Hean Tat Keh

Efficiency, effectiveness and productivity of marketing in services

Abstract How can a service firm right-size marketing expenses and yet strive to maximize revenue? This paper represents the first attempt to model these efficiency and effectiveness issues using a 49-unit Asia–Pacific hotel chain as illustration. We employ a triangular DEA model with total expenses (controlling for number of rooms) as the raw input, marketing expenses as intermediate output/input and revenues from room rentals and F&B as final outputs. We infer that efficiency tails off when more than 12% of the budget is expended on marketing activities. In terms of effectiveness, we find that all the units rated as relatively inefficient can accrue increasing returns to scale in revenues from marketing activities. By contrast, in the productivity stage linking the raw inputs to the revenues, we observe mostly decreasing returns to scale. Our results highlight the crucial role of marketing in service organizations.

How Do Price Fairness Perceptions Differ Across Culture

This research investigates the effects of across-consumer price comparisons on perceived price fairness as a function of culture. Collectivist (Chinese) consumers are more sensitive to in-group versus out-group differences than individualist (U.S.) consumers. The collectivist perspective orients consumers toward the in-group and heightens concerns about “face” (i.e., status earned in a social network) that arise from in-group comparisons. Process evidence for the causal role of cultural differences derives from manipulated self-construal and measurement of the emotional role of shame evoked by face concerns. Finally, in a robustness test, an alternative operationalization of the in-group/out-group distinction extends the findings to the context of firm relationships.

The effects of R&D and advertising on firm value: an examination of manufacturing and nonmanufacturing firms

Firm spending on innovation and marketing, as measured by research and development (R&D) and advertising expenses, respectively, are expected to yield positive returns in terms of share price performance. Given resource limitations, firms prioritize the quantum of their investments in R&D and advertising vis-a/spl grave/-vis other investments. We examine the relationship between firm performance and the intensity of their investments in R&D and advertising over an extended period covering 40 years and 15 039 firm-years. Our findings are consistent with the resource-based literature. Specifically, we find that intensive investment in R&D contributes positively to the one-year stock market performances of manufacturing firms but not for nonmanufacturing firms. We also find that intensive investment in advertising contributes positively to the one-year stock market performances of nonmanufacturing firms. For the three-year stock market performance, in addition to the findings of the one-year period, we find inconclusive evidence that manufacturing firms benefit from investment in advertising. The interactions of R&D and advertising intensities are insignificant in explaining the stock market performance of the firms except for the three-year horizon for nonmanufacturing firms, which is significantly negative. Consistent with the resource-based literature, this implies that firm performances are diluted when they invest their resources in activities outside their core competence.

Brand Concepts as Representations of Human Values: Do Cultural Congruity and Compatibility Between Values Matter?

Global brands are faced with the challenge of conveying concepts that not only are consistent across borders but also resonate with consumers of different cultures. Building on prior research indicating that abstract brand concepts induce more favorable consumer responses than functional attributes, the authors introduce a generalizable and robust structure of abstract brand concepts as representations of human values. Using three empirical studies conducted with respondents from eight countries, they demonstrate that this proposed structure is particularly useful for predicting (1) brand meanings that are compatible (vs. incompatible) with each other and, consequently, more (less) favorably accepted by consumers when added to an already established brand concept; (2) brand concepts that are more likely to resonate with consumers with differing cultural orientations; and (3) consumers’ responses to attempts to imbue an established brand concept with new, (in)compatible abstract meanings as a function of their own cultural orientations.

The Complexities of Perceived Risk in Cross-Cultural Services Marketing

Previous research has found that cultural differences influence consumer risk evaluation. From a cross-national perspective, the authors explore the individual and cultural causes, as well as the consequences, of postpurchase personal and nonpersonal risks for a credence service (i.e., insurance). Using survey data from 309 Chinese consumers and 193 Singaporean consumers, the authors find that two cultural dimensions (self-transcendence/self-enhancement versus conservation/openness to change) and individual contextual factors (involvement and face consciousness) exert differential effects on consumer perceived risk in the two countries. In addition, the authors find that personal and nonpersonal risks have varying levels of impact on perceived value and customer satisfaction in the two countries.

