Yong Liu

Interests

Research

Models of marketing strategies in the following areas: (1) Social interactions and new media, (2) Marketing strategies for media and cultural products, especially movie marketing, (3) Competitive strategies for business and nonprofits, (4) Firm strategies during product-harm crisis.

Teaching

Marketing strategy, Innovation & new product strategies, Entrepreneurship and innovation, Marketing research, Service marketing, Entertainment industries marketing, Social media.

Courses

Scholarly Contributions

Books

• Liu, Y., Lusch, R. F., Chen, Y., Zhang, J., Zhang, J., & Liu, Y. (2018). The Emergence of Innovation as a Social Process: Theoretical Exploration and Implications for Entrepreneurship and Innovation. World Scientific Publishing Co. Pte. Ltd.. doi:10.1142/10209
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  Understanding of business venturing cannot be complete without an understanding of the preconditions and drivers of the emergence of innovation in society. Considerable thought and theory have focused on the diffusion of innovation in society and the properties of innovation attributable to the entrepreneur or the firm. This chapter moves beyond these topics and focuses on theorizing about the emergence of innovations. The authors document how both theory and industry practices are moving away from viewing the emergence of innovation as a proprietary and mostly entrepreneur, individual or firm-centric process to a more open and largely social process. Importantly, institutions are viewed as both barriers to and opportunities for innovation and thus become the fundamental proposition for the emergence of innovation. The chapter develops five additional propositions on the emergence of innovation with both micro (firm-level) and macro (societal) implications. Implications for venture management, public policy, and research conclude the chapter.

Chapters

• Liu, Y., Lusch, R. F., Chen, Y., & Zhang, J. (2016). The Emergence of Innovation as a Social Process: Theoretical Exploration and Implications for Entrepreneurship and Innovation. In Open Innovation, Ecosystems and Entrepreneurship: Issues and Perspectives. World Scientific Publishing.
• Liu, Y., Chen, Y., Ganesan, S., & Hess, R. (2012). Product-harm crisis management and firm value. In Handbook of Marketing and Finance(pp 293-314).
• Liu, Y., Chen, Y., Ganesan, S., & Hess, R. L. (2012). Product-harm Crisis Management and Firm Value. In Handbook of Marketing and Finance. Edward Elgar Publishing Ltd. doi:10.4337/9781849802727.00022
• Liu, Y., & Weinberg, C. B. (2009). Pricing for nonprofit organizations. In Handbook of Pricing Research in Marketing(pp 512-534).
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  Abstract: Pricing decisions are particularly challenging for nonprofit organizations. They have a social rather than a for-profit objective function, they must obey a legal restriction not to distribute possible financial surpluses to those who control the organization's assets, and they have the opportunity to receive donations. While historically nonprofits have not developed their pricing capabilities as fully as they might have, pricing is becoming increasingly important, especially as many nonprofit organizations face declining support from government and are unable to increase private giving significantly. The goal of this chapter is to discuss pricing practice and pricing research in the nonprofit sector. We demonstrate how theoretical models of pricing strategies for nonprofits are different from those of for-profit businesses. Moreover, although only limited empirical data on nonprofit pricing are available, the data we do have suggest that nonprofits charge different (and usually lower) prices than similarly situated businesses. We survey the literature of nonprofit pricing to discuss important theoretical and empirical findings, and highlight the unique characteristics of nonprofits and the various modeling issues they generate for pricing research. We also discuss unresolved problems and potential research opportunities in nonprofit pricing.

