Krista Li

Krista J. Li is an Assistant Professor of Marketing at the Kelley School of Business at Indiana University. She received her

Areas of Expertise

Product Design, Behavior-Based Targeting, Game Theory, Behavioral Economics, Empirical Modeling, New Product Development, Innovation

Academic Degrees

• Ph.D., Marketing, Texas A&M University, 2016
• M.A., International Relations & Economics, Yale University, 2004
• B.B.A., Marketing, Lingnan University, Hong Kong, 2002

Professional Experience

• Assistant Professor of Marketing, Kelley School of Business, Indiana University, 2016-present
• Manager of Analytical Consultiong, Symphony Marketing Solutions (IRI), 2006-2011
• Senior Statistician, Revonet, Inc., 2005-2006

Awards, Honors & Certificates

• Marketing Science Institute Young Scholar Research Grant $5,000, 2017
• Mary Kay/AMS Dissertation Proposal Competition, Finalist, 2016
• Dean''s Award for Outstanding Research, Mays Business School, Texas A&M University, 2015
• Dean''s Award for Outstanding Teaching, Mays Business School, Texas A&M University, 2015
• Inaugural AMS Doctoral Consortium Fellow, 2015
• AMA-Sheth Doctoral Consortium Fellow, Northwestern University, 2014
• INFORMS Doctoral Consortium Fellow, Emory University, 2014
• INFORMS Doctoral Consortium Fellow, Boston University, 2012
• The Most Distinguished Student of the University Award, Lingnan University
• On President''s List, Academic Honors, Lingnan University
• Hong Kong Jockey Club Full Scholarship for Undergraduate Study, Hong Kong
• Zonta Club of Kowloon Awards for Outstanding Services
• Outstanding Service Awards for Hong Kong Tertiary Students
• Dr. and Mrs. James Tak Wu awards for Outstanding Service
• Canton Hong Kong & Macau Mandarin Contest, 1st Place, Hong Kong Division

Selected Publications

• Li, Krista J. (2018), “Behavior-Based Pricing in Marketing Channels,” Marketing Science, 37(2): 310-326.

Abstract With behavior-based pricing (BBP), firms use customers'' purchase history data to price discriminate between past customers and new customers. Prior research has examined BBP in a non-channel setting. In this paper, we investigate BBP in a channel setting in which manufacturers sell to customers through exclusive retailers. We examine how channel members'' adoption of BBP affects wholesale and retail prices, profits, consumer surplus, and social welfare. We find that BBP decreases channel members'' profits when retailers use BBP and manufacturers use uniform pricing. However, BBP increases channel members'' profits when both manufacturers and retailers use BBP. In addition, BBP by retailers alone increases consumer surplus, whereas BBP by both manufacturers and retailers decreases consumer surplus. When manufacturers also use BBP, BBP decreases social welfare to a greater degree than when only retailers use BBP. Furthermore, when manufacturers cannot use BBP, their profits are higher with long-term wholesale price contracts. When manufacturers can use BBP, short-term wholesale price contracts yield higher profits for manufacturers and retailers.

• Li, Krista J. (2018), "Status Goods and Vertical Line Extensions," Production and Operations Management, forthcoming.  

Abstract Conspicuous consumption of status goods signals consumers'' status and grants status value to them. In this article, we examine how firms selling status goods make vertical line extension decisions when they take consumers'' status preferences into account. Analyzing an incumbent''s vertical line extensions when it faces a threat of entry, we find that status preferences can make unprofitable extensions profitable. Moreover, without status preferences, an incumbent can introduce line extensions to crowd out the competitor''s profit and deter entry. However, with status preferences, introducing line extensions can increase the competitor''s profit and attract entry. We also find that incumbents should introduce downward extensions when they are monopolists and upward extensions when they face competition from lower-quality entrants. As the cost of entry increases, incumbents should change from introducing upward extensions to introducing downward extensions. As consumers'' status preferences increase, incumbents introduce downward extensions under a wider range of situations.

• Jain, Sanjay and Krista J. Li (2018), "Pricing and Product Design for Vice Goods: A Strategic Analysis," Marketing Science, forthcoming.

