Science Building A1214, Tencent Conference ID:583-5094-2312; Code:1214
Tao Xuezhen, Assistant Professor, Shanghai University of Finance and Economics
Financial promotions are widely adopted to establish and maintain market share. We use mobile payments to empirically evaluate the effectiveness of various promotion designs and quantify the basic trade-offs on consumers’ payment preferences. Using a dataset of students’ mobile payment records at a major Chinese university, we document how a UnionPay promotion attracts previous Alipay users and boosts their payment usage. We find that 88% and 28.6% of students’ received rewards convert to additional spending in grocery and dining, respectively. Furthermore, students’ UnionPay adoptions are only driven by discount rewards without changes to their inherent network preferences. We also document heterogeneity among students’ payment adjustments: heavy Alipay users are likely to switch to UnionPay, while heavy incumbent UnionPay users are boosted. Finally, we derive several implications about promotion design with counterfactual results. First, a narrower promotion coverage of eligible merchants concentrates the spending boosting, but it may not offset the loss of narrower adoption. Second, promotions targeting selected consumers can enlarge the user base or encourage usage, but not both. Third, with the same promotion budget, a higher discount ratio is more effective than a higher individual reward cap because of its wider effective user coverage.
Brief introduction of the speaker:
Tao Xuezhen is an assistant professor in the Department of Industrial Economics, College of Business, Shanghai University of Finance and Economics, and a PhD in Economics. His main research fields are antitrust analysis under asymmetric information, and the evaluation of the effectiveness of marketing strategies in different forms of digital economy. He is currently leading a project under the National Natural Science Foundation of China and participating in a project under the National Science Foundation of China.