April 2011: Vol. 6, Issue 4
Marketing Monthly Marketing Research Camp April 1, 2011
Research Advances in Marketing was the topic of our sixth annual Marketing Research Camp, held April 1. The purpose of the Camp is to bring together scholars engaged in exciting research topics in marketing and serve as a platform for the intellectual advancement of marketing. Following is a report on the speakers along with an executive summary of their talks. Gary Frazier (Richard and Jarda Hurd Chair in Distribution Management and Professor of Marketing, Marshall School of Business, University of Southern California, and Editor-in-Chief, Journal of Marketing) led off the day with a talk about “Contracts, Extra-Contractual Incentives, and Ex Post Behavior in Franchise Channel Relationships.” Executive Summary: Inherently, franchise and franchisee relationships are fraught with challenges. There may be a franchise control problem, where franchisees may have an incentive to maximize their own profit at the expense of the franchise. As a result, franchisors attempt to prevent these problems through
Why is this little boy so happy? See page 13.
TAMU’s Ram Janakiraman and USC’s Gary Frazier take time out from discussion to pose for a picture.
contract formulation. However, some problems relating to these contracts are the following: (1) No contract is complete (2) Monitoring can be counterproductive (3) There may be selective enforcement issues. To help overcome these constraints, there are a number of governance behaviors that can be undertaken to manage franchisee relationships after the start of the relationship; namely behavior monitoring, output monitoring, and enforcement. The authors look at the combinations of these governance mechanisms and the resulting effects on franchisee opportunism and compliance in the context of the US auto industry. They conclude that none of the governance mechanisms used in isolation helped to reduce opportunism or to elicit compliance. In fact, when behavior monitoring is performed alone, it actually reduces franchisee compliance levels. Their empirical results show Continued next page
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Marketing Research Camp (cont.) that the best outcome is a combination of these mechanisms. Specifically, behavior and output monitoring increased compliance as did enforcement and output monitoring. With regards, to increasing opportunism, enforcement combined with behavior monitoring provided the best result. Next up was Sanjog Misra, (Associate Professor of Marketing and Applied Statistics, Simon Graduate School of Business, University of Rochester ) with his talk, “A Structural Model of Sales Force Compensation Dynamics: Estimation and Field Sanjog Misra Implementation.� Executive Summary: Personal selling is an important component of the economyaccounting for over 40% of total sales. Furthermore, in many cases, the salesforce becomes the interface between the firm and the consumer. The authors posit that one should be able to see patterns in the selling behavior; specifically, that salespeople can manipulate the
Faculty and PhD students listen and think intently as discussion progresses‌
Research Camp Founder, Venky Shankar, awards participation plaque to Sanjog Misra.
timing of their sales in order to meet specific quotas. There is some evidence of this manipulation when looking at the quarterly sales pattern. Looking at the data from a U.S. manufacturer of contact lenses, the authors clearly show that salespeople would significantly increase their levels of effort as their quota targets approached. To quantify this behavior, the authors develop an empirical model to understand the dynamics of salesforce compensation which will then be used to help inform the firm about the best compensation route to take in order to maximize firm profits. Interestingly, one of the key findings is that salespeople are extremely capable of exerting just enough effort in order to achieve their target sales quota, thus suggesting that there is the ability to control the level of exerted effort. Using these behavior findings, the authors begin to design the optimal compensation plan. However instead, given real world constraints, they developed a set of feasible compensation plans. Ultimately, the firm selected one of these profit enhancing compensation frameworks and has seen a substantial and sustained increase in sales and profits. Continued on page 14
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Master of Science in Marketing News Live from College Station, It’s Thursday Morning!
Tim Washer and MS Marketing Students
Former marketing student, Tim Washer (‘89) moonlights as a comedy writer/actor. Credits include Late Show with David Letterman, Late Night with Conan O’Brien, SNL and The Onion Sports Network. His work has been covered by Advertising Age, ADWEEK, and The New York Times. Tim Washer is also a social media manager for Cisco Systems’ Service Provider Marketing group. Prior to Cisco, he served as head of social media video production for IBM, where he wrote/produced the company’s most successful YouTube series, “The Art of the Sale.” Mr. Washer was the guest speaker in Steve McDaniel’s MKTG 670 Marketing Leadership class on March 10. His well-received talk “Late Night Comedy TV Meets Corporate Social Media,” addressed the use of humor in getting your message across and overcoming fear in presenting your marketing ideas. Tim also managed to include several excellent marital tips, for a newlywed student in the class! Here’s a link to a recent Inc. article for which he was interviewed: http://www.inc.com/guides/2010/12/how-touse-humor-in-advertising.html As you’ll see from these four brief clips, Mr. Washer is an interesting fellow (anyone who gets to do a TV commercial with Catherine Zeta-Jones must have something going for him). http://vimeo.com/6749232 Lunch was served in the Cocanougher Center after class; students enjoyed the opportunity to meet with Tim and discuss a variety of topics.