Interorganizational Exchanges in China: Organizational Forms and Governance Mechanisms

This article discusses how organizations exchange with one another in China, focusing on the type of organizational ownership and the form of governance mechanism. The theoretical foundation builds on institutional theory, resource dependence theory, agency theory, and evolutionary theory. Given the three main forms of organizations in China – state-owned enterprises, privately owned enterprises, and foreign-invested enterprises – we show how these organizations choose between two types of governance mechanisms, contracts and guanxi, to manage interorganizational exchanges. We then analyze the possible modes of interaction between organizational forms. We argue that the relative importance of guanxi is likely to decline or that guanxi will shift from being primary in some organizations to complementary in all organizations with the progress of market transition. This conceptual framework is expected to help provide the momentum for further theoretical exploration and empirical study in this area.

The Effects of Advertising and Brand Value on Future Operating and Market Performance

This paper examines the joint effects of advertising and brand value on the firms future operating and market performance. We operationalize future operating and market performance as future accounting returns and future stock returns, respectively. Our results show that both advertising and brand value improve future accounting returns at the firm level. The impact of advertising and brand value on future stock returns is minimal. We find that spending on advertising results in better brand sales and brand profitability. Brand value is also a good predictor of brand performance. Thus, we conclude that advertising and brand value benefit the brand and the firm through improved accounting performance.

Lay Theories of Medicine and a Healthy Lifestyle

This research proposes that consumers hold “lay theories of medicine” that guide their preferences and behaviors in the health domain. Lay theories of medicine incorporate lay beliefs about illnesses and symptoms (i.e., a form of lay diagnosis that may feature causal [un]certainty) and lay beliefs about health remedies (i.e., a treatment function that takes into account how consumers think remedies work, including the focus and action rapidity of treatment as additional dimensions of response efficacy). According to the conceptual framework, lay diagnosis and treatment beliefs together drive consumer preference among alternative health remedies, which, in turn, has downstream consequences for a healthy lifestyle. A series of studies finds support for this framework in an investigation of Western medicine and its Eastern counterparts (traditional Chinese and Ayurvedic medicines) among Chinese, Indian, and Asian American consumers.

The Effect of Attribute Alignability on Service Evaluation: The Moderating Role of Uncertainty

Prior research suggests that consumers make trade-offs between two products by focusing more on alignable differences (i.e., the values of the options on the same attributes are different) than on nonalignable differences (i.e., the options have different attributes). The present research applies the structural alignment model to examine how uncertainty associated with the evaluation of services may lead to greater reliance on nonalignable attributes, especially for credence services. The results of three studies provide support for the uncertainty hypothesis. Specifically, study 1 showed that consumers rely more on alignable attributes when evaluating experience services, but shift their focus to nonalignable attributes when evaluating credence services that are associated with greater uncertainty. Using different operationalizations of uncertainty, studies 2 and 3 provided further support for the uncertainty hypothesis by systematically varying the ambiguity of consumer reviews (study 2) and consumer confidence in their judgment (study 3).

A re-examination of service standardization versus customization from the consumer’s perspective

The purpose of this paper is to investigate the pros and cons of service standardization (vs customization) from the consumer’s perspective, the key factors influencing consumers’ preference for standardized (vs customized) services and the outcomes of service standardization (vs customization).,The authors conducted a qualitative study and two behavioral experiments to test the hypotheses.,The authors find that the advantages of service customization include greater perceived control and higher consumer satisfaction. The drawbacks of service customization include greater perceived risk. These findings also suggest that consumers’ preference for standardized (vs customized) service depends on their consumption goal. Specifically, consumers with a hedonic goal tend to prefer customized services, while those with a utilitarian goal tend to prefer standardized services. These effects are moderated by their need for uniqueness.,The qualitative and experimental studies in this research reveal the antecedents (utilitarian vs hedonic goal) on consumer preference for service standardization versus customization, as well as the consequences in terms of perceived risk, consumer satisfaction and perceived control. The experimental studies were conducted with Chinese and American consumers, respectively, which lend credence to the robustness of the findings.,Results of the present research provide new insights into service standardization versus customization and have significant practical implications. In particular, service organizations should consider designing the appropriate service mode based on consumers’ characteristics, particularly their consumption goals and their need for uniqueness. If the customers focus on efficiency and functionality, the organization should try to provide standardized services. In contrast, for customers who are seeking fun and a novel experience, the service firm should try to tailor to their hedonic needs.,While previous research identifies “heterogeneity” as a key characteristic of services in general, the present findings qualify this received wisdom. In particular, the authors show that consumers’ preference for service standardization versus customization is a function of their consumption goal and need for uniqueness. Thus, the present findings refine the current understanding of service heterogeneity, which makes a significant contribution to the services marketing literature.