Journals/Publications

• Liu, Y., Zeng, D., Yang, Y., Yan, P., & Liu, Y. (2021). Location-Aware Real-Time Recommender Systems for Brick-and-Mortar Retailers. Informs Journal on Computing. doi:10.1287/ijoc.2020.1020
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  Providing real-time product recommendations based on consumer profiles and purchase history is a successful marketing strategy in online retailing. However, brick-and-mortar (BAM) retailers have ye...
• Zeng, D., Liu, Y., Yan, P., & Yang, Y. (2021). Location-Aware Real-time Recommender Systems for Brick-and-Mortar Retailers. INFORMS Journal on Computing.
• Gao, W., Ji, L., Liu, Y., & Sun, Q. (2020). Branding Movies in International Markets: The Effects of Title Translation on the Sales of Hollywood Movies. Journal of Marketing, 84(3), 85-105.
• Chen, Y., Ghosh, M. G., Liu, Y., & Zhao, L. (2019). Media Coverage of Climate Change and Sustainable Product Consumption: Evidence from the Hybrid Vehicle Market. Journal of Marketing Research, 56(6), 995-1011.
• Liu, Y., Viswanathan, S., Liu, Y., & Lin, M. (2018). Effectiveness of Reputation in Contracting for Customized Production: Evidence from Online Labor Markets. Management Science, 64(1), 345-359. doi:10.1287/mnsc.2016.2594
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  This study examines the effects of reputation in the nascent but rapidly growing online labor markets. In these markets, contract winners (vendors) provide clients with customized products such as computer software, business plans, and artistic designs. The products are used primarily for business purposes and require time for production after project-specific contracts are awarded. These characteristics render it unclear whether online reputation will have similar effects as in online retailing, where finished and standardized products are sold for consumption. We analyze field transaction data from a major online labor market. The analyses using matched contract samples and vendor panels consistently show that despite the governing power provided by contracts as well as the litigation and arbitration options, vendors’ online reputation can still be influential on clients. Vendors who have no reputation ratings are less likely to be chosen, and those with higher ratings are more likely to win subsequent ...
• Liu, A., Liu, Y., & Luo, T. (2016). What Drives a Firm’s Choice of Product Recall Remedy? The Impact of Remedy Cost, Product Hazard, and the CEO. Journal of Marketing, 80, 79-95.
• Qian, L., Liu, Y., & Gao, W. (2016). The personal touch of business relationship: A study of the determinants and impact of business friendship. Asia Pacific Journal of Management, 33(2), 469-498. doi:10.1007/s10490-016-9464-1
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  Business friendship refers to the integration of “business” dealings and personal “friendship” that permeates many markets. As relationship marketing and customer relationship management become increasingly prevalent practices, business friendship as a fundamental element embedded in business relationships needs to be better understood. This paper studies how business friendship is formed and its impact on key marketing outcomes. We propose that business friendship is driven by three factors spanning business and personal domains—congeniality, rule adherence and business reputation. Our empirical analysis is based on survey and actual sales data from 263 client firms of a leading provider of business intelligence and strategic planning services. The results show the three factors contribute significantly to business friendship. We find that business friendship between the client and the supplier significantly impacts the sales to the client, and this impact is further moderated by how the two parties share responsibilities in achieving common goals. In addition, we show that business friendship induces one party to accommodate and cooperate with the other (i.e., compliance), and to engage in positive word-of-mouth. The framework and findings shed lights on how companies may influence (and be influenced by) business friendship as they increasingly emphasize long-term business relationships.
• Liu, Y., Yang, J., & Mai, S. (2015). Using Online Product Ratings to Study Network Externalities: The Case of Online Video Games. Marketing Letters, 26(4), 679-690.
• Liu, Y., Zhang, J., & Chen, Y. (2015). Social Learning in Networks of Friends versus Strangers. Marketing Science, 34(4), 573-589.
• Mazumdar, T., Liu, Y., & Liu, A. X. (2014). Star power in the eye of the beholder: A study of the influence of stars in the movie industry. Marketing Letters, 25(4), 385-396. doi:10.1007/s11002-013-9258-x
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  Organizations employ various risk-mitigation strategies to cope with the uncertainty in marketing new products. In the motion picture industry, an important strategy is to cast star actors and actresses in movies. The ultimate box-office success, however, depends on multiple stakeholders involved with financing, making, distributing, and watching the movie. In pursuing different goals and interests, the stakeholders may look for different aspects of star power to mitigate their own risk. This paper examines how the influence of stars varies across key stakeholders in the movie market. The results show that, in general, stars have a greater impact on the stakeholders involved in the earlier stages of movie development and exhibition (where the risks are greater) than on those in later stages. Movie project financiers and exhibitors are strongly and directly influenced by star power, but news media and movie audiences are influenced less and only indirectly. Situated at the early stage of the movie “value chain,” the financiers are most concerned with stars’ past box-office performance. Exhibitors, however, are influenced by the “match” between a star’s genre participation history and the genre of a specific movie. By contrast, news media and movie audiences are influenced indirectly through the stars’ impact on earlier stakeholders and their decisions. The findings shed light on the value of employing star elements in new products, the marketing of stars, and movie promotion strategies.