Tim Washer
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Congratulations, Alina!
SURPRISE!!
Dr. Alina Sorescu Receives Distinguished Teaching Award
Associate Dean Bala Shetty congratulates Alina along with Dept. Head Rajan Varadarajan.
Dr. Alina Sorescu is a winner of the 2011 Association of Former Students University Level Teaching Award. This is one of the highest honors bestowed upon faculty members at Texas A&M for sustained excellence in teaching--reserved for the very top faculty at Texas A&M University.
Alina was truly surprised when she was called out of a meeting with Dr. Rajan to find a room full of her students, colleagues, and husband eagerly waiting to present her with her recognition letter. Dean Jerry Strawser presented the letter amidst a tumult of applause.
Alina with her PhD students: (left to right) Michael Lowe, Nicole Hanson, Wonjoo Yun, Woojin Choi, Zixia Cao, Alina Sorescu, Ying Zhu, Bart DeVoldere, Minjung Kim, Scott Davis
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TAMU Collegiate Sales Competition A cooperative event for undergraduates sponsored by Pi Sigma Epsilon, Industrial Distribution Program, and the Marketing Department, and The Department of Agricultural Economics.
Professors Kerry Litzenberg &Norm Clark; AT&T Retail Leadership execs Bruce Ivers, Jay Brown, & Joe Farrell; Competition Winners Cade Wood, Kelly Bowen, April Gary, & Austin Poe; Professor Charles Futrell
Held March 5, 2011, this second, very successful, university-wide sales competition is the brainchild of three professors: Charles Futrell (Marketing), Kerry Litzenberg (Ag Econ and Marketing), and Norm Clark (Industrial Distribution Program). AT&T Retail Leadership Development Program was the major corporate sponsor along with 15 other companies. Sponsors supported the contest both financially and by role playing the customers, judging the students, and generally interacting with the group. A networking luncheon and evening banquet provided opportunities for the interaction of faculty, students and industry reps making it an informal recruiting event as well. Students have already received job offers and interviews as a result of this event. The actual competition was an NCAA bracket-type completion with three rounds: One case for the first round, the same case with more difficult objections for the second round, and a third case with even more challenging objections for the final round. Judging of the sales presentations uses a rubric designed by the contest developers. The actual judging is done by the industry reps; students receive all the grading sheets on their performance at the end of the contest. Jay Brown, Joe Farrell and Kurt Liebendorfer from the AT&T Retail Leadership Development Program were instrumental in developing the cases; former students Katie Parrish (State Farm) and Lauren Heintzelman (Nestle, and 2nd place winner in the first TAMU sales contest) helped manage and prepare the students for the contest. Continued next page
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TAMU Collegiate Sales Competition (cont.) Corporate Sponsors Gold Internal Data Resources, Inc. Sewell The Scotts Company LLC Wilson Supply Womack Machine Supply Co.
Prof. Kerry Litzenberg with contest winners Kelly Bowen and Cade Wood
Prof. Charles Futrell enjoying the proceedings.
Industry rep role-playing the customer with student contestant. Keynote speaker, Bruce Ivers, Exec. Director, AT&T Retail Leadership Development Program
Industry representatives judging video-recorded interviews.
Silver AT&T Retail Leadership Development Program Crawford Electric Supply/Sonepar USA Gexpro Hill Country Electric Supply Hisco Hydraquip LCR-M PEPSICO—Tropicana, Quaker, Gatorade Smith & Associates Bronze CEMEX Energy Alloys Hormel Foods Corporation Liberty Mutual Lilly Animal Health Nestle
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TAMU Collegiate Sales Competition (cont.)
The Final Four Students making the most of networking opportunities
Prof Norm Clark watches one of his students present, while the industry representatives watch and grade.
Lauren Heintzelman (‘10), Nestle rep and 2nd place winner from the first TAMU sales contest, came to help prepare students.
2011 Texas A&M Collegiate Sales Contest Bringing together Industry Representatives, Students and Faculty with an interest in Professional Personal Selling Link to sales contest slide show
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Congratulations!
