Faculty & Research

Marketing

Marketing

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About the Unit

Marketing is critical for organic growth of a business and its central role is in creating, communicating, capturing and sustaining value for an organization. Marketing helps a firm in creating value by better understanding the needs of its customers and providing them with innovative products and services. This value is communicated through a variety of channels as well as through the firm's branding strategy. Effective management of customers and pricing allows the firm to capture part of the value it has created. Finally, by building an effective customer-centric organization a firm attempts to sustain value over time.

Our faculty addresses a broad array of topics in all of these areas. Our work attempts to get a better understanding of how consumers use information and make choices and how these choices affect the firm's strategy for new product development, customer relationship management, branding and other marketing efforts. We examine issues related to branding, business marketing, global marketing, distribution channels, pricing, direct and interactive marketing, sales management and return on marketing investment. Some of our faculty specializes in specific industries such as retailing, agribusiness, social enterprise, media, arts and entertainment.

There are several new developments in marketing that offer opportunities for us to make important contributions in the future. The current economic crisis is changing consumers' current and future purchase and consumption patterns. Search engines have changed the way consumers obtain information and make decisions and they are also dramatically changing the advertising industry. Social networks and user generated content have opened a new way for consumers to engage with each other as well as with brands and companies. There are significant changes in the attitudes of consumers and companies about social issues. Consumer preferences and choice of products are increasingly influenced by social factors. Companies are recognizing that there is a large market at the "bottom of the pyramid" and marketing to these consumers may require a new framework. These and related developments provide great opportunities for the marketing faculty to make a significant impact in the future.

Recent Publications

When It's Time to Expand Beyond the Base

By: Marco Bertini and Nader Tavassoli
  • September–October 2017 |
  • Article |
  • Harvard Business Review
Related

AI Can Help Address Inequity—If Companies Earn Users' Trust

By: Shunyuan Zhang, Kannan Srinivasan, Param Singh and Nitin Mehta
  • September 17, 2021 |
  • Article |
  • Harvard Business Review Digital Articles
While companies may spend a lot of time testing models before launch, many spend too little time considering how they will work in the wild. In particular, they fail to fully consider how rates of adoption can warp developers’ intent. For instance, Airbnb launched a pricing algorithm to close the earnings gap between Black and white hosts. While the algorithm reduced economic disparity among adopters by 71.3%, Black hosts were 41% less likely to use it, and so in many cases it made the earnings gap wider. The company needed to better consider how the algorithm would be perceived, and address that in its rollout to encourage its target audience, Black hosts, to trust it. This presents two lessons for companies: consider how an algorithmic tool will be perceived and create a targeted plan to build trust.
Keywords: Artificial Intelligence; Algorithmic Bias; Technological Innovation; Perception; Diversity; Equality and Inequality; Trust
Related

The Unintended Consequences of Raising Awareness: Knowing About the Existence of Algorithmic Racial Bias Widens Racial Inequality

By: Shunyuan Zhang and Yang Yang
  • 2021 |
  • Working Paper |
  • Faculty Research
In May 2016, a series of news articles on algorithmic racial bias went viral and triggered a nationwide outrage on social media, raising public awareness of the existence of algorithmic racial bias. The new public awareness raised an important question: How does awareness of the existence of racial bias in some algorithms influence the disadvantaged group’s receptivity to unrelated algorithms that are unbiased (i.e., race-blind) and offer significant financial, education, or health benefits? The current research is the first attempt to investigate this question. An analysis of an Airbnb dataset reveals that, before the 2016 media coverage of algorithmic racial bias, Black hosts were less likely than white hosts to use Smart Pricing (i.e., an unbiased pricing algorithm with a demonstrated financial benefit); after the media event, the racial gap in Smart Pricing usage widened by 61.2%. A controlled experiment further demonstrates the mechanism: awareness of algorithmic racial bias differentially affects the expected financial benefits of Smart Pricing along racial lines, increasing the expected benefits of Smart Pricing among white hosts and reducing the expected benefits of Smart Pricing among Black hosts. Theoretically, this research contributes to the nascent literatures on algorithmic bias and algorithm aversion and the classic literature on judgment and decision making. Practically, it offers important implications for policy makers, firms, and media outlets that wish to prevent the public’s awareness of certain algorithmic biases from spilling over to algorithms that are unbiased and beneficial.
Keywords: Racial Bias; Algorithmic Bias; Race; Attitudes; Theory
Related

