to improve business communications.

Business communications are important as different specialists in a company have their own sets of jargon. Ineffective communication could be costly. For example, if the engineers cannot effectively tell the marketing team what they can or cannot do, while the marketing team cannot effectively tell the engineers what customers want, the end product will be totally irrelevant to the market demand. We see large corporations such as Microsoft have developed their own language manual in order to facilitate inter-company communication. However, it takes a lot of effort to learn a language, and the language is only useful if all parties can understand it. People are realistic and if they believe other parties are not putting in enough effort into learning the language, they will lack an incentive to learn it and the internal language system may collapse. One of Dr. Du’s current project is on studying when the introduction of an internal language system can improve communication and firm advantage, and how a firm can incentivize each party to put in the adequate effort. It is therefore very important for marketing scholars to work closely with industry practitioners in order to create knowledge that will be conducive to their actual operation.

The quantification of marketing

While not everyone looks forward to becoming a scholar, students nowadays are keen on taking a second major to increase their competitiveness in the market. In that regard, Dr. Du recommends students to major in statistics or computer science.

Dr. Du observes that the market’s demand for talents sensitive to statistics and programming is growing exponentially. Marketing talents are not only expected to make strategies through business intuition or past experiences but also using more scientific methodologies to substantiate their claims. Managers nowadays are also increasingly keen on developing their data acumen in order to establish their own views when reading data prepared by their analysts.

Marketing is no longer a talking subject. It is incorporating more and more multidisciplinary knowledge from the fields of psychological science, economic models and statistical knowledge. Students must, therefore, work harder on their numerical reasoning in order to excel.

Knowledge sharing: Competition behaviors among hegemonic platforms & A case study on effective and ethical pricing

Platform competitions and pricing are hot topics in marketing. In order to facilitate students in their studies, we have capitalized on this opportunity to seek advice from Dr. Du in these aspects.

Can regional hegemons invade the market of another regional hegemon and win?

Regional platform hegemons are platform companies so entrenched in their regional market that their dominating status has become unchallenged. However, can the hegemon in Asia beat the African hegemon in its own market? Dr. Du believes that it is possible in three ways.

First, a regional platform hegemon’s rise to power is likely because of a network effect. They have become a natural monopoly because they have entered the game so early that they have the time and resources to capture the first batch of vendors and buyers. When time-lapse, it will create a snowball effect, making them more and more reputable and large in the market. Creating a situation that they are THE best platform in the region. However, Dr. Du believes that the market structure of platform companies allows multi-homing to take place, referring to the situation that customers could afford buying the services of multiple platform companies in tandem. For example, mainland customers could purchase goods from both Taobao and Tianmao.

Second, companies can compete through specialization. Using Craigslist and Airbnb as an example, while the former is an ad platform advertising all kinds of residences, Airbnb focuses specifically on lodging services. Specialization has enabled Airbnb to stand out while indirectly competing with Craigslist.

Lastly, companies are free to adopt different monetary strategies to entrench in different niches and market segments. For example, Tidal and Pandora are both music streaming giants in the North American market but they focus on different customers. Tidal, for example, provide high-quality music without any ads interruption. As a result, it requires customers to pay subscription fees. Pandora, on the other hand, relies heavily on ads income. Therefore, they have opted to provide free services to customers while forcing them to sit through ads. While both are delivering the same services, both are not competing head-to-head with each other as they are targeting customers with different preferences.

Effective pricing and ethical business – A Japanese case study

About a century ago, the CEO of a renowned Japanese retail chain had stated that the market value is unable to reflect the real value of a product and the company will only charge above the cost price. Moreover, even during the Fukushima earthquake in 2016, the company did not mark up the price of their bottled water.

Regarding pricing, in order to encourage students to study marketing in a more scientific manner, Dr. Du believes that students should emphasize on the incremental value of goods and services. If your competitors are charging at 2 dollars and if you can provide an extra value (increment) of 3 dollars, you can charge at 5 dollars. Pricing is beyond supply and demand. Companies not only have to take their competitors’ strategies into consideration, but they also have to be aware of consumers’ pursue of fair pricing. For example, assuming that the functions of a cell phone and an iPhone are the same, it is rational for the retailer to charge both at the same price. However, if consumers discover that the cost price of a cell-phone is 30% lower than that of an iPhone, they would demand the retailer to mark-down the cell phone.

In addition, pricing strategies is to a large extent based on cost structures. Using Walmart as an example, as they purchase in bulk, they could always get the best price from suppliers and charge at a low price. However, if your cost structure cannot afford that, it is better to highlight service experience and product quality instead.

Lastly, about ethical business, Dr. Du argues that doing business is not a one-time game. You have to develop your reputation as your business is expected to continue for years to come, and you want your customers to keep coming back. While CSR may not have a direct impact to support company performance, it is an effective way to avoid being antagonized by social groups.

Way forward

Dr. Du felt very impressed with the strong business acumen that HKU students possess. Comparing case analysis made by MBA students and the undergraduates from his introductory course at HKU, Dr. Du is shocked that the undergraduates are sometimes performing as good as the MBA students. The only thing he felt a bit disappointed is that many undergraduates took marketing because they considered that it’s for those who are bad at mathematics. While Dr. Du is willing to teach them step by step, he hopes that they could muster up the courage to face their inner demons.

Other than nurturing students’ numerical reasoning skills, Dr. Du also hopes that he could contribute to HKU by producing more high-quality research on platform sales. In the long run, he hopes that he can put his practice into work by consulting platform giants such as Alibaba.