Executive Associate Dean Bala Shetty, MKTG Dept. Head Rajan Varadarajan, Star Performer Clarissa Means, and Dean Jerry Strawser
Congratulations to “Star Performer” Clarissa Means. The Mays Business School “Star Performer” Staff Grant Program annually recognizes staff members who have demonstrated excellent and
outstanding performance during the past year that exceeds the expectations of their position. Winners receive a desk-top plaque and a $1000 (pre-tax) award.
At the office celebration of Clarissa’s award, Dr. Paul Busch took the opportunity to laud his student worker, marketing student Maria Sommer, for her recently completed successful season as Captain of the TAMU Swim Team.
Paul Busch and Maria Sommer
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Center for Retailing Studies Gallery Furniture Retail Education Lobby Dedication Jim McIngvale, owner of Gallery Furniture, a.k.a. “Mattress Mack,” is famous for doing more than providing same-day furniture delivery service in the Houston area -- he’s also known for his extraordinary commitment to community service and philanthropy. He feeds the hungry, helps victims of natural disasters, gives furniture to the needy, and generally lends a hand wherever he can. He’s also a key supporter of the Center for Retailing Studies at Mays Business School. On March 29, his investment in retailing education at Texas A&M was permanently recognized with the dedication of the Gallery Furniture Retail Education Lobby in the Center for Retailing Studies (CRS). “He is truly one of the most talented, innovative and successful merchandisers on the planet, bar none,” Center Director Cheryl Holland Bridges said when introducing him before the ribbon-cutting ceremony for the new lobby. “Mack truly loves Aggies, and we love him.” Mays Dean Jerry Strawser said any recognition the college can give McIngvale will fall short of what he deserves. “This guy simply makes the city of Houston and the state of Texas a better place,” he said. Gallery Furniture has been involved with CRS for more than 15 years, but McIngvale’s involvement goes beyond financial gifts. He guest lectures regularly in classes, has presented twice at the Retailing Summit and develops mentoring relationships with students interested in retail. McIngvale said he supports Texas A&M because it reinforces the timeless values of good manners and hard work. “Texas A&M gives such an opportunity to people that they’ll be able to change the world,” he said. “I’m thrilled to be a huge supporter of Texas A&M.” His father taught him to be generous. “We have a responsibility to make a difference – we all do,” he said. “Texas A&M does that.”
Gallery Furniture owner Jim McIngvale, Mays Dean Jerry Strawser, and CRS Director Cheryl Bridges enjoying the Retailing Education Lobby ribbon cutting
Continuing to inspire Mays students to discover the world of retailing, McIngvale committed to an endowment of $250,000 at Mays, which was used to create and support the Gallery Furniture Retail Education Lobby. The facility features a comfortable area for students to study, hold group meetings and lounge. A wall-mounted TV streams current retailing and business news. Bridges says McIngvale’s gift is central to their mission of being a bridge between the academic and professional world, as it will put students in contact with the latest information from the marketplace in a dynamic learning atmosphere. Information displayed on the TV includes presentations from retailing conferences, information about retail companies and career paths, profiles of student achievements in retailing, and video interviews with retailing CEOs. The multimedia materials encourage students to consider careers in retail, says Bridges. Continued next page
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Gallery Furniture Dedication
Leonard Berry, Distinguished Professor of Marketing and founding director of the CRS, said he admires no one as much as he does McIngvale, both for his innovative approach and for his openness to customer feedback. Berry said he is amazed at McIngvale’s energy and enthusiasm, and his fearless approach to marketing. Most of all, Berry said, McIngvale conducts business in such a way that Gallery Furniture epitomizes social profit. “We learn all about financial profit – how to get it, how to keep it, how to earn more, but I believe the social profit Gallery Furniture creates for Houston is one of the key contributors to the
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Jim McIngvale and the CRS Retail Education Lobby plaque
company’s financial success,” Berry said. Then, Berry turned to McIngvale and added, “I’m proud of you for your business success, but even more so for your generosity as a business leader.”
New York City Market Tour
Every spring break, fifteen retailing students forego the sunny beaches of South Padre for the winter snows of the Northeast to experience the New York City Market Tour. The tour exposes students to the corporate culture of buying offices, design studios, and major retailers in NYC. Organized by the Center for Retailing Studies, the
trip is an important stepping stone for students interested in pursuing careers in New York City. Two students from last year’s tour currently hold fulltime positions at the international catalog, eCommerce and plus size apparel merchant, Redcats USA, on 7th Avenue. Twelve more students were interviewed this year and two have already been offered summer internships with Redcats. Executive Vice President of Human Resources, Kelly O’Neill, told the group, “Aggies are a great fit for our organization. We knew when we hired one, more would follow. We are very pleased with the success these students have had here.” Redcat Aggies Jennifer Reiner and Amy Frey talked about their roles in the company and the transition from College Station to New York City. “It was a huge change, but I love it here.” said Amy, “There is nothing better than Saturday in the park. We even found a great Tex-Mex place!”