STARZPLAY: Shooting for the Stars

By: Elie Ofek, Marco Bertini and Alpana Thapar
  • September 2021 |
  • Case |
  • Faculty Research
In mid-2021, Maaz Sheikh, cofounder and CEO of STARZPLAY, a Dubai-based subscription video on demand (SVOD) provider that catered to the Middle East and North Africa region, was wrestling with how to find the right balance between continued subscriber growth and profitability. Founded in 2015, the company was the first major SVOD player in the region providing high quality and affordable Hollywood content. STARZPLAY rapidly grew its subscriber base through a business model sensitive to the varied tastes and payment preferences of households in the region and was able to maintain leadership even after global players like Netflix and well-funded homegrown companies entered the market. At the time of the case, several U.S. major studios, including the likes of Disney, Paramount, and HBO, were in talks with local operators about potential partnerships. Sheikh needed to prepare an appealing proposal, knowing full well that other regional players were likely doing the same and that these studios might decide to enter independently. He had to think carefully about the company’s brand position and its plans regarding content, pricing and payment options, and marketing spend in order to fuel continued growth, while managing the increasing pressure from investors to drive the business toward profitability. Sheikh and his management team had big ambitions for STARZPLAY. What would be the plan that ensured the company continued to prosper despite the mounting competition?
Keywords: Pricing; Growth; Profitability; Subscription Business; Business Model Innovation; Fintech; Subscription; Performance Measurement; Promotions; International Marketing; Streaming; Competition; Marketing; Strategy; Entrepreneurship; Media and Broadcasting Industry; Middle East
Related

Worldreader: Helping Readers Build a Better World

By: Marco Bertini, Elie Ofek and Julia Kelley
  • September 2021 |
  • Case |
  • Faculty Research
Founded in 2010, Worldreader was an international nonprofit organization that promoted reading to children around the world. For many years, Worldreader distributed e-readers to under-resourced communities and funded its operations primarily through philanthropic donations. In 2019, Worldreader launched the BookSmart mobile reading application, and soon thereafter came the idea of a new, self-perpetuating funding structure: the “flywheel.” Worldreader aimed to charge schools and community-based organizations a $6 monthly subscription fee per child to use BookSmart, with the goal of using earned revenue to sustain operational costs and using philanthropy to cover other strategic priorities. However, Worldreader soon realized that ability to pay varied greatly among potential “customers,” leading to several exceptions to the initial price. The team also worried that the subscription hindered achieving scale and conflicted with Worldreader’s ultimate goal of impacting millions of children. As Co-Founder and CEO David Risher and his team prepared for an upcoming meeting with UNICEF, which typically sought fixed-price contracts, they considered whether a price per-child, per-month would be acceptable. More broadly, they considered whether they had landed on the optimal price point and funding strategy — and the potential implications of pursuing earned revenue on Worldreader’s ability to bid for international development grants.
Keywords: Price; Financial Strategy; Education; Early Childhood Education; Learning; Geography; Geographic Scope; Global Range; Goals and Objectives; Marketing; Marketing Strategy; Markets; Organizations; Mission and Purpose; Social Enterprise; Non-Governmental Organizations; Nonprofit Organizations; Society; Social Issues; Strategy; Commercialization; Expansion; Segmentation; Education Industry; Africa; Asia; Latin America; Europe; North and Central America; South America
Related

Carvana (B): Building Through A Pandemic

By: Robert J. Dolan
  • September 2021 |
  • Supplement |
  • Faculty Research
Related

Can We Afford Sustainable Business? Taking a Creative Approach to Pricing Can Benefit Society, the Environment—and Your Company

By: Marco Bertini, John Pineda, Amadeus Petzke and Jean-Manuel Izaret
  • Fall 2021 |
  • Article |
  • MIT Sloan Management Review
Related

The Pitfalls of Pricing Algorithms: Be Mindful of How They Can Hurt Your Brand

By: Marco Bertini and Oded Koenigsberg
  • Article |
  • Harvard Business Review
More and more companies are relying on pricing algorithms to maximize profits. The use of artificial intelligence and machine learning enables real-time price adjustments based on supply and demand, competitors’ activities, delivery schedules, and so forth. But constant price shifts have a downside: They may trigger unfavorable perceptions of a firm’s offerings and its brand. It’s vital, therefore, to understand and manage the signals being sent by the algorithms. The authors offer real-world examples of companies that have succeeded in this endeavor and others that have not. And they recommend four steps to avoid harm: Determine an appropriate use case for algorithmic pricing and explain its benefits to customers; designate an owner to supervise and be accountable for the system; set and monitor guardrails, both to protect against wild surges and to learn how price changes affect all aspects of the organization; and override the algorithms when necessary.
Keywords: Algorithmic Pricing; Dynamic Pricing; Price; Change; Technology; Brands and Branding; Perception; Consumer Behavior
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Contact Information

Marketing Unit
Harvard Business School
Morgan Hall
Soldiers Field
Boston, MA 02163
Marketing@hbs.edu