• Liu, Y., Liu, A., & Mazumda, T. (2013). Star Power in the Eye of the Beholder: A Study of the Influence of Stars in the Movie Industry. Marketing Letters, 1-12.
• Chen, Y., Liu, Y., & Zhang, J. (2012). When do third-party product reviews affect firm value and what can firms do? The case of media critics and professional movie reviews. Journal of Marketing, 76(2), 116-134.
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  Abstract: Third-party product reviews (TPRs) have become ubiquitous in many industries. Aided by communication technologies, particularly on the Internet, TPRs are widely available to consumers, managers, and investors. The authors examine whether and how TPRs of new products influence the financial value of firms introducing the products. An event study covering 14 major media and professional reviews of movies released by 21 studios shows that TPRs exert significant impact on stock returns in the direction of their valence. However, the impact comes from the valence of a review that is measured relative to other, previously published reviews and not from the absolute valence of the review itself. The authors further study the dynamics of TPR impact on firm value and find that the impact exists only for prerelease reviews and is the strongest on the product release date, though it disappears when sales information becomes available after product release. These results demonstrate that TPRs play significant roles as the investors update their expectation about new product sales potential. The authors also find that advertising spending increases the positive impact of TPRs on firm value and buffer the negative impact. Therefore, firms could strategically use marketing instruments such as advertising to moderate the impact of TPRs. © 2012, American Marketing Association.
• Li, X., Zeng, D. D., Liu, Y., & Yang, Y. (2011). Click Fraud and the Adverse Effects of Competition. IEEE Intelligent Systems, 31--39.
• Chakravarty, A., Liu, Y., & Mazumdar, T. (2010). The Differential Effects of Online Word-of-Mouth and Critics' Reviews on Pre-release Movie Evaluation. Journal of Interactive Marketing, 24(3), 185-197.
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  Abstract: In this paper, we examine the persuasive influences of online user comments (or word-of-mouth) and of the reviews by movie critics on moviegoers' evaluation of to-be-released movies. Two distinctive features of this study are: (1) moviegoers are considered to be heterogeneous in their movie going frequency and (2) word-of-mouth and critical reviews are concurrently available, and the views expressed in the two messages are in conflict. Using three experiments with natural stimuli, we find that the persuasive effect of online word-of-mouth is stronger on infrequent than on frequent moviegoers, especially when it is negative (Study 1). The effect of negative word-of-mouth on infrequent moviegoers is enduring even in the presence of positive reviews by movie critics (Study 2). The relative influence of word-of-mouth and critical reviews are asymmetric with infrequent moviegoers more influenced by word-of-mouth, while frequent moviegoers more influenced by the reviews (Study 3). We validate this source-segment alignment through secondary data analysis. © 2010 Elsevier B.V.
• Liu, Y., Chen, Y., Lusch, R. F., Chen, H., Zimbra, D., & Zeng, S. (2010). User-Generated content on social media: Predicting market success with online word-of-mouth. IEEE Intelligent Systems, 25(1), 75-78.
• Lusch, R. F., Liu, Y., & Chen, Y. (2010). Evolving Concepts of Markets & Organizations: The New Intelligence and Entrepreneurial Frontier. IEEE Intelligent Systems.
• Lusch, R. F., Liu, Y., & Chen, Y. (2010). The phase transition of markets and organizations: The new intelligence and entrepreneurial frontier. The Missouri Review, 25(1), 71-75. doi:10.1109/mis.2010.27
• Chen, Y., Ganesan, S., & Liu, Y. (2009). Does a firm's product-recall strategy affect Its financial value? An examination of strategic alternatives during product-harm crises. Journal of Marketing, 73(6), 214-226.
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  Abstract: Product-harm crises often result in product recalls, which can have a significant impact on a firm's reputation, sales, and financial value. In managing the recall process, some firms adopt a proactive strategy in responding to consumer complaints, while others are more passive. In this study, the authors examine the impact of these strategic alternatives on firm value using Consumer Product Safety Commission recalls during a 12-year period from 1996 to 2007. Using the event study method, the authors show that regardless of firm and product characteristics, proactive strategies have a more negative effect on firm value than more passive strategies. An explanation for this surprising result is that the stock market interprets proactive strategies as a signal of substantial financial losses to the firm. When a firm proactively manages a product recall, the stock market infers that the consequence of the product-harm crisis is sufficiently severe that the firm had no choice but to act swiftly to reduce potential financial losses. Therefore, firms dealing with product recalls must be sensitive to how investors might interpret a proactive strategy and be aware of its potential drawbacks. © 2009, American Marketing Association.