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New York City Market Tour At the Fossil Showroom, students viewed product samples, the lookbook, and fall trends in watches, handbags and accessories. Like many of the retailers visited, Fossil is headquartered elsewhere (Richardson, TX) but its showroom is in NYC to be accessible to buyers and vendors in the nearby garment district. On one day, students saw the highs and lows of retail price points—from $7,000 sequined chino pants to $9.99 off-price Mattel toys. They started the day with a behind the scenes tour of Bergdorf Goodman. The 110 year old luxury department store, at the southern end of Central Park, offers the finest selection of couture lines, home goods, and ready-to-wear apparel for the fashion-forward customer. David Battane, a 25 year veteran who knows everything about the store and the fashion industry, led the tour. He saved the best for last-students were thrilled to be invited into a sales presentation led by Michael Kors, the internationally acclaimed designer, who was in the
(cont.)
store teaching the sales team the highlights of his summer collection—which included the sequined chinos. At the other end of the retail spectrum, merchants at the Ross Buying Office told students how they carefully cultivate relationships with vendors. “When a company cancels an order, we want the vendor to think of Ross as a choice buyer for their merchandise. This is how we bring the same products at a better price to our customers,” said Alan Krisfalusi, Senior HR Director. Students fund the trip themselves, so they have made a major commitment to pursuing careers in NYC. Christine Brett said, “I really learned the realities of the business. The trip opened my eyes to different career routes.” Others said they appreciated the experience interviewing, and the importance of networking and meeting people. No matter what lesson they learned, each student left the Big Apple with a greater understanding of the world of retailing and life “in the city that never sleeps. “
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Center for Retailing Studies Executive professors See complete spring calendar of executive professors. Marc Eckhart, Regional Manager, Barnes & Noble College Booksellers and Ying Zhu, PhD Candidate & instructor in MKTG 322, Consumer Behavior
Scott McLelland, President, H-E-B Houston, and Professor Manjit Yadav, MKTG 675, Marketing Strategy
With information turning digital and up to 22% of college students turning away from textbook purchases, you would assume college booksellers would be gravely concerned over the industry’s future. However, the feeling at Barnes & Noble College Booksellers is just the opposite. Regional Manager Marc Eckhart told students his company is confident that hard copy books will be around forever. The textbook industry, like most, is constantly evolving to meet changing customer expectations. For years, the retailer offered students the option to purchase books in the store or online, new or used. Today, they can rent textbooks for the semester. Diverse options make shopping more convenient, personalized, and in most cases cheaper for the consumer. Marc explained, “Students shop when they want.” Most textbook orders received online are made between 12:00AM – 2:00AM! Marc treated students to MSC Bookstore coupons. They left the classroom eager to figure out how much money they could save next semester by renting their textbooks.
Many wonder how H-E-B can compete against major national grocery chains while only operating in Texas and Mexico. Scott McClelland, H-E-B President of Houston, says that H-E-B does what other retailers “can’t, won’t, and haven’t thought of.” He explained to students that Walmart carries eight kinds of apples, while H-E-B carries twenty-two, offering much greater diversity of selection to its discerning customer. They know their customers, and market to them accordingly. “We stock what you want to buy, and merchandise what we want to sell.” As a result, H-E-B is the market share leader in all but one market in which they currently compete. Scott explained how H-E-B is always adapting to better serve their customers. In 2006, the company opened Mi Tienda, its first Latino-focused store. The store stocks products favored by Hispanic customers, from piñatas to Mexican baked goods to special cuts of chicken and pork. Last year, H-E-B launched Joe V’s Smart Shop, a no-frills shopping experience which offers large savings on meats, produce, and groceries in low income neighborhoods. Like many other H-E-B executives who share their time and expertise in College Station, Scott has become an Aggie fan. When asked why he recently stepped down from his role on McCombs School of Business advisory board, he joked, “I couldn’t find a Longhorn I wanted to hire.”
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Habitat for Humanity Home Dedication
Q: Why is this little boy so happy? A: Because he’s receiving the key to his new home!
Dr. Len & Nancy Berry and Lowes sponsored a Habitat for Humanity home in College Station for Amy Austin and her son Brodrick. Brodrick received the key to their home (with his mom) at a joyful ceremony on Saturday morning, March 12, at the home site, 126 Southland in College Station. Bryan/College Station Habitat for Humanity works with volunteers to build new homes for low-income families currently living in substandard housing in the Bryan/College Station communities. Habitat is dedicated to eliminating poverty housing and making the right to simple, decent shelter a matter of conscience and action. This is the second Habitat home that Len & Nancy have co-sponsored with Lowes.