Abstract The rising obesity epidemic is a worldwide concern for consumers, firms, and policy makers. One reason for the rise in obesity is consumers'' over-consumption of vice goods such as cookies, crackers, and soft drinks. Some authors have suggested that firms have incentives to make vice goods unhealthier and to encourage over-consumption. There are calls for regulations to ensure that firms make such products healthier by reducing harmful ingredients and provide nutritional information. Furthermore, public policy makers have begun to educate consumers to avoid over-consumption by using strategies such as pre-purchase planning. In this paper, we investigate how firms selling vice goods should respond to the growing concerns about obesity. We analyze how firms should adjust prices and product design to cater to consumers with self-control problems and obesity concerns. We use the literature on hyperbolic discounting to model consumers with self-control problems. In this framework, we examine how the unhealthiness of vice goods affects prices, firm''s profits, consumer surplus, and public health. In addition, we study how public policy efforts to encourage pre-purchase planning impact firm''s profits and consumers. Our results show that unlike standard goods, for vice goods a decrease in quality (i.e., increase in unhealthiness) and an increase in price can serve as a self-control device and increase demand. Therefore, firms sometimes can charge higher prices and make more profits by producing unhealthier products. Interestingly, producing unhealthier products can sometimes increase consumer surplus and improve public health. We also show that as the proportion of consumers who use pre-purchase planning increases, firms should respond by raising prices. In such situations, consumer surplus and public health improve but firm''s profits decline. These results have important implications for restaurants and firms that sell vice goods and for public policy makers who aim to combat obesity.

• Liu, Yan, Krista J. Li, Haipeng Chen, and Subramanian Balachander (2017), "The Effects of a Product''s Aesthetic Design on Demand and Marketing Mix Effectiveness: The Role of Segment Prototypicality and Brand Consistency." Journal of Marketing, 81(1): 83-102.

Abstract A product’s physical appearance is difficult to quantify, and the impact of product appearance on demand has rarely been studied using market data. The authors adopt a recently developed morphing technique to measure a product’s aesthetic design and investigate its effect on consumer preference. Drawing upon categorization theory, the authors consider the effects of three dimensions of aesthetic design—segment prototypicality (SP), brand consistency (BC), and cross-segment mimicry (CSM)—and their moderating effects on marketing mix effectiveness in a unified framework. The empirical analysis uses a unique, large data set consisting of 202 car models from 33 brands sold in the United States from 2003 to 2010. The authors find that consumer preference peaks at moderate levels of SP and BC and that economy-segment products benefit from CSM of luxury products. Moreover, SP intensifies price sensitivity, and BC muffles price sensitivity while increasing advertising effectiveness. Two what-if studies illustrate how managers can use the empirical model to evaluate alternative aesthetic design choices.

• Li, Krista J., and Sanjay Jain (2016), "Behavior-Based Pricing: An Analysis of the Impact of Peer-Induced Fairness," Management Science, 62(9): 2705-2721.

Abstract Firms tracking consumer purchase information often use behavior-based pricing (BBP), i.e., price discriminate between consumers based on preferences revealed from purchase histories. However, behavioral research has shown that such pricing practices can lead to perceptions of unfairness when consumers are charged a higher price than other consumers for the same product. This paper studies the impact of consumers’ fairness concerns on firms’ behavior-based pricing strategy, profits, consumer surplus, and social welfare. Prior research shows that BBP often yields lower profits than profits without customer recognition or behavior-based price discrimination. By contrast, we find that firms’ profits from conducting BBP increase with consumers’ fairness concerns. When fairness concerns are sufficiently strong, practicing BBP is more profitable than without customer recognition. However, consumers’ fairness concerns decrease consumer surplus. In addition, when consumers’ fairness concerns are sufficiently strong, they reduce inefficient switching and improve social welfare.

• Shankar, Venkatesh, and Krista J. Li (2014), "Leveraging Social Media in the Pharmaceutical Industry," in Min Ding, Jehoshua Eliashberg, & Stefan Stremersch (eds.), Innovation and Marketing in the Pharmaceutical Industry (International Series in Quantitative Marketing, Vol. 20) (pp. 477-505), Springer.

Abstract Social media and social networks are the rage these days. The healthcare industry in general and the pharmaceutical industry in particular, are being reshaped by the proliferation of electronic communication through social media. Consequently, marketing practices are also evolving rapidly. Pharmaceutical marketers need a better understanding of how social media work and how they influence marketing strategy. This chapter reviews the burgeoning literature on word of mouth, in particular relating to social media and on how social media and social networks are redefining marketing strategy in this context. It provides a framework for analyzing the effects of social media on patients, physicians, and marketers. It offers actionable implications for pharmaceutical companies, provides pointers to successfully develop and implement an integrated social media marketing strategy, and highlights fruitful avenues for future research.