• Mazumdar, T., Liu, Y., & Chakravarty, A. K. (2009). Persuasive Influence of Online Word of Mouth and Professional Reviews. ACR Asia-Pacific Advances.
• Zhao, X., Atkins, D., & Liu, Y. (2009). Effects of distribution channel structure in markets with vertically differentiated products. Quantitative Marketing and Economics, 7(4), 377-397.
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  Abstract: This study examines how the structure of distribution channels may influence firms' quality and price strategies and how they may in turn affect consumer welfare. It treats product quality as a decision variable so that the degree of product substitution becomes endogenous rather than exogenous as in previous studies. We find that, with vertically differentiated firms, the changes in channel structure have asymmetric effects depending on whether they occur in the high-quality channel or in the low-quality channel. The product quality of the high-quality channel decreases when it decentralizes unilaterally. However, product quality of the low-quality channel would increase when it decentralizes. The high-quality manufacturer and its channel suffer more from decentralization in comparison with their low-quality counterparts, and the low-quality manufacturer actually receives greater profits when both channels are decentralized. An important driver behind these asymmetries is the interaction between firms' pricing incentives in integrated versus decentralized channels and what consumer segments they serve. Our analysis indicates that decentralization may reduce consumer welfare, but decentralization in the high-quality channel hurts consumers more than that in the low-quality channel. Therefore in a competitive environment where firms make both quality and price decisions, channel integration would have significant welfare enhancement effects through the elimination of double marginalization, especially if it happens in the high-quality channel. Moreover, we demonstrate that once quality is endogenized, integration is the only equilibrium of channel structure choices. This suggests that the private incentives of firms may actually benefit consumers but do not have to be in line with the general preference of industry regulation for decentralization. © Springer Science+Business Media, LLC 2009.
• Krider, R. E., Tieshan, L. i., Liu, Y., & Weinberg, C. B. (2008). Demand and distribution relationships in the ready-to-drink iced tea market: A graphical approach. Marketing Letters, 19(1), 1-12.
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  Abstract: The relationship between distribution coverage and market share for an incumbent brand and for new entrants in the ready-to-drink iced tea market during its growth phase is explored using state space diagrams. This graphical visualization method was originally developed to disentangle lead-lag relationships between short nonstationary time series, a situation in which standard econometric methods have difficulty. In this research we show the usefulness of this method for long time series in offering complementary insights to econometric models, in providing a simple and managerially useful tool, and in conducting exploratory data analysis to guide subsequent modeling decisions. In the ready-to-drink iced tea market, usage of this method shows that during introduction of new brands and growth of the category, demand leads distribution, but that as the market matures, the dominant incumbent can defend with a distribution-leading-demand dynamic. Further, distribution coverage eventually becomes relatively stable so that short term fluctuations in demand (probably due to responses to promotion) have minimal impact on distribution. © 2007 Springer Science+Business Media, LLC.
• Putler, D. S., Li, T., & Liu, Y. (2007). The value of household life cycle variables in consumer expenditure research: An empirical examination. Canadian Journal of Administrative Sciences/Revue Canadienne des Sciences de l'Administration, 24(4), 284--299.
• Liu, Y. (2006). Word of mouth for movies: Its dynamics and impact on box office revenue. Journal of Marketing, 70(3), 74-89.
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  Abstract: This article uses actual word-of-mouth (WOM) information to examine the dynamic patterns of WOM and how it helps explain box office revenue. The WOM data were collected from the Yahoo Movies Web site. The results show that WOM activities are the most active during a movie's prerelease and opening week and that movie audiences tend to hold relatively high expectations before release but become more critical in the opening week. More important, WOM information offers significant explanatory power for both aggregate and weekly box office revenue, especially in the early weeks after a movie opens. However, most of this explanatory power comes from the volume of WOM and not from its valence, as measured by the percentages of positive and negative messages. © 2006, American Marketing Association.