Len & Nancy Berry, with new homeowners Amy and Brodrick Austin
Link to Habitat website page (more pics and info) Len & Nancy speak at the home dedication.
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Marketing Research Camp (cont. from p. 2)
Rishika Ramkumar
The afternoon session started with Rishika Ramkumar (Assistant Professor of Marketing, Mays Business School, Texas A&M University) who spoke about “The Effect of Asymmetric Social Ties on Online Contribution: The Role of Tie Strength and Homophily.”
Visiting Scholar Bart DeVoldere, U. Pittsburgh’s Cait Poynor Lamberton, MKTG Prof. Kelly Haws, and MS student Kristina Casey
Executive Summary: While participation in online social communities continues to increase at a rapid rate, the number of those contributing content, such as user reviews, remains at a very low level. Increasing online contribution can result in improved user experiences, and from a firm’s perspective, can improve their revenue stream by driving an increase in their web traffic. In order to improve the online experience, we need to understand what drives online contribution in online communities and how a user’s network impacts her motivation to contribute content. A key component of these online communities is that users can create their own social networks thus forming unique social ties. Understanding how influential these social ties are may depend of the strength of the relationship and also on shared characteristics. Using data from an online music blog aggregator that aggregates over 1500 music blog posts, the authors model the effect of tie strength on contribution. A key conclusion is that stronger network ties were more influential in decision making than weaker network ties.
PhD candidate Ying Zhu speaks with Gary Frazier and Krista Li, incoming PhD student. Continued next page
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Marketing Research Camp (cont. from previous page) Cait Poynor Lamberton (Fryrear Faculty Fellow and Assistant Professor of Business Administration, Katz School of Business, University of Pittsburgh) gave the final talk of the day, “A Spoonful of Choice: Using Allocation to Increase Consumer Satisfaction with Compulsory Payments.” Executive Summary: All spending is not considered equal in the minds of consumers. Some payments, such as taxes or home owner association fees, are inherently more painful to make. These compulsory payments offer collective benefits with low levels of upfront choice; this combination prompts low levels of satisfaction with the expenditure experience.
Cait Poynor Lamberton
What if you give consumers a little bit more choice in how they allocate their spending? Would this make payments less painful in the cases of collective benefits? The authors study how the allocation of a small portion of the payment across different expenditure categories influences consumers’ satisfaction levels. They find that this allocation can increase satisfaction with compulsory payments, and this increased level of satisfaction can be done with relatively small proportions of allocation amount. Thus, giving consumers “partial choice” led to a decrease in their level of reactance and an increase in their perceived level of benefit.
Many thanks to Nicole Hanson, first year PhD student, for the excellent executive summaries.
Announcements CRS Scholarship deadline is April 15. Please encourage students to apply online for awards. M.B. Zale Scholars applications are also due April 15. Apply online. Link to Mays Business Online article by FSF Scholarship finalist Alexandra Sinatra – Fashion Aficionados
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Shankar and Dotzel (‘09) Awarded Research Grant – Whoop!!
Advisors’ Corner The summer and fall course schedules have been released on Howdy, so Leslie has been busy meeting with students in anticipation of preregistration in April. In addition, Leslie spoke to the American Business Women’s Association about degree opportunities in Marketing.
Thomas Dotzel and Venky Shankar's project entitled "Service Innovation versus Goods Innovation: Effects on Firm Value and Risk" has been selected as a winner of the Social Sciences and Humanities Research Council of Canada Research Competition and awarded a research grant of $40,800.
On a Personal Note…
Theresa Morrison’s daughter Hallie won the Grand Championship in Horticulture award at the Brazos County Youth Livestock Association's 2011 Show on March 26. Her award winning design was purchased at auction by the BCS Chamber of Commerce. Congratulations, Hallie!
Steve and Nancy McDaniel recently attended the wedding of one of our BBAMarketing and MS-Marketing graduates, Stephen McGee (now playing for the Dallas Cowboys). Mr. McGee and his new wife, Brittany, were married in Midland on March 5. The lovely wedding was co-officiated by Stephen’s and Brittany’s fathers, both of whom are ministers. The newlyweds honeymooned in Bora Bora. Lady Aggies NCAA Women’s Basketball Champions Welcome Home video We want to include your news items in the next issue. Please submit them to Laurie Marshall at lmarshall@mays.tamu.edu,
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