• Liu, Y., Putler, D. S., & Weinberg, C. B. (2006). A reply to "a comment on 'is having more channels really better? A model of competition among commercial television broadcasters' ". Marketing Science, 25(5), 543-546.
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  Abstract: Liu et al. [Liu, Y., D. S. Putler, C. B. Weinberg. 2004. Is having more channels really better? A model of competition among commercial television broadcasters. Marketing Sci. 23(1) 120-133] examine the television broadcast industry using a model in which profit-maximizing broadcasters seek to gain viewers by choosing the type of program to offer and by spending money to set program quality, allowing broadcasters to sell access to those viewers (through inserted advertisements) at a fixed rate per viewer. Wu and Chou [Wu, C., S. Chou. 2006. Commentary on "Is having more channels really better? A model of competition among commercial television broadcasters". Marketing Sci. 25(5) 541-545] argue that the duopoly result for a certain range of the cost parameter in Liu et al. is not a pure strategy Nash equilibrium. They further propose some modifications to the original model to restore Liu et al.'s results. In this reply, we demonstrate how a single strategy, not included in the strategy space of the Liu et al. duopoly model leads to the difference between our analysis and that of Wu and Chou. While we had intended to rule out this strategy, the text was not entirely clear on this issue; Wu and Chou's comment provides an opportunity to clarify the situation. We provide both empirical and theoretical support for excluding this strategy, which allows us to focus on the more plausible competitive situations in television broadcasting. We also reply to Wu and Chou's other comments on several issues, such as the relative importance of program type versus quality. © 2006 INFORMS.
• Liu, Y., Putler, D. S., & Weinberg, C. B. (2006). The welfare and equity implications of competition in television broadcasting: The role of viewer tastes. Journal of Cultural Economics, 30(2), 127-140.
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  Abstract: This paper studies the behavior of commercial television broadcasters in markets where the distribution of viewer tastes varies. Our results show that a highly "clustered" market enables the broadcaster to offer a program of a popular type but with lower quality (i.e., lower production values) than is the case when viewers have more diffused tastes. We find that viewer equity in the television market (i.e., the percentage of all potential viewers who have at least one program they consider worth watching) and viewer welfare (i.e., total consumer surplus) may not coincide. Depending upon the distribution of viewer tastes and the cost of providing quality programming, the number of broadcasters required to fully cover the market to avoid market failure may be greater than the number of broadcasters that produce greater viewer welfare. The study suggests that regulatory bodies need to pay attention to the distribution pattern of viewer tastes and the broadcasters' desire for return on programming investments, since both factors have important implications for competitive outcomes and viewer well-being. © Springer Science+Business Media B.V. 2006.
• Kride, R. E., Tieshan, L. i., Liu, Y., & Weinberg, C. B. (2005). The lead-lag puzzle of demand and distribution: A graphical method applied to movies. Marketing Science, 24(4), 635-645.
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  Abstract: Understanding the lead-lag relationship between distribution and demand is an important and challenging issue for all marketers. It is particularly challenging in the movie industry, where the very short lifespan and decaying revenue and exhibition patterns of motion pictures means that the associated time series are short and nonstationary, rendering existing econometric methods unreliable. We propose an alternate method that uses state-space diagrams to determine lead-lag relationships. Straightforward to apply and interpret, it takes advantage of the eye's ability to see patterns that algebra-based formulations cannot easily recognize. A number of validation tests are provided to illustrate the usefulness and limitations of the method. We study the weekly data for 231 major movies released in 2000-2001. While econometric methods do not provide consistent results, the graphical method of visually inferred causality clearly shows a pattern that demand leads distribution for most movies. In other words, the dominant industry pattern is one of movie exhibitors monitoring box office sales and then responding with screen allocation decisions. The managerial implications of these findings are discussed. © 2005 INFORMS.
• Liu, Y., & Weinberg, C. B. (2004). Are nonprofits unfair competitors for businesses? An analytical approach. Journal of Public Policy and Marketing, 23(1), 65-79.
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  Abstract: This study examines duopoly price competition between a for-profit firm and a nonprofit organization. It shows that the competitive outcome is predominantly the consequence of their different objective functions. The damage to the for-profit caused by the nonprofit's policy and regulatory advantages is only marginal. Moreover, the for-profit can protect itself by acquiring Stackelberg price leadership.
• Liu, Y., Putler, D. S., & Weinberg, C. B. (2004). Is having more channels really better? A model of competition among commercial television broadcasters. Marketing Science, 120--133.

Proceedings Publications

• Liu, Y., Zeng, D., Liu, Y., & Li, X. (2011). Publisher click fraud in the pay-per-click advertising market: Incentives and consequences. In Proceedings of 2011 IEEE International Conference on Intelligence and Security Informatics, 207-209.
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  Pay-per-click (PPC) advertising is being seriously threatened by the click fraud (CF). In this paper, we report a game-theoretic analysis of the incentives and consequences of CF involving Web content publishers. We find that the publisher competition induces CF, harming the efficiency especially the publisher payoff allocation in the market.

Presentations

• Liu, Y. (2017, February). Contingency Selling under Product Uncertainty and Service Capacity Constraint: A New Pricing Model with Applications to Sports Events. AMA Winter Educator’s Conference. Orlando, FL: American Marketing Association.
• Liu, Y. (2017, June). Capturing Virtual Business Opportunities from Real-World Events: Findings and Insights from Sports Video Games. Wharton Customer Analytics Initiative (WCAI). San Francisco, CA: University of Pennsylvania.
• Liu, Y. (2017, June). How Does the Effect of Product Recalls Extend Beyond Country Boundaries? A Study of the Automobile Market in China and the United States. INFOMS Marketing Science Conference. Los Angeles, CA: University of Southern California, INFORMS.
• Liu, Y. (2017, June). Strategic Behaviors in Online Reviews: A Study of Yelp.com. INFOMS Marketing Science Conference. Los Angeles: University of Southern California, INFORMS.
• Liu, Y. (2016, June). Consumer Choice in On-Demand Video Service: The Effects of Previews. INFORMS Marketing Science Conference.
• Liu, Y., Ghosh, M. G., & Wang, P. (2016, June). Modeling the Impact of Digital Piracy on Quality Competition. INFORMS Marketing Science Conference.
• Liu, Y. (2015, June). The Effects and Mechanisms of Online Product Reviews. Invited talk, Zhejiang University. Hangzhou, China.
• Liu, Y. (2015, November). The Effects and Mechanisms of Online Product Reviews. The 2nd Conference on Marketing and Internet Economy. Guilin, China.
• Liu, Y. (2015, October). The Concentration of Start-ups in Incubators. Society of Interdisciplinary Business Research (SIBR) Conference. Hong Kong, China.
• Liu, Y. (2015, September). Consumer Choice in On-Demand Video Service: The Effects of Previews. China India Customer Insight Conference. New York City: Yale School of Management/Cheung Kong Graduate School of Business.
• Liu, Y. (2015, September). Consumer Choice in On-Demand Video Service: The Effects of Previews. Yale School of Management China India Customer Insight Conference.
• Liu, Y. (2014, September). Advertising Decisions in Anticipation of Word-of-Mouth. SIBR 2014 Hong Kong Conference. Hong Kong: Society for Interdisciplinary Business Research.
• Liu, Y., & Weinberg, C. (2014, April). Modeling Quality and Price Decisions of Nonprofit Organizations and the Nonprofit / For-profit Competition. UA/ASU Research Symposium. Tempe, Arizona.
• Liu, Y., Chen, Y., & Zhang, J. (2014, September). The Impact of Social Network on the Success of Innovation: A Study of the Hollywood Movie Industry. International Conference on Culture Creative Industry and e-Business. Shanghai, China.